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Cleveland and the Economy
This week's New York Times Magazine features a story about the epidemic of foreclosures in Cleveland, where, it is estimated, some 10,000 homes are vacant. The story follows a Cleveland city councilman around his neighborhood, in the process, explaining how such devastation was wrought. The picture of streets filled with boarded-up homes, stripped of their fixtures, plumbing, is bleak. Accompanied by statements like the following, it makes for a somber and foreboding portrait of the years to come.
“Ravaged by the closing of American steel mills, Cleveland has long been in decline. With fewer manufacturing jobs to attract workers, it has lost half its population since 1960. Its poverty rate is one of the highest in the nation. But in all those years, nothing has approached the current scale of ruin.”
It seems like no one really knows how bad the economy will get, and how long the current recession will last. A recent New York Times editorial compares the youth of today to those who grew up in the Great Depression, suggesting that the next era may become known as “The Great Recession.”
Of course, it's all too easy to predict the end of all things, visions of a coming apocalypse having long served as an easy way to sell papers, boost ratings and populate religions. And yet, the visions of impending doom seem just as likely to be true as not, and, powerless, we must wait and see what the future will hold.
On a recent episode of Chicago Public Radio's This American Life, which was devoted to explaining the current state of banks in America, the outlook wasn't much better. A dense and complicated situation, even for those directly involved, as host Ira Glass said, it would be easy enough just to “sit this one out.” But can we afford to? It would seem not.
According to Glass' program, which outlined the banking crisis in layman's terms, the culprit, rather than shady lenders, greedy bankers, or corrupt regulatory agencies, is us. Yes, you read that right. Sure, lenders took advantage of many hardworking people looking for their slice of the American dream, looking to better their lives and the lives of their children. The bankers got rich. The regulators did nothing. All the while, though, Americans continued to buy and spend far beyond our means, using the seemingly limitless credit we were afforded not just on our homes, but on credit cards, too.
The standard of living has increased dramatically in the United States in the last quarter of a century, and that is in a large part because credit has been so easily available. Whether we are heading for a depression or a “Great Recession,” we would all be well-served to reconsider our debt-loving ways. Just as the previous generation who came of age in 1930s did, we may be forced to learn some lessons about economics from hard times. That, it seems, is the only way people learn.