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My theory is that we're in danger of a global repeat of the Great Depression that hammered North America and, to a lesser extent, Europe in the 1930s. The last
by michaelochurch 11y ago
My theory is that we're in danger of a global repeat of the Great Depression that hammered North America and, to a lesser extent, Europe in the 1930s.
The last one, in the 1920s, was caused by ill-managed prosperity, I would argue. You had sudden gains in agricultural productivity, which led to crashing commodity prices, which eventually led to rural poverty. One might have "expected" farmers to move into the cities and become the new middle class, and some did, but that doesn't work out so well when thousands or millions of poor, hungry people are doing the same thing. What was just "rural poverty" (of course, half the country was still rural) in 1925 became more widespread by 1927-28 (noticeable slipping demand for consumer products) and finally was recognized as a Great Depression after it tanked the stock market in 1929-32.
We have, in 2015, a lot of ill-managed prosperity. We have a culture in Silicon Valley that glorifies ill-managed prosperity. (What else do you call funding Clinkle?) And the same thing that happened to food prices in 1900-30 (slow at first, accelerating toward the end) is happening to almost all human labor in 1985-2015.
It may not end well. Including the damage brought by the war, I'd argue that most of Europe didn't get out of the Depression (manifest somewhat differently over there, especially in the fascist countries) until the late 1950s.
- frandroid 11y agoAre you saying that poor peasant led to the Great Depression? I thought runaway speculation did...
- paulpauper 11y agoThee cause was probably a combination of speculation, leverage, overbuilding, and so on. No one really knows the exact trigger, but a popular opinion seems to be that the Smoot–Hawley Tariff Act made it worse -although even that is debated. The stock market crash lead to margin calls and the sudden evaporation of millions of dollars of wealth and that probably triggered a cascade effect, as business obligations could not be met due to the sudden loss of wealth.
- michaelochurch 11y agoYou're conflating the October 1929 stock market crash with the Great Depression. They happened around the same time and they're related but they're not the same thing. The 1987 and 2001 stock market crashes didn't cause decade-long depressions, and the 1987 crash was a larger drop than 1929. One-day crashes make headlines but aren't that damaging to the underlying economy unless it's already very brittle.
- paulpauper 11y agoill-managed prosperity Who do you propose manage it? That seems overbearing, to assume that some entity can do a better job managing the wealth of those who earned it. Wealth inequality will always be with us, just as it has all throughout history. In a free market, bad decisions are punished through the loss of wealth.
- seiji 11y ago> managing the wealth of those who earned it. certainly an adorable point of view, but most wealth being transferred internationally these days is captured through exploiting natural resources (hundreds of millionaire Saudi Princes) or outright bribery/graft (many chinese political officers buying up California, many russian political and corporate officers buying up London and NYC). There's a reason middle eastern and russian rich people buying up Manhattan real estate insist on installing 3 bullet proof panic rooms throughout their apartments. Stealing resources and exploiting people grows your enemies list considerably. Not all wealth comes about because a 28 year old IPO'd their billion dollar social flimflam startup. > bad decisions are punished through the loss of wealth. We've lost that ability in any meaningful capacity.
- paulpauper 11y agoWe've lost that ability in any meaningful capacity. Lumber Liquidators stock fell 80% on the management's bad decision to use crappy Chinese flooring, so that is one example of bad decisions leading to loss of wealth.
- seiji 11y agoLumber Liquidators isn't exactly a global mover and shaker. You can always punish the little guy. You can always name a person to take the fall, but it doesn't restore balance to the force. Wake me up when HSBC sees meaningful fines or when Putin has his $70 billion in illegally acquired wealth confiscated.
- michaelochurch 11y agoThank you for posting this. It's not a popular viewpoint on HN that you're putting forth, but it's an important one. People in the Hacker News sphere both exaggerate the proportion of rich people who got there in decent ways (in reality, it might be 10% in the U.S. and 2% globally) and the degree to which Silicon Valley is an exception. Not all wealth comes about because a 28 year old IPO'd their billion dollar social flimflam startup. Worse yet, most of the 28-year-olds who are able to get the introductions and press support necessary to make a flimflam unicorn are the offspring of those resource extractors and corrupt officials and health insurance lobbyists. It's like money laundering, but with social assets (connections, pedigree) rather than financial ones.