By Michael Barone
Friday, February 07, 2014
America succeeds because Americans fail and forgive.
That's the intriguing message -- or part of it -- of Megan McArdle's new book
"The Up Side of Down: Why Failing Well Is the Key to Success."
McArdle, a Bloomberg blogger and columnist, stands out
among economic writers, and not just because she's the only woman among them
who is 6 feet 2 inches. She combines a shrewd knowledge of economics and
practical experience with a writing style that every so often segues into
comedy monologue.
Americans fail a lot, she argues. Most new businesses
fail. Most predictions are wrong. As the screenwriter William Goldman wrote
about Hollywood, "Nobody knows anything."
And attempts to guard against failure can result in
greater failures later on. Children prevented from roughhousing at recess may
engage in riskier behavior later. Antibiotic overuse makes bacteria resistant
to antibiotics, which then don't work when you really need them.
But good judgment comes from experience. And experience
comes from bad judgment -- from failures. The key question is how you respond,
whether you learn from failure and rebound.
Drawing from pre-history, McArdle contrasts farmers and
foragers, the hunter-gatherers who lived before the development of agriculture.
Foragers tend to share success with neighbors, in the
expectation that others will share later. They see success as the result of
luck -- the hunter who happens to spy a particularly vulnerable mammoth.
Farmers tend to share success only with family members.
They see success -- a plenteous harvest -- as the result of their own families'
hard work and conscientiousness. They see no reason to share it with the lazy
and feckless.
Americans, in McArdle's view, have values like those of
farmers. Much more than Europeans, they believe that there is a connection
between effort and reward. Those who have earned more deserve it.
Europeans tend to believe that success comes mostly from
luck. They enlist government to, in President Obama's words to Joe the Plumber,
"spread the wealth around."
But in some respects, Americans behave like foragers.
They're often ready to forgive failures. High-tech entrepreneurs like to hire
people whose businesses failed because it shows a willingness to take chances.
The U.S., McArdle points out, has the most accessible
bankruptcy laws in the world. You can slough off your debts (except for student
loans) relatively easily. In supposedly progressive Denmark, they hang over you
for life.
The result is that, contrary to F. Scott Fitzgerald's
adage, there are many, many second acts in American life.
Americans also, though McArdle doesn't mention this,
donate far more to charity than Europeans do. Great philanthropists have
created beneficial institutions -- Andrew Carnegie's libraries, John D.
Rockefeller's research medical schools, many donors' universities -- which
Europe can't match.
McArdle mostly ignores religion, but this blend of farmer
property-owning and forager sharing is in line with Christian teaching. There
is such a thing as sin, and it should be penalized. But there is also the
possibility of forgiveness and redemption and a duty to share in your own way.
Though not technically part of the millennial generation
(those born after 1980), McArdle presents a Millennials' view of the world.
Sudden macroeconomic shifts can result in months of
soul-deadening unemployment (she was working in IT just as the dot-com bubble
burst).
The future is wildly unpredictable, failure is frequent,
success seemingly serendipitous (her freelance blogging got her a job blogging
at the Economist).
Her advice is to avoid enterprises that are in long-term
decline, such as General Motors starting in the 1970s. In business and public
policy, try to learn from well-conducted experiments -- but recognize that
successful trials can't always be replicated on a large scale.
Don't rush to conclude that disasters like the 2008
financial crash are the result of conspiracy or the errors of one easily
identified group of malefactors. Bubbles happen in any free market economy and
are hard to identify until they burst.
"The world is an increasingly insecure place,"
she writes, "and there is no way to make it less risky."
The best way ahead is to admit mistakes quickly,
understand that you may well fail, but you can usually rebound and punish
rule-breaking promptly and consistently but lightly.
This book about people who fail is also a book about how
a nation succeeds. The "American Bourgeois Synthesis," McArdle
writes, is good but not perfect, promoting entrepreneurship but over-penalizing
some mistakes.
Americans -- and America -- can succeed, but only if
people learn from their failures.
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