Built to fail

ARTICLE: Last Man Standing, by Tyler Cowen, The Wilson Quarterly, Spring 2009

Very sensible and worth reading. Provides way too much detail on Euro banking and the Asia treatment is a toss-off, but the basic line on the U.S. Is counter-intuitive (to your average American) and thus most worthy right now.

Gist line:

In the terminology of financial economics, the United States is, relatively speaking, a countercyclical asset. Its not that America profits from bad times or war but that we have a relatively greater capacity to limit our losses and eventually bounce back. We are built to fail, so to ­speak.

As always, it is the flexibility of our rules and the strength of our institutions that make us different.

(Thanks: jarrod myrick)

Comments

[TEJ]

I think his reasoning misses the boat. It's not directly due to our nation's size or demographics. It's the innovation and energy from lots of young people and recent immigrants, funneled through 50 states each experimenting with different approaches to governing. We have both small caps to come up with new ideas and market movers who can push the good ideas to market. We get so far out on a free market limb sometimes we fall while the rest of the world is still enjoying their economic highs. We then pick ourselves up, dust ourselves off, and get to it again before the rest of the world has finished falling down. We're the lead goose, far enough ahead in the cycle that we are effectively countercyclical at times.

[Matthew Garcia]

We may fail sometimes, but we fail small and learn from it, then come back stronger than before to win big overall. To fail big would leave nothing to improve upon...