The text explains in great detail the economic causes of the Stock Market Crash in 1929 and the Depression that followed but only hints on the role feelings and emotions play in the economy. The Dow Jones Industrial Average hit all time record highs this week when it surpassed 15,000 points so we should be a confident nation. Are we? Charles Dow and Edward Jones created this index in 1896 to track 30 “blue-chip” companies by compiling how many stock shares were purchased or sold each day. This index, combined with other factors provide investors an idea of the economy’s direction (and attitude). Click on the Dow Jones link above and write down the Dow’s total in 1896 – find the high number for every 25 years or so – what can you say about the confidence of the nation during those high years? What events occurred?
In the movie, Cinderella Man, boxer James Braddock says he prefers to fight in the ring because “at least then I know who is hitting me.” During the Great Depression, Braddock and millions of people did not know what or when the next economic hit would come from and whether they would be able to recover. Hoovervilles, soup lines and the Dust Bowl were a reality which FDR attempted to eradicate through his New Deal Programs. The irony to me is that although we have data driven indices like the Dow to track the economy, the intangible feelings of consumers often guide it. Although I would never claim to be an economist, I will share a personal story about the recent “Great Recession.”
As you may know, I owned a very small residential Architectural Design business for 7 years before the Recession hit in 2008-09. The building industry thrives when people are optimistic. Simply put, a client will build a new home or an addition if he feels secure in his job. Once the recession hit in 2008, consumer confidence crashed and suddenly their existing residence seemed ok as they were scared to invest in a bigger, newer home. That was bad news for designers and builders. I had numerous conversations with builders and contractors who would stop in my office to chat because they were embarrassed to go home early due to a lack of work. These were husbands and fathers and most conversations revolved around fear of what is to come next. From where will the “next invisible punch” come and how hard? Will I lose my way of life, my home? Many did lose their business, some their homes while others like myself left the industry all together. Best yet, there are those inspiring, steadfast small business owners who though fearful at times, refused to be knocked down long and are successfully riding the economy out today. I looked at the Recession as an opportunity to take the time to decide once and for all if my vocation, or life’s calling, really is to teach which I had felt since I served as an 1997-ASC. My “fear”(and it was real) was supplanted with the dedication needed to complete education college courses and begin an extremely fulfilling teaching career.
More historic examples of Fear’s role in the economy:
- One of FDR’s advisors stated that “a Depression is much like a run on a bank. It’s a crisis of confidence. People panic and grab their money” (Text 660).
- A January, 2009 Time article warned during the depths of the Great Recession that “The fearful are far more pessimistic, and it’s a short journey from pessimism to withdrawal [from the economy].”
- Play the famous FDR “Fear” portion of his First Inaugural:
So it should make sense how stories like James Braddock and other athletes lifted the spirits of some Americans and maybe even momentarily lifted some of their fear away. Many other Americans used the various forms of entertainment discussed on pages 636-37 in the text as a way to deal with the Depression era’s hardships. Choose one of the examples on those pages and discuss why it was popular and link a historic picture/clip of that event during the Depression. Listen to one of FDR’s “fireside chats” (also see text, 653) for language the president used to alleviate the citizen’s fear. How does the president talk to the American public today? Is it similar? Do you think the US is more hopeful or fearful today as compared to the Great Depression or Recession Eras? Give an example to prove your point. Where do we look to alleviate fear or gain hope? What is something that makes you fearful? hopeful?