Take a step back and count your blessings

Normally, Friday posts are about the funny and quirky side of economics, but today I want to take a step back and reflect on how good we have it. In recent months, the mood has become incredibly pessimistic here in the UK as well as in Europe and the United States. The war in Ukraine, runaway inflation, and recession fears have run rampant in recent months. Add to that the constant threat of climate change and the rise of authoritarian rulers and it really looks bleak at times. But as I am fond of telling everyone around me these days, we should enjoy the day. After all, we are in a sweet spot right now. Covid hasn’t killed us and World War III hasn’t started, yet.

Two days ago, I wrote about a paper that looked at the mentions of panic in the New York Times and the Wall Street Journal and it certainly feels as if in recent months, panic has spiked once again. Yet, a chart in that paper shows the occurrence of recessions, bank failures, wars, disasters, and epidemics that affected the United States.

Recessions, wars, disasters, and epidemics in the United States 1871 to 2021

Source: Mai and Pukthuanthong (2021). Note: Wars are wars globally, not just ones with the involvement of the United States

Compare the last 30 to 40 years since the 1980s with the past and you will find that:

Recessions have become much rarer. Before the Federal Reserve was established and central banks managed monetary policy in developed countries, we used to have a recession every 3 to 5 years. Now, we tend to have one every 10 years or so. Epidemics have become incredibly rare. So much so that until 2020 we all but forgot about them as a potential risk. Wars have remained a staple of world politics with periodic flareups at times. But at least in Western Europe and North America, there hasn’t been a war in 70 years. NATO and the EU have been exceptionally successful in keeping peace in Europe, a continent that for thousands of years has been ravaged by wars on a constant basis.

So sit back and count your blessings of living in a world where modern medicine has made epidemics incredibly rare and increased the life expectancy of all of us substantially. A world where global trade and globalisation have lifted more people out of extreme poverty than any invention or policy has ever done in the history of mankind. A world where central banks have become so good at managing the economy that recessions are essentially a once-in-a-decade event. A world in which military alliances have not triggered wars but prevented wars for two generations. A world where the quality of life for the poorest households in developed countries surpasses the quality of life of the richest people on the planet a hundred years ago.

It’s easy to be pessimistic about the world, but it is also unfounded. Think about that and count your blessings.

And if you think that the previous generations didn’t have problems like we do today, let me tell you they had Harry Truman, Doris Day, Red China, Johnnie Ray, South Pacific, Walter Winchell, Joe DiMaggio, Joe McCarthy, Richard Nixon, Studebaker, television, North Korea, South Korea, Marilyn Monroe…