Forecasters of woe never mention what comes next.
We have good reasons to worry about the economy, with Washington running trillion-dollar-plus deficits and the baby-boomer entitlement bust looming ahead. But we shouldnt let our understandable worries degenerate into doomsaying.
Some of my friends seem inclined toward such gloom and doom. Its almost as if they cant wait for the catastrophe to arriveperhaps because it will prove their prescience or demonstrate that the existing political order is too corrupt, irrational and evil to survive.
Others have more workaday motives. Theyre selling somethingprecious metals, investment advice, survival goods or bearish publicationsand they expect sales to increase as consumer fears increase.
Some doomsayers think the collapse will be triggered by runaway government spending, excessive taxation, oppressive regulation, food shortages, fuel shortages or natural disasters such as deadly pandemics or lethal changes in the worlds climate. I have yet to encounter a claim that we are doomed because of an impending beer shortage, but Im confident that sooner or later, such a scenario will be bruited about.
Still other doomsayers are anticipating hyperinflation when, as Austrian economist Ludwig von Mises observed in his book Human Action, the monetary system breaks down, all transactions in the money concern cease; [and] a panic makes its purchasing power vanish altogether. Mises saw such calamity in Austria and Germany after World War I. Similar crackups have occurred elsewhere at various times, including the Confederate States of America during the final year or so of the Civil War.
Even in the worst of times, however, economic calamity doesnt mark the end of economic life. Austria, Germany and the U.S. South did not disappear as a result of their currencies ruin. Although many people suffered, most people found a way to survive, life went on, and economic activity eventually resumed after the adoption of a reformed or foreign medium of exchange. Most people survived even the recent hyperinflation in Zimbabwe, notwithstanding the Mugabe governments best efforts to starve them.
One aspect that virtually all tales of impending mega-woe have in common is that they end with the catastrophe itself: The day of reckoning finally arrives, the dreaded event occurs, and the story ends.
However, stories end that way only in the movies, when the screen goes black. In real life, people soldier on. Even during the time of the Black Death in the 14th century, when 30 percent to 60 percent of the entire population of Europe died and hundreds of towns disappeared after their inhabitants perished or abandoned them in a futile flight from the incomprehensible killer (inadvertently spreading the disease everywhere they went) Europeans did not die out.
Suppose we accept one of the horrifying doomsday forecasts at face value. Then what?
Do the doomsayers really believe that when the government cant pay all of the pensions and medical bills it has promised to pay life will come to an end? Do they believe that when the government defaults on its debt, the economy will cease to function? Do they believe that when the U.S. dollar loses all of its purchasing power, people will not find a new medium of exchange for their transactions?
We need to have a modicum of faith in peoples common sense, creativity and will to survive and prosper even in the face of great difficulties and obstacles. If people could keep society running in the aftermath of the Black Death, they could keep it running after the U.S. government defaulted on its debt.
Years ago, when I lived in Seattle, I sometimes encountered people who seemed terribly worried that because the Northwests old-growth trees were being cut, the so-called Northern spotted owl (a bird genetically indistinguishable from the abundant spotted owls in the Rockies yet somehow imbued with a sacred status) was sure to perish. Try as I might, I could not resist the urge to say to them, Look, suppose you were a Northern spotted owl, and the loggers cut down the tree you were occupying. Would you fall down and die, or would you simply fly to the nearest not-so-old-growth tree and go on living as usual?
I would be pleased if todays economic doomsayers felt an obligation to answer a similar question in regard to their own forecasts.
Robert Higgs is Senior Fellow in Political Economy at The Independent Institute and Editor at Large of the Institutes quarterly journal The Independent Review. He received his Ph.D. in economics from Johns Hopkins University, and he has taught at the University of Washington, Lafayette College, Seattle University, and the University of Economics, Prague. He has been a visiting scholar at Oxford University and Stanford University, and a fellow for the Hoover Institution and the National Science Foundation. He is the author of many books, including Depression, War, and Cold War.
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