Goodbye Yellow Brick Road
Text by Drew Gowing | January 2012
At the beginning of the Great Depression, more than 20% of all Americans worked on farms. Indeed, it took 1/5 the US population to produce enough food for the country. Developments in agriculture, however, were gaining momentum. Genetics and machines combined to create better seeds, fertilizers and the mechanization of modern farming practices. Today, as a result, it takes less than 2% of the population to produce more food than Americans’ could possibly ever consume.
As machines began to replace manpower on farms, America turned from an agricultural to machine based economy, and turned the 20% of those who tilled the land into the ranks of unemployment. Its important to note, however, that the banking crisis didn't culminate until 1933 -- long after the Depression began and much longer still after unemployment had started to soar! By 1931, in fact, unemployment was already at 16% and had reached 23% by 1932. The underlying cause was a structural change in the real economy: the widespread decline in agricultural incomes and prices that was caused by greater prosperity.
While history blamed the Great Depression on the Federal Reserve Board's tightening of the money supply, Ben Bernanke, a scholar of the Depression, and our illustrious Chairman of the Federal Reserve, responded to the current crisis by opening the monetary floodgates! Beginning in 2008, the balance sheet of the United State's Central Bank doubled and finally tripled to just shy of 2.8 trillion. And while the Fed, in doing so, may have saved the US banks from collapse, it didn't succeed in saving the economy. For while FDR’s New Deal successfully began putting folks back to work, it’s well to know that WWII (and the jobs it created) are what saved and ultimately restored the US economy.
Pulling out of Iraq this month, after nearly 9 long years, and no clear objective, should remind us that our investing 1 Trillion dollars and 110,000 lives couldn’t, shouldn’t and didn’t save the store. See, that trick only works if were a machine-driven economy. Someone needs to actually build the planes and tanks and bullets and such, and with most of that being outsourced our debt-to-G.D.P. ratio (the usual measure for debt sustainability) collapses.
Perhaps no one understood that better than the publishing magnate, William Randolph Hearst. Completed in 1929, Hearst withdrew his plans for a magnificent tower on Manhattan’s Upper West Side in lieu of the modest 6 story, cast stone facade that stood as the publisher’s central headquarters for the next 70 years. But when I got a chance to tour the newly renovated 46 stories of steel and glass last month, I realized that Hearst’s ability to adapt to the challenges of structural change are what sustained his family owned business, and ensured his legacy over and throughout the past century.
Further still are the challenges posed to conventional publishing by social media, and the digital threat now poaching on our beloved paper and ink. This magazine, for instance, once a local print publication, is now downloaded in 40 countries throughout the world and selling (as of this issue) in 6. But as I descended back onto the vicissitudes of 57th Street and smack into the reality of the 21st century after our tour, I realized that were living through yet another structural change in society. Here, Citizen Journalists are fast becoming the new publishing barons as each hold the power to promote, send or publish a message in the delicate palm of their hand. Not merely to one another, mind you, but into a Brave New World that I fear will never, ever be the same again.
