Reality Check: This isn’t the Great Depression
The Wall Street Journal today ran an op-ed by Zachary Karabell about the country's current economic crisis - or, more accurately, against the very notion of crisis:
There is no denying that the current financial morass is deep and painful. But taking the long view, there is something both startling and disturbing about the gloom that has settled over Wall Street and the country in general. In fact, looking back over the past century, it would be a stretch to rank the current problems as especially notable or dramatic. Something else is going on - namely a cultural rut of pessimism that is draining our collective energy, blinding us to possibilities, and eroding our position in the world.
Karabell isn't arguing that we should be Pollyanna optimists about all this - he's just pointing out that statements like Alan Greenspan recently made that our current economic mess is "the most wrenching" since Word War II are a bit of an exaggeration:
Next time someone compares the present to the Great Depression, stop them. Between 1929 and 1932, the Dow Jones index went to 41.22 from 380.33, a decline of 89%. Today's hang-wringing about a 20% decline in the major indices (much of it since recouped) doesn't come close.
Karabell clearly has a strong grasp of political psychology. Reminding people how well off they already are - and how far this country has come since the Great Depression - makes them more likely to embrace the kinds of progressive change that will help us move past this bump in the road. After all, the belief that we can achieve anything has been a defining feature of the American character. Karabell quotes Lord Bryce from "The American Commonwealth":
America excites an admiration which must be felt upon the spot to be understood. The hopefulness of her people communicates itself to one who moves among them, and makes him perceive that the graver faults of politics may be far less dangerous there than they would be in Europe. A hundred times in writing this book have I been disheartened by the facts I was stating; a hundred times has the recollection of the abounding strength and vitality of the nation chased away these tremors.
When Fortune magazine's Allan Sloan, who's been covering the business of business for decades says, "I'm more nervous about the world financial system than I've ever been in 40 years," Bryce's statement bears reminding. Karabell ends with a warning:
This isn't a Democrat-Republican divide. Ignoring problems is just as much of a liability as overstating them. But our deep pessimism and fear places us at serious disadvantage globally.
Today, in China or in Dubai, you can feel the electric hum of activity, ambition and sheer optimism about the future. Certainly, some of that is naive, but it is also a strength and a source of energy. China's stock market was down almost 50% in the past months, yet that has hardly dented the optimism. There have been severe real estate crashes in Shanghai and the Gulf, yet that hasn't derailed the sense of forward progress.
The path to a more balanced view of ourselves is impossible to chart, but the first step is surely to have better perspective on where we are and where we have been. The alternative to grime-encrusted lenses isn't rose-tinted glasses, but more equanimity about our weaknesses and our strengths would surely help us navigate.
Unfortunately, the problem with downward spirals is, well, that they spiral downward. There is little evidence just now that we are about to break this cycle, and until we do, we will watch in awe, envy and fear as peoples throughout the world do what we used to do so well.