Are We Sinking Into a New Great Depression?

Fifteen percent unemployment and the Oregon legislature is preparing to raise taxes. As in California, the people have voted down tax increases, but the legislators refuse to believe them. Instead, they threaten to cut vital services as a sort of punishment for false consciousness by voters, even as they race to preserve as many state government jobs and perquisites as possible.

Fifteen percent unemployment. What does that look like? Well, we all may know soon enough. But what is most disturbing about it is that it doesn't look that much different. A few more beggars. A few less new cars on the highway. Fewer people in the stores. More vacancies at the local motels.

But, for the most part, as surveys are showing around the country, people are hanging on, holding off buying anything but the essentials, taking vacations closer to home, restructuring their debt where they can. There is a general, albeit nervous, sense that we've now gotten through the hard times and that prosperity, if not just around the corner, is at least not too far off.

But what if that isn't true? Taking advantage of the unsurpassed broadband in Bandon, I surfed the Web last night -- and thanks to Instapundit.com, found this story. Downstairs, my son and his friend are thrilling themselves searching out horror movies on cable TV. But, like most grown-ups, I don't need to search for scary things; they do an excellent job finding me. Like these charts.

Remember Your Eighth-Grade History

For several weeks now, I've had a disquieting feeling about the economy. And, I suspect, consciously or unconsciously, so have many Americans. I remember my parents telling me that their lives barely registered the stock market crash of 1929. Rather, the Depression hit full-force in 1931 -- and reached its full horror in 1933.

None of that will surprise anyone who took eighth-grade U.S. history. But what few people seem to know these days is that after the economy seemed to turn upward in 1934, it crashed again two years later. In fact, in many lives, that's when the real damage was done. That's when my great-grandfather lost the farm in Oklahoma -- the one he'd home-steaded 40 years before in the Land Rush. My father's family in Oregon went on relief, and my teenaged dad fed himself as a field worker by picking string beans (he never ate them again).

Look at those charts again. Nothing in them suggests that the stimulus of the past eight months has accomplished much of anything. On the contrary, almost every chart seems to suggest that we are making exactly the same mistakes of 1929-1939. It is almost as if it is programmed into human nature, and we can't help ourselves.

Every sane adult knows what it takes to pull out of an economic deadfall: You tighten budgets, cut inessentials, pay as you go and restructure your debt -- and hang on to your current job for dear life. And we also understand that, when it comes to a national economic crash, the same principles apply -- with the addition that you stimulate the economy briefly with increased spending, you cut taxes and loosen onerous regulations, maintain free trade because the alternative is so much worse, and you support innovation and new company creation in hopes that a new cohort of hot companies will help pull you out.

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