For the first time in eight years there is talk of a global recession or worse, a depression. It is a word that sends shivers down the spines of even the most hearty and confident among us. It conjures up images of the Great Depression of the 1930s. Its opening date was in October 1929 with the Great Crash on Wall Street. Within a few short years, the world economy went into a freefall, what was called in those days “The World Slump.”  Collective efforts by the great industrial powers came too little. What followed still haunts us and is reinforced by countless programs on The History Channel, epic-making films, shelves of books, and references to the chain of events that followed the slump:  mass unemployment, breadlines, the appeal of fascism and communism as alternatives to capitalism, Hitler in Germany and Japanese aggression in Asia, and the coming of the Second World War. 

These events made an indelible impression on everyone who lived through what has been called the nightmare years. The lives of  “The Greatest Generation” and many of their children were shaped by the Depression mentality: prepare for a rainy day and a wariness of those who offer quick fixes, lessons lost on the grandchildren of those who lived through it.

Today, many of our problems have affected the entire globe: the credit crisis, the depreciation of the dollar, inflation, and the cost of fuel. In a world with a population of more than 6 billion, a major economic downturn could be as bad or far worse than the 1930s.

No one can say with any certainty if this will happen. History does not repeat itself, only situations that appear to look similar. If historical analogues are taken too seriously, confidence in the future can, in its self, trigger unforeseen consequences. This being said, most depressions have much in common, far more than a depression in the growth line, the origins of the word dating back to 1819. Depressions bring to the surface long simmering and unresolved problems just below the soil of every nation. Hitler and fascists elsewhere understood this and were able to manipulate societal ills; in the case of Germany the lost war of 1914-18. Rearmament was a quick fix for mass unemployment. While there is no Hitler on the horizon, if the current recession gets worse we can expect to hear from those who offer up quick solutions and point the finger at those allegedly responsible.

In our nation, Europe and Asia, open-ended immigration has been welcomed in good times. But in hard times characterized by mass unemployment, these jobs are coveted and the newly arrived find themselves unwanted. In the 1930s, immigration came nearly to a halt. Today, voices can now be heard to limit or stop mass immigration. This has already surfaced here and in the European Union (EU). Simply stated, one of the first things we can expect if the world enters a serious economic downturn is the quick fix in the form of immigration restriction and the appearance of traditional forms of nationalism.

Closely related is economic nationalism; more precisely, calls for protection of domestic industries, import barriers and surcharges on imported goods, another name for tariffs.  We have already heard this during the primaries with calls for revisiting the North American Free Trade Agreement. Now we are hearing calls for the protection of our remaining smokestack industries and calls for Congress to pass incentives for those industries that moved off-shore to return home.

Another casualty of a depression may be environmental legislation. If oil and gas climbs to unsustainable levels, more calls for off-shore drilling, the use of coal and the conversion of shale to oil can be expected. Meanwhile, in Germany and other EU nations, the moratorium on the use of atomic power may come to an abrupt end and here at home we could see significant investment in atomic power, the lifting of all restraints on new off-shore drilling and the widespread use of coal long before giving the green light for a Manhattan-style project to develop new technologies to fuel our inappeasable appetite for energy.  

Fortunately, even if the world slips into a deep depression, rarely do all historical patterns reappear. Collective mechanisms are already in place to address the stabilization of the credit markets, place restraints in the unchecked speculation in commodities, and finding new ways to preserve the industrial/rural balance while assuring that our progeny inherit a functioning planet. Above all we must avoid the easy trap of quick fixes, mainly in the form of nationalist solutions. A repeat of the 1930s must be avoided at all costs.

-- Sander A. Diamond