The Uses of Economic Adversity

By Peter Vanderwicken

The cost is high, but adversity has its uses: the recession has played a major role in the calming of America. Looking for a job takes precedence over looking for trouble. Unemployment undermines the counterculture's confidence in a cornucopia able to feed forever both the straights and the dropouts. And in subtler ways the recession has lowered the general tolerance for uproar, enhancing the concern for private welfare at the expense of political concerns and street theatrics. Sidewalks are too narrow for protest marchers and food stamp lines.

The effect is ironic, because the 1970 recession was the nation's mildest in this century. But the reason is plain: the downturn's jolt to Americans' accustomed confidence was far greater than its blow to their pocketbooks. Almost two-thirds are now telling pollsters that the state of the economy is their biggest concern. Unemployment has been lower than during any previous recession; yet three out of four Americans expect rising unemployment and economic difficulties this year. "The notion that things will be better tomorrow has received quite a shock," says Economist George Katona.

The dip had a disproportionate impact for several reasons. In the Eisenhower years, when recessions recurred, expectations of continued prosperity never rose too high. But after nearly a decade of rising employment and prosperity, any downturn was bound to be jarring. The vastly increased coverage of economic news made more people aware of the recession, even if it did not affect them directly, than were aware of the deeper, frequent downturns of the 1950s. Much of the political rhetoric of the last decade, moreover--"the new economics," "the Great Society" --bred hopes that the economy could be controlled and that Government intervention could ensure general prosperity. Many people believed that Richard Nixon, who attributed his 1960 defeat partly to that year's decline, would prevent another Republican recession.

The Nixon slump has had some beneficial side effects. It has curbed the speculative excesses that developed in the inflationary superboom and helped to puncture many of the nation's bloated expectations of future prosperity. It has restored the key element of risk without which the economic system becomes wasteful and unbalanced. During the boom, companies hoarded unneeded workers; employees, knowing they would not be fired, showed up for work late or not at all. Now companies are paring their unproductive workers, and the others, concerned about their jobs, appear on time.

Recessions always tend to restrain passions as much as spending. "One effect of unemployment," says Harvard Sociologist Seymour Martin Lipset, "is to make a man concentrate on his personal problems. If he is unemployed or worried about his job, personal problems take priority. He doesn't have the psychic energy to think about society." Many of the McCarthy liberals and peace-movement activists have become silent since they lost their jobs as laboratory scientists or systems analysts in the defense and research plants along Boston's Route 128. Despite the General Motors siege, there were fewer strikes last year than in 1969, and fewer workers quit their jobs.

Many parents, strapped by inflation, rising state and local taxes, and soaring college tuition, are no longer able to support nonworking students. Job hunting has diverted youthful political energies. The need to find a job also tends to moderate radical notions about the materialism of U.S. society. If it follows the historical pattern, the recession might even help to restore parental power. "The authority of parents and teachers, which was weak in the '20s, came back in the '30s because students were more dependent on them," says Lipset.

While the recession has cost radicals the leisure to protest, it has helped dramatize the plight of the poor and unemployed. It has increased public support for welfare reform, for extension of unemployment benefits, for higher Social Security payments. Thus the recession serves an educational function for the public at large, and it may help many of the reforms envisioned by liberals in the '60s to become enacted in the early '70s.

The leveling of the inflationary spiral was as important as the business decline in calming social tensions. Since early 1969 the inflation rate has not increased, though it has yet failed to decline noticeably. When prices began to rise in 1966, those relationships became distorted. Savers were penalized and speculators rewarded. People were angered at stockbrokers' taking four vacations a year and plumbers making $20,000; they felt that neither deserved it. "Inflation is a sign that something is terribly unbalanced in society," says Economist Sam Nakagama. "There is normally a relationship between effort and reward. Inflation rewards speculation." But in the recession, the stockbroker may be unemployed and the construction trades are under growing pressure to moderate their demands. "Recession restores a relationship between working and reward."

The recession has also caused a reassessment of much of the liberal dogma that dominated national thinking in the '60s. There is a growing suspicion that even with the postwar "peace dividend," the U.S. may not be able to eliminate poverty, cleanse its environment and rebuild its cities as quickly as most Americans would like. By dampening Americans' personal expectations, the recession has served as well to moderate their demands on the nation. The public is willing to admit that national priorities must be set and that some desirable goals will require time to attain. The downturn has re-emphasized the virtues of hard work and self-reliance and has brought about a modest revival of the puritan ethic. None of this means that recessions are desirable. The goal of rising prosperity is not only a fundamental part of the American credo; it is absolutely essential to the solution of nearly all America's problems. But the recession has at least restored a certain sense of realism.

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