After feeling somewhat exasperated while watching a reputable financial news program last week, an idea occurred to me: we need to re-introduce the Sabbath. Not in the religious sense of the word, but as a general day of rest from financial or economic progress. The notion struck me after hearing a reporter express dismay over a softer-than-expected read on some monthly economic data point. While I realize the media is paid based on viewer ratings and that doom-and-gloom stories attracts more attention than upbeat forecasts, it would still be nice to acknowledge what’s going right every now and then. And I think it would also be beneficial.
As everyone knows, our market system is based on capitalism. Lesser known is that we’re in a period of what’s called “growth capitalism.” But this hasn’t always been the case. Merchants only started tracking growth metrics during the Industrial Revolution, according to the book, “The Economics of Good and Evil.” Capitalism, as defined by my Google search, is an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state. Notice that there’s no mention of the word “growth”. Now, I’m all in favor of growth, but with purpose and ideally, some periods of rest. Because growing all the time without set-backs, pauses, and most importantly, reflection, is unsustainable at best and dangerous at worst.
Dangerous because if growth must be achieved at all costs, debt often results as an unintended consequence. When nations and even individuals feel the need to grow for the sake of growth, they often go to extreme measures, often taking out more debt to meet unrealistic targets. For nations who have an independent Treasury, they are able to manufacture more paper money and at least temporarily out-run mounting debt levels. Individuals aren’t so fortunate – or are we? Knowing we can’t manufacture our own currency out of thin air, most individuals curb spending and debt issuance and work to live within their means. We ideally accumulate rainy-day savings funds for when growth naturally slows down or declines, i.e. a job loss or unexpected expense comes up.
But back to a financial or economic Sabbath. It seems in our modern-day society where growth is the undisputed law of the land we frequently fail to appreciate what is going right. We’re so afraid of not hitting the mark that we neglect to notice job growth is on the rise, unemployment is pretty darn low, and the housing market is on the mend. Sure there are plenty of problems that need attention, but acknowledging and even appreciating our relatively healthy economy in no way negates the problems. I would argue that focusing on what’s working and improving actually gives us more energy and capacity to better work with prevailing problems.
Finally, instituting a financial or economic Sabbath, if even on an individual level, allows us to shift from a deficit mentality to one of “enough.” As I reflected on the financial news program that got me thinking about a Sabbath, I realized that having to always meet certain growth targets implies a belief that our current situation is not okay, i.e. a deficit mentality. And interestingly, this mentality is prevalent at a time when debt as a percent of GDP has never been higher. It seems we’re creating what we fear the most – a big ole’ deficit.
Fortunately, things aren’t as bad as the media would have us believe and it’s not too late to stop and smell the flowers. Individually taking stock of what is working and how much we do have (we live during the wealthiest period in the history of the world) can start to reverse our collective deficit mentality and maybe turn the tide towards sustainable, purpose-driven growth.
Carrie A. Tallman, CFA
Director of Research