This article first appeared in the October 2009 edition of the Natural Investing newsletter
Much of the controversy over the health care proposals in front of Congress has swirled around their cost. Reform opponents claim that expensive overhauls, bailouts, and the resulting massive federal budget deficits will weaken our country. This column will attempt to answer the question: Is this hype or reality?
First of all, it is crucial to note that the current debate over health care reform and budget deficits has become extremely polarized. When almost everyone involved, including many “experts,” has an obvious political agenda or bias, it becomes extremely difficult to get reliable information. Add in the obscure nature of government finances, and how is one to muck through the debate to get a sense of the reality beyond the headlines?
No matter how this economic crisis turns out, it is already assured a very prominent place in our memories. It’s not just the endless parade of scary headlines announcing precipitous market declines, massive government bailouts, skyrocketing unemployment, and high-profile frauds and failures. What really shakes us to our core is the thought, the mere possibility that “The end of the old way of doing things is here. Things will never be the same again.” What if this were true? What then, can we expect in our new, more uncertain future?
Let us start by taking a look at our current situation from a historical perspective. A cursory review of the last few hundred years reveals a virtual cornucopia of financial crises. Just to name a few: the Dutch Tulip mania of the 1600’s, the South Sea Bubble of the 1700’s, the Panics of 1873, 1893 and 1907, the Crash of 1929, the dot-com crash, and finally, our current situation. I highly recommend reading the stories of these panics, because the parallels with today are breathtaking. One cannot help but feel like history is simply repeating itself. Or, more interestingly, we may be seeing that the economy ¬– as one expression of human nature – operates within larger natural patterns that are built of cycles upon cycles: day and night, work and rest, breath, tides. And likewise, the cycles of sickness and health suggest that once having lived through a health crisis, we often find ourselves looking at life anew, and forging new ways to move forward.
So let’s look at some history, ponder the present, and begin to imagine the future that may emerge from this time.