The decade ending today began in a moment of fear. As midnight approached on Dec. 31, 1999, people wondered whether their computers, unable to process Y2K dates, would crash, causing planes to fall out of the sky, elevators to get stuck in their shafts and computer systems to frizz out. But as the world, starting at the International Date Line in the mid-Pacific, moved into the new decade, century and millennium, it became clear there would be no disaster.
Perhaps the billions of dollars in Y2K fixes had paid off; perhaps the precautions had been unnecessary. Whatever. We had lived through a decade of expanding freedoms and economic prosperity and had successfully, it seemed, anticipated and warded off disaster. We had reached the end of history. It seemed like clear and happy sailing ahead.
No such luck. The decade beginning 1-1-00 has been a time of one unanticipated disaster after another. Our powers of prognostication proved paltry. Experience has taught us again and again that there was more to fear than even the most respected experts expected. A decade of unexpected successes has been followed by a decade of unexpected fears.
Start with 2000. For nearly two centuries, it’s been obvious that the winner of a presidential election could be determined by a very small number of popular votes in a single state. But it hadn’t happened since 1876, when the outcome was settled by an appointed commission. But on election night in 2000, the television networks first called Florida for Al Gore, then for George W. Bush, then realized that the margin between the two was only about 1,000 votes out of 6 million cast.
It took 34 days for the issue to be settled, by the U.S. Supreme Court, in a set of decisions so opaque that it took time to figure out that Bush had prevailed. The partisan anger and hatred engendered by the 34-day controversy set the tone for the rest of the decade, even after Bush was re-elected by an unambiguous margin in 2004 and left office in 2009.
But Y2K and the presidential stalemate were mere prologue.
The Decade of Fear really began — unimaginably, traumatically, tragically, indelibly — on Sept. 11, 2001. An agonized nation watched the World Trade Center collapse and the Pentagon smolder. Bush rallied the nation at ground zero on Sept. 14 and in an address before Congress on Sept. 20, and the American military smashed the Taliban in Afghanistan with everything from aerial drones to riflemen on horseback.
In retrospect, it was clear that America had been under attack for some time — the first World Trade Center bombing in 1993, the Khobar Towers bombing in 1996, the blowing up of U.S. embassies in Africa in 1998, the attack on the USS Cole in 2000. But no one had connected the dots.
And, though America has not suffered another 9/11, no one can rule it out. A nation that thought it lived in safety and liked to believe it was loved faced the grim fact that Islamists continue to hate us and seek to inflict as much damage as they can.
The scandal that pinioned the energy-trading firm Enron broke in late 2001 and unfolded in stomach-turning detail through 2002. It eroded confidence in securities markets and sparked passage in 2002 of the Sarbanes-Oxley bill, which appears to have reduced the number of initial public offerings in U.S. stock markets. Both developments contributed to dismal stock market showings through most of the decade.
2003 saw the invasion of Iraq by the United States and 34 allies, approved by wide margins in Congress but opposed by France, Russia and China in the United Nations Security Council. Initial military operations proved more successful than critics predicted, and Saddam Hussein’s brutal regime was ousted from power. But violence flared and spread over the next three years far beyond the predictions of Bush administration strategists, and anti-war feeling in the United States contributed to Democrats’ recapture of Congress in 2006.
Nature had its own arsenal of fear. On Boxing Day 2004, an underwater volcanic explosion set off a tsunami that killed some 250,000 on the shores of the Indian Ocean.
And in August 2005, Hurricane Katrina slammed into the Mississippi Gulf Coast and New Orleans, and broken levees submerged much of a major American city. The U.S. Coast Guard rescued about 20,000 in New Orleans, but the powers of nature proved greater than the powers of man. It soon became obvious that for many years the government — the Army Corps of Engineers, Louisiana, and New Orleans levee authorities — had failed to do what was necessary to protect America’s one below-sea-level city.
In 2006 North Korea exploded its first nuclear bomb, while violence ramped up beyond previous levels in Iraq after the bombing of the Samarra mosque. And behind the scenes, as we now know, Iran was pursuing its own nuclear weapons program. The axis of evil identified by George W. Bush in 2002 was still very much in business.
Through much of this decade, low interest rates and rising house prices allowed consumers to raise cash by refinancing their homes and allowed homebuyers — and speculators — to move upmarket in hopes of making windfall gains. The government policies that encouraged easy mortgages and investments in mortgage-backed securities were based on the assumption that there could never be a nationwide drop in housing values.
Oops. By 2007 it was apparent that there was a housing bubble and that it had burst, with values plummeting in high-growth markets like Las Vegas, Phoenix, Orlando and California’s Inland Empire.
Policymakers were slow to adjust. Democrats and some Republicans in Congress resisted tighter regulation of mortgage securitizers Fannie Mae and Freddie Mac, the Federal Reserve kept interest rates low for too long, and many financial firms doubled down on mortgage-backed securities.
The economy went into recession in December 2007, the National Bureau of Economic Research told us later, and the financial markets soon ran into turmoil. The lead regulators — Federal Reserve Chairman Ben Bernanke, New York Fed President Timothy Geithner and Treasury Secretary Henry Paulson — rescued Bear Stearns in March 2008, put Fannie and Freddie into conservatorship in early September, but then allowed Lehman Brothers to go bankrupt on September 15.
This was a financial crisis the likes of which the nation had not seen since the 1930s, and the nation stood on the precipice of panic.
Bernanke and Paulson went to Congress and asked for a $700 billion TARP fund to bolster financial institutions, arguing that otherwise financial markets might collapse. Congress stumbled but eventually voted for the money on October 3.
Stock values plunged during this financial crisis, lending dried up, and the recession deepened to levels not seen since the early 1980s. Incoming President Barack Obama persuaded a heavily Democratic Congress to pass a $787 billion stimulus package in February 2009, promising that it would hold unemployment to 8 percent.
That promise was not kept: Unemployment topped 10 percent by October. The federal budget deficit, thanks to TARP, the stimulus package and declining revenues, increased to $1.4 billion — 13 percent of the gross domestic product, a figure not seen since the government was spending willy-nilly during World War II.
Amid this economic crisis, the Obama administration sought congressional approval for health care legislation that its experts promised would bend the cost curve downward, and for cap-and-trade legislation to curb carbon dioxide emissions that climate scientists was needed to avert natural disasters fifty years hence.
It was not surprising, perhaps, in light of the experts’ dismal record of anticipating recent crises, that public support for these measures plunged despite the president’s eloquent statements of support. The House passed a cap-and-traded bill in June 2009 and a health care bill in December, and the Senate after some unusual contortions passed its version of health care legislation on Christmas Eve. But critics on both the Left and Right argued plausibly that none of these bills would achieve their predicted ends.
So it has been a decade of fearful surprises for the American people, of natural and man-caused events that have beset us despite the predictions of experts and the reassurances of those in responsible positions in government and out.
In retrospect, we may have been misled because so many of the surprises of the 1990s were happy ones. The end of Communism removed a strong enemy, and the spread of market economics in Eastern Europe, China, India and elsewhere led to unparalleled world economic growth.
Ross Perot in 1992 told us that federal budget deficits would swallow the economy and that NAFTA would suck jobs southward; instead the budget deficit disappeared by the end of the decade and the number of jobs skyrocketed.
Technological advance improved productivity at more-than-historic rates, as Federal Reserve Chairman Alan Greenspan predicted, and then, as the decade ended, Y2K proved to be no problem.
So we may have been primed, on that decade-ago morning of January 1, 2000, to expect that every surprise would be a happy one, and that there were lots of good things in store we didn’t expect. This decade has taught the lesson taught by so much of human history: Many surprises are bad news, and they should often be regarded with fear.
