Wisconsin Interest 

Let's Leave the Pessimists and Cynics Behind

By George Lightbourn

You could almost see the faces of the immigrants as they descended the ramp onto Ellis Island. Their arduous journey was over. They were about to become Americans.

They stepped into the Great Hall of the Immigration Station, their faces taut with apprehension, their voices mingled with unfamiliar chatter from all points on the globe.

Theirs was a shared apprehension to be sure, but that building was alive with an overriding feeling of hope; hope for themselves and hope for their sons and daughters. As they left Ellis Island bound for the fields and factories of America, they left with the certainty that they were now Americans and, because they were Americans, their lives would forever be better.

So how did the nation that lured these industrious, buoyant immigrants become the nation it is today—a nation of dour pessimists? Why has contemporary America become a nation of cynics, addicted to gloom? Like hummingbirds, we flit from one sour trend to the next: from the war in Iraq to the rising price of gasoline to the spread of steroids among our sporting heroes. We thirst for bad news and when we uncover it, we cannot wait to share it.

Oh sure we are vaguely aware that some modicum of good news exists, but we barely acknowledge it. Good news has become the malaria of modern America: it is to be avoided at all cost.

But good news seems so square, so 1950s. In fact the 1950s has become a caricature of an era draped in the netting of naïveté: the haircuts were beguiled, the media unsuspecting, the value system childlike.

Contrast the fluff of the 1950s to the hard edges of the 1960s. For some reason America is proud of its lineage to the cynicism of the 1960s: the clenched fist, the flower in the gun barrel, a burned draft card. For some reason, it is that decade that has somehow served as the psychological foundation for the America we know today.

Over the intervening decades we have hardened our cynicism. And we have raised children who have constructed their own brand of indifference from the shards of our cynicism. To them natural disasters, such as hurricanes and floods, are really no big deal. Corruption in government or corporate America; well duh. And voting—that’s strictly for suckers.

The Dreadful News We Find So Healing

What happened to the shiny sanguinity of those immigrants from long ago? Why have we become so grim, and more to the point, is our dourness justified? Let’s begin by reviewing the dreadful news we find so healing.

Most of us are drawn to economic news because tucked neatly between the American heart and the American mind is the American pocketbook. As a nation we fixate on the economy and we know all-too-well that the economy of 2008 is in decline. But then, it seems that there is always something amiss with the economy. Now, thanks to our tutors in the media, we can revel in the red ink and the ski-sloped production graphs twenty-four hours a day.

What have they been telling us lately; that lay-offs are everywhere, and anyone who works for big business is vulnerable. Wisconsin is no exception. In recent months we have seen lay-off notices posted on the gates of some of the state’s largest employers: General Motors, Midwest Airlines, NewPage, Sub-Zero.

We’re also painfully aware that the American dream of owning our own homes is threatened: new housing starts are at their lowest point in seventeen years, sales are lagging and home prices are actually falling. Many of us had been counting on the expected proceeds from selling our homes. Now we’re not sure anyone will buy them.

The value of the dollar seems in freefall and the U.S. position as the world’s economic top dog is shaky. Rising home values and a muscular dollar had been pillars of our economic psychology. How can we not look nervously to our economic future?

Heaped on top of our economic queasiness is a lagging confidence in our government. Our Commander-in-Chief seems to relish his disconnect from the populace. Government inefficiencies are well documented, scandals abound, be they in capitol cloakrooms or airport restrooms. Our chosen leaders watch passively while the Medicare and Social Security systems are awash in red ink. Closer to home, we see more of the same: Wisconsin state government lugs the millstone of a $2.2 billion deficit from year to year and many of our local governments have promised to pay the health care costs of retired employees from dollars they do not have.

We also see cracks in our social foundation. Confidence in our religious institutions is at an all time low which might explain why one analysis estimates that only 26% of us go to church. In Bowling Alone, Richard Putnam documented that our sense of community is collapsing and now Bill Bishop tells us in The Big Sort that we have segregated ourselves ideologically to such an extent that not only are our friends and neighbors likely to look and think like us, we find those outside the circle culturally incomprehensible.

What has happened to America, to that shining city on the hill? It would seem that the economic growth that underlies the American psyche is in jeopardy. Our standing in the world seems a sliver of what it once was.

Maybe we have good reasons for why we have locked arms in our collective grimness. Maybe we have good reason to turn our collective eyes toward that nice young man from Illinois who wants to be our President. Maybe we need to embrace his fuzzy message of change; after all he’s just trying to make us feel good about ourselves.

Rubbish!

It’s OK to be OK

What we need is not some vague messenger of change that seeks to exploit our national malaise. What we need are leaders who can restore a proper perspective on the current human condition in America. And what is that perspective?

The Economy

Let’s begin with the economy. Yes, the U.S. economy is sluggish. The economists can show that we are experiencing a period of correction after a period of economic exuberance—otherwise know as a false positive brought on by greed. However, the U.S. economy is far from broken. Most people, even well-read people, might be surprised to find out that we are probably not in a recession. As this is being written, U.S. GDP is actually in the black for the year. Inflation is still a relatively modest 4.4%. Unemployment, that most visceral economic indicator, stands at 4.8% in Wisconsin. In spite of the talk of economic disaster, nothing suggests an economic collapse. Only people fortunate enough to live in an economic juggernaut would feel so glum about these numbers. Yes the economy isn’t as virile as it was a couple of years ago, but the overreaction to our slumping economy would make one think that we have never experienced a downturn before or that we might never pull out of it. Of course we all know that we have and we will. In fact some of us already have. Take a look at the sales tax collections announced by the Wisconsin Department of Revenue. When the annual sales tax proceeds were announced in July, you could almost hear the bean counters at the Department of Revenue exhale as collections were found to be up 1.5% for the year. Someone out there is buying something.

Housing

At this point the true pessimists would almost surely point to the downturn in the housing market. After all, a lot of people were banking their economic future on the growing value of their home. Another group was expecting to stop paying rent and to move into a home at least as grand as the one they grew up in. Now all of that is on hold.

There is no question that the housing market is down significantly in the past year. It seems that nothing is selling and, when it does sell, prices are down. In fact data from the Wisconsin Realtors Association bears that out: sales are down 20% and prices are down 3%. Could it be any worse?

Before we collectively slump our shoulders, let’s consider the bigger picture in the housing market. First, for a couple of years, a number of economists have been predicting a falloff due to the abnormal investment in housing. So no one should have flinched when the bubble burst. Second, we should all understand that if this is the worst crisis to hit housing in our time, we’re doing pretty well. Unless we’ve purchased our home in the past year or two, we’ve still seen a nice appreciation in value. Even here in the Midwest where the housing market never reached the boiling point of the coasts, our homes are still worth a lot more than when we bought them. Even with that jolting 3% drop in the price of the average home sale, since 2001 Wisconsin housing has increased by 27%. Sure we’d prefer it to be 30% or 35%, but 27% growth is a very good thing.

And for those hoping to buy a house, the bad news is that the days of interest-only mortgages and lenders performing imaginary due diligence are over. You will have to actually have a substantial down payment and enough income to support a mortgage just like your parents did. The good news is that, for those people, this is an ideal time to buy. Not only has the price inflation calmed down, it is still possible to finance a home at less than a 7% mortgage rate. These two factors are very positive and are likely to restore order to the housing market before long.

The American Character

It seems natural to describe American life solely in economic terms since we seem absorbed in money and consumption, yet that is an exceedingly myopic view of America. The narcissistic face we present to ourselves and to the world belies the true spirit of America. The truth is that we—all of us—are an incredibly generous people. Our charitable giving continues to astound those who track such things. Staff at the Minneapolis Federal Reserve pegs our annual giving at $250 billion. They also note that the American spirit of giving is irrepressible, even through recessions.

That irrepressible spirit of giving has also been documented by the Hudson Center for Global Prosperity. The 2008 report from the people at Hudson shows that the U.S. government gave $23 billion to developing countries, an amount that dwarfed the giving from any other nation. However, the giving from private Americans for the same year was $35 billion; half again as large as the amount given by our government. We are a nation that has a lot and we share it.

Health Care

Any pessimist who has ventured this far into this essay must be florid. It is clearly time to bring out the heavy artillery in the battle of the bleak: health care. No one could possibly defend the status of health care in America, could they? After all, in this land of plenty, this land that has proven so generous to those on foreign shores, shouldn’t we be ashamed that 47 million Americans are uninsured?

Well in Wisconsin whatever we’ve done to get people insured must be working. You see in Wisconsin only five percent of us were without insurance the year before the last survey was taken. That’s about as low as anywhere in the nation. But did we rest on that accomplishment? No, we expanded a government program that has added another 77,000—mostly children—to the ranks of the insured. Lest those numbers put a smile on our faces, the dour pessimists argue that we haven’t done nearly enough. They argue that we need to scrap our entire health care system and replace it with a new system like the Canadians and the French have. You see, we can never do enough to make these people smile.

Maybe, rather than scrapping our health care system, the rest of the nation could learn from what Wisconsin has done. Not only have we figured out how to ensure that nearly all of our people have health insurance, we have access to the finest medical technology anywhere. Many among us have a relative or an acquaintance that is alive today owing to diagnostics and treatments that seem futuristic; almost miraculous. That’s right, health care that is the envy of the world is available to all of us right there in our local Wisconsin hospitals and clinics.

Energy

Finally, let’s touch briefly on energy. In the last year we have seen both gasoline and natural gas prices spike, a trend that is unlikely to relent. The new reality is that our traditional sources of energy will forever be significantly more expensive, which will undoubtedly pinch our pocketbooks and make us alter our consumption.

However, we are unable to bring ourselves to turn more fully to coal or—gasp—nuclear. We have even restricted the areas we will allow ourselves to drill for oil on our own property. Think about what that says about America. We have amassed such wealth that we can afford the luxury of turning up our noses at sources we know will provide inexpensive, reliable energy.

Of course the long-term answer to our insatiable energy demands will come from an energy source that is either not yet known or not yet viable. But no one—not even the sourest pessimist—believes that such an energy source cannot be found. And, profoundly, it is safe to say that we all believe that such an energy source will be found in an American laboratory. Energy independence is only a matter of time.

A Proud Lineage

We find ourselves at a rather odd place in our history. Measured against nearly any standard—compared to other countries or compared to earlier times in our own history—we are indeed a fortunate people. Yet we cannot bring ourselves to be happy. We have become a gloomy crowd with a melancholia that makes us suckers for populist leaders. You see, populists depend on gloom, for they cannot peddle their message of hope and change to the contented.

However, we cannot escape our true lineage, a strong, sure line that traces its way through the Greatest Generation on back to the Ellis Island immigrants who built the foundation for today’s America. Those Americans understood adversity much better than wealth or entitlement. It is inconceivable that they would overreact to slight changes in inflation or housing starts the way the heirs to their nation do.

No, those people would marvel at the state of health care and would go slack jawed when they discovered that no fewer than 68% of households own their own homes. They would beam with pride upon learning of the generosity of their offspring. Their America has become a county that has not forgotten the importance of sharing its undeniable wealth.

So let us leave it to others to stand, stoop shouldered, looking at the floor with cap in hand. We will leave them to their gloom as they allow themselves to become victims of political pandering. That is simply not us. We will never forget the privileges we have inherited, and we will never diminish the beneficence that is America. We’ll leave that to the populists and their downward looking followers.

 

George Lightbourn is Executive Vice President of the Wisconsin Policy Research Institute and former Secretary of Administration for the State of Wisconsin.

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