Wednesday, November 12, 2008

Tuchman's Law - Is The Economy Really That Bad?

Economic news is depressing these days. Ford and GM are dying - with shares trading at below $4 a share. Banks have failed. Even entire countries like Iceland is facing bankruptcy. Oil, which was hit by speculative trading that drove futures to nearly $150 a barrel have fallen - below $60 a barrel as of closing November 11, 2008. US consumers are not shopping affecting retail, particularly this holiday shopping season.

Home foreclosures continue, driving down home sales both new and existing. Cars are not selling, gas consumption in the US and worldwide (including China) have waned. And now - increasing rounds of layoffs as corporations attempt to trim the fat.

Yet even with all of these economic bad news, for most of us, is it really that bad? Or are we still functioning but with more sacrifice?

No doubt a lot of people are feeling the pain and have curtailed a lot of "luxuries" (whatever that may be - for me, it's going to the movies).

But, the fact that the bad economic news is not juxtaposed with the latest robberies, mugging, or murder-suicide over finances and is, instead, matched with more economic bad news, it makes me wonder if most people have found a way to cope.

Perhaps the American and human spirit is more resilient and is capable of coping with economic hardships. Perhaps, Tuchman's Law is in effect?

Tuchman's Law was coined by American author and historian, Barbara Tuchman who wrote "The Guns of August", a history about the buildup and first month of World War I. The book, by the way, was referenced by President John F. Kennedy during the Cuban Missile Crisis and he encouraged his Cabinet to read it to help deal with the crisis (a really well done movie, Thirteen Days, is about the Cuban Missile Crisis).

Tuchman's Law, however, states that the presence of negative news would have you believe that the world is ending and that it seems at every moment, something bad is going to happen when the reality is that bad news is actually OUT of the ordinary.

The fact of being reported multiplies the apparent extent of any deplorable development by five- to tenfold. Disaster is rarely as pervasive as it seems from recorded accounts. The fact of being on the record makes it appear continuous and ubiquitous whereas it is more likely to have been sporadic both in time and place. Besides, persistence of the normal is usually greater than the effect of the disturbance, as we know from our own times. After absorbing the news of today, one expects to face a world consisting entirely of strikes, crimes, power failures, broken water mains, stalled trains, school shutdowns, muggers, drug addicts, neo-Nazis, and rapists. The fact is that one can come home in the evening, on a lucky day, without having encountered more than one or two of these phenomena.(reference)

I suspect that for most of us, the presence of the economic bad news has strained us, but has not broken us, caused us to be homicidal or suicidal (much). Perhaps my faith in God is also my strength because I know who's in control, regardless of a Democrat or Republican in charge.

But with most Americans having faith in a God - be it Christian, Jewish, Muslim or other - I suspect that most Americans are coping and making appropriate sacrifices, strengthened by their faith.

So while the news seems bad, most of us are still handling our business. We go to work. Or look for a job - anything to pay the bills. We curtail our spending to essentials as much as possible (life still does take place, after all, so some measure of luxury can still be afforded).

To me, even with all the economic bad news and even though things are bad, things are not quite so bad. Tuchman's Law does indeed apply.


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