A Bicycle Built for History?

Is each generation destined to repeat the same errors over and over?

Photo: Ben Kerckx. Source: Pixabay

There’s a theory that says civilization is like the tide, moving in and out on a regular basis. This idea was perhaps first articulated by the ancient Greeks, as they tried to understand what makes up a just society. The story of Daedalus and Icarus illustrates this: Icarus, excited by having the ability to fly, flew too close to the sun. His wings melted and he crashed into the sea.

This idea, that society goes through stages, was articulated during the Enlightenment, and later by modern scholars. The basic notion is that people start out in bondage, they throw off their chains to become free, freedom brings prosperity, prosperity leads to laziness, and laziness winds up in bondage again.

The cycle of slavery/freedom/slavery has its appeal: it seems to explain the rise and fall of classical empires, like Greece, Rome, and those of the Middle East, as well as dynastic succession in China. Also, it can be adapted to explain economic cycles and market crashes. The Financial Crisis of 2007 through 2010 has been described as a “Minsky Moment” – named for Hyman Minsky, a Keynesian economist who observed that stable markets lead to excessive risk-taking which results in financial losses, panic, and retrenchment. In this model, bankers, traders, and financiers play the role of financial arsonists, setting the economy ablaze – so it can later rise from its own ashes.

But the cyclical view of history ignores the capacity of people to learn and make progress. Sure, it’s enchanting to imagine conversations with Socrates in the Athenian agora, or sitting in on one of Adam Smith’s lectures in Edinburg. But I’d rather live here and now than any other time in history. For one thing, without modern health-care, most of us would be crippled or killed by accidents and disease. There’s a reason why life-spans keep growing. For another, for all our social inequality, the average person today is far less likely to suffer from tyranny, oppression, and poverty now than any other time in history. Our illnesses are those of abundance, not scarcity.

Source: Our World in Data

Four hundred years ago or so, a miracle happened: we developed the idea that through broad ownership of private property and political participation we could enjoy the fruits of our own labor and improve the circumstances of the next generation, and the next and next. That miracle has spread, and the world now enjoys greater prosperity than ever before.

But the cyclical view has a point. Freedom isn’t free. We always have to on the lookout for laziness, complacency, and corruption. “The price of liberty is eternal vigilance.”

Douglas R. Tengdin, CFA

Charter Trust Company

“The Best Trust Company in New England”

By |2018-05-10T06:58:03+00:00May 10th, 2018|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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