Planning Decisions, Inc.

THE BOTTOM LINE FROM CHUCK LAWTON

Investment and Economic Development is About Overcoming Fear

Published Saturday December 29, 2007

And the angel said unto them, Fear not:
for, behold, I bring you good tidings of great joy,
which shall be to all people.
~Luke, 2:10

What if the shepherds had feared? Think what they would have missed.

Economics—the so-called dismal science—is generally considered to be focused on the mundane, the everyday stuff some of us work at making and others of us spend time buying. Gross national product, unemployment, inflation, recession—a passel of mind numbing concepts backed by eye glazing numbers. Like the weather, the economy is always there, and we’re always trying to forecast what it’s going to do in the next month or two. But deep beneath all the products and services, the Wii’s and Guitar Pro’s and chocolate mousse massages, nobody really has a clue.

That’s because while wants and desires are limitless, investing and buying are not. And that’s because, like most core human activity, they’re driven less by reason and more by hopes and fears. When interest rates seemed to be forever falling and home prices to be forever rising, high hopes drove everyone to try to get on the apparently perpetual gravy train—less and less qualified buyers hoping to finally hop aboard the American dream and more and more delusional lenders hoping to overcome low interest rates with fees from finding the next sucker to buy their increasingly complex and opaque bonds.

Then, when the harsh reality of making higher payments with the same old income set in, fear took over. Since nobody knew who held the riskiest loans—and those who did were afraid to admit it—nobody wanted to lend to anyone. Voila, a credit crunch, and even solid investments based on reasonable expectations backed by strong management and good credit histories were suddenly unable to obtaining financing. How this mess of excessive hope and groundless fear unfolds will determine the economy’s story for the coming year.

So what is a reasonable person to do? What is the message from the dismal scientist?

Listen to the angels. Fear not.

Maine is entering a new economic era, one—to borrow the language from the report of the Governor’s Commission on Maine’s Quality of Place—of prosperity based on people and place. To realize this prosperity, however, we must not become paralyzed by fear.

Fear produces and perhaps derives from a backward and inward orientation and a pessimistic attitude. It leads us to the past, to the way Maine was. Things used to be good; they aren’t anymore; I want them the way they were. Fear leads us to pursue policies that are reactive, defensive, restrictive, protective and legalistic. They are designed to identify and help “victims” of pernicious trends or actions; they represent “playing not to lose.” Fear leads us to impose building caps to keep out school children; to impose suburban zoning across wide swaths of rural land; to oppose tax reform because it might disadvantage someone’s business; to reject municipal consolidation because it might be inconvenient.

Hope, on the other hand, leads to a forward and outward looking attitude; it is oriented to the future, to the way Maine could be. Hope leads to policies that are active, aggressive, bold and experimental; policies that are designed to test new approaches, that are designed to risk making mistakes for the sake of learning, that are based on the premise that trying to insure that no one “loses” is a recipe for insuring that no one “wins.”

This is not to say that hope is blind, Pollyannaish optimism or implicit reliance on a “greater fool” to come along and bail us out. It is founded on hardheaded attention to harsh facts and regular accountability. But it is ultimately founded on the belief that being open to the wondrous possibilities of the world is preferable to cowering in fear before an unknowable future.

COMMENTARY