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The Personal, Unfair Recession


That graph comes from a sobering survey released by the Economic Policy Institute. There's a tendency to talk of joblessness as a "lagging indicator," which is pretty bloodless. As pollster Geoff Garin said, however, this is a very personal recession people are experiencing. Almost 60 percent of voters are near to someone who has been laid off. More than 60 percent of voters are near to someone who has had his or her wages cut.

On some level, this is almost a bit hard to believe. Unemployment has risen substantially. But it's not gone from 2 percent to 20 percent. The survey, however, says what it says. People aren't reading about the recession. They're living in it. In response to this, you'll sometimes hear members of the administration argue that the situation could be much worse. That's entirely correct. But voters don't viscerally get could-have-beens. They get what is actually happening, and they don't like it. In fact, they more than don't like it. They don't think it's fair:

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When the financial crisis hit, there were a lot of political comparisons with the Great Depression. It seemed like an opportunity. But in retrospect, there was a gaping difference between the Depression and the Recession. The Depression hit individuals. The bank run consisted of voters lining up outside banks. The policies meant to correct it thus focused on individuals. FDIC insurance, for instance, protected the deposits of individuals.

The Great Recession took place in the so-called "shadow bank" sector. The bank runs consisted of banks making runs on other banks. The policies that protected assets protected the assets of banks. The biggest recapitalization efforts did not recapitalize consumers, but financial institutions.

This was all done, of course, for the benefit of individuals. Of voters. The economic logic behind preserving the financial sector was bulletproof. But the electorate is not composed of economists. And all they know is that the banks got a lot of money, and this is the worst recession in memory.

By Ezra Klein  |  September 30, 2009; 3:23 PM ET
Categories:  Economy , Polls  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Public Option Compromises
Next: Presidential Approval and Unemployment


I hope you realize now why people are p!ssed off and won't support new spending.
The economic logic behind preserving the financial sector was bulletproof. Says who? Letting the tax cheat and Bernanke pad the books of Goldman wasn't what people were asking for. Saving AIG was all about saving Goldman’s and the rest of the privileged stock options. I fixed this for you.
And all they know is that the banks got a lot of money and won't lend any of it.
Sorry for the rant, but I'm p!ssed about this!

Posted by: obrier2 | September 30, 2009 3:56 PM | Report abuse

The Democrats could frame the case for the strong public option as helping the little people without bailing out the financial sector.

Posted by: Lee_A_Arnold | September 30, 2009 4:02 PM | Report abuse

The problem, of course, is that when the federal government tries to do anything to help the little people, the masses cry "socialism."

Posted by: cog145 | September 30, 2009 4:10 PM | Report abuse

It is a cruel recession, and a very cruel recovery.

GS pay will average 700K per employee! Wow, is that a typo? Courtesy the US taxpayer! And all I got was a paycut, the elimination of retiree medical benefits, and the elimination of my spouses defined benefit pension plan. My sister got her hours cut. She lost her 401K match (they don't have pensions). Then there's healthcare, retirement security, cost of living, the dollar, inflation, deflation, etc etc to worry about.

But it's all about jobs. If people don't go back to work, if people don't start feeling a bit more secure in their employment, all bets are off as far as 2010 and 2012 are concerned.

Posted by: luko | September 30, 2009 4:25 PM | Report abuse

The perception among many is that no DIRECT benefit equals no benefit.

The fact line is that TARP and the Recovery money saved all of our asses. For those of us who are suffering (my co-workers and I received compensation cuts earlier this year), we're not suffering nearly as much as we would have been if not for these programs. Yes, they're less than perfect--far less. But we were rapidly spiraling into another great depression. Undeniably, government economic policies made a difference to all individuals.

Posted by: cjo30080 | September 30, 2009 4:36 PM | Report abuse

If the average person is "close to" 10-15 people, and the total (augmented) unemployment rate is 13%, then what's surprising about 2/3 of the population being close to someone who lost their job? That's about what you'd expect.

Posted by: Quant | September 30, 2009 4:42 PM | Report abuse

Obama should talk about his tax cut more. That is a direct benefit to over 90% of the population that I bet 75% don't realize.

Posted by: Quant | September 30, 2009 4:45 PM | Report abuse

Ezra Klein: "The economic logic behind preserving the financial sector was bulletproof. But the electorate is not composed of economists."

Ezra isn't an economist either. Nor am I. So let's see what folks like Paul Krugman, Joe Stiglitz, Dean Baker, et al, have said.

They've repeatedly said that while preserving the financial sector was essential, preserving specific banks and "banks" (e.g. Goldman-Sachs) in terms of their present ownership and management wasn't. That's why they invented receivership. Instead we got a crooked deal where the Financial Masters of the Universe, who created this mess in a fit of incompetence that would have gotten anyone else fired 10x over, got bailed out. Saving the financial sector enough to keep the real economy from completely dying was just a side effect.

And now we have zombie banks, monetization of debt courtesy of Fed lending policies that directly benefit only the banks, and no prospect of real reform.

Posted by: alex50 | September 30, 2009 7:37 PM | Report abuse

A lot of ungrateful folks in your poll.
The president's stimulus package extended unemployment benefits THREE times to millions, up to 79 weeks total for people in the states with the worst unemployment rates. 79 weeks! If you can't find a job in your town, then move to one that has better opportunities.

And yet many of these same people are sitting at home, yelling at the TV, shaking their fist at Obama, while wasting their unemployment check on beer and cigarettes. They will not get off their lazy butts and look for a job until their benefits finally expire.

Their logic is that the jobs that are available, do not pay as well as their unemployment check, so, why not just sit back and enjoy the benefits?

There's plenty of jobs for people who are willing to work and willing to relocate. Why else would unemployment be 4% in North Dakota or 6% in Oklahoma and D.C.?

Posted by: taskforceken | September 30, 2009 7:46 PM | Report abuse

OMG It is a real life 'people willing to work' post from a scold. I thought these only existed in the WSJ and on the Heritage website. Apparently this genius does not understand that those collecting unemployment insurance were in fact gainfully employed. Seems to undermine the notion that they are not willing to work. I suspect his post is just a revamp of when he was yelling at welfare queens driving Cadillacs in the 90's

Sure it is not a big deal to a 20 something tool to move to DC to work for a lobbying firm run by dad's old golf buddy. Bit more problematic when you have a family and a mortage. Fargo is a fine town but it doesn't appear to need thousands of construction workers at the moment.

Look forward to seeing more wisdom from those who think the unemployed are lucky and lazy in the Americas's Next Great Pundit contest.

Posted by: PMuldoon | September 30, 2009 10:37 PM | Report abuse

bulletproof? 95% of the bailout is going to wall st - in terms of helping employment, we should have spent the $ on a new wpa for infrastructure, while letting banks, gses and insurers get wiped out, simultaneously creating institutions to fill the gap, as we have done before. It will be hard to spend more now… look at what we're getting for our $ :

Posted by: lucky9 | October 1, 2009 7:29 AM | Report abuse

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