Balancing corrective criticism and self-worth

In his private dining room earlier this month, the chairman of the New York Stock Exchange was enjoying a moment of leisure. The chicken salad was nearly gone. The waiter had left the two of us alone. And John J. Phelan Jr. was in an expansive and philosophical mood. ``I've never seen so much bearishness,'' he mused. ``I mean, you go to meet people in the Street, you go to dinner parties, and they all [say], `When is the next depression coming? When is the real estate market going to fall out of bed? When is it all coming to an end?'''

``If in fact it does come,'' he noted, ``it'll be the first time in modern history that everybody knew it was coming before it came.''

That was on Friday, Oct. 2. On Monday, Oct. 19, the stock market plummeted. A record-breaking fall on Wall Street wiped away some $500 billion in equity value.

Had Mr. Phelan prophesied that specific calamity? Not according to my notes. But his antennae were certainly on the alert.

Now that the dust is settling from Monday's plunge, the nation is left with a paradox. On one hand, as Phelan's comments make plain, everyone seemed to know that a market correction - maybe even a rout - was in the offing.

On the other hand, the pundits have generally been at a loss to explain last Monday's events.

To be sure, the experts did finger some shortterm causes: new concerns over higher interest rates, doubts about dollar-yen and dollar-mark ratios, worries about a war between the United States and Iran.

And they pointed to longer-term trends as well: increasing market deregulation, ``program trading'' of huge blocks of stock on computer-generated command, fears of an uncontrollable US deficit.

But again and again, in their why-it-all-happened assessments, the word ``psychological'' kept appearing. In the frenzy of selling, we were told, reason was driven into corners. Emotion roared forth. What happened, apparently, defied rational explanation. Fear simply took over.

That explanation makes sense - as far as it goes. In the end, however, it leaves unresolved a major question: fear of what? What is there, in the cultural and social landscape these days, that has set the nation so much on edge?

Some, pointing to government, single out the failure of courage in dealing with the nation's spending. Is Congress capable, they wonder, of tightening its belt and bringing revenues into line with expenditures? Or must every budget-balancing effort degenerate into partisan squabbles? Are there no true statesmen left to rise above the fray and pilot the ship of state back into safer waters?

Others, like Phelan, point to consumerism, debt, and greed. Nowadays, he noted sadly, ``money is in - money is the trendy thing to have.'' In the past, he observed, wealth was but one of many measures of success. ``But in the '80s,'' he concludes, ``it's that quest for the buck that has really been driving everything.''

Those are two powerful fears - especially taken together. After all, you can try to offset future anxiety by present-day prudence. Or you can attempt to justify today's spending by assurances of tomorrow's stability. But what do you do when neither seems secure?

Let me suggest a third, and I think even deeper, source of fear. Literally, what happened last Monday was a vast collapse of worth. Value simply vanished. What happened metaphorically that day was an equally vast manifestation of self-deprecation and self-doubt. It is almost as though the market were registering a long-festering decline in the nation's sense of self-worth.

And why not? A collapsed sense of self-worth threatens the nation on every side. Some of America's most challenging individual problems - teen-age suicide, drug abuse, alcoholism, teen-age pregnancy - have at their root a lack of self-worth. So do some collective problems. Everywhere you turn, it seems, you hear the searching questions: ``Are we losing out to foreign competition? Are our families caving in? Are we failing to educate our young? Have we abandoned our ethics? Are we, in other words, no longer worthy of being called a great nation?''

Serious questions, these. They're not to be answered by glib assertions that all is well. But neither are they to be addressed by refusing to recognize the real worth of the nation's ideals, traditions, and accomplishments.

How to go forward? Interestingly enough, the market itself hints the way. The rally on Tuesday and Wednesday was based on a simple recognition: that there was tremendous worth left in the nation's companies, and that there were still reasons to invest.

Maybe that message will spread. Maybe, sobered by last week's jolt, the country can strike a balance between the need for corrective criticism, on one hand, and the need for genuine appreciation of its own self-worth on the other. There's lots that needs mending, granted. But there's lots of real value left.

A Monday column