(Graph courtesy of Globescan, https://globescan.com/2011/04/06/sharp-drop-in-american-enthusiasm-for-free-market-poll-shows/)

Today’s topic is a twist to an irony in higher education. People say campus politics are so intense because the stakes are so low. The job is getting done, so it leaves a lot of time for intrigue. Does that apply to the economy and society as well?

Certainly we have not seen things so divided as we do now. I recall and lived through the late sixties and early 1970s, and those times were divided over the U.S. role in the Vietnam War. Still, there were statesmen, and while democracy was messy and the president in 1968 resigned at least in significant part because he was behind in the primaries and polls, Congress still functioned. Through the turbulence of the 1960s and 1970s, such leaders as Tip O’Neill demonstrated that Republicans and Democrats could compromise. 

On its face, the 1970s should have been a trainwreck. Watergate, two recessions, one with a horrible stagflation, high inflation, and even higher interest rates, the OPEC oil crisis, and a pardon for crimes committed by a president in office would have brought our current economy and society to its knees. Yet, the nation also passed a clean air and a clean water act that were the first major efforts to remedy environmental damage. Nixon made our first forays to China. Indeed, many of the most progressive initiatives were passed under bipartisan support and compromise in what today would have all the ingredients of dysfunction. 

Today, despite the headlines, the economy is good and incredibly resilient. If crime appears rampant, it is at least partly explained by a change in media that brings news of almost any transgression to our immediate attention. More nations are skirting poverty through economic development, and China, Europe, and even the U.S. are installing far more sustainable energy sources than new hydrocarbon-based power generators. There are big problems to solve, and perhaps insufficient action, but there is well-meaning dialog. 

So, why are nationalists and populists prevailing? Why are so many civilians being killed indiscriminately as very powerful nations do battle in the territory of much weaker foes? Why do terrorists fly airplanes into buildings and rape and pillage villages? Why does the value of a peaceful human life seem to be so depreciated that wonton killing has been normalized? And why is there so much hate, even within otherwise productive and peaceful countries?

I started off by saying that drama sometimes erupts when the stakes are so low. That does not really explain things, although by macroeconomic measures, the economic stakes are currently low in the U.S. The root cause of our divisions are deeper than mere economic. 

We are divided because we feel divided. The Caucasian middle class American dream is fast disappearing, especially for those not brought up on smartphones and IPads. The factories that fueled global manufacturing have moved from America to China and Mexico. In the U.S. we build more cars, but with just a tenth the labor as fifty years ago. This year is experiencing the biggest wave of retirements in its history, but few have saved enough to retire comfortably, and most have little confidence that the social security system will remain robust. 

In other words, we are doing well, but many, maybe even a majority, see very dark economic clouds in their future. A strong minority have lost their livelihood, even as former steelworkers are told that all they need to do is train to master 21st century technologies with what are closer to skill sets unchanged since the 19th century. Corporations that did not even exist a generation ago, such as Meta (Facebook), Alphabet (Google), Tesla, NVIDIA, Apple, and Amazon have replaced US Steel, American Motors, Amoco, Pan-Am, and Woolworths. 

Deregulation has made air travel inexpensive, which also means that members of Congress spend weekends at home rather than getting to know their colleagues over what were once traditional bipartisan soirees and golf outings in Washington. Collegiality has gone by the wayside and, with it, the virtue of compromise. 

Social media plays a part too. Facebook, X, and Google control what news we see and what posts we read based on algorithms designed to feed us more of what our viewing patterns indicate we like, and more of those items that will elicit anger since strong emotions are correlated with passion and product purchases. Each of us ultimately live in a media vacuum if we rely on social media aggregators for our information. 

These all bode poorly for society. But, we have faced adversity before without succumbing to dysfunction. The problem is that, while there are so many negative influences that now divide us, there is little that unites us. 

America was once a nation of immigrants, united by an American Dream and the torch of the Statue of Liberty. It was a nation united by a sense of common purpose, followed by its many successes with a sense of international exceptionalism. A nation was united on one side of an Iron Curtain that exemplified the Cold War. Much of the Western World was united in its adherence to free markets, democracy, and liberty. 

Once the Cold War ended, at least from a Western perspective, some peoples lost their purpose. For others who sense they may have lost the Cold War, their purpose was intensified, but the victors were looking forward to peace dividends rather than backward to rehashing and refighting past glories. 

The unity of purpose when a society is striving for something is distinct from the energies devoted to fighting against something. Aspirations for something better is less powerful than the motivation of fear. Social media algorithms even know this. Such positive images of puppies and rainbows are nice, but they aren’t so powerful as negative messages and fear. Get people angry enough and society is ready to take up arms, even against itself. 

This negative energy has, in the past, been overwhelmed by our collective aspirations. But, when these collective aspirations dissolve into divisiveness and fear, we look inward rather than outward. We take solace with people who look like us, talk like us, and share our beliefs. All of a sudden, differing beliefs of others shift from a novelty to a threat to our identity. This is the energy of isolationism, protectionism, and nationalism. We fail to see synergies and the big picture. We retrench rather than expand. The majority of the planet now resides in such nationalism. We now know what social media pushers have long since discovered - the devils on our shoulder are far more motivating than our better angels. Social media, mass terrorism, and 9/11 sprouted at about the same time, and 4.5 million civilians have since died in the wake our our divisions since then. 

Now, regardless of our personal perspectives, Israelis and Palestinians both feel threatened and persecuted. Dialog is ineffective in an atmosphere of trauma. Similarly, Ukrainians are traumatized, and Russians are being convinced they are being persecuted by Ukraine. A discussion of the roots of the trauma is not helpful when people remain in trauma. We should not expect quick, easy or simple solutions to such vexing divisions and demonizations.

On the other hand, our better angels thrive on synergy. We are better together than apart. Our diversity of talents and approaches unleashes creativity, energy, and entrepreneurship. These are the same synergies of free markets, free trade, and free expression. Economists have proven that economies thrive in such environments, and all boats can be lifted by that rising tide. 

But when our economic devils make us feel threatened, we isolate and protect our markets, rather than expand them to mutual advantage. We view competing ideals not as an avenue for competition that brings out the best of us all, but as a threat to be invalidated or destroyed. We replace healthy competition with unhealthy interactions. Rather than running faster, we trip up the guy running next to us. We view their success as our failure. Once strategic partners become benign at best and malignant at worst. We no longer stand with them to be stronger together, and instead stand aside in their struggles, as they stand aside as we struggle. 

This is the energy of isolationism that divides nations and increasingly divides different people within a nation. It causes us to vote not for leaders that bring us together, but for those who divide us further. We increasingly vote for who we dislike the least rather than like the most. We become a surly and angry lot. 

The world has gone through waves of such divisiveness. The mercantilist philosophy of competition in the 1500s through the 1700s bred the amassing of resources and the promotion of colonialism under the illogical belief that those who hoard the largest booty wins. Adam Smith replaced this failed economic philosophy with the more expansive theory of trade and the advantages of specialization. He showed the folly of amassing nature’s capital through colonialism instead of employing capital for the betterment of humankind. Since this revelation, the world experienced a dramatic increase in prosperity, and we have not looked back since, until recently. Mercantilism, isolationism, and the notion that the problems of our partners are their problems and not ours seems to have become the theory of the day. The United Nations, the World Trade Organization, and the International Court of Justice, once arbiters of our shared vision, have become feckless in the wake of nationalism and protectionism. 

Maybe we need a threat to us all that is sufficient to once again bring us all together. Yet, most people and most all scientists recognize global warming as perhaps the largest economic and societal threat to simultaneously affect humankind. Even such a looming threat has changed our actions very little, perhaps because they are not sufficiently immediate. 

I’d hate to see us have to face an immediate threat sufficient to renew our view that those with whom we stand next we can also stand shoulder-to-shoulder. Growing up in the 1960s, I imagined that someday we could transcend our economic and societal differences and, in my lifetime, attain prosperity, overcome poverty, recognize our shared values and reject those who would divide us. I recall an amazing assemblage of rockers worldwide who collectively sang “We are the World” in 1985 to address suffering in Africa, if not only for our better angels, but because we recognize that if Africa can someday thrive, the world economy will be strengthened. 

Today's graph shows that the average citizen of China now believes in free markets more than the average American. Ah, I look back at that spirit during the Cold War when everything seemed possible and we valued collaboration, within and between nations, even to the extent that Berlin tore down that wall. Now, most of the talk is about building walls. The devil on our shoulder is getting the better of us. Where are the angels of free markets, liberty, competition, and democracy when we really need them? Let us emphasize the divinity of free markets, liberty, and cooperation over the holy war of divisiveness, isolationism, and destructive beggar-thy-neighbor mentalities.