Our economy has had its ups and downs in recent months and years. The experts say that we can’t technically have a double-dip recession because of the time that has passed since the official end of the first recession, but in my opinion, we’re not going to enter a double-dip recession because we never got out of the first one.
Definitions are important and valid, but at the end of the day the economy is an idea, and a recession is one shade of our attitude towards this idea, not simply a result of unemployment, debt, an unbalanced budget, and impotent spending.
What’s In Our Heads
If the economy is an idea, then we must believe in the idea for it to be and work. That is not to say that the idea, in this case the economy, does not exist without our belief in it, but that our belief in and about it colors the way the economy affects us and causes us to behave. Just consider the erraticism of the stock market recently and why I contended it’s behaving this way (click here).
For instance, when people believe that the economy is good, they are more inclined to spend. Why not? many figure. Things are looking up; the job market and salaries are rising; others around me are spending; deals are good.
However, when we’re told that we’re in a recession, that unemployment is at record highs, that the stock market is all over the place, that this or that company is not even giving cost-of-living wage increases, we’re inclined to use the phrase “tighten our belts” more often, spend less on credit cards, hedge our bets at work by doing more for the same pay, and generally become more fiscally conservative with our personal budgets.
All of this is fine and natural, but it’s important to remember the power the economy has as an idea on a very personal level. After all, plenty of people don’t have jobs in good economies, too, and opt to spend less for various reasons and feel like things aren’t great from a monetary perspective. When the economy is bad, though, this is just happening to more individuals, and on the aggregate level the perception becomes greater that the economy is bad.
A Booga Booga Booga
Consider the Boogeyman.
Kids are afraid of the Boogeyman not because they’ve seen him and he’s affected their lives in a physical fashion. He doesn’t really come out of their closets or from underneath their beds when parents leave the room. He’s terrifying as an idea because the environment is scary – e.g. it’s dark, noises sound stranger at night, parents aren’t around to protect kids, etc. – and because kids can’t even imagine all of the terrible things he will do to them if he finds them. Thus, kids cry and get upset and run to mommy and daddy. They are reacting to an idea that affects them because they believe that it has power.
In order for the idea of the Boogeyman to work, kids must have faith in it, and the same goes for our economy. In order for it to work, we must have faith in it.
When we allow the aggregate noise of those disappointed with the economy to make us all afraid of its power and badness, we all take the actions and attitude that further cripple the economy. It’s a spiral. We lose faith in the economy’s power to be strong and do right by us, and that’s part of what the economy is: our reaction to it. It has power as an idea.
Stand Up to the Idea
We are in a recession, but for most of us, it’s the idea of the economy rather than a lost job or failed business that keeps us in this recession mindset. Rather than dread the recession and lose faith in the economy, I contend that we need to change our attitude towards it. We need to prize austerity and appreciate the positive effects this environment can have on our fiscal responsibility and understanding of the things we do have.
Consider the Boogeyman again. It is the kid who braves the night alone instead of crying to his parents, believing that the Boogeyman is always on the brink of getting him, who gets more courageous every night, increasingly able to withstand the fears of lurking dread. Let’s stop whining about the horrors of this economy and getting wrapped up in the definitions of a recession.
Now it’s about how we react to this recession that matters.
How have you been reacting – both mentally and practically – to our economic climate?