Black Jet – Volume 2020-3 Where Do We Go From Here?
May 15, 2020 by, Marshall Snipes
There are many opinions regarding when the economy and therefore life, will go back to normal. Optimists think the economy will return to its pre-virus vitality – pessimists think the world has changed and things will never be the same. The truth probably lies somewhere in between. Since most think the circumstances we find ourselves in are unprecedented, and the past is no measure for what happens next, then consensus is that we are flying blind.
The Black Jet Theory is the notion “that most of what currently happens, when viewed through the filter of common sense, leads to a different conclusion than the widespread view of current thinking by those who control the dissemination and content of information (academia, the media, politicians and other “experts”).[i] If we apply the Black Jet Theory to our current situation, we might come to a different conclusion than either of the extremes above. Current thinking seems to be that we will return to business as usual and the only variable is timing.
Recently, I have been in several meetings with various people who make a living anticipating the economic future that we will live in during the next “business cycle”. Some of these folks are from Wall Street and some from the business community at large. Most believe that at some point we will return to “normal” because we always have. Recent polls show that half of Americans believe that normalcy will return in less than six months. Only 6% polled believe that we will never return to normal.[ii] The Black Jet Theory would lead us to think differently.
Since the closest we come historically to the situation we find ourselves in today is the Great Depression, let’s stop and take a look at what happened. Unemployment reached its peak in 1933 at 24.9% and remained above 14% until 1940 when America began preparing for World War II.[iii] That’s seven years. Unemployment levels released last Friday showed that 20.5 million Americans filed for unemployment[iv] in April pushing the unemployment level to 14.7%. This is the highest unemployment rate since the Great Depression and far above the 4.4% level at the end of March. Not at 1933 levels yet but certainly we are headed in the wrong direction. The longer the economy is closed or partially closed, the higher the unemployment rate will go.
You can make the case that we are in different times and the current crisis cannot be compared to the Great Depression. In many ways that is true. However, one thing does not change and that is human nature. Our nature to react to fear is no different today than it was in the 1930’s. As long as we are bombarded in the media with stories that promote fear (directly or indirectly), the recovery will take longer.
In Tom Brokaw’s book, The Greatest Generation[v], he defined that generation as “America’s citizen heroes and heroines who came of age during the Great Depression and the Second World War and went on to build modern America.” I would submit that the culture they created would further define their generation, and that culture is instructive for today.
When I was in grade school, we were leaving church one Sunday and I passed by a penny that was lying on the sidewalk and kept walking. My dad stopped me and asked me why I did not pick up the penny. I had no answer other than being lazy. He then used that moment to teach me a lesson. He said that was more money than his family had in 1936. I went back and picked up the penny and I have never forgotten that lesson. Even though the economy boomed in the 50’s, life was much better for most folks and unemployment rates stayed in the single digits, his generation never forgot the painful lessons they learned from a time of poverty and scarcity.
Many years later my wife, an attorney, was in business to liquidate estates. Most of her clients were families whose parents were members of the greatest generation. What she discovered was the greatest generation lived differently; they saved, they hoarded everything from twist ties to mason jars, they turned off lights that weren’t being used and they had a view that things could change at any time, because you never knew when the next Great Depression would hit. So, how will the current generation act once we recover from our current dilemma?
The reaction will of course be dependent on how long it takes the economy to rebound. But here’s what common sense (The Black Jet Theory) suggests:
- People will react similarly to the greatest generation. When pain occurs, no one will want to relive that pain.
- People will consume less and save more waiting for the next virus, loss of income and the shutdown of our economy. Memories will not grow short any time soon. During good times, people spend more. During bad times, people save. That trend has already begun in 2020.
- Businesses and other organizations will have less income especially in the short term and will have to behave accordingly, thus slowing the recovery. At some point the federal government cannot continue to print money. Those that are successful will not be those who are planning to return to business as usual, but those who have a long view and understand that the past ways of doing business will have to change. We must remain flexible and adaptable.
- There will be a return (at least for some) to religion – remember the Billy Graham revivals of the 1950’s. People in the face of crisis will seek answers to loftier questions than where the next entertainment dollar will be spent. Regardless of your worldview, people will be looking for answers.
Our society will be different than it was prior to March of 2020. How we react to those differences will define the current generations and their legacies to their children and grandchildren. Don’t be led by current thinking that changes with the wind. Don’t take my word for it, think for yourself.
[i] “Black Jet – Volume 2020-1”, by Marshall Snipes, May 1, 2020.
[ii] “National Public Opinion Data: Re-Engaging with the Health Care System” prepared by Jarrett Lewis, Partner, Public Opinion Strategies Alexandria, Virginnia May 8, 2020.
[iii] “Labor Force, Employment, and Unemployment, 1929-1939: Estimating Methods” Bureau of Labor Statistics.
[iv] “The Employment Situation – April, 2020” News Release May 8, 2020 Bureau of Labor Statistics.
[v] “The Greatest Generation” by Tom Brokaw 1998.