“Fueled by easy credit, the real estate market had been rising swiftly for some years. Members of Congress were determined to assure the continuation of that easy credit. Suddenly, the party came to a devastating halt. Defaults multiplied, banks began to fail. Soon the economic troubles spread beyond real estate. Depression stalked the land. The year was 1836.” John Steele Gordon, “The Madness of Crowds.” Commentary Magazine. Nov. 2008. www.commentarymagazine.comThere is a Canadian by the name of Paul Philp who has studied American booms and busts extensively. He has identified approximately 20, I’ll repeat that, 20 historical periods going back to 1776 that are similar to the current economic downturn. He believes that financial crises are actually a unique mechanism inside the American system for making big jumps in technological productivity and economic prosperity. Just when other countries start to catch up with the technological capabilities and economic performance of America, U.S. society takes one of these big jumps that leaves other countries eating our dust.
It’s very messy, and it can be very destructive for individuals. But the vast majority of Americans are always better off for the experience.
No other country has such a mechanism. Mr. Philp believes that it is in the basic character of the American people to visualize extraordinary personal gains and to take personal risks that other people would find dangerous and even bizarre.
Alexis de Tocqueville, a French aristocrat who visited America in the 1830s, described the citizens as the most ambitious, imaginative, restless, and impatient creatures he had ever encountered.
Over time, this basic characteristic of the people became institutionalized in social, economic, and political structures and processes.
The boom-and-bust nature of our American society is ingrained in the very fabric of our being. It is who Americans are, individually and collectively, and we will never change (at least I hope not).
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