The Four Questions Q1: What causes Americans to never give up even when the market crashes?
As a whole, Americans are risk takers.
From the early days of the United States (U.S.) colonies the settlers came from various places within Europe. And they came for various reasons: to increase wealth, broaden influence over world affairs, freedom of religion, and hope for a better life. They came with very little and risked everything for the chance of prosperity. The trip was long and hard and there was no turning back. Hence, the early colonists were risk takers and, that culture was the catalyst for the American Revolution.
I recall reading something in George Washington’s (the Commanding General of the Continental Army and first U.S. President) memoirs that said something to the affect that when accepting the commanding role of the Continental Army from the Continental Congress (speaking to the Congress), “You understand that the likelihood of us winning this war with a bunch of militia (mostly farmers) is unlikely, and when we lose, the King will cut our heads off and stake them at the gates for everyone to see so they understand never again to defy the King”. As you can see Americans have been taking risk for as long as the U.S. has existed, and that mindset continues today.
Everything about the U.S. encourages risk.
The bankruptcy laws allow a fresh start almost as many times as one can think. The U.S. tax rules encourage risk by providing for tax breaks by allowing losses to reduce a person’s tax liability. Children are taught at an early age to not fear failure, and if you want something you have to work hard and go after it. We Americans have a saying, “You are only a failure if you don’t try”. There was once an article in a New York business publication that had statistics reflecting that most successful business people failed seven times before finding success. Some of the most famous Americans contribute their failures to their success: Michael Jordan, Robert De Niro, and many others. They will tell you their failures taught them what not to do and what to do the next time.
The U.S. financial system also encourages risk. The greater the risk the greater the reward. Hence, the U.S. is a culture of risk. But that does not stop Americans from looking at what failed, and from those failures what did not work and what did work. This attitude of learning from mistakes and them moving forward is what helps the U.S. economy get back on track after a market crash and recover quickly from a bad economy. Americans never give up. They brush off the dust of failure and move forward looking for the next opportunity and how to exploit it. It’s called capitalism.
Capitalism is the American Way
Capitalism is what provides freedom, prosperity and hope for a better life. Capitalism has been the American way and culture from its earliest beginnings.