Thursday, December 18, 2008

Freaking Out

I wish I could claim this idea was original, but I stole a good part of it from Jonah Goldberg's article in National Review yesterday. I have already written about my concern that we are over-hyping the current bad economy (i.e. forgetting how bad the 70's were in our rush to proclaim this the "worst crisis since the Great Depression"). That said, I always like to include the disclaimer that it IS pretty bad, and as bad has it has been for a long time. I'm reminded of the joke that Ronald Reagan told on the campaign trail in 1980: "A recession is when your neighbor loses his job. A depression is when you lose yours. And a recovery is when Jimmy Carter loses his." If you are upside-down in credit, out of work, or otherwise struggling (or know somebody who is), then you're likely not that interested in me yelling "Remain calm! All is well! (picture Kevin Bacon doing that in the final scene of Animal House.)

However, I think the advice to not freak out is pretty good here. It's rarely a good idea to make snap decisions in the midst of a crisis. As Goldberg points out (quite rightly, I think), if you think that the biggest problem with Bush's foreign policy is that he freaked out, bought into the politics of fear, and therefore threw out the rulebook and heaped stupid decisions one upon the other, then why would you advocate doing the exact same thing in economic policy? Of course, some say that the evil George Bush was just looking for an excuse to shred the Constitution and make war on poor, helpless, misunderstood Arabs. Likewise, some now claim that those who want to nationalize the financial and automotive industries, create a "NEW New Deal," etc. have a socialistic agenda and are just seizing on the current crisis to implement it.

I, for one, prefer not to assume bad motives. I would just say, in the immortal words of Frankie Goes to Hollywood, "Relax. Don't do it." As a nation, and indeed, as individuals and families, we should take a deep breath and go back to good, old-fashioned principles. Yes, desperate times sometimes require desperate measures. But a bad idea doesn't become a good one by coming along in a time of panic. What principles, you may ask? Well, for the nation, there's things like the Constitution and capitalism. For example--a "Car Czar?" Why do we need a Car Czar, a drug war Czar, an energy Czar? Once upon a time, we used to have a really cool system of checks and balances where decisions were made by the people's elected representatives. Just a thought. And it used to be that when companies couldn't pay their bills, they filed chapter 11. Just a thought.

And for us as individuals, how about things like cutting back, spending less than we make, paying off debt, and living on a budget? I won't go 100% Dave Ramsey on you here, but the same financial wisdom that Solomon detailed 3000 years ago hasn't changed any. And it's not just financial stuff. Put first things first. Remember that this station is temporary, and that eternity lasts a long, long time. It's a lot easier to be calm when you realize that.


bekster said...

I totally agree. However, I willingly have been keeping my head in the sand so as not to become "alarmed" by the media, so I suppose it's possible that things really are that bad. From what I can tell, though, the nation/world is in a very ironic place. Because the economy is slowing down, people freak out and stop spending. But, we need people to spend to get the economy going again. Tommy just mentioned tonight that when Bush did the whole "economic stimulus" thing, people used the money to pay off debt and add to their savings, which is what they "should" have done with the money, except that what the country really needed was for people to go blow it on expensive TVs and other things that would actually stimulate the economy. It's like we're stuck in a Chinese finger-trap. I think the trick is to know whether you're in a position to save or a position to spend. Those who can spend should take the risk and do what they can to keep the money flowing, while those who can't afford to lose anything should be as frugal as possible. It is good, on one hand, that prices inevitably will go down so that consumers can afford to start spending again. But, on the other hand, it is bad for prices to go down because it will also cause salaries to go down. My hope is that, if people can refrain from "freaking out" and just remain calm, spending what they can and saving what they must, the laws of supply and demand will even things out in the long run. We will either spiral up or spiral down, but it does seem that there is more potential to spiral up if the fear can just lessen.

bekster said...

BTW, I hadn't before made the comparison to Bush. That makes a lot of sense.