Note: This is an excerpt from my book, Christians and the Illusion of Control, which will be available soon.
For a very brief time in history, at a specific place in the world, wealth was measured not only by land or money, but also by how many tulips you owned. Tulip bulbs to be exact.
In Amsterdam during the early seventeenth century, a single tulip bulb could go for as much as $50,000 in today’s dollars.1 People borrowed money to get in on the action, and a wide swath of the Dutch people were caught up in the frenzy. No, this was not simply a luxury traded among the wealthy noblemen of the era. Farmers, maidservants, chimney-sweeps - people of every stripe saw the wealth supposedly being created and did all they could to get their piece.
Foreign money poured into Holland, and the prices went up accordingly, as though they were riding a wave. Then the wave crested, and receded, and took along with it the hopes and dreams of countless Dutch people.
In 1637, for reasons which remain elusive, people became nervous (or wise) and began to detach.2 Others took notice, and began to exit the tulip trade as well. Soon a panic ensued. According to an account from that time, “Substantial merchants were reduced to beggary, and many a representative of a noble line saw the fortunes of his house ruined beyond redemption.”3
A rapid rise in prices of tulip bulbs had created the first financial bubble on record. The speed with which the prices rose was topped only by the speed with which they fell. This pattern is seen throughout history and is especially true in America. Large swings in the economy were a regular feature of life in the US during the 1800’s and early 1900’s. The modern world is not immune, having experienced the bursting of bubbles as recently as the Great Financial Crisis of 2008.4
What causes an episode like the Tulip Bubble? And what causes it to be repeated? There are undoubtedly many reasons for any particular episode, but economist John Kenneth Galbraith offers a larger and more general explanation. People were “dangerously captured by belief in their own acumen and intelligence and conveyed this error to others.”5
Mr. Galbraith further asserts that when bubbles occur people avoid the one activity which could help prevent them in the future: self-reflection. Humans have a knack for attributing success to their own skill and any failures or setbacks to the skill of others. It comes easy to us. But what does this say about us? How is it that we so stubbornly see what we want to see?
Christians carry a special burden with this knowledge. We know from Scripture there are forces at work we can’t see. We read that those who worship God must worship in Spirit and in Truth. How elusive Spirit and Truth must be when we have a hard time accepting what is right in front of us?
We know the Spirit of God can’t be seen, but He is not the only thing hiding in plain sight. In the human psyche reside a complex series of processes used to both take in information and to make sense of that information.
These tools work fast, to the point of being automatic much of the time. Mostly, this works well for us. We don’t have to spend much time thinking about two times two, or reading a billboard, or engaging in basic conversation. The shortcuts our brain has developed over our lives allow us to take care of these sorts of things with minimal effort.
When things get complex or uncertain, however, these tools can fail us.
Our minds operate with the idea that the world should make sense. And so we set about making the world make sense. Patterns are seen, inferences are drawn, and lessons are learned. We feel in control.
The problem lies in a basic fact of life which contradicts this feeling - we are not in control, at least not like we think (or hope) we are.
1. John Kenneth Galbraith, Short History of Financial Euphoria, pg 28
2. Ibid, pg 31
3. Ibid, pg 31
4. Ibid, see chapter 5, “The American Tradition”
5. Ibid, pg 49
