The Pessimism Bubble

Unemployment, oil spill, climate change.. but maybe it ain’t ALL bad. Ross Douthat, op-ed columnist for the New York Times, writes July 5 that we have been down before and recovered.

"Pessimism bubbles formed during America’s last two economic crises," he writes. Take a look at "the stagflation era in the late 1970s and the post-cold war recession that ushered Bill Clinton into the White House. Go back and read Jimmy Carter’s famous “malaise speech,” which liberals have lately been rehabilitating. With its warnings about retrenchment, rationing and a permanent energy crisis, it feels like a contemporary document. But it isn’t, and Carter’s prophecies were wrong: the grimmest speech any modern president has given was delivered just a few years before America kicked off a long era of impressive economic growth.

"..(E)ven now, there isn’t a major power in the world that wouldn’t happily change places with the United States. Our weaknesses are real, but so is our potential for resilience. While our rivals (in Asia as well as the West) face a slow demographic decline, our population is steadily increasing. The European Union’s recent follies make our creaking 200-year-old institutions look flexible by comparison. And China can throw up all the high-speed rails and solar panels it wants, but it won’t change the fact that most of the country is still sunk in rural poverty.

"All of this is cold comfort if you can’t find a job, or can’t afford your mortgage payments. But historical perspective is important. The more we remember the pessimism bubbles of the past, the better our chances of bursting out of this one.

"Here endeth the pep talk. Happy Fifth of July.”