Ask two different economists and you'll get three different answers about whether or not the U.S. economy is about to enter a recession. However things pan out, now's a great time to contemplate what scholars have learned about the consequences of recession: Sustained economic slowdown is more than a pain in the pocketbook. If recession drags on too long, it can poison a nation's moral climate.
In his 2005 book The Moral Consequences of Economic Growth, Harvard economist Benjamin M. Friedman shows that time and again, economic expansion has fostered greater opportunity, tolerance, social mobility and a concern for fairness. Meanwhile, economic contraction has gone hand-in-hand historically with xenophobia, self-defeating trade protectionism and the political persecution of minorities.
When the economic pie is expanding, and most of us are enjoying rising standards of living, we tend to feel optimistic, expansive, magnanimous. When jobs are thick on the ground and livin' is easy, we're most likely to feel there's enough for everybody. Racial equality in the U.S. has most often made strides when poor whites have felt that they had the least to lose from the economic advance of blacks during periods of growth.
But when the economy starts to shrink, and we feel we're stalling or sliding backward, we become all too ready to consolidate our own advantages — to slam the gates of opportunity and bolt them behind us. It's no accident that new immigrants are least welcome when citizens sense they're fighting for shares of a shrinking pie. The divide between "us" and "them" sharpens in protracted recessions. And democratic majorities can turn ugly.
Thankfully, there is no reason to expect the coming recession, if one is coming at all, to last long enough to test the limits of liberal tolerance. This is just the mild bottom of the business cycle's pendulum swing. But the prospect of recession should remind us of the dangers of decline. And it should remind us to be grateful for the less tangible gifts of growth.
Will Wilkinson discusses the economics of tolerance on Marketplace (February 6, 2008) [Real Media, MP3]