Keeping Calm and Carrying On

For the past several days I have been vacationing in Arizona. Since arriving here, I have encountered reproductions of the British WW2 war poster, “Keep Calm and Carry On”, in at least four different stores, in the form of postcards, t-shirts, bumper stickers, and key chains. In the face of a fearsome economic downturn, a housing crisis and staggering job losses, it's no wonder that Americans are telling themselves to calm down. As a Canadian visiting America, it’s extremely clear that people here are feeling very uneasy, and that this level of discomfort is being felt in all aspects of daily life.

Yesterday at the grocery store, I came across a woman in the produce section who was angrily bemoaning the fact that too many of the fruits and veggies were not “made in America”. “Why should those Mexicans get our money, when people here need the work?”, she irritably hissed. I quietly wondered to myself if she understood how expensive and limited her shopping experience would be if it was restricted to items that were “made in America”.

That same day, 60 illegal workers were rounded-up in an immigration raid in downtown Phoenix. In the face of what President Obama has recently called a “full-blown crisis”, it seems that the folks here in Phoenix aren’t feeling all that generous to outsiders these days.

It’s worth noting that this anxious cultural mood is not unique to Phoenix, or even to the United States. The German word “zeitgeist”, literally meaning “spirit of the age”, is a philosophical term used to describe the political, moral, intellectual and cultural climate of any particular historical time. With hardly a country untouched by this economic crisis, it’s fair to say that the current global zeitgeist is one of fear and anxiety. But America is a powerful country; its response to this financial crisis will no doubt influence the actions of nations across the globe.

So, will Americans be able to take their own advice, to keep calm and carry on? Or does the American zeitgeist reflect the attitude of the woman I encountered in the grocery store – anxious and fearful, and hateful as a result?

So Much for the Invisible Hand

The economist Adam Smith used the metaphor of the invisible hand to theorize how a free market – one which allows individuals to maximize their profit potentials – can benefit all the individual members of a community. Intended as an argument against protectionist government regulations, this theory basically says that as social creatures, we are driven by self-interest, but that this drive is ultimately good for society as a whole. Based on essentially the same principle as Darwin’s notion of natural selection, the logic behind Smith’s theory dictates that just like disadvantageous traits in plants, animals, and humans, inefficient business models will cease to exist.

Which brings us to the current context of global economic downturn and bagazillion dollar bailouts. It would appear that when the shit hits the fan, even free-market enthusiasts get cold feet. America, once a champion of free trade, is set to pass a $900 billion dollar stimulus plan that includes a (somewhat softened) “Buy America” provision. Similarly, in an attempt to stave off the inevitable, the dinosaur-like North American automotive industry is being rescued from extinction.

And in Canada last week, Prime Minister Stephen Harper’s budget passed with an $85 billion dollar deficit. This, despite the fact that until now, Harper’s political identity was firmly rooted in free-market economics. His master’s thesis, written in 1991, demonstrated that government interventions in the market served political, rather than economic interests. Clearly, Harper knows that if he had applied his free-market ideologies to last week’s budget, he’d likely be out of a job before the next election.

Which leads me back to Smith’s invisible hand. Smith’s entire thesis rests on the notion that as social creatures, we are driven by self- interest. Based on the recent Canadian example, one must conclude that he is correct. Although it seems that in this instance, the self-interest of a political leader trumped the imperative to allow self-interest to govern the market. For better or worse, it would seem that Smith’s invisible hand has been shackled.