“It is our innate urge to activity that makes the wheel go around”
We have been in this world for quite some time and a long time ago the Greeks came up with a word to describe the actual situation of the world economy. This word is krisi, now known as crisis. First used to indicate change in time, opportunity or decision, time passed and the negative connotation arose: “an unstable situation of extreme danger or difficulty”. People tend to forget that this other definition still remains: “a crucial stage or turning point in the course of something”. We panic every time we hear about “a crisis”, we do not know where to run, where to hide, we do not see the opportunity, we do not see the need for change, we are scared and fear has a terrible outcome: it immobilizes.
Expectations are what mark the speed of the economy. The interpretation of a crisis and its consequences build up the minds of the people that have to take decisions. The negative news that comes from all sectors is shaping them. A self-fulfilling prophecy that we are falling into the abyss is making this fall even larger. We believe that we are going to hell, so be it.
It is important to understand the what, why, where, when and how of this particular crisis.
I have no doubt about the importance of understanding what is happening and what can happen. We need this information, we urge the analysis but we must also start thinking how are we going to get off this bus that we insist on pushing towards the cliff.
John Maynard Keynes on his attempt to explain demand for money stated that there were three main reasons why people asked for it. One is for transactional needs, referring to the money we need in order to buy our every day stuff; the second one is for precaution, in case something bad happens and we need money to cover for it; the third reason is the speculative one and is this one the interesting for us. In this third reason he said that not only risk has a different threshold for all of us, if not that we are dominated for what he described as “animal spirits – a spontaneous urge to act rather than inaction and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities”, meaning that we are not as rational as we like to think we are.
On the real side of this crisis we need that politicians, entrepreneurs, consumers, producers exploit their “animal spirits”. We should call politicians to generate incentives and not only allocate resources, that people recognize these incentives, that entrepreneurs create new ways of making business, that consumers get smarter, that producers become efficient, in other words, that the whole economy takes this opportunity to clean up the dust that has been thrown under the rug.
I know it is silly to say that if we think positive everything will be fine, that if we dream of a better world suddenly everything will change. It is even sillier to sit down and do nothing about it. I like to think that we are at the doors of a new era and that this crisis is holding plenty of opportunities. The only thing that I need now is to spread this feeling.
Mariano Tiscornia
