Recession or Depression? The people who make things are out of work while the people who do very little are still getting paid

What is the difference between a recession and an economic depression?

According to one adage, a recession occurs when a lot of people are thrown out of work. But a depression happens when you lose your job.

Based on those definitions, part of America is experiencing a recession due to the coronavirus pandemic, and another part is suffering through a severe economic depression.  By and large, the people who make things or provide services--factory workers, construction workers, mechanics, and restaurant employees--are unemployed. Many of these folks can't pay their rent or make their mortgage payments, and a lot of them have lost their health insurance.

But the media stars and politicians are still getting paid. Alexandria Ocasio-Cortez said yesterday that unemployed people should boycott the economy and refuse to go back to work after the coronavirus shutdown ends.  That's easy for her to say. She's got a sweet gig as a congresswoman.

And then there's Don Lemon, the CNN reporter who mocked the Michigan protestors who lost their jobs due to the COVID-19 pandemic.  They're upset because they can't get a haircut, Lemon sneered.

Yeh, Don. Make fun of the unemployed. You aren't missing any meals.

It is clear to me that the political class and the media elites have no idea what is going on in America.  More than 20 million people are out of work, and millions more will be unemployed by the end of the summer.

And what does Congress do? It passes a relief bill that includes cash for the Kennedy Performing Arts Center and National Public Radio.

College students, who borrowed money to pay their tuition bills, are sent home in mid-semester; and what's the government response?  A brief respite from making student-loan payments. Meanwhile, Congress creates the Higher Education Emergency Relief Fund and distributes $14 billion to the nation's universities.

And it's not just the politicians and media who have insulated themselves from our Great Depression. People who hold government jobs are still getting paid even though many of them are doing very little. The Baton Rouge airport lost 90 percent of its passenger traffic due to the COVID-19 pandemic, but no airport worker has been furloughed. The feds sent the airport $8.4 million, which helps pay the salaries of people who have virtually nothing to do.

All the colleges and universities shut down this spring. Still, the presidents, vice presidents, associate vice presidents, deans, assistant deans, and Title IX compliance officers have seen no drop in their standard of living.

The professors are still getting paid as well, even though their classrooms are empty. They claim to be doing a bang-up job teaching online, but that's mostly bullshit. Students have sued five universities, demanding to get their tuition money back. They know they've been shortchanged.

A massive chasm separates the people who have lost their jobs from the people who are still working. And it will be no consolation for anyone when the unemployment rate hits 30 percent, and the suffering class becomes larger.

The day is coming, and it is coming soon when people who thought their jobs were secure will be unemployed. Even some tenured professors, who believe they enjoy bulletproof job security, will soon be applying for food stamps.

AOC: Don't go back to work, America! 

Coronavirus is a black swan event for regional public colleges: Many will be forced to close

A black swan event is an unexpected occurrence that has potentially devastating consequences. For higher education, the coronavirus pandemic is a black swan event.

Even before COVID-19 forced a shutdown of the national economy, American colleges were suffering from enrollment declines. Declining birthrates have led to a shrinking number of college-age individuals in recent years. Small liberal arts colleges and for-profit institutions were particularly hard hit.

Regional public colleges are also suffering. In Pennsylvania, for example, the state's system of public universities saw an enrollment decline of 20 percent between 2010 and 2019. One small public college, Cheyney University of Pennsylvania, saw its student body shrink by 61 percent to less than 1,000 students. Lock Haven University, another Pennsylvania public school, experienced an enrollment drop of 42 percent.

Thanks in large part to the coronavirus pandemic, the Pennsylvania State System of Higher Education projects that its 14 public universities will lose between $70 million and $100 million this spring. Some state legislators are calling for the system's small colleges to close.

Several Ohio public universities have also seen enrollment declines. Ohio University, Kent State University, the University of Toledo, and the University of Akron all lost students in 2019.

The University of Wisconsin's 26 two- and four-year institutions have recorded enrollment drops as well. UW's two-year colleges experienced a shocking 49 percent drop between 2010 and 2019.  One institution, UW-Plattville at Richland, a satellite campus of UW-Plattville, lost 58 percent of its students in just one year.  As reported by the Wisconsin State Journal, the University of Wisconsin's branch campuses had fewer students in 2019 than they did in 1973.

All these enrollment drops took place before the coronavirus pandemic showed up. And enrollment declines will surely accelerate in the wake of statewide stay-at-home orders that have triggered staggering drops in state tax revenues.

In the years to come, regional publ colleges all over the United States will be forced to close. Many states have far too many regional campuses. As public revenues decline in the wake of the COVID-19 crisis, the states simply can't afford to keep them open.

Moreover, increased opportunities for online learning are making regional campuses obsolete. If students are going to take their classes from home computers, there is no need to have a brick-and-mortar campus in their neighborhood.

College-bound high school graduates who decide to enroll at a public university in their home state should make every effort to get admitted to their state's flagship public university.  By and large, the flagships are seeing an uptick in their enrollments and can offer broader course offerings and student services than the regionals.

A few regional public institutions are thriving and maintaining their enrollment levels. The University of Louisiana at Lafayette, where I taught until I retired, is poised to remain viable even if the economic downturn persists. ULL has a nursing school, engineering programs, and computer-science offerings that make its degrees attractive in Louisiana's job market.

But in Louisiana and in most states, the small, marginal public colleges that were often their community's largest employer will be shutting down. For most students, it will not make sense to attend a regional school that may disappear before they pay off their student loans.

Growing up poor in western Oklahoma: The Kool-Aid years

My parents grew up in the Dust Bowl during the Great Depression. And when I say Dust Bowl, I'm not talking about the generic, dust-parched Midwest. 

I'm talking about THE Dust Bowl--the epicenter of an ecological disaster that struck the Texas panhandle, northwestern Oklahoma, and southeastern Colorado. Topsoil disappeared, wheat crops blew away, and cattle herds had nothing to eat.

More than 300,000 Oklahomans fled to California in the thirties, but my mother and father's families stayed put.  My mother went hungry from time to time. She saw her father's cattle shot by government agents who paid him a dollar per cow for the carcasses. 

The Depression went away when World War II started, but the war did not heal the Dust Bowl. As a child in the 1950s, I remember seeing sand dunes piled so high on the dirt road to my grandfather's farm that our family's 1950 Chevy could not get through.

When I was growing up in the 1950s, my family was still poor, as evidenced by the food we ate. My mother purchased margarine, never butter. We bought Miracle Whip because it was cheaper than mayonnaise, and we made grilled cheese sandwiches with Velveeta, not cheddar.

And we drank Kool-Aid for a treat--lots of Kool-Aid.  We favored a red flavor and mixed the powder with water and refined sugar. In those days, Kool-Aid only cost a nickel a packet. Hey, who needs Coca Cola?

Over time, my mother and father clawed their way into the middle class. My father had a government job with the Bureau of Indian Affairs, and his wages gradually crept up. He also farmed on the side and had a small lawngrass growing business.  He grew bermudagrass in a field at the Wichita Indian Agency, which he sold to people putting in new lawns. No one seemed to mind that he was running a private enterprise on federal property. 

But although we entered the middle class, my parents never got over the Great Depression. My mother's childhood was so seared by poverty that she remained convinced until the day she died that the next Depression was right around the corner. She was a modest food hoarder and had an impressive collection of vintage Jello boxes at the time of her death.

My father never went to the doctor. If he felt poorly, he treated himself from veterinarian supplies he kept on hand for his cattle.  He would cut off a piece of a three-inch-long bovine penicillin tablet and pop it into his mouth. 

As a youth, I scoffed at my parents' attitudes about money, their mystical belief in the value of hard work, and their deep disapproval of neighbors who lived more lavishly than they did. Who needs to drive a Mercury, they asked? After all, a Chevrolet is a perfectly respectable car. Who needs a color television when our Halicrafter black-and-white works just fine?

And now America faces another Great Depression.  Twenty-two million workers filed for unemployment over the past three weeks, and millions more will soon join them. And this time, when the bottom drops out from under our economy, we will be burdened with student loans, credit card debt, and 72-month car loans.

In short, we are going to suffer just like our parents and grandparents did in the 1930s. God grant us the grace to suffer in good spirits, to come to the aid of our family members and neighbors, and to keep our sense of humor.  We will be more cash-strapped in the years to come, but who knows? Life might be just as rich and satisfying even when there are no credit cards in our wallets.

Who needs Coca Cola?

As the economy spirals downward,take charge of your mental health

Let us pause in life's pleasures and count its many tears

While we all sup sorrow with the poor

Hard Times

Stephen Foster (1854)

Make no mistake. America is spiraling downward toward a major Depression. Seventeen million people have already lost their jobs, and the unemployment rate will undoubtedly rise later in the year. Many unemployed people won't be able to pay their rent or make their mortgage payments.   Laid-off workers who had employer-provided health insurance will lose it and find they can't afford to pay for it themselves.

Financial stress has mental-health consequences and people who have suffered financial setbacks will be understandably depressed.  Thus, if you are one of the millions of Americans who have lost their jobs or a substantial part of their retirement savings, you need to pay close attention to your own mental health.

First, if you find yourself slipping into clinical depression, let your doctor know. Depression is a fairly common malady and is treatable. Your family physician can prescribe an antidepressant that can alleviate this medical condition.

Second, get some physical exercise, but don't overdo it. You don't need to run a marathon to get the benefits of physical activity. Just take a walk or ride your bicycle. Exercise is a proven way to reduce stress and depression, and relief is usually immediate.

Third, pay attention to what you eat. If you are down on your luck and scraping by on unemployment checks and food stamps, you may need to cut your food budget. But try to continue eating foods that you enjoy.  A good meal, especially a meal shared with family and friends, helps relieve depression.

If you are pinching pennies, you will probably stop eating in restaurants. But you can buy a cheap grill and broil hotdogs in the backyard.  You can also learn to cook inexpensive food so that it tastes delicious. I once swore I would never eat collard greens, but my wife cooks them so well that greens taste like a gourmet dish. 

Fourth, don't neglect relaxation. During the Great Depression of the 1930s, people went to the movies, which provided cheap entertainment. Today, a movie, a soda, and some popcorn will set you back about fifteen bucks.

But a Netflix subscription doesn't cost much, and you can see a new movie every night of the week. Don't cancel that subscription to cut costs unless you are desperate.

Fifth, take up a hobby.  If you are poor, you will probably not take up golf or skiing. But you can plant a small garden, even if it is nothing more than a potted tomato plant by your back door. You will find it immensely satisfying to grow and eat vegetables you grew yourself.

Finally, remember that the financial hardship you are experiencing is not your fault. You are the victim of twin evils: corporate greed and the coronavirus. 

If you've been laid off precipitously, told to clean out your desk, and walked to your car by a security officer, you have not lost your human dignity or the capacity to live a rewarding life. Do everything you can to take care of yourself and your family, and remember to manage your mental health.

Bait and Switch: In response to the coronavirsus pandemic, colleges shifted to online instruction. Students aren't happy

According to Investopedia, "Bait and switch is a morally suspect sales tactic that lures customers in with specific claims about quality or low prices . . ." However, once customers are lured in,  "the advertised deal does not exist, or is of far inferior quality or specifications, where the buyer is then presented with an upsell."

When the universities shut down last month in response to the coronavirus pandemic, they sent their students home and partially refunded dorm fees they had collected from students living on campus. They also shifted all face-to-face teaching to online instruction while continuing to charge full tuition.

In essence, the universities engaged in bait and switch. They promised a classroom learning experience, but they substituted an inferior product--cobbled together online classes.

 But many students weren't happy with the change. In their view, online teaching is an inferior product.

Inside Higher Ed told the story of Arica Kincheloe, who took out $50,000 in student loans to enroll in a one-year accelerated program in social service administration at the University of Chicago.
Like most higher education institutions, the University of Chicago canceled on-campus classes and directed faculty to shift to a distance-learning format.

But Kincheloe believes she has been shortchanged. "It's a throwaway--a shortened quarter," she said. "I do not feel like I am getting the same education that I would have otherwise."

Other University of Chicago students agree with Kincheloe.  Fifteen hundred students signed a petition calling for a 50 percent reduction in tuition, and 850 students formed a group that is threatening to withhold their tuition payments.

UChicago administrators don't see a problem with the change. Administrators say students will get full credit toward their degrees even though the instruction has been modified. Therefore, the university will continue charging students full tuition.

The University of Chicago probably considers this controversy a temporary annoyance. All this may blow over if the university returns to traditional on-campus teaching this fall.

But I doubt it.

Private colleges have justified extortionary tuition by arguing that a student's on-campus experience--both curricular and extracurricular--is superior.  Those ivy-covered buildings, those cerebral tweed-coated professors, networking opportunities to mingle with rich people--the elite universities claim the whole package justifies charging tuition as high as $60,000 a year.

But if students are sitting at home taking classes that are little more than correspondence courses, then they might as well go to a less expensive state university.

Likewise, HBCUs are going to have difficulty justifying their existence if their instruction moves to a distance-learning format. As Pearl K. Dowe argued in a recent essay, the survivability of HBCUs "has always been rooted in their commitment to serve, educate and advance Black students in a [physical]space that is edifying, nurturing and empowering." So why would Black students enroll at an HBCU if they're taking their classes online?


I'm not saying the universities intentionally engaged in bait and switch. The pandemic forced them to suspend traditional classroom teaching. But they know that their hastily put-together online classes are a cheap substitute for face-to-face interaction with professors. In fact, many universities have gone to pass/fail grading for online instruction--an implicit admission that this mode of teaching is inferior.

I agree with the University of Chicago students.  The online instruction they are getting is not what they bargained for and is a shoddy substitute. The University of Chicago should slash tuition for the spring semester by 50 percent.

Online instruction is a shoddy substitute for classroom teaching.

Fighting for milk: Now is the time to take any kind of work you can get

In the movie Cinderella Man, Russell Crowe plays the part of James J. Braddock, a professional boxer who breaks his hand in the ring, forcing him to leave his chosen profession and work as a common laborer. Then the Depression comes, and Braddock's family faces starvation. Braddock returns to boxing with ferocious intensity and winds up winning the World Heavyweight Championship.

In the movie, a reporter asks Braddock to explain why he had become a better boxer. Braddock answered that he was a better boxer because he had discovered what he was fighting for.  And what was that, the reporter asked?

"Milk," Braddock replied.

Washington Post columnist Michelle Singletary made a similar point to people who have been laid off or furloughed from their jobs.  "Apply for any kind of work," she advised. Despite the economic downturn, some companies are still hiring, and all jobs bring in at least some money.

There was a time when experts advised people not to take menial jobs if they had been laid off from a professional position. A stint as a restaurant worker does not look good on the resume of someone who applies for a job as a financial analyst.

Also, many employers are reluctant to hire people who appear to be overqualified for the jobs they are seeking. Unemployed lawyers, for example, have difficulty getting employed as paralegals because the law firms believe that a licensed attorney working as a paraprofessional will be perpetually dissatisfied.

But these are desperate times, and they are becoming more desperate. If you have a home and a family, it makes sense to take any kind of work at all--any money you earn helps protect what is important to you.

After all, as the cinematic version of James Braddock showed us, working for milk is a dignified occupation.

Russell Crow as James J. Braddock: Working for milk

Joe Biden's student-loan forgiveness is seriously flawed, but it is a step in the right direction

Joe Biden announced his plan for student-loan forgiveness in a Medium commentary posted a few days ago.  He proposes to forgive all federal student loans for persons who earn up to $125,000 a year and who acquired their loans to attend a community college, a public college or university, or an HBCU (historically black college or university).

Biden's debt forgiveness plan is a step in the right direction, but it is seriously flawed.

First, Biden's plan does nothing for people who racked up student debt to attend for-profit colleges. We've known for a long time that the for-profit college industry has preyed on disadvantaged populations--people from low-income families, minorities, and first-generation college attendees.  On average, students leave their for-profit institutions with more debt than they would have acquired had they attended a public university.

So why not extended student-loan forgiveness to people who took out loans to attend a for-profit institution?

Second, student debtors who enrolled at private universities get no relief under Biden's plan unless they attended a private HBCU. This makes no sense to me at all.

Why should students who studied at Xavier University, a Catholic university in New Orleans, get debt forgiveness, while students who attended Loyola University, another New Orleans Catholic school, receive no relief at all? Are students who attended HBCUs more worthy of assistance than students who attended other colleges and universities? I don't think so.

Finally, Vice President Biden's proposal gives no relief to people who took out private student loans. Let's remember the fact that the so-called Bankruptcy Reform Act of 2005 explicitly made private student-loans virtually nondischargeable in bankruptcy.  Then-Senator Biden supported that bill and voted for it.

Why should a student who took out student loans from Wells Fargo or Sallie Mae be denied debt relief while students who took out federal loans get their student debt completely wiped out?

I support any legislation that brings assistance to overburdened student debtors--including plans proposed by Senator Sanders, Senator Elizabeth Warren, and former VP Biden.  So Biden's plan, imperfect as it is, has my support.

But wouldn't be simpler and fairer to amend the Bankruptcy Code and allow beaten down debtors to shed their student loans in bankruptcy like any other nonsecured consumer debt--regardless of where they went to college?

After all, the bankruptcy judges have the authority and the expertise to reject bankruptcy claims that are fraudulent or brought by people who have the financial means to pay back their lawful debts.

In my view, Biden's student loan relief plan is not well thought out. If implemented, it will ignite bitter resentment from people who are burdened by college loans taken out to attend private universities or for-profit colleges. And it will undoubtedly offend people who took out private student loans that are nondischargeable in bankruptcy because of a law Joe Biden helped enact back in 2005.

Joe Biden wants to forgive your student loans if you attended this Catholic university but not if you attended another Catholic school located in the same city.