The Positive Side Of Recession
The Positive Side Of Recession
However, at a certain point, the disconnection between reality and expectation becomes too great, and there is a need for a readjustment.
Recession is that readjustment.
There are two types of recession. Most recessions are “cyclical”. They come around regularly, as reactions to periods when growing confidence gets out of control. Confidence, like fear, breeds on itself – the fact that one is confident makes one more confident – until one becomes detached from all sense of proportion. Sooner or later, there must be a reality check.
Politicians may pretend they can break the “cycle of boom and bust”, but when they try, they postpone the inevitable and make things worse.
It is the same principle as paying for everything on credit. At the time, one feels prosperous. Yet the day will come when one has to repay the debts. The longer one postpones that day, the worse the debts will be and the harder they will be to repay.
A cyclical recession occurs when a whole economy effectively looks at its credit card statement and decides it needs to reduce its outstanding balances a bit.
The more serious class of recessions are “structural”. A structural recession is more than a crisis of confidence. It occurs when a deep, underlying problem in an economy can no longer be denied.
For example, for many years, British industry tolerated lax management and labour practices, in denial about the fact that the British Empire was gone, and its captive markets with it. Sooner or later, British business had to come to terms with the new reality. That realisation was the recession of the early 1980s.
Those who went through that recession remember it as a painful experience. Inefficient industries contracted or were wiped out altogether. Yet, without that wholesale demolition, the foundations could not have been laid for the viable modern economy that developed in Britain in the 1990s.
So both types of recession are sometimes inevitable, often necessary, and usually beneficial, at least in some respects.
That is, however, scant consolation to the individuals and businesses who may be suffering at the time. They do not want to hear that it might be for their own good, and that, just as the economy is overextended, so they, as individuals and as businesses, need to take in their own belts a little.
Recession may in fact be the wake-up call that forces them to take necessary measures that not only preserve them but may turn out to be the making of their fortunes.
Yet for some it comes too late, and no amount of overdue realism can save them from personal or corporate bankruptcy.
Business is Darwinian. Survival of the fittest is cruel, but ultimately it is the best way to allocate limited resources. If a business is terminally inefficient, or operating in a market of decreasing viability, it is better that the money of the investors, the labour of the employees, and the enterprise of the management be deployed elsewhere, where they can do more good.
The “redeployment” process can take years and some may be left behind by it, but, where it is unavoidable, it is best done quickly.
The problem with recession as an agent of that “redeployment” is that is it is a blunt instrument, destroying not only the terminally inefficient but also many businesses that might be viable under other circumstances.
Yet even that gives all who go under the consoling thought that they might be in the minority whose downfall was caused by recession rather than the majority whose weaknesses the recession only exposed.
The Positive Side Of Recession - To learn more about this author, visit Guy Kingston's Website.
Like this article? Share it with your friends
Economies rely on a degree of overconfidence. There is a gap between present realities and future expectations without which there would be no enterprise, no investment, no credit, no commerce, and no currency.
However, at a certain point, the disconnection between reality and expectation becomes too great, and there is a need for a readjustment.
Recession is that readjustment.
There are two types of recession. Most recessions are “cyclical”. They come around regularly, as reactions to periods when growing confidence gets out of control. Confidence, like fear, breeds on itself – the fact that one is confident makes one more confident – until one becomes detached from all sense of proportion. Sooner or later, there must be a reality check.
Politicians may pretend they can break the “cycle of boom and bust”, but when they try, they postpone the inevitable and make things worse.
It is the same principle as paying for everything on credit. At the time, one feels prosperous. Yet the day will come when one has to repay the debts. The longer one postpones that day, the worse the debts will be and the harder they will be to repay.
A cyclical recession occurs when a whole economy effectively looks at its credit card statement and decides it needs to reduce its outstanding balances a bit.
The more serious class of recessions are “structural”. A structural recession is more than a crisis of confidence. It occurs when a deep, underlying problem in an economy can no longer be denied.
For example, for many years, British industry tolerated lax management and labour practices, in denial about the fact that the British Empire was gone, and its captive markets with it. Sooner or later, British business had to come to terms with the new reality. That realisation was the recession of the early 1980s.
Those who went through that recession remember it as a painful experience. Inefficient industries contracted or were wiped out altogether. Yet, without that wholesale demolition, the foundations could not have been laid for the viable modern economy that developed in Britain in the 1990s.
So both types of recession are sometimes inevitable, often necessary, and usually beneficial, at least in some respects.
That is, however, scant consolation to the individuals and businesses who may be suffering at the time. They do not want to hear that it might be for their own good, and that, just as the economy is overextended, so they, as individuals and as businesses, need to take in their own belts a little.
Recession may in fact be the wake-up call that forces them to take necessary measures that not only preserve them but may turn out to be the making of their fortunes.
Yet for some it comes too late, and no amount of overdue realism can save them from personal or corporate bankruptcy.
Business is Darwinian. Survival of the fittest is cruel, but ultimately it is the best way to allocate limited resources. If a business is terminally inefficient, or operating in a market of decreasing viability, it is better that the money of the investors, the labour of the employees, and the enterprise of the management be deployed elsewhere, where they can do more good.
The “redeployment” process can take years and some may be left behind by it, but, where it is unavoidable, it is best done quickly.
The problem with recession as an agent of that “redeployment” is that is it is a blunt instrument, destroying not only the terminally inefficient but also many businesses that might be viable under other circumstances.
Yet even that gives all who go under the consoling thought that they might be in the minority whose downfall was caused by recession rather than the majority whose weaknesses the recession only exposed.
The Positive Side Of Recession - To learn more about this author, visit Guy Kingston's Website.
Like this article? Share it with your friends
 | |
 |
No article feedback found. |
| |
Leave Your Feedback |
 | |
| |||
Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
|||
Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
|||
|
To learn more about the Evan Elite Author Program please contact us. | |||
 | |
|  |
Subscribe to Guy's articles
 | |
|
|  |
 |
|
Guy Kingston Video - Public Relations agents cost too much and do a lousy job? Then do your own PR. In this video, DIY PR expert Martin Tracy from the Framing Workshop shares his experience, skills and advice with Guy Kingston. Essential viewing for every small business owner and entrepreneur.
|
|
|
 | |||||||
|
 | ||
 |
||
 |
||
 |
||
|
| ||
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
 |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
|
 Ideal Client EMPLOYMENT PRACTICES LIABILITY Woman business success Entrepreneurship Or Job? Mental Imagery |
|
 | ||
 |
Top 50 HR Blogs 2009
Top 50 HR Blogs 2009 | |
 |
Top 50 Blogs For Startups
Top Blogs To Watch In 2008 | |
| ||
 | ||||
| ||||
|
| ||||
| ||||
|
|
|
|
|
||||||||||||
|
Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
|
|
|
