Recession

A recession is not about gas prices or the cost of corn. Recessions do not pop up overnight, and their greatest effect is not a dip in the gross national product or the per capita income.

Consumer spending droops, causing corporate spending to drop as the think tanks go into survival mode. Governments cut interest rates to encourage spending but ultimately this puts more money into circulation and causes inflation, simultaneously devaluing the currency and slowing the rate at which savings accrue interest. Days get shorter, working parents get more tired, and politicians lose approval ratings.

Technical Foul

In highly industrialized nations, consumer spending is the source of economic activity, and there is the illusion that, if people would just get back to spending, everything would be better. This impression is a lie. Capitalist societies have gone so far as to exist in a state where individuals can actively spend more than they have. Ultimately, the collective bank accounts of the population serve as the hedge fund of an economy, and as the economy sinks, savings shrivel, turn into credit card debt, and eventually there is simply nothing left to spend.

Reducing interest rates encourages corporate spending, which can temporarily boost the job market and keep things afloat. If the economy at large does not pick up, then soon the creditors will eat away at the new, free margins and the downward spiral will continue. The truth is that a recession cannot be magicked away. Such voodoo economic measures as the intentional devaluation of currency, price fixing, or interest rate freezes, help in the short term, if at all, and cause severe backlashes afterwards.

Credit runs short and it becomes harder for people to spend money that they don’t have.

A Moral Defeat

Why do governments deny the inevitability of recession? Recessions are not economic phenomena, they are public relations nightmares. Normally, the government’s PR is handled independently by each and every politician, but when the economy starts slowing down, the very state of the economy rests on the emotional states of the population. Politicians can artificially raise morale with empty promises. The effect is temporary at best, and, if things don’t turn around in a matter of weeks, political statements lose their power.

Moods shift. Radicals become more radical. Hate groups ramp up operations. Liberals start touting about the all-encompassing good of socialism. Conservatives start screaming about the importance of opposing liberals. Recent college grads suffer in silence, and the hard working, iconic, “common man” begins bringing his lunch to work to save a few dollars.

The real trouble is that recessions are caused by people making smart choices. Disturbingly, it is the very act of living within one’s means and saving for a rainy day that extends recessions.

Brave New World

Recessions and depressions are not economic maladies. A recession makes the world grittier, and more real. More people must work for a living, and access to luxuries is restricted. It is the economic hardships of the past that shaped the lives of our grandparents and built the responsible and intensely worldly generations whose culture we are leaving behind. A new era of hardship heralds in a new era of real people, where fewer live lives without trial, and it becomes hard and harder to look condescendingly on those who work for a living.

They are great times because they are hard times. A recession means that nobody can be sheltered for the reality of the struggle for survival, and even the most devout materialists are forced to develop some character.

At the same time, it means that fewer and fewer people can follow their dreams and afford an apartment at the same time. There will be fewer poets, and fewer visionaries, and the gap between the rich and the poor will become more pronounced.

If anyone out there knows how to make a living from writing during a recession, I’d be glad to hear about it.

Photo by ddfreyne