I’m going to propose a theory, without proof, about how the world works. My theory is based on my observations, feelings, and some deep and not so deep thinking. It’s also based on some ideas I’ve borrowed from other people, some whom I know and some whom I don’t.
We are used to cycles, day and night, the seasons. My idea is based on cycles. Cycles can be broken. The farmer comes out every day to feed the turkey so when the turkey sees the farmer come out on Thanksgiving he looks forward with confidence to another fine meal, but the turkey will soon be the victim of a cycle change.
Most people don’t have time for anything complicated. They want simple explanations. As my youngest son likes to say, “Give me the cliff notes.” So, here are my cliff notes.
A long time ago, I read a piece by Ray Dalio, the famous, wealthy hedge fund manager in which he proposed a simple model of country development he sometimes calls the “Big Cycle.” I liked this idea and used it in some of the economic classes I taught.
At first a country is poor and knows it’s poor. Then something happens, back in my early days of economics this was mysteriously called “the take off,” an idea popularized by Walt Rostow. The country starts to get richer. The people, however, don’t see this at first and still think they’re poor. So, they don’t change their way of life. The country is rich but thinks it’s poor. Eventually the people recognize that they are actually rich. In this stage the country is rich and knows it’s rich. Hubris sets in and a profligate ethos takes over and the country overspends and overextends itself. This results in a return to, if not poverty, at least mediocrity. This is the fourth stage, the country is poor but the people think they are rich. In summary: Poor and know they’re poor, Rich and think they’re poor, Rich and know they’re rich, Poor and think they’re rich. I thought it was a pretty neat idea and I still do.
Over the long run, economic growth has steadily progressed since the Industrial Revolution for better or worse. So, the fourth stage hasn’t resulted in a complete return to the bleak world of subsistence. Not yet anyway.
What I’ve been thinking recently is that a similar four stage model might apply the cultural and political problems that currently plague our country. The four stages I’ve got in mind are in summary:
- fiscal conservative, social conservative. This would apply to a country that is in the first stage, a country that is poor and knows it’s poor. There is no room for error, so change of any kind is scorned.
- fiscal conservative, social liberal. A country that is growing rich but still thinks it’s poor remains fiscally conservative but starts to open up to new ideas and diversity.
- fiscal liberal, social liberal. A country that is rich and knows its rich throws caution to the wind and charges ahead on all fronts. This is hubris at its worst, Icarus flying too close to the sun.
- fiscal liberal, social conservative. As the country inevitably moves toward mediocrity, disappointment pushes people to become socially conservative but they remain fiscally liberal since they are addicted to the good life.
Obviously this is a very simple model and all sorts of valid objections are warranted. I have no illusions that it explains everything but it might provide a means to analyze our current situation. Something to think about.
My idea about how to think about culture and the economy is based on the philosopher Walter Kaufmann’s four cardinal virtues: courage, humbition (ambition with humility), love and honesty.
Courage is the ability to act despite fear and doubt, facing challenges despite potential failure.
Humbition is a fusion of humility and ambition, the ability to recognize one’s shortcomings while still striving for excellence.
Love is not just an emotion but a commitment to the well-being of others, actively seeking their happiness even when it means suffering alongside them.
Honesty is the bedrock. It is a commitment to truth and a willingness to speak honestly, even when it’s difficult.
Can we consider Dalio’s simple model of country development together with my idea of cultural and political change without sacrificing Kaufmann’s four cardinal virtues?
I don’t know. I don’t know if any of these proposals make sense. The cycle turns. Man plans and God laughs.