Political Fallout from the Great Recession

On yet another endless Asian flight (it seems to take 6 hours to get anywhere out here), I read an interesting piece in the McKinsey Quarterly by Robert Wright, an economics professor at NYU's Stern School of Business. He did a historical look back to depressions and recessions past, and found--perhaps not too surprisingly--that the bigger the economic fall, the more dramatic the political changes for various nations.

Examples: the American Revolution was set off in part by a land bust between 1764 and 1768, which put thousands of colonists in debtors' prison. Who knew? And it was a surprise to me that the financial panic of 1857 and subsequent recession helped to bring on the Civil War, by exacerbating tensions over slavery and states' rights. This is also the time period that the Republican Party coalesced. Of course, the Great Depression and FDR's New Deal are responsible for what social safety net there is in this country.

If the Great Recession of 2008/09 has any lasting political effect, it's likely to be along those lines. A few months ago, Newsweek ran a cover entitled "We're All Socialists Now," and I still think this sums up what's likely to be the most lasting political shift of this downturn. It's easy to have an ownership society when what you own has value. When it doesn't, like Europeans, we'll be looking to government for more help.