Economics

Next Time Somebody Says "This is the worst meltdown since the Great Depression" and You Think "That's bullshit"…

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You kids need to understand: every single thing sucked in 1975.

…just recite the following:

Quarterly GDP growth entered into its most degenerating two-year period since the Great Depression. Over a seven-quarter period from 1973 to 1975, GDP went down five times, which meant that there was at least one recession and probably another in the period, making for a double dip, as in 1969-1970. In early 1975, GDP was still 3 percent off the 1973 mark, an enduring contraction the likes of which had been completely unknown during the quarter century of postwar prosperity. And in the recession years of 1974 and 1975, consumer prices somehow increased at World War I rates – 11 percent and 9 percent, respectively. At the end of 1975, the economy was only marginally bigger than it had been in 1973, and prices were 25 percent higher.

For a while, it looked like the stock market would not hold. In 1973-74, the indexes fell halfway to zero before snapping back somewhat in 1975. The Dow industrials stabilized at about 850, 15 percent below the 1966 peak. There had been 66 percent inflation in the interim, however, meaning that if you had been holding the whole while, you had been getting killed. Then there was unemployment: it surged to 9 percent in 1975, easily the highest level since the Depression, a rate that was one-quarter higher than during any postwar recession.

This is a brief passage from a two-page iliad of suffering described in Brian Domitrovic's great book Econoclasts: The rebels who sparked the supply-side revolution and restored American prosperity. Note that of all the economic well-being measures described above, only one is worse today than it was during the Gerald Ford Administration: Since the current economic team took office in January 2009, unemployment has increased from 7.6 percent to 9.6 percent.

I'm on record somewhere believing supply-side policies will not solve the current recession, because the recession itself is the solution. I should clarify that supply-side policies – or even the mutant-cannibal-hillbilly versions of those policies that emerged under Ronald Reagan – would be less destructive than the catastrophic policies of the Obama brain trust.