A Case for Optimism

As you can surmise from our posts, we are not hopeful that the world can avoid hard times. However, a true optimist is someone who will make the best of any situation, good or bad.

A depression is not merely a destructive force, but a force for change. New businesses and institutions grow out of the wreckage of the old. Emerging industries meet new needs, and more efficient operations replace obsolete models. Whether what new forms replace the old are "better" or "worse" is a subject of debate that we won't get into.

In the USA during the depression of 1929-1939, many major, traditional sectors of economic activity more or less completely withdrew from the scene and were replaced. For example, the family subsistence farm was replaced with specialised, industrial farming. The mom-and-pop corner store was replaced with the supermarket. The workshop manufacturing system was replaced with mass production. Horse-driven transportation was replaced with cars and trucks.

What industries of today are heading for the chopping block, or at least facing prospects of diminished significance? US auto makers? The "FIRE" economy? Big government? Public education? It's a difficult thing to predict, but if these sectors do not deliver value in proportion to their cost, they will likely shrink until they do.

Also, how will the forms of economic life change? Will online shopping grow in significance as the mall-dependent retail stores fail? Will globalisation increase or decrease - that is, will goods and services from around the world be a larger portion of one's spending? - or will import substitution grow as entrepreneurs discover how to use small scale technologies and the internet to beat the advantages of the mass market and global trade?

What this has to do with optimism is this: if you lose your main source of income, what will you do? We hope you won't simply join the bail-out parade. We hope you will turn on your inner entrepreneur and recognise the many activities all around you right now that can be done for a profit. Join forces with others who are on the ball, or create something new on your own. The possibilities are endless. Even if others around you go mad with bailout-mania, resist the temptation to have someone "make work" for you, unless you are just going to use that as a "day job" while you build up your creative work. You are never too old to learn a new skill - in fact, learning new skills keeps both mind and body sharp.

We have been reading many sad stories of people who have lost their jobs or businesses, but kept spending their way right into bankruptcy and homelessness. Wishfully expecting your income to be restored is not optimism, it is reckless delusion! One must always live within one's means, no matter how meagre. If you loose 70% of your income, you must cut at least 70% of your spending. This can be a hard thing to do, and depressing psychologically. We know, we have been there.

There's a Depression on, folks. There's a good chance you, Reader, are looking at an imminent, massive, and persistent decline in your income. You must be able to respond to that appropriately if you want to have a hope of restoring your sense of accomplishment in life. Economic depressions break people psychologically. You must prepare yourself to avoid involuntary homelessness and starvation. Soberly assess how much you could rely on friends, family, your church, or "the government" to prevent that eventuation.

In conclusion, optimism is proactively managing a loss of income, and working towards its regrowth. We will further elaborate on both those tasks in future posts.