Where Economic Ignorance Is Bliss

Wishing will make it so.

We have written many times about how vitally importance of confidence and faith to any economy.  If nobody has faith they'll get paid, if nobody believes in the future, business simply seizes up.

It's for this reason that the #1 job of the President of the United States is to be First Cheerleader - not just to America, but to the whole world.  When Reagan inherited Carter's stagflation and what appeared to be a dominant Soviet Union, did he wring his hands?  No; he proclaimed "Morning in America!"

Though unemployment was actually worse when he began running for re-election than when he took office, the economy was getting better, and he was able to talk the economy back to rude health.  His policies helped, but his confidence was the most vital ingredient in the recovery.

Every great leader knows this.  During the dark days of the Battle of Britain, Churchill didn't shy away from the grievous struggle ahead, admitting that "I have nothing to offer but blood, toil, tears and sweat" - but then, he expressed absolute confidence in victory with a clear plan that "We shall defend our island, whatever the cost may be."  He made his people believe they'd win, and they did.

This makes a difference even when reality is precisely the opposite.  As we've explored before, Franklin Roosevelt in his socialistic ignorance did everything within his power to make the Great Depression longer and worse; but he really believed that what he was doing would work.  He expressed confidence in the future, and he worked hard to cheer up the American people even when there was no objective reason for cheer.  To this day, we picture him with a great big smile on his face, and he's beloved by many who remember his rule.

America today is frozen with fear - fear of new regulations and taxes, fear of economic collapse, fear of national decline and of a dark future for our children, fear of some new disaster on the international stage.  These fears are entirely justified.  Instead of cheerleading, our gloomster in chief keeps telling us how awful things are and how bad they're going to be.  By listening to him and curling up in our shells, we help make those fears come true.

The Cassandra Problem

Cassandra, Greek mythology tells us, was cursed with a) the ability to foretell the future but b) never to be believed.  Her powerlessness in the face of certain tragedy eventually drove her mad.

A great many Americans are suffering from the same fate today, and have for many years.  I recall vividly, as a boy, my father's warnings about the national debt being piled up and how our economy would seize up someday.  Even in those days, he knew what would eventually happen as generation after generation got used to living on the dole and expecting government to provide and as government got used to providing everything for everybody.

So, knowing this, what do you do about it?  Back then, all the prominent geopolitical thinkers were wringing their hands about Japan Inc. ruling the world.  As it happened, we had contacts there, whom I got to know over the years.  I had connections where the money and power would be when America flatlined.

Well.  Japan is well into its second Lost Decade; its economy hasn't grown since I was in college, and its youth-unemployment problem is if anything worse than ours.  What my father foresaw for the United States has come to pass in full measure, but our defensive plans have come to naught.

I can readily imagine a young boy today whose father strongly suggests that he learn Chinese.  After all, our infrastructure crumbles while theirs grows by leaps and bounds, with modern business following in its wake.  China is no longer Communist in much but name and it's easy to imagine that it won't be even that pinko a few decades hence.

Yet China has vast problems of its own, from grotesquely imbalanced social lifestyles to absurd monuments to central planning foolishness like its notorious Ghost Cities.  China's economy has grown only because the West buys its cheap products.  When we can no longer afford them - and that day is coming - will the Chinese be rich enough to buy their own stuff?  Or will their economy simply collapse in a heap?

The lesson?  It's not that hard for a reasonably intelligent and well-informed individual to clearly identify trouble on the horizon.  It's another thing altogether to come up with a plan to avoid it, much less profit from it.

If we'd been into finance, we might have shorted the American dollar and invested in yen, which would have been a disastrous mistake.  After all, ex-governor Jon Corzine's hedge fund MF Global Holdings just lost billions buying Greek and Spanish bonds and filed for bankruptcy.

Making predictions is difficult indeed, especially if you're talking about the future.

Americans did it before.
Americans can do it again -
if we can bring ourselves to.

Pulling the Hole In After You

Who has the biggest bragging rights through this recession?  In a word: the survivalists, who stocked up on hard commodities like gold, guns, and ammo, the value of which have shot through the roof.  Alas, for the economy as a whole, such "investments" are a black hole; they don't generate growth, jobs, or benefits, they just sit there in a box.

We all know the mantra of the major news media: "if it bleeds, it leads."  Through most of history, most of the time, people thought things were doing decently because they simply did not know about any of the horrors over the next hill or around the corner.  They had no way of knowing about the hurricane offshore, or the barbarian invasion getting under way, or the plague ship about to dock.

They didn't know to worry, they just went ahead with their daily lives, and most of the time it worked out OK.  When it didn't, they died quickly and with little warning or time to fret.

Today, we are buried under an avalanche of bad news.  Much of it winds up being totally irrelevant - remember the panic over the Hurricane of the Century, Irene, which turned out to be a damp squib in every location that was so worried about it?  The major damage was in Vermont, of all places, where they hadn't been concerned at all.

We'd be fools to just carry on business-as-usual since that's what got us into trouble in the first place.  Our federal government does desperately need a major slash-and-burn the likes of which we've never seen.  Our personal finances do need rebalancing, paying off debts as much as possible.  In addition, our economy-destroying rules and regulations need to go where the sun don't shine.

Unfortunately for the media, most of the predicted horrors will never come to pass - that's simply statistical fact.  Even those that do will directly affect very few.  Three thousand innocents died on 9-11.  This was a devastating blow to American confidence and, of course, a grievous loss to their families; but more people than that die in car wrecks every few days, and the nation doesn't roll up into a ball of panic.

Perspective, Presidents, and Pride

America can be strong, rich, and confident again.  America will be strong, rich, and confident again, if we can vote out those who grind us down, and throw off the "nattering nabobs of negativity."

We so desperately need a new Reagan, and not merely because of his conservatism, nor his policies, nor his down-to-earth old-fashioned American horse sense.  We need a leader with Reagan's sunny optimism and confidence in the American people, who'll hold up a mirror to our nation and point out the best features, not the warts and blemishes the Left loves to focus on.

Because just as it's possible for a person to worry themselves into an early grave, so can a country.  It need not be that way; and if there's one thing the history I've seen through my life proves, it's that America is indeed the world's "last, best hope."  As much trouble as we're in, everywhere else is in far worse shape.

When your back is against the wall and there's no place to retreat, it's time to turn and fight.  That's what the Tea Party is all about; really, that's what America has been about since the days of the Founders.

The liberals' idiotic policies have our backs to the wall.  It's time to fight!  Throw the rascals out!  But first, put on a happy face.

Petrarch is a contributing editor for Scragged.  Read other Scragged.com articles by Petrarch or other articles on Economics.
Reader Comments

Petrarch, I liked your reference to Agnew's famous quote, it is spot on. There's one thing that I have noticed over the years about the difference in liberals and conservatives. The left is always mad about something and wanting to control it and the right is, like Reagan, of a sunny nature, smiling and leading onward. It must be in the DNA of people because you can use logic and statistics that are irrefutable and their answer is, "it just isn't fair". With an attitude like that one can only go on and try to repair the damages that they inflict on our country.

November 17, 2011 5:59 PM
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