From October 1987: the editors search for the moral lessons of a stock market crash

This was the week when H. Ross Perot, the Texas billionaire whom we might have expected to ride out the Oct. 19 stock market crash with a comfortable cushion, informed us that he had already got out of the market a year ago because he could not understand what was happening in it. It was also the week in which Robert Solow, a professor at the Massachusetts Institute of Technology, received the Nobel Prize in economics, and this amiable person, whom everyone liked at first sight, said plainly that if we did not understand what was holding the market up, we could not be too surprised when it fell. But it fell much further and faster than anyone had ever seen it fall: 508 points, or 22 percent of its total value, in a single day. A week after this cataclysmic drop, the market had recovered approximately 200 of those points, but many commentators expected new lows to be "tested" in the coming weeks—that is, if the historical pattern holds. By the end of this year, supposing that a modicum of stability can be reestablished in the market, we may be able to gauge better the effects of "Black Monday." Even now, it is possible to draw certain common-sense conclusions.

A Permanent Change. On Black Monday itself, those who were on the floor of the New York Stock Exchange did not hesitate to speak of a "crash." John J. Phelan Jr., chairman of the Exchange, uses the term "meltdown," which not only suggests the evaporation of wealth but also recalls, whether Mr. Phelan intends this or not, Chernobyl's poisoned atmosphere and corrosive burns. It was a day no one will ever be able to forget, not unlike those days—to use a personal analogy—of nervous or emotional crisis that ever after mark our lives. We have seen the bottom drop out and do not know but it may happen again, so that we feel ourselves vulnerable, humbled and therefore careful in a new way. The point is, such a change is undeniable and permanent, and those who reassure us that things can be just as they were before, given a few minor adjustments, do not understand what we have been through.
 
The Interconnectedness of the World Economy. During the week of the meltdown, even the most unsophisticated came to appreciate how Tokyo's market tomorrow (in progress "tonight" for us) depended on how New York's had been today. Each day the early morning news immediately filled us in, first on Tokyo/Sydney and then on London/Paris, as if in preview of New York's coming attractions. Ordinary mortals were treated to a kind of global mobility they had heretofore enjoyed only in games of Risk—a comparison not without its point. One chatty news story reported that on the Sunday evening before Black Monday, at an elegant Dallas dinner party (salmon and lamb), one of the guests excused herself and went to the phone to check on the Asian markets and returned to report they were plummeting. This report did not confirm whether Mrs. Thatcher had already finished her lamb or, if not, whether she felt like finishing it.
 
The more serious point is that the functioning of the world economy depends ever more immediately on the financial and economic policies of the United States in curbing its domestic and foreign indebtedness. Conversely, the ability of the U.S. Government to alleviate this crisis depends on the cooperation it can expect from Germany and Japan, to mention the most powerful of the other economic players, in keeping interest rates down. Another way of looking at it: The screams of pain that have been emanating for years from the indebted nations of Latin America, hard pressed by high interest rates in the United States, could finally be heard breaking out on Black Monday from the floor of the New York Stock Exchange. And the remedies that the International Monetary Fund has been urging on "profligate" Latin American economies, including decreased government spending and increased taxes, now must be applied one way or the other here at home.
 
Responsibility. The short answer to the question, "Who is to blame?" is that all of us are. The President, it is true, has not exactly excelled in addressing the problem. In fact, he has run up larger budget deficits than any President before him. But the Congress has acquiesced in this policy, or has been powerless to overcome it. The American people, content that the economy was apparently perking away, at least according to certain indices that obscured the fact that it was perking on borrowed money, went along—lulled by the President's constant if ill-informed assurances that all was well. Black Monday is the "smoking gun" evidence, if any were needed, that all is not well, and we seem finally to have reached the point where discipline and austerity are demanded by the exigencies of the situation. The alternative is to continue playing out to the limit this "I'm OK, you're OK" game, even though we are like those comic-book characters who wear rain barrels instead of clothes when they are broke.
 
The Christian Reaction. There is, of course, no explicit church teaching on the stock market crash. But it is equally clear that the policies decided upon for pulling ourselves out of this crisis will have a content that is profoundly moral. Such was the point ofthe U.S. bishops' letter, "Economic Justice for All." By coincidence, that teaching was reiterated in the week before the crash when the bishops, looking forward to the upcoming political campaigns, issued a statement on "Political Responsibility: Choices for the Future." One of its points is that every economic decision should be judged in light of whether it protects the dignity of human persons, especially the poor; and another is that the U.S. role in the international economy should be evaluated with relation to the poor in the third world. In the present emergency, when the stock market is bouncing up and down over hundreds of points, and the meltdown dissolves billions of dollars overnight, it might be easy to overlook the moral imperative that the economy serve all the people, and especially the poor.
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