Saturday, April 1, 2023

Opinion | A recession would strike at our pocketbooks — and our politics


Placeholder while article actions load

Think we’re a divided nation now? A recession would make it much worse.

Wall Street is increasingly worried about the possibility of a recession. Jamie Dimon, the chief executive of JPMorgan Chase, says a recession is entirely possible. Deutsche Bank predicts a “major” economic turndown by the end of 2023. A number of prominent investors share these sentiments. Elon Musk, for one, thinks we are already in one.

Here’s hoping they’re all wrong, and not simply because no one wants to go through an economic downturn. American life is beset by flashing red warning lights, but two in particular — an increase in social isolation and a lack of trust — signal that a recession is likely to make our already fractious politics deteriorate further.

Let’s start with loneliness, something so common in the United States it was described as an epidemic even before covid-19 intensified our social isolation. A recession will exacerbate it, because financial shocks do that. And loneliness is not just bad for our health, our social life and our mental well-being. It’s also terrible for our politics and civic life.

There’s a link between social isolation and an attraction to extremist ideology — so much so that Hannah Arendt flagged it when she wrote about totalitarianism. Decades later, in 2017, a paper published in the journal Research in Psychology and Behavioral Sciences found that lonelier individuals were more likely to embrace right-wing authoritarian politics.

If you know that, it should come as no surprise that people who supported Donald Trump for president were more likely to show signs of being socially cut off and adrift than those supporting other candidates. In 2016, one survey found that Trump supporters were significantly less engaged in community activities than those who backed his primary opponent Ted Cruz. In 2020, polling by the website FiveThirtyEight discovered that Biden voters had larger social networks, while those who said they lacked “close social contacts” favored the now-former president.

For obvious reasons, economic downturns have long been associated with political volatility and change at the ballot box — just look at President Biden’s falling poll numbers amid pandemic-era inflation. But American society is plagued by something else that makes such swings more likely, which brings us to our second warning sign: lack of trust.

At the end of the baby boom, three out of four Americans said they trusted the government most or all of the time, according to the Pew Research Center. Now it’s roughly one in four. In the late 1990s, 64 percent said they had confidence in the public’s political wisdom, and only one-third said they did not; by 2019, those numbers had essentially reversed.

With a lack of trust comes instability. A working paper published by the National Bureau of Economic Research in 2018 (and updated in 2021) found that in democracies, the less faith people have in their government and social structures, the more likely it is that an economic crisis will lead to a change in political leadership.

Less-trustful societies are angrier ones. Instead of giving the political leadership the benefit of the doubt and expressing faith in their ability to steer us through crisis, many people blame the party in power for whatever ills befall our society. They throw the bums out — which, if it happens this November, means the political party controlling Congress will be the one populated by many officials who say they believe the 2020 election was stolen.

Finally, recessions strain society and bring out the worst in many of us. Some people might like to imagine the Great Depression as a time of “Waltons”-esque family solidarity, but it was also a time of religious and ethnic hatred, with millions falling under the thrall of authoritarian governments in places including Germany and the Soviet Union. The Great Recession gave us the tea party, a movement fueled, in part, by racial animus. That, too, increases during economic downturns.

The truth is, hard times do not make people more generous and politically engaged — and they don’t bring us together, they pull us apart. People become so intent on protecting themselves, it doesn’t occur to them that engaging politically to protect our society and economy is another way to take care of our own interests, too.

If a recession is upon us, our bank accounts won’t be the only things in jeopardy.

Source link