Those who cannot remember the past are condemned to repeat it.
One of my grown sons is carefree about his children. The other is cautious. One lets his son jump off cliffs (metaphorically speaking), the other encourages his to enjoy more tranquil pursuits. One has children who have never been sick or had accidents. The other spent way too much time in neonatal intensive care units with premature babies. Think you can match the personal history with the protective parenting? It’s not that hard, right? Most of us would be the same way. Once burned, and all that.
It’s no accident, I think, that the Great Recession of 2008 did not happen while my grandfather was still alive. He and my grandmother rented out rooms in their house to make ends meet in the 1930s; and they were among the lucky ones. The crash of 1929, just after he became a stockbroker, and the ensuing depression, changed my grandfather forever. You couldn’t get him to borrow too much if you paid him.
The forerunner to the Great Depression was wild stock speculation fueled by easy credit. Economists are still not entirely sure why the bursting of the stock bubble triggered a depression, but I know what my grandfather thought. He believed it was the result of too much greed, too much debt, and then, as the edifice tumbled, blind panic. People grabbed their money from banks, many of which failed; commerce ground to a halt; nobody could find a job. It took WW II to jolt the economy back to life.
The Great Recession of 2008, which everyone seems to agree was pre-ordained by over-borrowing, had to wait for my grandfather’s generation to hand over the helm of the economy. Didn’t the people who came after him know the same things he did? Yes, but they didn’t feel them.
Economists like to assume we are all rational actors, but neuroscientists tell us we are not. New studies show that our economic behavior, just like some of our more basic drives, is strongly influenced by biology. Hedge-fund traders get a rush of adrenaline and dopamine when they are on the hunt. It makes them feel invincible. It enables outsized risk-taking. The other end of the neurological spectrum is the fear of debt my grandfather felt. His brain had been sensitized by financial trauma, just as a trader’s is doped by the prospect of a killing in the market. Much of the time we are acting no more rationally in the conduct of our financial affairs than a teenaged boy trying to get laid, or a rabbit running from the shadow of a hawk.
I’m not sure there is anything to be done about all this. Short of some modern “Total Recall” serum that could implant fear of stupid risks, it seems we just have to live with the limits of our experience. Perhaps economists should take that into account when they try to model future behavior. How has the population changed? Is there anyone still around who lived through that last disaster, or has our collective response been reset to naïve?
Remembering is different than knowing. The experiences we have change us in ways that reading about them cannot. They inoculate us like a flu shot, or sensitize us like a bee sting. Perhaps George Santayana understood the semantically subtle but physiologically powerful difference between knowing and remembering. As for me, I did not. I assumed that societies kept records and passed them along and that each new generation possessed the cumulative wisdom of all who came before. Not so, apparently; or at least not always.
For all who, like me, desperately want to believe we can learn from the mistakes of the past, I offer this sobering modification to Santayana’s dictum: Those who have not themselves experienced the pain of the past are doomed to plan the future with the innocence of children.