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Print ArticleARE RECESSIONS GOOD FOR THE ECONOMY?
Again, the very best fast answer is "Yes!" But it just doesn't tell the whole story. The better answer to the potential benefit of recessions is more properly balanced. Recessions are unpleasant proof of the free market economy at work, mopping up excess. In so doing, critical resources (skilled workers, working capital, etc.) become freed up to be deployed more efficiently elsewhere — a cold but true statement. As forest fires act as efficient superintendents for mature forests, a moderate recession will clear the economic underbrush that, left unchecked, would eventually choke the landscape after years of expansion. Each dry season teaches us more and more about the contributing factors at work during these engulfing infernos. Nature has given and she will also take; economies expand and contract. The outcome leaves a more vibrant forest almost anxious to get to the job of regrowth. The fires provide a vital gift to the future, but offer very little to those caught in the conflagration. The need for the fire and the cost of the fire are both great.
The following are some benefits of bad times:
• We are forced to become more locally and globally competitive.
• As teams of people do more with less, greater productivity can be achieved.
• With oil prices at harmful levels, we may be forced to seek alternate fuel sources.
• The subprime mortgage mess and its bad loans will clear out of our credit system.
• Housing, having self-corrected, will return to good form and we'll be better
for it.
• The economy emerges from a recession leaner and more efficient for the next wave of
growth.
BLAST FROM THE PAST: ATTITUDES AND EXPECTATIONS MATTER
In January of 2002 this magazine published an article I wrote called "What If They Had A Recession And Nobody Showed Up?" Six years later, that article is more relevant than ever. It spoke about the emotional and psychological power of the word "recession" and how even we, as knowledgeable business owners, cut our own throats by actually contributing to the dampening consumer confidence and feeding this unpleasant beast. You can weaken the beast with a simple, confidence-inspiring mantra: American consumers love to consume — and they'll be back! Once again, I urge you to block out the one-recession-fits-all hypnosis, tear off your black armband, focus on what you can change within your party of potential and take aggressive steps to locate and leverage the opportunity in your economy.
About the author: Chris Traynor, a senior professional in human resources, is the director and knowledge scout for Whip-Smart Management Consulting LLC., Wayne, N.J., (www.whip-smart.com) and has more than 25 years of experience in the solid surface industry as a consultant to fabricators, distributors, manufacturers and associated firms. He can be reached at ctraynor@whip-smart.com or 973-831-4274.
