A gale of a tale
In the 19th century, Samuel Langhorne Clemens moved from Missouri to Nevada to worldwide fame as Mark Twain.
Joseph Schumpeter moved from Austria to America to a less celebrated but significant fame in the 20th century. Despite their differing disciplines, Schumpeter shared with Twain a point of view.
“Buy land, they’re not making it anymore,” is a famous quote from Twain, America’s literary lion. Another quote from the master wordsmith that is less well known goes this way: “No real estate is permanently valuable but the grave.”
Economist Schumpeter couldn’t write as well, but offered this: “The opening up of new markets and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating the new one. … [The process] must be seen in its role in the perennial gale of creative destruction; it cannot be understood on the hypothesis that there is a perennial lull.”
Analyze these and other writings of Twain, whose trek through Nevada provided him a rich vein of insight into human and other nature. Analyze Schumpeter’s writing, or at least the clarity of thinking behind it, which is similar. Things change, recycle, even die.
The U.S. Steels of industry may survive, but only as heirs and assigns of the behemoths they once were in a world altered by competition with the likes of NUCOR, Arcelor-Mittal, Steel Dynamics and other upstarts.
Toyotas of tomorrow won’t be Toyotas of yesterday thanks to slippage in quality control and pressure from the likes of a resurging Ford, the Japanese sibling Honda, that South Korean usurper Hyundai, or people-movers yet to come.
Google glows but must regenerate or die. Given long enough, the name may survive but the next new thing, or the one after that, will provide a gale that in years to come blows Google into a giggle, a gaggle or a long gone gig.
Even land and real estate can go down in value, as well as up, despite Twain’s first observation above. A bubble blows, then either slows or blows up.
These are realities with which Nevada, the United States and the world are coping. Despite years of economic progress interspersed with regressions, a downdraft like this one can prove an ill wind that blows little good.
The Obama administration, the Federal Reserve and our own state officials try to save the day, but face a daunting task. Market forces, represented by insights from Schumpeters and Twains, won’t alter much due to the hopes of President Obama, the manipulations of Fed Chief Ben Bernanke or the flailings of lesser folks in Carson City or New York City.
Despite economic recovery hopes, gale force economic winds about which Schumpeter warned may yet return—not unlike those described by Twain in Roughing It.
“(T)he daily ‘Washoe Zephyr’ set in; a soaring dust-drift about the size of the United States set up edgewise came in with it, and the capital of Nevada Territory disappeared from view. Still, there were sights to be seen which were not wholly uninteresting to newcomers; for the vast dust-cloud was thickly freckled with things strange to the upper air—things living and dead, that flitted hither and thither, going and coming, appearing and disappearing among the rolling billows of dust …” To sum it up, Twain called it “a peculiarly scriptural wind, in that no man knoweth ‘whence it cometh.’”
Or, as Schumpeter would have it, a “gale of creative destruction.”