We have a lot to be afraid of, so we are told.
- Global growth slowdown
- Emerging market weakness
- Currency manipulation
- Over-valuation of stocks
- Market volatility
- Dollar strength
- Normalizing interest rates
The list goes on and on. All of the above are cited as reasons why CEO’s will not spend money on hiring people or investing in capital goods, why workers will not change jobs even when treated badly, why investment in infrastructure and education cannot be done. In short, why we are stagnating.
Fear in America is becoming a self-fulfilling prophecy. The more we are afraid, the worse things get.
Whether Janet Yellen admits it or not, fear is dictating central banking policy. Former Dallas Fed Chair, Richard Fisher, has said, “The central bank is living in constant fear of market reaction and that is not the way to manage policy.” Fear, when manifested by the Fed, is not helpful.
Business leaders are no better. The Business Roundtable’s CEO Economic Outlook Survey Q1 2016 finds CEO’s expectations for sales, capital spending, and hiring over the next 6 months modest, increasing from 67.5 in the fourth quarter of 2015 to 69.4 in the first quarter of 2016. But the index remains near three-year lows.
Managing fear was something the U.S. was historically good at. Remember Roosevelt? The guy who said, “We have nothing to fear but fear itself.”
Harvard Business Review just penned a great article on the danger of inaction by business leaders, invoking Roosevelt and his ability to manage the fears of a nation during a time of economic depression. Roosevelt prevented a bank panic by displaying confidence and asking people to not give in to their forebodings. What if he bunkered up instead of giving his fireside chat?
Everybody is afraid and anxious these days. But fear is often counter-productive and harmful in the long run if not managed. Neuroscientists know this about fear:
“When we’re in the grip of our fears, we are at least 25 times less intelligent than we are at our best.”
So fear makes us less able to perform optimally, to make rational decisions, and to move past the barriers in our way.
Waiting for the next Black Swan to cross our path is no way to create a future, whether you are a person or a business. The 2008 financial crisis has left psychic scars on all of us, but businesses are well-capitalized and CEO’s are in good financial shape to start taking some risks on new ideas, products, and people.
Since Black Swan talk is all the rage now, I did a bit of investigating on the actual birds. They do exist, mainly in Australia. But they were hunted, almost to the point of extinction, by us. The reason they are rare is because we made them that way.
Therein lies the lesson of fear. We create our own futures, whether it is by what we do or by what we don’t do.