Activist investor Carl Icahn was on CNBC this week, ranting against the board of directors of eBay, when he broadened his harangue to include the broader economy, saying that markets and the nation are in deep trouble, particularly because of lingering unemployment, and that an economic fall is coming.
Anticipating that audience members were rolling their eyes, having heard all this before, he apologized for always being a “Cassandra,” the character of Greek myth who carried the curse of seeing the future but never being believed when she spoke prophesies.
The problem with all this, in terms of traditional bubble theory, is that bursting bubbles are accompanied by unfettered exuberance about the future. Bubbles burst when a kind of mindless group-think or herd behavior takes over, causing us to violate rules of rational economic behavior. We ignore stop signs. Heck, we knock down stop signs. We just go.
The irony in this current behavior of markets is that guys like Icahn do have an audience — they keep warning us, and therefore they mitigate the chances a bubble will burst. Even if we don’t entirely believe Cassandra, we hear her warnings, and enough members of the herd respond to save us.
The current talk about economic bubbles makes me think about the bubbles of politics that could burst this year. Unlike the warnings and caution that protect the economic bubble, almost no one seems to be warning that deep and persistent wrong-track sentiment could burst the bubble of political stability.
The once widely recognized rule of the game was that sustained political negativity results in defeat of incumbents, changes in administration, and even regime change. Few pollsters believe in that paradigm anymore. In the minds of many pollsters and political strategists, it’s all about partisanship and class struggle these days. Voters are just so focused on defeating the bad guys that they don’t notice the bad times.
I believe many strategists, too, think of concepts like “regime change” as some sort of third world or antediluvian notion that could never occur here. But now that we have seen successful citizen uprisings in more modern societies, like Egypt and Ukraine, I wonder whether it’s time to rethink our winking at seemingly intractable wrong-track sentiment.
Look back at the Declaration of Independence for some inspiration. The document seeks to make very clear that our founders weren’t seeking hastily to make a change. Look at these excerpted words:
“Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer ... than to right themselves by abolishing the forms to which they are accustomed. But when [there is] a long train of abuses and usurpations ... it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. Such has been the patient sufferance of these Colonies. ... In every Stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury.”
How long is our own “train of abuses and usurpations?” We’ve been upside down on the direction of the country for more than a decade. That’s a long train. Can’t anyone in the herd see it?
Hill is a pollster who has worked for Republican campaigns and causes since 1984.