A New Era of Introspection

I suppose it is not a widely held view, but suddenly I feel better about the America my twenty-something children are inheriting. As a parent I never did get comfortable with the giant rushing snowball culture that has characterized turn-of-the century America. I could never shake the nagging feeling that the fierce momentum of the economy left them chasing a train they could never catch and worse, denied them the validation they deserved for simply being good, caring people.

The last few weeks have certainly been anxious times. And, I worry particularly about the fate of middle class retired folks who may have lost a good part of their nest egg with no time to rebuild their financial security. I suspect that, politically, the fate of senior citizens may be the first crisis-level challenge of the next President.

However, for the rest of us, my sense is that the economic collapse may deliver an unexpected dividend in the form of a higher regard for simpler but more satisfying values.

I mean this in both economic and social terms. Economically, our young people have an opportunity to invest in America on rational terms. And, more importantly, they have now seen first-hand that their long- term security is a function of their own hard work and their own contributions to society not merely to their nerve and guile at a casino table.

And, as these slower times overtake our lives they will also inevitably find that their happiness is rooted in so many things more compelling and satisfying than the frenetic pursuit of wealth. Don’t get me wrong. I am an unabashed believer in free enterprise but what we have experienced over the past twenty-five years wasn’t free enterprise. Somehow, we morphed into a cruel satirical imitation of a “market driven economy”.

I can’t explain how we got there, but I have a pretty firm idea about why. Somewhere along the line we evolved into a culture that first ignored and ultimately rewarded cheating. We graduated young lawyers and MBAs acculturated in the virtue of finding ways “around the rules”. We canonized economists and political scientists who provided philosophical justification for those who sought to exploit financial advantage in dark, non-transparent markets in which any call for “rules” or “regulations” was condemned as anti-competitive or simply naive.

I saw this first hand in the Fall of 2000 when I testified before the Federal Energy Regulatory Commission at the height of the Energy Crisis. I will never forget the depressing shock that I experienced when I realized that the Commission did not care about “outcome”. They were wedded to a “philosophy” and the fact that their rules were being flaunted, their markets manipulated, and their consumers crushed by ridiculous price spikes just did not matter to them.

Worse, they revealed a certain pride in the innovation and creativity exhibited by the market manipulators who had been “smart” enough to figure out how to turn the market to their advantage and then, perversely, took actions to make the markets even less transparent.

In the end, FERC and their buddies at Enron, et al were the architects of their own demise. Energy markets were returned to regulation by stealth and the delusions of competitive retail energy markets live now only in the minds of demented academics. But, the country learned nothing. The same casino-like behavior continued on Wall Street and in the mortgage markets until it came to a screeching halt over the past few weeks.

This time it will be different. Things will get better. But, they will also get different.

Only time will tell if our political institutions are nimble enough to avoid simply lurching left and instead move more carefully toward the simpler goals of reasonable rules, swift and honest enforcement, and a practical concern for outcomes. But, my son said something to me last week that made me realize that we are headed to a better place. “You know, Dad, I think the new retirement strategy will be to pay off your home.” Now that is a return to sanity that will benefit us all.

So, in these “tough times” I am looking forward to the holidays with a sense of goodwill and calm that I haven’t felt in 25 years. None of this is meant to diminish the significance of the difficulties many will encounter or the challenge ahead of us. But, we are, I believe, about to enter an era of introspection and a time in which we elevate the importance of those things that really matter at the expense of the glitter and the gloss that has preoccupied our lives and distracted our public debates.