Why So Glum America?

“We have the highest net worth and net income in history in real and inflation adjusted terms. Since the rather mild recession of 2001, the economy has grown at a rate of over 4%/year in real terms. This economy is adding 6,000 new jobs/DAY! We are the most productive economy in the world. Germany is second, but falling rapidly behind us. Yet, 43% of the population thinks that we are currently in a recession. Why is that?” Steve Appel, portfolio manager for Fifth Third Bank’s $3 billion investment portfolio was in Effingham last week sharing his insight at a local Chamber of Commerce monthly meeting.

He blamed part of the misperception of reality on the media, “They put murders on page one and births on page 26. You expect births but murders are out of the norm.”

He also referred to Rich Karlgaard’s column on the subject in this past week’s Forbes. Karlgaard is my favorite business writer who is able to frame subjects in very insightful ways. Karlgaard writes that politicians, economists and journalists all view the world as a zero-sum game, because they all occupy a zero-sum world. This zero-sum thinking believes such things as: “the world is running out of resources; people consume more than they contribute; and wealth is a zero-sum distribution game. History overwhelmingly refutes these ideas; otherwise, humankind would still be living in caves, sharpening spears for the hunt.” You can read the article at http://www.forbes.com/forbes/2006/0109/031.html?_requestid=3352.

Appel went on to sum up, “The economic pie is not static. We can work to make it bigger and should. When I graduated from high school in 1967, the highest tax rate was 75% and only 1 out of 25 households made over $100,000/year. Compare that to six out of 25 today. And, both comparisons are in constant 1994 dollars.” He attributed much of our gains in the USA to the benefits of free trade and fantastic gains in productivity.

I couldn’t agree more with either Appel or Karlgaard. What they both report on a national basis is applicable on the local. Too often we dwell on the negatives rather than looking at the number of positive things going on. Are you focused upon a static pie or finding ways to grow the pie bigger?