This year, Thanksgiving comes during a time of economic fear and uncertainty.
Market drops have been as brutal as any in the past hundred years, and dire economic commentary can be heard on the news around the clock.
Bearish commentators are having their day, taking credit for predicting the current crisis. Now many are using their media platform to predict further doom and the end of America's economic prominence.
Peter Schiff, for example, says that "the growing imbalances in the U.S. economy, its twin budget and current account deficits, its lack of domestic savings, and the erosion of its industrial base, have now reached a point where a severe recession, culminating in a substantial decline in the over-all American standard of living, is imminent." Jim Rogers in an interview yesterday said "I hope you're worried . . . the demise of the UK as it went from being a great power to a declining power -- I'm afraid it's happening here."
The bears are having their day now, but Americans should not let themselves be talked into believing that our system is ready to collapse. The American economy remains the greatest example of the incredible blessings of freedom and free-market capitalism in the world. In spite of the imperfections and encroachments on freedom present in the system, America remains among the freest economies in the world in terms of protection of private property and the right of the individual to participate in the economy in whatever legal manner he decides to do so for his own economic improvement.
At Thanksgiving, it is appropriate to take a step back and see the big picture and the incredible advances that this economic freedom has enabled.
At the turn of the last century (just over a hundred years ago), for example, the life expectancy for male infants was just 32.5 years for non-whites. For white males it was a few years longer: 38 years. Those who survived to the age of ten had a longer life expectancy -- to an age of between 42 and 48 years old.
The free market has enabled tremendous advances in medicine that explain much of the incredible increase in life expectancy from those amazing early 1900s statistics. But medical advances are not the whole story -- free-market capitalism has enabled incredible advances in food production and distribution, in the distribution of electricity to homes and businesses, and the ability of homes to have indoor plumbing, to the point that having water delivered right to a tap in the kitchen instead of being pumped by hand from a well is now taken for granted by almost everyone in society. The widespread availability of air conditioning and central heating have also played a role in lengthening lifespans, as have a century of technological advances that have made greater productivity possible with less physical danger than in centuries past.
Free markets mean that you are not restricted from entering the market to sell your goods or services based on your race, or your religion, or your sex, or your country of origin. Those who seek to restrict economic activity on those grounds (as well as on the fear that you may take away their business by offering a better product or better value than what they are offering) are acting against free markets. There are generally far fewer of such barriers to participation in markets today than there were in 1900, and this fact is also part of the story of the incredible increase in opportunity and prosperity that we have seen in this country and that we can be thankful for.
That it is still very possible in this country to start with an idea and turn it into a business that does a billion dollars in annual sales (or more) is evidenced by the entrepreneurs who come to Silicon Valley from all over the country, and all over the world, to try to do it -- and by those who have and continue to successfully do so, not just in Silicon Valley but in other parts of the country as well.
The advances of the past hundred years -- from the introduction of the Ford Model T to the introduction of the Apple iPhone, and countless other ideas before and since that have added value to our lives -- were made possible by a system that is very much still in place.*
The current economic chaos has given an opening to those who say that the American system is ready to fade into history, and that standards of living are doomed to suffer a horrendous collapse. We can be thankful that these reports are, as Mark Twain would say, "greatly exaggerated."
Happy Thanksgiving to you, from Taylor Frigon Capital Management.
* The principals of Taylor Frigon Capital Management do not own securities issued by Ford (F) or Apple (AAPL).
For later posts dealing with the same topic, see also:
- "Dent vs. Schumpeter . . . and Kurzweil" 03/24/2009.
- "The dark side of zero-sum thinking" 04/20/2009.
- "Happy Thanksgiving 2009" 11/24/2009.
- "Happy Thanksgiving 2010" 11/24/2010.
- "Lawlessness in California" 12/16/2010.
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