Dec 08 2008
…according to the great Harvard philosopher Alfred North Whitehead (1861-1947).
And Daniel Henninger in the Wall Street Journal (12/4/08) agrees: “America needs its frontier spirit,” especially in our current economic crisis. “The greatest danger…is that the United States will lose its historic appetite for risk. The mood now is that risk-taking got us into this mess. Risk, though, is the quintessential American trait that built the nation — from the Battle of Bunker Hill to the rise of the microchip.”
Because there is little adventure without risk, Henninger is effectively concerned about the “full decay” of civilization warned of by Whitehead. Yet despite our current economic crisis, the macroeconomic and historical patterns of the last 200 years clearly show we are poised on the edge of the next golden age of exploration, technology, and prosperity, which we call a Maslow Window. For example, the financial Panic of 1893 led to an estimated 18% unemployment in 1894 which the country recovered from by 1899. A few resilient years later the U.S. surged into the ebullient Peary/Amundsen Maslow Window which featured the groundbreaking Wright brothers’ flights, the monumental first successful voyages to the north and south poles, the stunning Titanic (the 1997 film is currently the #1 highest grossing movie of all time), and the visionary leader Theodore Roosevelt plus the greatest macro-engineering project of the last 200 years (until Apollo) — the Panama Canal.
But fear is still everywhere. In today’s New York Times (12/7/08), neuroscientist Gregory Berns, M.D., Ph.D. notes that everyone is scared, and “Fear prompts retreat. It is the antipode to progress. Just when we need new ideas most, everyone is seized up in fear…” Berns recommends that we avoid being a “fearmonger” and even “tuning out media that fan emotional flames.”
Do opportunities for success still exist out there? According to The Economist (12/4/08), “Risky assets look more attractive now than they have in ages.” And, “the time for investors to take financial risks is when risky assets offer a sizeable long-term return, not when risk premiums are low.” Berns agrees that “right now there are incredible opportunities to do something differently.” Despite the risk, “If I wait for money to start flowing again, the opportunities will have passed.” Henninger reminds us of famous adventurer Daniel Boone who had his own real estate problems; Boone “went belly-up speculating on Kentucky land. He moved on in 1788 and paid his debts. So should we, without losing sight of the American frontier, where we discovered the rewards of risk.”
I would only add that — over the last 200 years — no financial crisis has ever delayed the opening of a Maslow Window.