The Qualitative Revolution

It has always seemed strange to me...the things we admire in men, kindness and generosity, openness, honesty, understanding and feeling, are the concomitants of failure in our system. And those traits we detest, sharpness, greed, acquisitiveness, meanness, egotism and self-interest, are the traits of success. And while men admire the quality of the first they love the produce of the second.

                                                      John Steinbeck

The Quantitative Revolution in the United States has just about run its course. The U.S. has posted remarkable growth over the last half century. But for all intents and purposes, it’s over. Will GDP grow? Sure, but at rates far below what we have historically seen and well below what most expect. The rate of Real GDP growth in the U.S. has been in decline since the 1960s – and there is no evidence to suggest a sudden spike in demand anytime soon.

You’ve heard about Peak Oil – the point when the maximum rate of extracting oil from the earth was reached in 2005. How about Peak Cars?  The number of car and truck sales in the U.S. has been in decline since it peaked in 2000.

How about Peak Homes? The number of existing new home sales has been in decline since it peaked in 2005. (Housing Starts numbers look even worse)

The days of continuously posting more and more sales of these treasured must-haves are behind us. After consistently increasing unit sales every decade after World War II, the American Dream hit a wall after 2000 – and has been in trouble ever since.
To put these metrics in perspective, if we combine the sale of new cars and existing homes to create a QUANTITATIVE AMERICAN DREAM INDEX, we are currently delivering unit sales equal to those of the mid-1980s. Selling at levels from a quarter century ago is no dream - it’s a nightmare - especially for those who keep score using conventional means to argue that the American Dream is still within reach of most Americans. It is sadly not.

YEAR	NEW CAR SALES	EXISTING HOME SALES	TOTALS	+/-
1970	10.2 MIL	1.6 MIL	11.8 MIL	N/A
1980	11.4 MIL	2.9 MIL	14.3 MIL	+2.5
1990	14.1 MIL	2.9 MIL	17.0 MIL	+2.7
2000	17.8 MIL	4.6 MIL	22.4 MIL	+5.4
2010	11.8 MIL	4.3 MIL	16.1 MIL	-6.3

Combined sales of cars and homes dropped by 6.3 million units from 2000 to 2010 – nearly a 30 percent decline in two of the most important markers of U.S. economic health – and not just for the direct sales they represent, but also for the ancillary sales and market activity they generate as well.

The reason that these statistics matter is that cars and homes are two of the key components of the traditional notion of the American Dream - what I like to call the Quantitative American Dream. If these important metrics are in decline, then the Quantitative American Dream is in decline – signaling the need for serious reassessment - not only as to how we measure progress but how we actually define what the American Dream really is and what it takes to experience it. What is success? Is it more money, a more prestigious job, a bigger house, a second or third car? Or is it more time with your family, friends, your personal passions, or more time to recharge physically and emotionally?

I once had a boss who insisted on trumpeting quarterly results especially when they were record results. He started with blasting the news that record results had been delivered for four consecutive quarters, five consecutive quarters, six consecutive quarters, seven consecutive quarters. He had created an expectation that was impossible to maintain. At some point, the string would be broken and the results would not be record-breaking. This is what Washington, Wall Street, and the media has created – quantitative expectations that simply cannot be sustained. That better comes in only one flavor – more. It was a huge mistake opening that Pandora’s box – but once opened, there was no going back – and this will almost certainly not end well.

The Quantitative Revolution has had an amazing half-century run. Americans have bought and sold more cars and homes than any country on the planet. Since the mid-1960s, Americans have purchased a mind numbing 528 million new cars and trucks and over 150 million existing homes. But such robust growth does not – cannot – will not - last forever.

Like all consumer universes, it had its limits – and those limits have been reached. Sadly, though, the powers that be are only able to think in terms of a larger economy and are incapable of offering solutions in the event that the economy does not grow. That’s a real problem. Most politicians – whether they realize it or not – are offering conditional solutions to our economic problems. With growth, I have solutions. Without growth, I have no solutions. They have framed the discussion in such a way that they can wash their hands of responsibility unless and until the economy grows – and at a rate that they have determined to be appropriate.

The danger with such an approach is that it represents a WAIT strategy - requiring something that is out of our control to happen before our actions can be effective. If the economy grows, then we can create jobs. WAIT strategies are not PROACTIVE, often cause paralysis, and are not very effective – not in war, not in sports, and not in business.

This is why Washington cannot solve your problems. It cannot keep you employed or find you another job. Regardless of what politicians and pundits say, the government cannot create a job for you. That leaves each one of us to solve our own problems. It’s up to us as individuals to take charge of our own lives.

The ultimate solution WILL NOT come from trying to figure out how to get back to 4-5 percent GDP growth. The ultimate solution to our current economic and personal suffering WILL NOT come as the result of reviving the current Quantitative Revolution - but in starting a new one.

Welcome to the Qualitative Revolution.

Like all revolutions, this one starts with the individual and works from the BOTTOM UP – not the TOP DOWN. TOP DOWN is broken in America – waiting for an edict from the President or Congress or Warren Buffett to show us the way will not save us.  

It’s time for us all to stop whining, stop WAITING, and take control of our own destinies. If you truly love liberty, then now more than ever is the time to use that liberty to create a new life for yourself – one whose quality and standard is defined by you, for you.

NEXT UP: The Qualitative Manifesto