Saturday, February 13, 2010

Rethinking Our Response to Recessions

This current recession, particularly the depth of it, has got me thinking...about forest fires. Bear with me.

One method of forest management is to clear the forest floor of dead vegetation, to clear out old growth, and thin out the forest in general. Another approach is to allow the forest to be natural, to accumulate an abundance of vegetation old, young, and dead. In either, forest fires are inevitable. But in the cleaned up forests, the fires tend to be less severe and more manageable, whereas in the forests with a lot of dead vegetation and old growth, the fires are more severe and less manageable.

So, what does this have to with the economy. Well, start by forgetting the use of the word "managed." Because we actually manage this economy too much by trying to preserve its old growth and nearly dead vegetation. Every time we have even a minor economic downturn, we are doing everything in our power to pull ourselves out of it. As someone who needs my job, I get why that is our first instinct. But in doing so, we prop up a lot of bad businesses and business practices and we allow a lot of debts that should be cleared of the books to build up. And it results in a severe economic contraction at some point down the road. Perhaps we should start looking at protecting the tinder in our economy less during downturns and instead start looking encouraging areas of new growth that will be less vulnerable.

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