This post was inspired by a conversation I had with someone who, after a couple of beers, saddled up to the table and said what a lot of people are feeling … “I am just not sure that America will pull through this … I am really concerned ..”

Boy.

That gets you thinking. Maybe even moreso than you may already be thinking.

It becomes more real when something that may have been rattling around in your head all of as sudden is out there.  In public. Real words.

So.  Personally I am an optimistic cynic. As well as a studier of history and generations. And while I do believe because of the cycle of generations (and the fact we lose histrical knowledge over time) we are doomed to repeat mistakes … as well as inspired to repeat new success.

“We cannot absolutely prove that those are in error who tell us that society has reached a turning point, that we have seen our best days.  But so said all before us, and with just as much apparent reason …  On what principle is it that, when we see nothing but improvement behind us, we are to expect nothing but deterioration before us.” Thomas Babington Macaulay, 1830 in Edinburgh Review.

Yeah.

Said in 1830.

Good ole Tommy was taking on all the doomsayers of his day.

Lets bring him back.  We need him.

Ok. Don’t get me wrong. America is a country with some serious problems.  As I noted in an earlier article at least 55% of America is really hurting (PewRearch: the 2 Americas). One in six Americans are using food stamps. And the government cannot agree on how to take steps to address the problems so there is governmental paralysis.

And I believe the problems run as deep as they do because of real estate more than anything else. The last figures I saw suggests almost 30% of homes with mortgages are upside down (and that skews toward the younger labor force). It’s a double hit to America. Home value has decreased over 33% (yeah,  that means many homeowners have lost 1/3 of their equity) since the peak. And that translates into a stagnant work force (homeowners have lost the mobility to move to available jobs). So real estate has affected wealth and overall labor force.

So. Why should we have optimism (beyond the great quote at the beginning of this post).

Well. US has the biggest economy on earth. Think of it like a huge aircraft carrier.  It will not turn on a dime.  It takes time and space to get going in the opposite direction. US is the possessor of the world’s reserve currency (that has far reaching global implications for our future success).  And the US has a nice track record of re-inventing itself every generation or so. And an incredible track record of re-invention at “crisis” moments – political crisis (Andrew Jackson bringing in the voice of everyday citizens, Theodore Roosevelt creating a 3^rd party) as well as financial crisis.

In addition I was reminded of optimistic thinking in a great article I found online (of which I cannot now find again) which referenced a guy named Dr. Matt Ridley.

Dr. Ridley  (Matt Ridley, author The Rational Optimist) argues that traders’ wealth builds empires and entrepreneurial tinkerers are more likely to inspire scientists than vice versa. From Stone Age seashells to the steam engine to the personal computer, innovation has mostly been a bottom-up process.

Therefore progress is sustainable as long as there is innovation and ongoing trade.

lastly.

He also states that with new hubs of innovation emerging everywhere, and with ideas spreading faster than ever on the Internet, he expects bottom-up innovators to prevail.

His prediction for the rest of the century?

“Prosperity spreads, technology progresses, poverty declines, disease retreats, fecundity falls, happiness increases, violence atrophies, freedom grows, knowledge flourishes, the environment improves and wilderness expands.”

Now. Am I implying that the phenomenal growth and changes we’ve seen for the last 150 years will continue? Well.  Yes and no. phenomenal growth is relative.

Americans are typically optimistic, but right now most of us are under a cloud of pessimism. A new Bloomberg report finds that 40% of people think the economy will stay the same over the next year; 40% think it will get worse; and only 20% think it will get better. Another survey, meanwhile, shows there’s also great pessimism among the wealthy.

We need to boost the every day families spending power.

We need to remember the qualities that got us to being the largest economy in the world.

But the reality is that this is not the worst of times.

I try to balance pessimism with optimism. Things are never as bad as they seem when they’re bad, and they’re never as good as they seem when they’re good.

Out of adversity comes opportunity.  And out of the big always comes the small (which will become big).

Creative destruction is a powerful economic engine.

And there is always money to be made if someone is willing to step up. .

Regardless.

we shouldn’t ever be taken in by the oversimplified labels of boom and bust that are being bantered about to describe what is happening.

We always need to remember that companies fail even in boom times while others succeed in recessions.

And while unemployment, which is typically a lagging economic indicator, will continue to rise yet while economies have struggled they have not totally frozen (or failed).

There is still a lot of money to be made, demand to be met, customers to be served and innovations to be created to create new markets.

And there are a boatload of companies making money right now, a lot of people working and a lot of people thinking even if they aren’t working. And we are still the largest economic engine in the global mass transit system.

And if we seize the moment (instead of being dragged down by the moment) we will reinvent ourselves one more time.

Donald Sull, professor of management practice at London Business School, wrote recently about seizing the upside of a downturn.

“Most managers look for golden opportunities when the good times are rolling. This is a mistake. The best opportunities often arise during downturns when distressed sellers are forced to offload valuable assets at bargain prices.”

“Economics is not about things and tangible material objects; it is about men, their meanings and actions.”

Ludwig von Mises

Perspective is a tricky thing.

Just as success looking in the rear view mirror uses an obvious kind of circular logic where a particular social, cultural or economic  phenomenon is applauded it is also that same rear view mirror that ignores how uncounted (large) numbers faced the same phenomenon and failed. It is a fact, the truth, that answers to questions of history are usually not well understood in the moment.  It is only with the benefit of hindsight that we can piece together the relevant factors that might have produced noteworthy events. For every economist who stands up and points to how their economic crystal ball predicted the future there are dozens with broken crystal balls. And my other gripe with most economists is they focus on numbers solely ignoring the cultural & social aspects which influence attitudes & behavior.

Regardless.

I am simply providing my own point of view on perspective for what is happening in today’s economy. In 1830 when that quote was made the average lifetime of someone was a little less than 50 years old.  Now it is a little less than 80- years old. That alone gives people different perspective. As well as it absolutely changes generation cycles and the friction between old & new (because there are more older people hanging around we retain knowledge longer but it also creates additional friction with younger people who typically inspire the new thinking).

But, in the end, today’s economy is not about government or stocks or unemployment figures.  It is about people and their attitudes, values and actions. America will be okay if we make it okay.

Yes.  Maybe the truth is as simple as if we refind what Clotaire Rapaillle suggests is America’s Culture Code (“just do it”) … well … we will just do it.