Economic cost and human suffering in virus-hit US ‘like 1930s Great Depression’

The Great Depression of the 1930s was a defining trauma of the 20th century.

It is what every recession is marked against.

After 36 million people filed for unemployment in America, a figure that hasn’t been seen since that protracted crisis, forecasters are delving into the archives once again to compare.

In West Virginia, a state that has long been at the sharp end of any economic downturn, people agree.

Image:
More and more people are relying on food banks to survive

I met many people who felt the two eras share a great deal in terms of economic costs and human suffering.

And they don’t talk about those days glibly here, as West Virginia was very much at the sharp end of loss in the 30s.

At Manna Meal, a soup kitchen in the city of Charleston, they’ve seen a big shift in the people turning up hoping to get free meals.

Brooke Parker, deputy executive director, says a lot of the people they’re seeing had jobs before the coronavirus pandemic.

“They’ve always supported themselves, they’ve always paid their bills, they’ve always got their own food, they’ve never had to go to a food pantry.

“What they’re experiencing now is just incredible shame and humiliation at having to come and eat somewhere like this.”

:: Listen to Divided States on Apple podcasts, Google Podcasts, Spotify, and Spreaker

I’m told they account for about 30 percent of the people here – their lives, their security, turned upside down in a matter of weeks.

Image:
Jimmy was a caretaker but lost his job and is sleeping rough

Jimmy tells me he was a caretaker until very recently, but lost his job and his apartment. Now he’s sleeping rough.

Along with their income, people are losing their health insurance – the two come hand in hand in America.

West Virginia Health Right is a rare, free clinic in the city, offering hope to people in troubled times.

They, like the soup kitchen, have seen a big change in the people coming through their doors and a sharp spike in patients looking for help with anxiety and depression.

But the clinic is facing its own challenges – drug companies ratcheting up prices for medication.

Image:
Pills being dispensed at West Virginia Health Right – a rare, free clinic

Rhonda Francis, clinical and pharmacy coordinator, said: “Different things were so expensive that normally were not expensive.

“Generics that have been on the market for years went up, some of them by 400 percent, which was ridiculous because they’ve been out there forever.”

Insulin has also been subject to sharp price hikes. And as Rhonda points out, without it, people inevitably end up in hospital.

Such is the nature of the US healthcare system, that vulnerable people with chronic conditions have to file for bankruptcy to get the drugs they need.

Image:
US unemployment hit record highs during the Great Depression

Image:
People walking along train tracks to collect relief food in West Virginia in 1935

Of course the Great Depression was a protracted crisis that lasted a decade.

It was caused by a financial meltdown and was made worse by bad policy choices, like the Federal Reserve’s decision to raise interest rates.

The banks were far weaker institutions then too. Some economists claim drawing any comparisons with the Great Depression isn’t helpful because the coronavirus fallout will be shorter and less severe.

But some, like Claudia Sahm, of the Washington Centre for Equitable Growth, believe the images and metrics are as stark, that the country could well endure many years of this and that congress is the only thing standing in the way of America enduring another depression.

She said they have the hallmarks already of high unemployment, a deflationary spiral and no guarantee there won’t be a very long slog.

“America is fundamentally underprepared for recessions and has no social safety net… the aerial images of thousands of people waiting in cars for food banks, are the bread lines of the 1930s.”

Image:
Tailor Anthony Paranzino is optimistic even though sales are down 70% from this time last year

Local tailor Anthony Paranzino is much more optimistic. “It’s going to be a rough recession,” he said frankly.

His sales are down 70% from this time last year. “But also I also think it’s going to teach some people who’ve never known hard times how to kind of figure out ‘I’ve got to do some stuff for myself’.

“We’ll see some repatriation of manufacturing. I think we’ll see more people paying attention to local businesses like ours.”

One thing many economists do agree on is that the Great Depression highlighted the need to act quickly early on as the failure of institutions and government prolonged the pain. The lack of international trade also hampered progress.

The test of this presidency and this congress may well be how willing they are to pile trillions of dollars more into helping to keep people afloat and to trade with other countries. Neither will be easy decisions or natural reflexes.