How Would We Behave in a Great Depression?

Posted on April 28, 2006 by Dave Pollard

Spectrum of global worldviews, per Michael Adams’ American Backlash. The beliefs and behaviours shown in bold are increasing the fastest, and are particularly prevalent in the US and among younger people.

It is not in human nature to prepare for catastrophe. We are, at heart, a reactive species, adapting to situations as they occur, rather than anticipating and taking steps to mitigate or pre-empt them. This is abundantly clear from our recent reactions to 9/11 and the consequences of Bush’s Middle East wars, to SARS and Mad Cow and Poultry Flu, to the Asian tsunami and last year’s hurricanes. We are not prepared now for economic depression, for disease pandemic, for the End of Oil or the End of Water, for the effects of global warming including the 2006 hurricane season, for biological or chemical attacks by desperate individuals, or for nuclear wars precipitated by overpopulation, famine, cultural conflict or Bush’s threats to launch nuclear attacks on non-nuclear nations.

Most of these catastrophic events have a reasonably high degree of probability of occurrence, and those that occur will probably cause horrific damage, death, loss and suffering. For some of them, we have feeble contingency plans, known mostly only to governments that have demonstrated clearly that they are not capable of carrying them out anyway. For the rest, we have no plan at all. We will worry about them if and when they occur, make it up as we go along. That is our nature.

On that basis, given that at least some of these events are most likely unpreventable, inevitable, and not prepared for, how will we behave when they occur?

Let’s look at what might happen in a second Great Depression to answer this question. Many people, including leading economists and historians, have acknowledged that this is likely, as our debt-ridden and over-extended economy is now so fragile that only co-dependence is keeping most of us from bailing out and precipitating it. The world’s only superpower, with the imminent collapse of its automotive and airline industries, is now utterly dependent on its two biggest industries: War, and Profit-Skimming. The US Defense and Homeland Security Departments, totally funded by taxpayers and with a larger centrally-planned budget than any communist regime could have dared dream of, is spending money like water, with (at best) zero return on investment. Corporate profit-skimming, the result of oligopoly price-gouging, is giving many global corporations, most of them US-based, huge mark-ups for almost zero risk, very little real ‘work’ and extremely low investment, which consumers, no longer protected by anti-combines legislation, have no choice but to pay. These fantastic and unwarranted ROIs are necessary to prop up the wildly overpriced stock market. Much of the rest of the US economy is dependent on massive government subsidies, a form of corporate welfare, without which they could not compete, or even survive, in the international marketplace. These subsidies are in turn financed by taxpayers, and by the largest government debt in the history of civilization.

The first domino to fall, many seem to agree, will be the US dollar, followed quickly by the stock market and the housing market. Interest rates will soar to double digits as borrowers desperately try to refinance US dollar debts no one wants to own. The net worth of millions, perhaps the large majority of North Americans (the Canadian economy is totally dependent on the US economy), will be quickly wiped out. Consumer spending will cease, and as a result corporate profits will disappear and bring about massive layoffs and pay cuts. Debts incurred to pay for consumer purchases and real estate will be called in, resulting in large numbers of foreclosures and bankruptcies.

Keep in mind that the immediate effects of a plunge into Depression are on paper only. While you may lose your life savings in a month, it may take a year or two, through slow attrition, before you lose your job. You will probably find that, without all the expenses of your (and your spouse’s) job, many of the costs you incur now will disappear. As Paula at Adaptation has explained, the first real pinch you will feel is the cost of food, especially when your worthless dollars are no longer accepted by vendors. You may find, as many did in the last Great Depression, that growing your own food (with your new idle time) makes sense.

I don’t believe we’re going to see massive rioting, looting, home invasions and theft-related murders when this happens. In fact, I think most people will pull together, help to maintain civil order, and be generous with what they have. That’s based in part on my positive view of basic human nature, and in part on my study of past serious Depressions, both global and local (like the recent one in Argentina). But blog readers and writers who have commented on this are of two minds about this: In particular, there seems to be a sense that the US has become so un-compassionate over the past fifty years that hoarding and civil disorder is more likely to occur there than in other countries. There also seems to be a sense that the younger generations today (who are disproportionately in the lower right quadrant of the behaviour spectrum illustrated above) are more fatalistic and inclined to take an “every person for him/herself” approach to such a crisis. I’m not so sure, but this is important to know, especially if this Depression can be stalled off for another ten or twenty years. What do you think?

There are some who believe that millions will be rendered homeless (by eviction following bankruptcy or foreclosure) when a Depression occurs. I think this is unlikely, because lending institutions would be better off taking a small amount of money each month instead of houses they can’t resell, and in fact having people stay in the house at least prevents it from being ransacked. In the last Depression foreclosures and evictions were common in some areas and rare in others. Since financial institutions are unlikely to be prepared for a Depression, it’s hard to say what they will do. My guess is that they’ll only foreclose and boot people out into the street as a last resort once the Depression is well underway. The trick I think is to either have no debt on your home, or to have enough cash that when Depression hits you won’t be one of the unlucky first wave to run out of money — they’ll be the ones to be evicted.

Utilities are another big question mark. If the Depression occurs (as I believe it will) before the major impacts of the End of Oil, you’re going to be hungry and unemployed long before the lights go out and the heat and air conditioning stop. But if you’re dependent on your car, life could be very difficult, because oil prices are likely to spike well before electricity prices do. And, again, if you’re paying with a worthless currency, you’re going to find gasoline unaffordable. You’re going to have to find a means to work, and buy the stuff you need, close to home — or move. There could be a major exodus both into the cities that still offer jobs and into small towns with cheap housing close to local food supplies — and away from the suburbs, which offer neither. The suburbs could become partially abandoned and fall prey to squatters and scavengers.

Given this scenario, I still bravely believe that we would muddle through pretty well — until and unless cascading disasters like disease pandemics, ecological catastrophes brought on by global warming, global wars precipitated by massive famines in struggling nations, or the End of Oil, add to the burden. In fact a Depression might actually equip us to better face the adversity of these subsequent threats to our well-being.

That’s my take, but I’m interested in your views on this. If you think a Depression is highly unlikely or impossible, please save your thoughts for another time or post. What I’d really like to hear is if and when we face another Great Depression, how will we react, behave, and adapt to it? And what stories can you tell, from relatives who lived through the last one or who lived through a more recent one in another part of the world, that can help us, if not plan, then at least prepare ourselves for what we will face?

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11 Responses to How Would We Behave in a Great Depression?

Robert Gable says:

April 28, 2006 at 20:10

re: younger generations being fatalistic and inclined to take an “every person for him/herself” approach to such a crisis. Fourth Turning/Generations authors Strauss and Howe predict the opposite. They see the Millennial generation especially (those under say 25) as being optimistic and communal. And they will follow the lead of their (hopefully) wise elders, as the young GI Generation did through the Great Depression and more so, WW2.I talked with one WW2-era person who suggested that no one at the time considered anything other than doing one’s duty. True crisis-level fear, which we haven’t had since that war, has a way of motivating civic responsibility.
Ann Holden says:

April 29, 2006 at 00:25

Please visit this website and open forum to see what is really going on within the mortgage industry today.http://www.msfraud.orgANYONE who has a mortgage is a target of Mortgage Servicing Fraud.
Oibalf says:

April 29, 2006 at 01:59

I’d like to think that if there were a Depression, people would come together peacefully, with little rioting or looting, but I’m not so sure that will be the case.One of the things that is most strinking about our economy is the incredible amount of inequality that exists within it. According to some figures, the top 1% of our population controls something like 30% of the nation’s wealth.Such inequality is currently mostly invisible because even working class Americans can afford TVs, cars, and some of the luxuries of modern life. If, however, the economy were to crash, the great inequality that exists in the country would come to a head. Suddenly, only a small number of the wealthiest Americans would be able to afford food, and the majority of the population would find themselves stuggling to surive. The inequality that exists between the haves and the have-nots would lead to resentment, and possibly violent conflict.
Martin-Eric says:

April 29, 2006 at 04:58

I beleive that these me-too yes-sir types who are willing cogs in the economic clockwork will resort to finding a scapegoat to blame and to hoarding, because being one of the masses and following fashions is their only possible mode of existence. They don’t know any better and, as someone else recently blogged (I forgot who, thus no link), could not learn the basic survival skills they need quickly enough or acquire the necessary discipline to achive it either. The highly graphic example in that blog entry was, who do you know that could learn to kill and skin a pig for meat? the answer was, modern people are not used to killing and growing their own food anymore and would not know how even if their life depended on it. Meanwhile, people who can already see the system’s collapse will be ready. This includes younger generations who grew up as children of divorce, whose baby boomer parents embody everything that’s wrong about the career-driven consumer society. This also includes people in their 30s and early 40s who were the first victims of the baby boomers’ stronghold on the better jobs; victims of Enron, of multinationals that used to employ whole towns and who suddely outsourced everything overseas, of staff reductions and attrition done in the name of the bottom line, etc.The methods and values of younger people like my brother (mid-20s), myself (mid-30s) and a good friend (mid-40s) differ on some minor points, but all boil down to the same essentials: rebuilding solidarity and enabling deconsumption, by dropping friends and relatives who really don’t see it and focusing on regrouping with those who do.
Dale Asberry says:

April 29, 2006 at 07:38

Hello Martin, the blog entry you are referring to is from http://www.cryptogon.com/
James Samuel says:

April 30, 2006 at 14:23

From what I have been reading – and posting – learning the art of intensive food growing is probably one of the best ways of preparing. John Jeavons (google grow biointensive) quoted that in a footbal field of 500 people only one is a farmer (.02% of the population), it made me realise that many people could go very hungry when the oil driven corporate farming model starts to splutter and cough. And learning this skill gives levels of satisfaction way beyond spending hours reading about various collapse scenarios because you are now part of the solution.
Doug Alder says:

May 2, 2006 at 15:44

Dave what you’ve missed her is a simple fact – in the Great Depression of ’29 hte majority of folks in North america were either rural or one generation removed from rural and that even in most urban settings there was still lots of land that could be developed for food production (i.e. people had houses with property, not condos and apartments). The vast majority of today’s urban dwellers will have no way to grow their owm food and even if they did will not have the knowledge required – they ar far to removed from that heritage. Without government “soup kitchens” the next great depression will see massive starvation in north america.
Sam says:

July 12, 2006 at 05:43

Countries that might just escape the next great depression will be those who have natural resoures. Countries like Canada, have oil, grain, cattle, minerals etc. and plenty of them. Therefore they could probably be able to feed themselves instead of starving.Also they could trade their precious commodities will other countries, and that may cause them to even come out the the next depression undamaged, maybe even more healthy.
Librado says:

June 3, 2007 at 17:14

I was a part of the “Back-to-the-Land” movement in the early ’70’s. Settling in a small remote mountain village along with many like minded people known collectively as “hippies”. This situation was a voluntary excursion into minimalism and 19th century technology. The short list was: chop wood, carry water, keep the outhouse clean, and develope a social network as a survival skill. With the right attitude, it was fun. As a girlfriend from the big city said, I was living the eternal camping trip. The lifestyle was very similar to life in rural Mexico…which can be very pleasant with the right attitude. I am optimistic, yes this insane civilization will probably collapse, but now is the time to adopt a life of joyousminimalism among kindred souls. Don’t let the fear of uncertainty make you a slave to a livestyle that is obviously toxic. It’s never to late to have a happy childhood!
Librado says:

June 3, 2007 at 17:15

I was a part of the “Back-to-the-Land” movement in the early ’70’s. Settling in a small remote mountain village along with many like minded people known collectively as “hippies”. This situation was a voluntary excursion into minimalism and 19th century technology. The short list was: chop wood, carry water, keep the outhouse clean, and develope a social network as a survival skill. With the right attitude, it was fun. As a girlfriend from the big city said, I was living the eternal camping trip. The lifestyle was very similar to life in rural Mexico…which can be very pleasant with the right attitude. I am optimistic, yes this insane civilization will probably collapse, but now is the time to adopt a life of joyousminimalism among kindred souls. Don’t let the fear of uncertainty make you a slave to a livestyle that is obviously toxic. It’s never too late to have a happy childhood!
j smart says:

August 10, 2007 at 09:18

The Second Great Depression will be triggered by the market’s realization that global oil production has peaked and is now in decline (around 2009-2010). The side effects will be similar to the First Great Depresion, with people forced to compete for scarce jobs and food. This will lead to racial wars and the return of eugenics as there will not be enough food or jobs for the population, and as overpopulated countries hit by famine launch eugenically motivated food-grab colonial wars. Mushroom clouds for all, I’m afraid. Democracy will collapse, as a democracy is too slow to act decisivly in a sudden crisis. Before all of this happens, the world will experience a stock market collapse, followed by a currency collapse (possible hyperinflation and gold hoarding). The Second Great Depression will be worse than the first one, because at it’s beginning, the population is greater, although the population will eventually crash from war and famine as the “Big D” unfolds. Our social oil dependant holy icons like “Golbalization, multiculturalism, liberalis and the “single-career-childless-unmarried materialist” lifestyle will also end. Not enough oil.