08 February 2009

Economic Crises Stimulate Community and Interdependence

When times are good, we are quite happy to share in the rewards of prosperity, willingly accepting more in bonuses and pay than they may have actually deserved. We even spend money we don't yet have, based on optimistic valuations of our homes and other assets, not to mention projected future income. We don't need to rely on friends or family or unions because we feel self-assured that we can get another job easily and pay for whatever services we might require without the inconvenience of reciprocating. We somehow feel we can afford to neglect nurturing our relationships to family and neighbours.

As times get worse, we have less money and feel more insecure about the future. New jobs are scarce as many employers layoff workers while others hire new workers at the lower wages of an increasingly competitive labor market. We look for ways of supporting each other by sharing time and resources and helping our neighbours. Suddenly, we can't count on paying for all of our needs with cash and must rely on our relationships with friends, neighbours and relatives. A natural, healthy community spirit becomes essential.

While we draw nearer to our own select communities, we become less tollerant of others that we deem to be outside of our community and who we perceive to be encroaching on our prosperity. We become more nationalistic. We spend more time with our neighbours, but vote for protective tariffs to discourage trade with "others." We criticise immigrants, especially illegals, because they are willing to work harder for less compensation than we are. Instead of recognizing that jobs and wealth are unlimited in the world (if not, then all new entrants to the world since Adam and Eve would be unemployed) and that all humans have equal value, we fall into fallacious economic assumptions about a zero sum game (jobs and wealth are arbitrarily limited and must thus be distributed among us) and actively cultivate categorizations of "us" versus "them."

Many of us are suddenly unwilling to accept the possibility of failure and considerable loss, even though we were quite willing to accept the unreasonable prosperity of recent times. We rejoiced when our investments miraculously rose by 50% over a brief period, but find it somehow intollerable that they should fall by the same amount. We want to savour the benefits of free markets without accepting the associated risks.

Political propositions of security, where the government promises that nobody will be allowed to suffer too much or fall too low become very attractive. During crises, security trumps potential future prosperity and people are willing to trade the latter for the former. Alas, freedom comes with responsibility. Like the farmer, if we want to reap the rewards of his bumper crops we must also accept our lot in times of drought. Voluntary associations can ease the risks, but ultimately, we cannot have freedom without responsibility.

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