How does credit as well as loans work, both in personal and professional contexts? Should I borrow to buy a car? Why do educators wait until young adults go into debt, to teach them how to stay out of debt? To draw the rather expansive fabric of this topic together, the larger question is why do students have to learn through their own costly experiences, when we have so many viable historical ones from which we can take these lessons? These are questions that students should be asking, although they may be unaware to even ask them.
Unemployed Union March in New York by ashleywilson2
If we are going to teach history, my cause lies in making it relevant,
in terms of it becoming useful in student's forthcoming adult lives. In other
words give the history being taught, "value". The same value that one refers
to when mentioning the potential contributions of a new employee or any
recently acquired asset in a company for that matter. Yet, history does not give itself this value
alone. Without the individual deriving a message from it, history in itself is
useless. As the students of history have to create the very aspect we want to
take away from it. Issues, such as those mentioned above, that create this
value should not only be incorporated into history lectures to enhance our
pedagogical strategies, such as assisting students in remembering the events,
but also to teach practical life lessons as well.
To put a more specific focus on this topic for the purpose of
teaching, I ask the question, what does the recent housing crisis have to do
with the Great Depression of 1929? When reviewing the depression and the
terrible streak of poverty eternally associated with the crises of the early 20th
century, the endless aspects we can learn from the mistakes of the past are
incredibly transparent.
Although not necessarily a new comparison, I refer to own
recent housing crisis. The main flaw in our era's housing-market downfall and
in this respect differing from the depression of the 30's, is the feature of
variable interest rate loans. As David Wheelock, an economist for the Federal Reserve
Bank of St. Louis, eloquently describes the housing-market crash of the Great
Depression as a trailing result, in the 21st century irresponsible
mortgage loans were an initial contributing catalyst. [1]
Variable interest-rate loans, which so many young to middle-aged adults
grabbed, as their financial advisors confidently assured them that it was the
best course of action for new home buyers. This best course of action held true,
that is until those seemingly great interest rates did what all variables do,
which is change. As in the 20's just prior to The Depression, with spread of
consumerism, the increasing desire to own material items, the term deja vu
comes to mind and seems justifiably appropriate. It is realistic to state that
the ideology of our society has not changed to any large extent, despite the
potential lessons of the past that have been ignored by and lost to society.
Who doesn't want that new boat, brand new car, or oversized house that is just
not an economically sound purchase? The issue was and continues to be, at what long-term cost?
Yet once again, much like in the 30's, the instant that banks
are pressured, it is the consumer that receives the short end of the stick. As
Bruce Watson, in an article for Daily
Finance, states, during the first five years of the Great Depression, close
to three quarters of a million, yes a million, individuals no longer had
ownership of their property. The large majority of the foreclosures the author
was referring to were on family farms, individuals borrowing to try and carve
out a living on their property. While foreclosures on both rural and urban
properties were not due to the same specific reasons as "variable interest
rates" in the 21st century, despite the contrasts between the two
era's housing crashes, which Watson highlights, I see remarkable
similarities. [2] When one simply studies each crisis through a
comparative lens, the differences seem to assume minimal significance when
analyzing the broader trend of the consumer going into financial ruin, due to
their reliance or perhaps trust in bank loans. That is the significance of this
comparison that I express to my students. Specifics will always vary between
economic downturns, but the ever-deepening hole of debt is the trend we see
individuals fall victim to throughout history. Of course, I should note that
property loss was only one element of a much larger picture during the Great
Depression, including widespread hunger and much worse. Regardless, the comparison
is an essential lesson that gives educators an opportunity to teach U.S
history, with the added lesson that makes it relevant to today. Fortunately, these opportunities are without
end and readily available to those who have a passion for making history part
of our student's reality.
Historians who study oral history realize that the many
individuals who have experienced the Great Depression and took in the lessons
from it, have now passed. As the numbers continue to rise, those lessons they
are able to offer the generations of today pass with them, unknown to young adults
who could benefit the most from them. The concept behind this article is not to
give students a pessimistic outlook on life or business. Nor is it to scare
them from participating in such. Yet, my passion is to give them a deeper
understanding of what they study. In this instance, perhaps even a
multidisciplinary view, being vaguely related to the study history at times, so
they may participate wisely in our economy using the ever-fading lessons the
past has to give. The view we take on history has the potential to become our
strongest asset.
[1] David Wheelock, Federal Reserve Bank of St. Louis, stlouisfed.org.