The Economist: The economics of perseverance
Thomas Carlyle saw perseverance as the secret to a successful life. He wrote, “The tendency to persevere, to persist in spite of all hindrances, discouragements and impossibilities – it is this in all things that distinguishes the strong soul from the weak.” While this certainly rings true in light of two summers of Colorado wildfires and the slow recovery from The Great Recession, it also represents a somewhat countervailing perspective to economists.
As an applied economist, I get paid to forecast the future based on observable data and trends. I gave my first paid presentation as a young 20-something to business owners in a small Colorado community with a declining downtown. They were applying for a government grant and the firm I worked for was hired to assess the market feasibility of revitalizing the city center. This downtown, like so many, barely survived decades of decline as automobiles allowed people to find better values shopping in more distant districts. Revitalization was a tall order and I concluded the government should invest scarce resources elsewhere.
It’s certainly more fun when objective economic conclusions affirm what the product developers, entrepreneurs or city leaders believe in their guts to be the case. They have vision, and with capital they know success can follow. And sometimes it does, regardless of what economists conclude, thanks to perseverance.
So what really determines the future of a new product or project? Every banker knows that less debt helps projects endure hard times. Startup strategists argue for lower upfront fixed investment costs until the market is proven. Most marketers argue for quality implementation over detailed planning. While these are all important considerations, the stamina to persist against all odds could well be the key ingredient, especially important when there is a fundamental paradigm shift due to innovation or other overwhelming forces.
Last month my wife and I stumbled across Seligman, Ariz. – off I-40 along old Route 66. Our not-so-smart phone said there was an A&W there and a root beer float sounded great on a hot day. After driving into Seligman, we discovered the A&W was really Delgadillo’s Drive-In in the midst of a mini-tourist haven. How could a small town on an abandoned road with a population of fewer than 500 be thriving? I wish I could say that as an economist I was compelled to discover the answer. But the truth is I needed a haircut, and there was a quaint, old barbershop. That’s where we met Angel Delgadillo, who this summer celebrates his 66th year as a barber on Route 66. As Angel tells the story, his parents crossed the desert from Mexico in the early 1920s and settled in Seligman. His dad persevered during the Great Depression, working numerous jobs to raise his large family. Eventually Angel’s dad settled into the barber business after investing $200 in the fanciest barber’s chair of the time – when haircuts were 25 cents a pop.
As Angel cut my hair in his dad’s old chair, he took me back to 1977, when I-40 was completed and no traffic came through Seligman. After spending 10 years watching his town die, Angel got together with the remaining few and incorporated the Historic Route 66 Association of Arizona. Their letter to the state government requesting official designation failed to garner even a bureaucratic “no thanks.” Angel persisted and eventually got the official designation, making Route 66 the most famous highway in America. Today many small towns along Route 66 have sufficient traffic to keep them alive, albeit a fraction of the economy experienced in their heyday. While Angel cut my hair, tourists from all over the world stopped in to take pictures and enjoy a piece of Americana.
Economists are good at noting trends and forecasting possibilities, but we often forget the reality of perseverance. If we can study and document more esoteric topics, perhaps we should also study the economics of other character traits, such as determination. One might argue that America is the story of persistence – whether through immigration success stories, westward-moving homesteaders, entrepreneurs, or the poor working and educating themselves out of poverty, one generation at a time. It’s probably time to listen less to economists and more to our gut instincts for survival and self-improvement.