October is a month of many anniversaries, including one that is both a reminder and a warning. I am speaking, of course, of the Stock Market crash that took place 90 years ago at the end of October 1929 and ushered in the greatest economic crisis the country had ever faced: the Great Depression.
We know, in general terms, what caused the crash. A decade of rising wealth placed too much equity into the hands of too few people. The inevitable result was speculation unmoored to any accurate reading of the overall state of the economy. Over the next three years, unemployment in the U.S. climbed to 25 percent, triggering real fears that the unbearable conditions might lead to a revolution.
Beginning in 1932, New Deal programs were initiated to help ease some of the suffering and – just as importantly – adopt measures like the Glass-Steagall act which laid down a sharp line between commercial and investment banking.
For several generations, the New Deal’s social and economic programs prevented another crash. But then, the lessons of that critical period in our history were ignored and, as the saying goes, “those who ignore history are doomed to repeat it.” Increasing financialization of the economy, encouraged by changes in tax laws, began the trend that culminated in two of the most damaging political decisions initiated in the late 20th century. One was the repeal of Glass-Steagall on the grounds that “times had changed.” The other, equally or even more disastrous, was the adoption of the Commodities Modernization Act of 2000 which banned regulation of new forms of derivatives. Together, these two acts led directly to the crash of 2007-2008. Only a massive infusion of taxpayer money prevented another depression.
Today, we face increasing concentration of wealth in fewer and fewer hands, triggering the same kind of speculative folly that caused both the Great Depression and the 2008 economic crisis. Unless concerted action takes place, we are headed for another crisis in the not too distant future.
What steps need to be taken to prevent this kind of crash from happening again? What can and must government and business do to ensure that there are no new depressions or crises like 2008?
Please join us for a round table discussion on this topic at 9:00 am on Thursday, October 31st, at the University Club of St. Paul.
Registration and a light breakfast will begin at 8:30 am and the event at 9:00 am.
Cost to attend is $15 for members and $35 for non-members.
Seating is limited.
The University Club is located at 420 Summit Ave in St. Paul.
Parking will be available along Summit Ave.
The event will conclude at 11:00 am.