Preparing for the next recession
By Josh Hoxie
On average, our economy tanks every seven years or so. By now we
should have a pretty good idea of why that tanking happens, how we can protect
ourselves, and what the impact will be.
Unfortunately, we don’t.
Recessions remain a bit like death, inevitable yet near
impossible to predict. Like death, recessions also generate sadness. And the
Great Recession, as a
new collection of research papers from the Russell Sage
Foundation shows, generated a great deal of sadness.
In 2010, one year after the official end of the recession,
reported happiness hit its lowest level since researchers first started
recording the measure in the mid-1970s.
This shouldn’t be too surprising. During this time, home prices
tanked, unemployment skyrocketed, and retirement accounts shriveled up. And
many of the hardest hit families still haven’t recovered financially, leaving
millions of households now more susceptible to the next downturn, not less.
“Americans are financially worse equipped to handle unemployment now than a generation ago,” the Russell Sage researchers point out, “thanks to deteriorating household wealth and unemployment insurance benefits.”
Endurance athletes and psychologists will both tell
you that humans can adeptly block out memories of pain and suffering. In
the retelling of stories, we often gloss over the ugly parts and choose to
remember the pleasantries. This also appears to hold true for economics, too.
In the period since the last recession, the stock market has
more than tripled in value. Yet this increase has essentially only benefited
those at the top.
Our too-big-to-fail banks have grown even bigger, and
reckless behavior has returned to the financial markets. Inequality has also
been rising steadily, with nearly all the income gains of the “recovery” going
to the top 1 percent.
But this growing inequality isn’t inevitable. It’s a result of
policy.
The federal minimum wage still hasn’t budged from $7.25 an hour,
a go-hungry wage for families.
Federal tax expenditures, meanwhile — like
mortgage subsidies and beyond — go overwhelmingly to the already wealthy, and
do little to help low- and middle-income workers save.
That reality hurts Americans of all colors, but it hits
black and Latino families particularly hard. Racist policies have blocked them
from wealth-building opportunities for generations.
The researchers at Russell Sage have provided a sober reminder
that the Great Recession brought with it brutal and wide reaching pain. We need
to take action now to soften the blow of the next recession and prevent the
suffering we know is coming.
Changing our public policies to reach these goals, the data
show, will make us all happier.
Josh
Hoxie directs the Project on Taxation and Opportunity at the Institute for
Policy Studies and co-edits Inequality.org, where an earlier version of this
op-ed appeared. Distributed by OtherWords.org.
