The new economic statistics put growth at a healthy 3.5% for the third
quarter. We should be dancing in the streets. No one is, because no one
has any faith in these numbers. Waves of money are sloshing through the
system, creating a false rising tide that lifts all boats for the moment.
The tide will recede. The boats aren't rising, they're bobbing, and will
settle. No one believes the bad time is over. No one thinks we're
entering a new age of abundance. No one thinks it will ever be the same
as before 2008. Economists, statisticians, forecasters and market
specialists will argue about what the new numbers mean, but no one
believes them, either. Among the things swept away in 2008 was public
confidence in the experts. The experts missed the crash. They'll miss the
meaning of this moment, too.

The biggest threat to America right now is not government spending, huge
deficits, foreign ownership of our debt, world terrorism, two wars,
potential epidemics or nuts with nukes. The biggest long-term threat is
that people are becoming and have become disheartened, that this
condition is reaching critical mass, and that it afflicts most broadly
and deeply those members of the American leadership class who are not in
Washington, most especially those in business.

It is a story in two parts. The first: "They do not think they can make
it better."

I talked this week with a guy from Big Pharma, which we used to call "the
drug companies" until we decided that didn't sound menacing enough. He is
middle-aged, works in a significant position, and our conversation turned
to the last great recession, in the late mid- to late 1970s and early
'80s. We talked about how, in terms of numbers, that recession was in
some ways worse than the one we're experiencing now. Interest rates were
over 20%, and inflation and unemployment hit double digits. America was
in what might be called a functional depression, yet there was still a
prevalent feeling of hope. Here's why. Everyone thought they could figure
a way through. We knew we could find a path through the mess. In 1982
there were people saying, "If only we get rid of this guy Reagan, we can
make it better!" Others said, "If we follow Reagan, he'll squeeze out
inflation and lower taxes and we'll be America again, we'll be acting
like Americans again." Everyone had a path through.

Now they don't. The most sophisticated Americans, experienced in how the
country works on the ground, can't figure a way out. Have you heard, "If
only we follow Obama and the Democrats, it will all get better"? Or, "If
only we follow the Republicans, they'll make it all work again"? I bet
you haven't, or not much.

This is historic. This is something new in modern political history, and
I'm not sure we're fully noticing it. Americans are starting to think the
problems we are facing cannot be solved.

Part of the reason is that the problems--debt, spending, war--seem too big.
But a larger part is that our government, from the White House through
Congress and so many state and local governments, seems to be
demonstrating every day that they cannot make things better. They are not
offering a new path, they are only offering old paths--spend more,
regulate more, tax more in an attempt to make us more healthy locally and
nationally. And in the long term everyone--well, not those in government,
but most everyone else--seems to know that won't work. It's not a way out.
It's not a path through.

And so the disheartenedness of the leadership class, of those in
business, of those who have something. This week the New York Post
carried a report that 1.5 million people had left high-tax New York state
between 2000 and 2008, more than a million of them from even higher-tax
New York City. They took their tax dollars with them--in 2006 alone more
than $4 billion.

You know what New York, both state and city, will do to make up for the
lost money. They'll raise taxes.

I talked with an executive this week with what we still call "the
insurance companies" and will no doubt soon be calling Big Insura. (Take
it away, Democratic National Committee.) He was thoughtful, reflective
about the big picture. He talked about all the new proposed regulations
on the industry. Rep. Barney Frank had just said on some cable show that
the Democrats of the White House and Congress "are trying on every front
to increase the role of government in the regulatory area." The executive
said of Washington: "They don't understand that people can just stop, get
out. I have friends and colleagues who've said to me 'I'm done.'" He
spoke of his own increasing tax burden and said, "They don't understand
that if they start to tax me so that I'm paying 60%, 55%, I'll stop."

He felt government doesn't understand that business in America is run by
people, by human beings. Mr. Frank must believe America is populated by
high-achieving robots who will obey whatever command he and his friends
issue. But of course they're human, and they can become disheartened.
They can pack it in, go elsewhere, quit what used to be called the rat
race and might as well be called that again since the government seems to
think they're all rats. (That would be you, Chamber of Commerce.)
***

And here is the second part of the story. While Americans feel
increasingly disheartened, their leaders evince a mindless . . . one
almost calls it optimism, but it is not that.

It is a curious thing that those who feel most mistily affectionate
toward America, and most protective toward it, are the most aware of its
vulnerabilities, the most aware that it can be harmed. They don't see it
as all-powerful, impregnable, unharmable. The loving have a sense of its
limits.

When I see those in government, both locally and in Washington, spend and
tax and come up each day with new ways to spend and tax--health care, cap
and trade, etc.--I think: Why aren't they worried about the impact of what
they're doing? Why do they think America is so strong it can take endless
abuse?

I think I know part of the answer. It is that they've never seen things
go dark. They came of age during the great abundance, circa 1980-2008 (or
1950-2008, take your pick), and they don't have the habit of worry. They
talk about their "concerns"--they're big on that word. But they're not
really concerned. They think America is the goose that lays the golden
egg. Why not? She laid it in their laps. She laid it in grandpa's lap.

They don't feel anxious, because they never had anything to be anxious
about. They grew up in an America surrounded by phrases--"strongest nation
in the world," "indispensable nation," "unipolar power," "highest
standard of living"--and are not bright enough, or serious enough, to
imagine that they can damage that, hurt it, even fatally.