"Bullish on Iceland"
By coincidence, two great articles on Iceland’s economic collapse came out this week. The one by Michael Lewis is funnier and available for free online so it’s been more widely linked, but the one by Ian Parker is more evocative and does more to explain what actually happened. But running through both articles is, I think, a kind of telling shadenfreude at the island’s downfall. It’s nice for us, as Americans, to spend time thinking about Iceland—a country that seemingly screwed the pooch on the great credit boom more than we did.
Nevertheless, when you step back and think about it, though Iceland’s in for some rocky times in the near future, so are we all. And in a lot of ways, Iceland’s pretty well-situated for the future.
At the end of the day, they have a well-educated, healthy population a decent infrastructure and an absence of obvious pressing social problems. It’s a small, quiet, peaceful, orderly country that will suffer through the downturn and take advantage of business opportunities when the global economy revives. The United States is neither small nor quiet nor orderly. You could imagine the hard-fought crime control gains of the 1990s being totally reversed by a years-long recession, and you could imagine that pushing one or more cities into a downward spiral from which there’s little prospect of return.
Speaking of which, there are substantially more people living in Detroit than there are people living in Iceland, and it’s not at all clear—even on the most plausible possible optimistic assumptions about the economy—how their situations are ever going to be turned around. That’s a tale of collapse really worth dwelling on.