We could all use a bit of optimism in these tough economic times. In the face of adversity, a positive outlook gives us the strength to fight the good fight. But it's one thing to face challenges with the right attitude and another to insist on optimism no matter what.
I believe that blind optimism, with no regard for actual facts, will only lead us even deeper into our current mess. We can't afford to take a page from Voltaire's Candide, blithely insisting that "all is for the best in the best of all possible worlds," despite the looming presence of harsh reality.
How'd that work out for you?
The belief that everything will work out for the best, without any change or effort on our part, won't serve us well anymore. Neither will short-sightedly ignoring the possibility of trouble on the horizon. We're not being overly negative if we merely acknowledge that we might be facing the mother of all currency crises, or prepare for worst-case scenarios that might arise from economic mishaps or policy blunders.
Remember, blind optimism led people to believe that housing prices would never fall, leading them to ignore the risks posed by exotic loans. And for an entire decade, banks' confidence that all would be well even kept them from paying insurance premiums to the FDIC, falsely confident that the good times would never end.
Falling off the Wagoner
Yesterday's government-mandated ouster of General Motors
During his nine years in charge of GM, the article said Wagoner "never appeared to waver from his determination that GM would reclaim its spot as the unrivaled leader of the auto industry, despite steadily falling sales." Even in the midst of major problems, including three serious restructurings, the article said Wagoner remained stubbornly confident in the company's strength and his own abilities to right the ship.
U.S. automakers should long ago have seen the writing on the wall -- in bright red, 20-foot letters -- as their sales sputtered and rivals such as Toyota
Optimistic? Definitely. True? Hardly.
Get a grip on reality
Such "optimistic" thinking can lead industries to make terrible mistakes as the world passes them by. Look at the recording industry's stubborn insistence on an obsolete business model, ignoring major technology changes and its own customers' growing resentment and anger. That short-sightedness keeps me from even considering an investment in Warner Music Group
Or how about Sony
Yet we still don't seem to have shaken our habit of optimism at any cost. Investors recently became euphoric when Citigroup
Blind optimism is self-deception. People who demand a sunny outlook, even when confronted with plenty of legitimate reasons to worry, are essentially encouraging others not to be intellectually honest. We've had our fun ignoring the real world over the past decade, and now we're paying the price. Facing up to reality is the only way any of us will make true progress in business, investing, or life. I wish I saw more of this practical approach from the government, which seems to be spending money with no regard for its own solvency.
You want real optimism? Try calmly, honestly assessing the situation at hand, and then rolling up your sleeves and working to fix it. This may never be "the best of all possible worlds." But if we tackle our problems honestly and prudently, resisting self-delusion, we might just manage to make it a little better.