Fear: 0, 10, 17, 31, 85 Years On

Three events stand out for their drama during my DC career: the October 1987 market crash, when I remember being grateful for having a…

Fear: 0, 10, 17, 31, 85 Years On

Three events stand out for their drama during my DC career: the October 1987 market crash, when I remember being grateful for having a federal job during the biggest one-day market percentage loss in history; the 2008 financial crisis, its tenth anniversary being this month; and 9/11, with its 17th anniversary today.

Drama brings opportunities to see both courage and fear in action. On these historical days, courage tended to triumph over fear. Courage is widely celebrated in today’s well-justified wall-to-wall social media tributes to first responders and armed services members who heroically answered 9/11's call.

Yet the title of Bob Woodward’s Trump exposé, Fear, carries hints of irony and, for me, coincidence on a day like today. Irony in that it is published on a day we celebrate courage; coincidence in that I was supposed to work with Woodward 17 years ago today.

Sept. 11, 2001, I’d done the prep work for Chris Cox to interview Woodward on the television show we produced to send back to Orange County from the House of Representatives basement recording studio. That taping fell by the wayside after my boss had breakfast with Defense Secretary Don Rumsfeld at the Pentagon, started driving back to the Rayburn Building, a 757 hit the Pentagon while he was on the 14th Street bridge, and he sent us to work from home as soon as he walked into the office and even before the official Capitol evacuation order. I only remember the scheduled TV taping because Woodward called years later and reminded me. The guy keeps good notes.

(The most memorable parts of that day were driving home along the George Washington Parkway in the morning as smoke rose from the Pentagon and returning to the Capitol in the evening to watch the Congress sing God Bless America on its steps.)

Anniversaries are a time for perspective. And the perspective that dominates my thinking now is that civilization, young relative to the age of the earth, has conquered many things. But fear ain’t yet one.

This past weekend, fear caused me and my fellow passengers to take for granted once again that we must take off our shoes to ride an airplane. Better intelligence could go further at less cost toward protecting us from each other, but we also fear misuse of our personal data, so sharing information that could certify us as non-terrorists with the government causes us to tolerate security theater instead. The elite whose existence became more obvious after 2008 are willing to pay what it takes to get on “pre-check” lists that make travel easier, but most of us choose to pay the taxes, fees, and costs of hiring workers to do relatively non-productive manual passenger screening when they could be employed in more productive jobs that in turn generate more jobs and higher wages for all. We give up time with family and our own productive work to leave earlier for airports and wait longer to empty pockets and fill trays and un-fill trays and repack carry-ons and put shoes and belts back on because the fears of other attacks and of alternative ways to prevent them trump the courage required to change the system. We still pay high costs to satiate post-9/11 fear. Courage is essential to end that.

From the top floor of the U.S. Securities and Exchange Commission 10 years ago this month, the strongest memory remains the smell of burnt coffee from those who for weeks stayed into the early morning hours to try to do something to stop the bleeding from the asset-backed securities crash. The Economist argues this week that the government had no choice but to stand behind institutions, but “took the ill-judged decision to all but abandon insolvent households.” Had we used the technology available to give borrowers the power to renegotiate their loans with lenders at discounted rates and terms with reasonable adjustments to penalize lenders for making excessive loans to chase profits from the asset-back securities bubble, lenders would have lost money, but the total cost of their speculation would have been less for consumers and would have been more accurately imposed upon the shareholders and executives who chased excess returns by making it easy for consumers to overleverage themselves. People argued endlessly over the ratio of blame between lenders and borrowers, but no one had the courage and information and authority needed to step up and establish a number and create a system to allocate that fault fairly between lenders and borrowers. As it happened, lenders generally ended up better off than the borrowers, probably roughly in a ratio opposite of what a fair attribution of fault might be. Groupthink, uncertainty, doubt, and most of all fear caused policymakers to obsess about the need to “do something.” Those factors led to a considerably less than optimal solution.

Fear is what causes people to pull off Band-Aids slowly rather than all at once; it is what stopped the government from setting up a system to empower borrowers to rip the Band-Aid off the carcasses of their lenders as they bled cash. The transfusion from the government eventually got us to a point where we can be happy about today’s employment data, but we should have been here sooner, with much less harm to most and more restitution from the few. Loss aversion, it’s said, is a more powerful incentive than potential gain; 10 years ago, fear of loss among the few overwhelmed hope among borrower-victims; groupthink at the highest levels on steroids — the steroids of fear — blocked creative solutions; fear won.

It wasn’t always that way. The 1987 crash contained more economic drama in one day than was held by any single day of the 2008 crisis. It certainly wasn’t Dec. 7, 1941, or Sept. 11, 2001, but a healthier balance of fear and courage determined the outcome. In 1987, a president who appealed to the opposite of fear — who liked to quote Lincoln about better angels and who liked to talk about a Shining City on a Hill — took us back from the brink with reassuring words and demonstrable confidence. And the knowledge that visiting his wife in the hospital, and, similarly, how millions of Americans treat and love and respect one another, is more important than finance. And maybe that’s another reason we act more based on emotion than on logic when it comes to terrorism: Americans do care deeply about their loved ones and logic and love are different from each other; seemingly as different at times as courage is from fear. Yet fear on behalf of loved ones can be healthy. But love requires courage, too.

Where does the cycle of fear and courage end? Not yet on this earth. But FDR had it right 85 years ago: fear remains the only idea worth fearing. Everything else we can overcome with courage and love. It might take a bit of logic, too, to defeat fear, but that’s worth trying, most of all in the name of love.