MISSOURI WATCH: CAN IT REALLY BE LOVERLY?

In the musical comedy of choice of many in my generation, "My Fair Lady," a street gang in possession of good singing voices but little else harmonizes in cockney English, "Wouldn't it be loverly?" Probably just about everyone, English or American, poor or rich, old or young, pines fairly often for what is loverly or, grammatically speaking, lovely.

Just now, many seem to be getting it. The statistical artifacts -- reported numbers on everything from reported income to investment returns -- suggest as much. Pardon the trite phrase, but prosperity seems to "abound."

The economic prosperity of the 1990s (or, as some partisans would have it, the Clinton prosperity -- lucky man!) continues virtually uninterrupted. The U.S. government data for "economic indicators" have seldom appeared better. Unemployment is down. Inflation remains under control. Wonder of wonders, the federal budget deficit keeps shrinking and with a little abracadabra is headed for zero in a few years.

Likewise, the State of Missouri has just ended its fiscal year with a 7.3 percent gain in revenue, a figure that wasn't even approached in the late 1980s, and the increase is a direct reflection on how residents in the Show-Me State are faring today.

A similar glow shows up on the world scene. A Brazilian economist, Antonio Sartori, was quoted the other day as saying, "We are in a new morning in agriculture around the world." In keeping with that rosy outlook, U.S. farm product exports are holding up well this year, edging only a little below 1996. Within our state's largest industry, gains in livestock will almost offset reductions in crops, and direct government payments will be as large as in recent years, even in an era is which Uncle Sam is said to be abstaining from deep involvement in the economy.

Nor should we forget the Dow-Jones. Those hyphenated words should be a reminder that the index of stock market values keeps climbing toward an Everest peak, scarcely, and sometimes seemingly not at all, related to earnings.

It seems almost disloyal to see clouds when the sun is shining so brightly. And, in fact, there is no convincing analytical base for doing so. The only defensible ground for skepticism, and for flashing warning lights, lies in the historical record, and in an invariable distinguishing trait of market capitalism: its built-in cyclicality.

That ground, however, is rock solid. It appears especially so to those of us who lived through a near national cataclysm, the frightful and numbing depression of the early 1930s. The remembrance of those times, however, is not sufficient in itself to provide wisdom that others do not possess, an observation meant to assuage the sometimes bitter remarks of those who were very young or even unborn before World War II.

Depression children or not, we can all recognize that the big, overwhelming merit of market capitalism lies in its productivity. It develops technology and exploits resources more effectively than any other system can do. It works especially well when most participants are literate and competent and actively a part of it.

Our economic system, however, has its flaws. One is that it distributes income unevenly. Those already possessed of wealth are in the best position to add to it. This can continue until it becomes top heavy and breaks down of its own weight. The correction that follows is invariably painful.

A second feature of market capitalism is similar, and in fact somewhat related to uneven income distribution. The system is notorious for cyclicality. It seems as though all economic variables swing up and down, and some historians have even attempted to prove that the cycles move on fairly predictable schedules. Such observations no doubt prompted such past observers as our own Harry Truman and Great Britain's Winston Churchill to emphasize the importance of not only studying history but heeding it as well.

If today's stock market seems only to swing upward to ever higher, not to mention astonishing, levels, we need remind ourselves of some historic drops that have occurred before this decade, even when the economy was seen as emerging and strong. If readers are tempted to believe that commodities, whether stock certificates or hog bellies, can only travel north, then take a look at the farm commodity markets that register not only ups but numerous downs within a growing season.

Consumers too behave cyclically. They spend freely, then turn frugal and save more or maybe the other way around.

Likewise, an investment cycle is obvious. Vicious cyclicality can show up in the stock market, sometimes without hint of its growing presence. And draped over all other up-and-down movements, like a tent, is the business cycle. And this is the cycle that hits Main Street Missouri and America.

Grandly conceived governmental projects, whether in the District of Columbia or Missouri 's Cole County, are not always wise public policy even in the best of times. Elected officials in Jefferson City can dream great dreams and build grandiose monuments to their terms in office, but these visions can turn nightmarish after even slight downturns in state revenue and total disasters in the event of severe economic times. We would do well to remember this, even when the Dows and Joneses are batting nearly 8,000.

It's great, even exhilarating, to feel confident about the future. It's preferable and wiser to be sanguine about the instability that marks our kind of economy. Indeed, wouldn't it be loverly if all systems were to stay on GO!?

Wouldn't it be even better to admit, realistically, that they won't?

~Jack Stapleton of Kennett is the editor of Missouri News & Editorial Service.