 Hi, this is Gerald Friedman, Professor of Economics at the University of Massachusetts at Amherst, and I'm here today to talk about the Great Recession and this new course that we are developing or that we are offering on what's been happening in the economy over the last few years since the recession began in late 2007. Now the first issue that we want to address here today is why would we offer a course on a recession? There have been about 20 economic downturns since 1945, since World War II. Of those 20 economic downturns, none of them get a course at UMass, and probably none of them get a course at any other major institution. What's special about this recession? Yeah, we have a dog over there and he's scratching Beowulf. Okay, yeah, you're a good boy. Yeah, there's Beowulf. He's my dog. Yeah, thank you. Good boy. Okay, yeah. Beowulf likes to come to my lectures. He likes to come to UMass and meet all the students, and he would like to meet you sometimes. So if we get a chance, yeah, if you see him on the street, yeah, say hello. Okay, so why do we offer a course on this recession when we don't offer a course on the recession of 1970 or 1975 or 1957? You know, what's special about this one? Well, first of all, this is the worst recession since the 1930s. The downturn in the American economy and actually the world economy is steeper and deeper than in any other recession since the Great Depression of the 1930s. So the first thing about this is it's really, really bad. And in the next talk, we'll talk about some of the details about how it is really bad or the measurement of how bad it is. But let's just give you two statistics here. First is adjusting for people who have given up looking for jobs, people who are working part-time involuntarily, as well as people who are unemployed. The full unemployment rate has risen from about 6% to 16%. Actually went up to 17% and has dropped very slightly since then. As of now, early 2012, we're talking about one worker in six is out of work or working part-time and wants a full-time job. So that is a level of unemployment that we have not seen in the American economy since World War II, a much higher level of unemployment than in other recessions. And along the same lines, the median duration of unemployment, the average length of time that an unemployed worker has been out of work, is over 20 weeks now. That is four times the level when the recession began. Things are really bad and for those who are out of work, they are extraordinarily bad. Later in the course, we'll talk about the number of extra deaths in the American society since the recession began. In addition to deaths, there are rising levels of alcoholism, depression, high blood pressure, marital stress, all sorts of bad things have been happening at much, much greater levels because of the economic recession we've been in. So first thing about this recession is it's worth studying because it's really bad and I might add that the people who are being affected the most include many of those taking this course because young people are being hurt by this recession, having more trouble getting jobs, at unprecedented rates. So that's the first thing. It's a really bad recession. The second thing is the magnitude of this recession and the longevity of it. It started five years ago. The magnitude and the longevity raised questions about economic theory, which is what economists really care about. I mean, yeah, we care about how bad the economy is or the suffering that's happening, but what we really care about is what does it say about our theories? And what it says is that the prevailing orthodoxy, the classical approach to economics, is being proven wrong again and again. The prevailing approach, as we'll talk about more as we go through these theories, prevailing approach expects that everything will get better on its own. You know, there'll be little deviations, but the economy has a self-equilibrating mechanism that gets better all by itself as long as you stay out of its way. Under the general rubric of Sey's law named after Jean-Baptiste Sey, French economist of the late 18th century, this approach has dominated economics for centuries, been challenged by Marx, challenged by Keynes, challenged by some others, but this is still the prevailing approach. Well, it doesn't seem to be working very well. We've had a prolonged, we've had a major recession which challenges Sey's law and this recession has gone on and isn't getting better on its own. So on both those bases, the magnitude of this recession and what it says about economic theory, we have good topics for a course. So I hope you'll stick around, enjoy and we'll learn something together. Thank you very much. Bye-bye.