Morton J. Marcus is an economist formerly with the Kelley School of Business at Indiana University. His column appears in Indiana newspapers, and his views can be followed on a podcast: https://mortonjohn.libsyn.com.
The 2018 elections are upon us. Just turn on your TV if you don’t believe me. But why should you do that? Facts, context, and experience are old fashioned ideas in today’s world. They have been replaced by rant, rote, and outright lies.
Normally, this column is over-stuffed with data. Not this time. Instead we’ll stay in the stratosphere where there isn’t enough oxygen to support facts.
Tonight (which may be several days before you read this), I’ll deliver a talk on fear in our nation. Since I have no qualifications as a psychologist, I am perfectly positioned to deliver this lecture.
Fear is often based on ignorance and the willful disregard of facts, context, and experience. Thus, Shakespeare kills off Polonius, the character in Hamlet who advises his son, “Neither a borrower nor a lender be.” The Bard knew better. Borrowing and the resultant debt are rational, healthy aspects of economic life.
The issue is not the borrowing, but how the money borrowed is spent. If it finances tickets to a punk-rock band performing at an over-priced, mosquito-infested concert, then borrowing is just another link in a chain of poor judgement.
Borrowed funds spent by government for education and infrastructure make sense. Borrowed for the enshrinement of an ideology is foolery. That’s why most monuments in Washington are privately funded whether it be FDR, Martin Luther King Jr. or Senator Robert A. Taft.
Our national debt is not comparable to household or corporate debt. Nevertheless, the fear of a national collapse because of the debt is rampant.
Fear and paranoia of a stock market collapse is quite popular these days. But there is no movement to reduce the “irrational exuberance” of investors that inflates stock prices. Nor are we prepared to halt the manipulation of stock prices by repurchases that ultimately increase the compensation of executives. Remember the corporate tax cuts that were intended for investment or higher wages?
Diversity of assets is the best protection against a stock market “correction” we are told. It also provides protection with regard to inflation, deflation, and other concerns. It’s avoiding the placement of all your eggs in one basket.
According to many fear-mongers, artificial intelligence is the enemy of mankind. So too was the horse-drawn harvester, the sewing machine, and anything that replaced good old-fashioned walking - - like elevators or electric scooters.
There are real concerns in each of these examples. But even mild agitation may set the stage for inappropriate corrective or preventive actions. Laws requiring a man to walk with a red lantern in front of automobiles proved unproductive.
To be overwhelmed by the thought of risk is as foolhardy as being exclusively enamored with the rewards. It is like breaking off an engagement when you see your prospective mother- or father-in-law and fear that your intended will transform into one of them.