The Crash Of '29, For Those Under 40

by Molly Ivins

Unfortunately, I suffer from congenital optimism. As Russ Baker used to say, "Cheerful to the point of idiocy."

But this time I think I've done it. I find myself quite as annoyed by those gloating over the decline of the Nasdaq, the death of the dot-coms and the wreck of high-tech as I ever did with the greedy, self-deluded nincompoops who hyped this stuff out the wazoo to begin with. Talk about never happy. What a grump!

We are watching a most singular phenomenon, in that the bust of this bubble -- itself a familiar feature of capitalism -- is limited (we hope). Even more oddly, it is limited mostly to young people. It's as though there were a Crash of '29, but it only affects those under 40 (who worked very hard).

It is quite notable, really, how hard they work. And they were supposed to be the brightest if not the best. The question is: What will they make of all this?

You've all heard the same explanations that I have: overvalued P/E ratios, blah-de-blah-de-blah. Well, come on -- it was hype, and it was bull, and it was more than just the stampede of greed that hooks onto the Next Big Thing.

As Thomas Frank points out in his scathing book "One Market, Under God," this was the tulip mania of old multiplied by millions of dollars' worth of the world's most sophisticated advertising. This bubble was, by cricky, marketed as a new economy, a faith, a cosmos.

As a consequence, its "pfffft" is more than just an economic downturn -- it is a loss of faith. It's hard to know what to say to someone who was worth $200,000 last year and is worth $20,000 this year. "Hey, $20,000 is a lot of money," while true, is not especially helpful. Because of the terrible overemphasis on one's portfolio as the equivalent of self-worth, from what I'm hearing, I'd say the devastating effects are not so much financial as psychological.

As has long been noted -- by, among others, Dr. Ernest Becker in "The Denial of Death" -- we live in a society where the size of one's checkbook is the standard measure of worth. There are several studies on the effects of feeling poor in America, even though most poor Americans are better off than most of the world's population. You may find this hard to credit, but it doesn't cheer them up much.

Because Austin is both a university and a high-tech town, we are already seeing down-but-not-out nerds. There have been more than 4,800 high-tech lay-offs here.

Now, the town also has somewhere around 10,000 musicians, most of them waiting tables and clerking at the Jiffy Mart while waiting for the Big Break. There is, however, a small but crucial age difference between most of those in the two respective groups -- the techies are too old to move back home with Mom and Dad.

It has always been easy to make fun of the nerds, especially the ones with personal trainers, inferior desecrators, underpaid illegal housekeepers, favorite chefs, unisex hairdressers, the Benz, etc. -- all of this combined with tattoos, navel rings, rainbow hair colors and other symptoms of impeccable hipness. Because, as Frank points out, part of the theology and the marketing of the new economy is that it is a rebel culture. They were supposed to be rich but cool, rich but nonconformist, business wizards but never seen in suits.

You may think this is a waste of sympathy, but it is precisely because of the-higher-they-fly, the-harder-they-fall that I think we have an unusual and tragic problem here. If one has that valuable old-Texas attitude -- hey, today a peacock, tomorrow a feather duster -- it's not hard to weather going broke. But this is a generation-specific crash, and as a perceptive article in The New York Times Sunday Magazine noted a few months ago, the "new Texas" of high-tech hasn't even met the old Texas.

It's not losing their money that's the problem. It's losing their faith -- not just in the "new economy" but in themselves. As you know, when Americans go off searching for new faiths, the results are often quite peculiar.

If all that the nerds get out of this crash is cynicism, then it will be a disaster. I'd like to suggest that some old lessons from the old economy be reconsidered.

As we learned from both the unregulated capitalism of the late 19th century and the Big Crash, capitalism actually needs strong unions, government regulation and a social safety network to function for everybody. Free markets do not solve everything; they are not magic; and higher profits are not a healthy ultimate value for a society. This country is about more than capitalism.