Pessimism Is Back


During these bright times of financial crisis, Seneca is back

The Roman philosopher Seneca should be the author of the hour. Living in a time of continuous financial and political upheaval under the emperor Nero, Seneca interpreted philosophy as a discipline to keep us calm against a backdrop of continuous danger. His consolation was of the stiffest, darkest sort: “You say: ‘I did not think it would happen.’ Do you think there is anything that will not happen, when you know that it is possible to happen, when you see that it has already happened?” Seneca tried to calm the sense of injustice in his readers by reminding them, in AD 62, that natural and man-made disasters would always be part of their lives, however sophisticated and safe they thought they had become.

If we do not dwell on the risk of sudden calamity, in the markets and otherwise, and end up paying a price for our innocence, it is because reality comprises two cruelly confusing characteristics: on the one hand, continuity and reliability lasting across decades; on the other, unheralded cataclysms. We find ourselves divided between a plausible expectation that tomorrow will be much like today and the possibility that we will meet with an appalling event after which nothing will ever be the same. It is because we have such powerful incentives to neglect the second scenario that Seneca asked us to remember that our fate is forever in the hands of the Goddess of Fortune. This goddess can scatter gifts, and then, with terrifying speed, make a 50-year-old company disappear into a worthless asset, or let a balance sheet be destroyed by an evaporation of demand.

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