If an alien dropped into the United States this week, they would
be forgiven for thinking our country was in the direst of straits.
Recent headlines have screamed out, "Fire and Fury",
"DEATH & HATE", "In Chilling Nuclear Terms, Trump Warns
North Korea". For people of all viewpoints, Facebook walls are
flooded with (typically echo chamber-ish to one’s own beliefs) desperate pleas
to “do something”.. So how bad is it?
True, recent events are scary.
A seemingly schoolyard pissing contest over nuclear weapons in North Korea, an
unreliable and unpredictable President in the White House and the apparent rise in popularity and
brazenness of white supremacists are not things to dismiss. However, I am struck by the fact that these
panicky headlines and Facebook posts are coming at a time when overall, things in the United States are pretty good! What happens when shit
really hits the fan?
Good news abounds in 2017.
While all of the following stats can be caveated and don’t necessarily
tell the entire story, they create a pretty reasonable argument that we are
living in a time where, historically speaking, things are pretty good. There are no current world wars. The stock
market is consistently hitting all-time highs after bottoming out during the
recession in 2009.[1] The unemployment rate is at 4.3%, a 16-year
low.[2] While our current environment of stubbornly low
inflation has its problems, it also means that people are able to buy goods
cheaply including gas being on average 43% cheaper than its high in 2008.[3] Although violent crime increased slightly in
2016, it is still at historic lows.[4]
If our current sense of panic is palpable at a point when many
economic and other conditions are pointing positive, we must be wary of the
consequences of a massive disruption, whether economic, political or military related. Ray Dalio, founder of one of the world’s
largest hedge funds, recently wrote a report on historical examples of populism
and how leaders who invoked this tactic rose to power.[5] Among his many findings about the rise of
populism, he notes that “the most important thing to watch is how conflict is
handled – whether the opposing forces can coexist to make progress or whether
they increasingly “go to war” to block and hurt each other and cause gridlock". In addition, in a day when every President’s
attempted power grabs are (correctly in my opinion) noted and lambasted by the
media and other social participants, it is hard to believe that in 1933, the
economy and democracy were in such dire straits that many academics, financiers
and those in the media were pushing for FDR to take dictatorial powers! As Jonathan Alter writes in “The Hundred Days”,
“.. he (FDR) toyed with whether to assume wartime powers, the line that had won him
such applause the day before. Which way
to go? He could easily have ruled by
emergency decree; the country would have cheered.”
Dalio’s findings and FDR’s examples warn us of the dangers of a
panicky public experiencing a devastating disruption of any kind and should be top
of mind as our country moves forward. Dalio indicates that even as tempers flare and the partisan divide deepens, it is imperative that the government still gets things done for the American people. FDR's story warns us of the potential consequences when an extreme shock hits the system and government is seen as ineffective. Combined, these lessons drive home the necessity of preparing for and being wary of the next, real crisis.
[1] http://www.marketwatch.com/story/what-stock-markets-string-of-all-time-highs-says-about-the-future-2017-07-17
[2] http://www.marketwatch.com/story/us-jobless-claims-fall-to-six-month-low-of-232000-2017-08-17
[3] http://gasprices.aaa.com/
[4] https://www.usnews.com/news/articles/2016-09-26/us-crime-rate-rises-slightly-remains-near-20-year-low
[5] https://www.bridgewater.com/resources/bwam032217.pdf
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