The upside of a 2009-style depression

Boston.com riffs on what a modern-day Great Depression would look like, and Tim O'Reilly extends the analysis. The fascinating thing I found in both is just how much good would come from a serious meltdown.

For example, Tim calls out the following:

• Desurburanization, and a preference for renting over owning a home [In other words, we'd go back to the world as it was before when you actually had to have saved money in order to buy a home - is this a bad thing?];
• The re-legitimization of hand-me-down culture..., including national second-hand chains [Again, this sounds excellent - people reusing things rather than buying new and trashing "old" before it really has the chance to become old];
• A preference for reliability over novelty and style [Sounds fantastic! Sign me up];
• "The neighborhood appliance shop could reappear in a new form - unlicensed, with hacked cellphones and rebuilt computers" [Again, more reuse];
• A fatter society, "as more people eat like today's poor"... [OK, I don't like chubbiness, at least not on my hips - Strike one];
• "More crowded subways and cheap, unlicensed day-care centers" [Bad on the day-care centers, but wouldn't it be great to see more use of the subways and other public transportation?].

I don't want to minimize the negative effects of a depression, but most of these things sound like real improvements over our current society, which is big on convenience and waste.

Boston.com suggests that "today we spend much of our money on healthcare, child care, and education, and we'd see uncomfortable changes in those parts of our lives," and I'm not arguing that it would be pleasant to spend more time in emergency rooms. I'm also not suggesting I'd want to see more of the inane time wasting that cheap entertainment might provide:

With the diminishing price of televisions and the proliferation of channels, it's getting easier and easier to kill time alone, and free time is one thing a 21st-century depression would create in abundance. Instead of dusty farm families, the icon of a modern-day depression might be something as subtle as the flickering glow of millions of televisions glimpsed through living room windows, as the nation's unemployed sit at home filling their days with the cheapest form of distraction available.

But maybe these problems would lead to a healthcare system more like France's, which could be a very good thing. (My first daughter was born under socialized medicine, and it was rubbish. But France's system has much to be desired.) And maybe we'd start saving again. Maybe we'd focus less on consumption, and more on creation.

In short, I think there's a lot of good that can come from the excess being wrung from our bloated, lazy economy. So long as it also results in a more compassionate, hands-on-to-help-others society, we may discover that economic uncertainty on a large scale could prove to be a blessing in disguise.

[daftkey]

Good post, Matt!

I had a similar conversation with one of the partners of our firm in 2006, during the height of the latest boom. (background - he had been consulting with CFOs and CEOs for businesses in Calgary, Canada since the last big recession back in the early 1980s - in my opinion, he's an incredibly brilliant man when it comes to business and economics). The conversation came up that what this city needs was a good recession.

$1500/mo rents on small houses, people driving three blocks in Hummers because the city was sprawling out of control, and incredible waste everywhere from consumer electronics to investments in bad oil exploration projects underscored everything that the boom was becoming about. Including the insatiable appetite for disposable everything.

Now there's a recession on the horizon, even here in Calgary, and the "good side" of it is already starting to show itself - starting with the Canadian government abolishing 40-year no-money-down mortgages. We'll see in the near future how things will pan out in the end - there are a LOT of people running the world right now who have never really lived through a major recession.

[nabeelmoidu]

If this depression makes the Washington powerhouses think twice before another attempt at flushing down a Trillion into war and oil industry , it can be the greatest gift for humanity.