Business Journal: Dr. Robert Wright Addresses Economy's Biggest Threat
Monday, June 8, 2009
Uncertainty may be economy’s biggest threat
Wright puts crisis into perspective with historical view
Rob Swenson, Sioux Falls Business Journal
Attempts by President Obama’s administration and Congress to reform programs such as health care and the tax system threaten the nation’s economic recovery, said economic historian Robert E. Wright.
In addition, federal fiscal stimulation packages could increase inflationary pressures, he said.
But uncertainty might be the biggest economic threat of all, said Wright, who gave the keynote speech at the Sioux Falls Business Conference’s “Ready to Rebound” seminar June 3 at Augustana College.
Wright is the incoming Nef Family Chair of Political Economy at Augustana. In September, he will become the school’s first endowed faculty chair. He presently works as a clinical associate professor at New York University.
“We don’t fear fear itself. We sweat what schemes our politicians might concoct to win the next election. The natural response to uncertainty is timidity,” Wright said.
“Better to hold onto what one already has than to aim for the stars, most people conclude. That’s exactly what makes economic uncertainty so economically dangerous.”
Wright’s speech was the leadoff event in a six-hour conference that attracted about 200 business people from the Sioux Falls area.
In addition, panel discussions featuring local experts covered five key topic areas: marketing, real estate, finance, human resources, and technology and the Web.
The free conference, which is expected to become an annual event with a topical business focus, was sponsored by Augustana, the Sioux Falls Business Journal and Argus Leader Media. Architecture Incorporated provided lunch for attendees.
Wright’s speech focused largely on the nation’s history of reacting to recessions.
According to the National Bureau of Economic Research, the United States has suffered 32 recessions, including the one that began in December 2007.
Recessions differ in ferocity and duration because of underlying causes, Wright said.
Most economists agree that the U.S. economy “is in quite a pickle” now, he said.
Large financial institutions lost equity capital by making bad loans, throwing the economy into recession. Industries such as automakers and consumer electronics retailers have defaulted on loans and laid off workers.
Small-business owners in Sioux Falls might not have as much to worry about as other places, however, Wright said.
Economies trend upward in places with governments that protect life, liberty and property, he said, and America has a solid foundation.
“You may not trust the politicos in Washington. I sure as heck don’t. But the men and women in Pierre provide us with a buffer. Their power is limited. But thankfully we’re not facing a Hitler, Stalin or Pol Pot in Washington,” Wright said.
The recession is a formidable foe, but the nation has been through worse, he said, so have faith in the nation and its ability to rebound.
Rob Oliver, president of Augustana, said Wright’s speech provided conference-goers a good, long-lens perspective of recent economic problems. Economic cycles are normal events that begin and end, said Oliver, a former bank executive.
Oliver quoted Wright by saying business people should not wait for government to fix the economy.
“We are the economy,” Oliver said. Duties such as strengthening businesses and providing jobs are “the responsibility of all of us.”
Oliver was pleased with the conference turnout and feedback he received from participants.
“It feels good to know we’re meeting a need, and the conversation was valuable,” he said.