by Charles Hugh Smith
This post is one in a series from respected guest commentators while Chris is at work on his new book. Please welcome them to the PeakProsperity.com community and enjoy the fresh perspective.
At some point, economic recessions trigger social recessions. Individual expectations and behaviors slowly gather the momentum to change cultural values, social relations, and the way entire generations think about key issues such as opportunity, security, prosperity, government, family, and the relative importance of money in life.
Those of us who know people who experienced the Great Depression have some glimmerings of how social recessions change people’s attitudes and values. Two examples come to mind: My grandmother had small savings accounts in multiple banks; clearly, she didn’t trust the idea of having one’s nest egg in one bank. And my uncle said that just having a job with a steady paycheck after World War II seemed like heaven. (He’d served in the 8th Air Force in Europe, surviving a 50% casualty rate for B-17 crews.)
But we don’t need to turn back the clock 65 years to view a social recession; there is a real-time one playing out in the world’s second largest economy: Japan.
The more you know about a culture other than your own, the warier you are about drawing parallels between two radically different societies. I studied Japanese language, geography, literature, and society in university, and have traveled widely in Japan with my wife, who is 3rd generation Japanese-American (sansei). As a consequence of living in a West Coast university town, we have been fortunate to have befriended many young Japanese in their 20s and 30s—friends whom we have visited in Japan.
I am not an academic expert on Japan, but I have deep ties to the culture and many of its people. Thus while I am cautious about claiming any special insight, I can comment on media reports with the confidence of personal knowledge
Social Recessions: Causes & Consequences
Social recessions appear to be triggered by declines in upward mobility and opportunity and increases in income disparity. In response, the young generations lose faith in the secure financial future that they were once implicitly promised, and they start opting out of careers, marriage, and having children.
For many citizens, these seemingly normal options are no longer financially viable. As the path to security narrows, young people realize that “following the rules”—studying hard and trying to fit into corporate/government niches—no longer offers the promised payoff. Cynicism replaces hope, and society stagnates and turns inward.
by singlespeak