Tulsa World: Deep economic downturns just natural cycle

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Deep economic downturns just natural cycle

By DR. R. HENRY MIGLIORE Business Viewpoint
Published: 12/4/2008 2:27 AM
Last Modified: 12/4/2008 4:48 AM

There may be no worse idea at the wrong time in our nation's economic history than the notion of bailouts for the financial and automobile industries.

Doing this is like putting a Band-Aid on a severed artery. It means more of the same. The CEOs keep their bonuses. The boards of directors keep snoozing at the wheel.

This country needs a cleansing. There are bad companies with bad management that have bad products and services that need to go bankrupt.

I don't believe a comprehensive "fix" can be accomplished in 12 to 14 months. We likely are looking at a five- to 14-year turnaround.

The world economic situation is part of the natural rhythmic cycle. This is how nature works; the caribou herd migrates, and geese go south for the winter. Man's economic system back to the 12th century follows a pattern.

Nikolai Kondratieff, a Russian economist who died in 1938, picked up on this and created a theory about regular "waves," or ups and downs.

Looking at history, there have been nine depressions — spaced about 60 years apart — since the 16th century. The waves in the United States have been 57, 54, and 53 years apart with the depressions of 1836-43, 1893-97, and 1929-42, according to a recent report in The Wall Street Journal.

So, here we are 66 years later with the predictable economic crisis — yet one that few economists or political advisers have spoken about as a cyclic phenomenon.

President-elect Barack Obama has the rare opportunity to get the United States back on track. Part of what he needs to do is focus on the long term.

With our nation in its 238th year and Canada at 187 years, we are very low on the learning curve. China and Italy have existed for thousands of years. These societies and others have adapted to change and become stronger world powers.

The Soviet Union broke up. Now Russia is emerging again as an economic and military power. I have worked as a consultant and visiting professor in China and Russia. People there are bright, calculating and have a mindset to look at the future.

Our North American mindset, in contrast, has been short-term, with the thought to only what's just around the corner.

Another issue facing the new administration is the danger of losing our moral compass. The United States has been drifting off the course of the founding fathers. At one time the Roman and British empires ruled the world. Moral decline, far-reaching imperialism and attempted excessive economic expansion brought both to their knees.

Along with our continuing economic troubles, the U.S. faces other challenges. We are involved in a costly, long-term military commitment. The Iraq and Afghanistan conflicts seem destined to go on for decades. And, we have no well-thought-out energy policy.

The recession actually may be a good thing. At the time our forefathers established the United States, free enterprise was simple: If you won't work and contribute, you don't eat. Families took care of each other. Now, we expect the government to take care of everything from birth to the grave.

A return to some of those basics would not hurt.

R. Henry Migliore is president of Managing for Success, an international consulting company. He also has held positions at Northeastern State University/Oklahoma State University-Tulsa and the Oral Roberts University School of Business.

The views expressed here are those of the author and not the Tulsa World. To inquire about writing a Business Viewpoint column, e-mail a short outline of the article to Business Editor John Stancavage at john.stancavage@tulsaworld.com. The column should focus on a business trend or outlook, or discuss other topics of interest. Articles should not promote the writer's business or be overly political in nature.

By DR. R. HENRY MIGLIORE Business Viewpoint

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