Peter Drucker felt that, every once in a while, societies cross “true divides.” They may not be wide or especially treacherous or otherwise obviously remarkable, but they put us in a new reality.
In 1873, for instance, the stock market of Vienna crashed, setting off panics throughout Europe. “Eighteen months later the economy throughout the entire Western world had fully recovered,” Drucker recounted in The New Realities. “But politically the crash on a fairly obscure stock exchange marked the end of the liberal era, the end of the 100 years in which laissez-faire was the dominant political creed.”
Are we at such a divide now? In many respects, we have recovered from the crash of 2008. According to today’s Wall Street Journal, citing new Federal Reserve data on the net worth of U.S. households, “Americans have rebuilt much of the wealth they lost during the recession.” In particular, the newspaper reported, “recent stock-market gains and a revival in the U.S. housing sector are boosting Americans’ wealth—a trend that over time could make them more inclined to borrow and spend, providing a lift for the overall economy.”
And yet, the Journal noted, “on an inflation-adjusted, per-household basis, only 63% of households’ losses have been reversed,” and the rise in net worth “masks significant differences between the affluent, who tend to own stocks, and the less affluent, who were disproportionately hit by the housing crash because their largest financial asset tends to be their home.”
As Drucker pointed out in Managing in Turbulent Times, besides retirement savings, the “other major component of ‘personal savings’ in developed . . . countries is investment in the individual family home.” When it falls in value, ordinary Americans feel it acutely.
Even more important, Americans don’t feel much optimism, despite the numbers. A new Bloomberg News poll found that more than 60% of Americans feel the country is on the “wrong track.” Recovery in numbers, apparently, has not led to a recovery in spirit.
Is this a delayed reaction—or a sign of a new reality?
Drucker, for his part, may well have found the poll more worrying than the Fed statistics, for it suggests great pessimism. “What is needed in this world today is not primarily wealth,” Drucker wrote in The Age of Discontinuity. “It is vision. It is the individual’s conviction that there is opportunity, energy, purpose to his society, rather than problems, inertia and hopelessness.”
What do you think is the single most important thing that could be done to make people believe we’re back on the right track?