Recession is NOT a Bad Word!
Posted on October 14, 2008
Filed Under Bailout Mistake | Leave a Comment
Heresy you say? How could a recession ever be a good thing? Especially given that our government seems to want to bankrupt itself just to prevent one. I will show several specific reasons but in a general sense it helps to focus us on what’s truly important, forces us to become mentally tough in order to survive, encourages us to be innovative and helps us to look beyond our current world view for answers that will prove helpful later in life.
Our modern society has become so accustomed to having a cure for everything and a drug to kill any pain that we don’t realize the value in actually toughing it out through a difficult situation in order to become stronger for the next one. Just as our body uses fever to kill infection and pain sensors to keep us from holding our hand on a hot stove, we need difficult financial, relational and spiritual situations to bring us back into a proper focus. Let me illustrate.
How Can a Forest Fire be Good?
I wasn’t around back then – but history shows that the pre-settler American Indians would use controlled fires to thin the forests of dead and diseased wood – leaving only the largest and heartiest of trees to stand. As Americans began to settle the west they of course needed wood for building and stopped this practice but their sometimes radical clear-cutting infuriated environmentalists who in the 1960’s and 70’s managed to limit both logging practices and influence the forest service to fight the smallest forest fires to protect the trees at all costs.
This proved to be disastrous when in 1988 over a million acres of forest was destroyed in Yellowstone by a combination of many years of protecting the forests from fires (building up dead and diseased wood) and then realizing that was a bad idea so changing the policy to “let it burn” which caused a huge conflagration on the accumulated tinder box.
I contend that the analogy can be made to our current situation – only we have even better hindsight than the forest service had. We can see the excesses that caused the current credit crunch. Instead of allowing that crunch to root out the “dead wood” in this scenario (bad loan decisions, greedy wall-street execs, completely incompetent home buyers) we want to prop up the system so that we can reduce the pain.
Unfortunately, the “pain” cannot be reduced – it can only be postponed and in so doing intensified on the next generation. Unfortunately, in our fast-paced society, we can’t push the pain an entire generation away. Just as in the great depression – as the government tried to prop up wages and pricing to prevent a recession it only served to push the entire country into an economic abyss.
Unfortunately, nobody of consequence and power will read this article – so nothing of import will change.
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