Friday, February 20, 2009

Ten Positives of the Recession

If you watch TV, listen to the radio, or speak to people, you've probably heard why this recession is the "worst since the Great Depression." Not only is that comparison absurd, but there are actually many positives to this difficult time; here are a few.

1) Overall production (which is what really makes us rich/poor) may not actually be down as much as we think:
But when unemployment suddenly rises, as in a recession, people shift from work for pay to household production; people don’t take more leisure time than before.

So if we would measure output to include production at home, we would infer that a recession doesn’t reduce total output by as much as we thought; and perhaps the utility burden of a short recession is not as severe as one might imagine.
2) The evolution of good and bad businesses:
Economic cycles are Darwinian, picking off weak companies and leaving survivors stronger. A year into the recession, solid retailers have their pick of mall space. Respected banks are getting an influx of deposits. Tech companies with money to spend are having an easier time hiring.
3) The influx of skilled workers into other fields:
You may have guessed by now what all this has to do with Wall Street. Like them or not, the men and women who’ve gone into finance in the past 10 or 20 years have certainly been among our best and brightest. They are super-well-educated and work incredibly hard, with intense focus. In economic terms, these people represent a huge stockpile of human capital — and now, some 200,000 or so of them are losing their jobs. Perhaps even more noteworthy, however, are the hundreds of thousands, perhaps millions, of college undergrads and graduate students who had planned to work in finance.
During each recession cycle between 1968 and 2004, the rate of growth in evangelical churches jumped by 50 percent. By comparison, mainline Protestant churches continued their decline during recessions, though a bit more slowly.
5) Governmental belt tightening (it has to happen eventually) may result in less defense spending globally, thereby making everyone safer for cheaper:
we can know with absolute certainty that some governments must be overproviding what is called national defense; otherwise the service would not be needed in the first place. The overprovision is often a significant net loss of efficiency not only in the country "defended" but in other countries its government threatens.
6) It will increase America's relative global status:
the US has become the only remaining super-borrower, able to issue thousands of billions of dollars in debt at record low rates while the dollar strengthens. People are unwilling to lend to almost anybody except for the US Treasury.
7) Recessions can be great times to start good businesses like...
FedEx, Microsoft, CNN, Wikipedia, HP, etc. Pre-existing companies can also make incredible gains in years where the economy is down, like Google, PayPal and Inc.
8) Even though access to health care declines, heath actually increases:
Sure, it's stressful to miss a paycheck, but eliminating the stresses of a job may have some beneficial effects. Perhaps more important, people may take fewer car trips, thus lowering the risk of accidents, and spend less on alcohol and tobacco. They also have more time for exercise and sleep, and tend to choose home cooking over fast food. In a 2003 paper, “Healthy Living in Hard Times,” Christopher J. Ruhm, an economist at the University of North Carolina at Greensboro, found that the death rate falls as unemployment rises. In the United States, he found, a 1 percent increase in the unemployment rate, on average, decreases the death rate by 0.5 percent.
9) It may be good for grandparents:
Doing the annual pilgrimage to South Florida this holiday season, we’ve all been struck by how everywhere seems to be more crowded than usual. Parks, beaches, even stores are jammed. We could barely find a parking space at our favorite park, which is usually empty.

Could it be that with the down economy, people canceled or didn’t book expensive trips like cruises or ski vacations in favor of bunking with grandma and grandpa?
10) Last but not least, maybe God has a purpose for this recession. John Piper thinks so:
1. He intends for this recession to expose hidden sin and so bring us to repentance and cleansing.

2. He intends to wake us up to the constant and desperate condition of the developing world where there is always and only recession of the worst kind.

3. He intends to relocate the roots of our joy in his grace rather than in our goods, in his mercy rather than our money, in his worth rather than our wealth.

4. He intends to advance his saving mission in the world—the spread of the gospel and the growth of his church—precisely at a time when human resources are least able to support it. This is how he guards his glory.

5. He intends for the church to care for its hurting members and to grow in the gift of love.


  1. Good sir, an excellent article with which I agree. Except for point 8. I am currently doing a research study that shows a positive correlation between a falling economy and rising blood sugar and creatinine levels. Simply put, with economic recession comes poorly controlled blood sugars and declining kidney function. Thus, while short term health is better during economic hard times (because of people who can't afford cigarettes and alcohol), people with long term problems such as diabetes, hypertension and heart disease are hitting the "donut hole" in their insurance, losing their provider, eating foods that are cheaper (i.e. higher in fat, carbs, cholesterol and glucose) or simply not buying their medications. Because these aforementioned diseases are long term, their effects might not be seen at all during the recession in a overall health survey. Later in life, however, these problems will lead to increased morbidity in indigent populations with these problems.
    Summary: Your statistic is true but misleading.

  2. Very interesting long term perspective. And your right, it wouldn't show up in the data until after the study is over. Thanks Paul!

  3. Nonchristian Paul11:49 PM

    As a Christian, you probably forget that not everyone sees the same world as you. In fact, I hope I don't shock you when I say that not all would agree that your #10 is a positive.

    Most importantly, your third point of #10. I'm not sure how many people would rather have an ancient spirit's worth than real life money. Besides, shouldn't your god find worth in the most rich? Why can't we all have our cake and eat it, too?

    I'm not sure that your fourth point is that great, either. Get people while they are poor and weak and vulnerable. They will believe anything!

  4. Point well taken NC Paul. But you have to realize, the top of the page is, so everything is going to be from my point of view. I think wealth is good, so I advocate for the free market. I think God is good, so I advocate for his community.

    As for #10, the Bible is pretty clear that God uses hard times to teach his people:

    1 Peter 4:12, 13: Dear friends, do not be surprised at the painful trial you are suffering, as though something strange were happening to you. But rejoice that you participate in the sufferings of Christ, so that you may be overjoyed when his glory is revealed.

    I think God does want us to be wealthy. Man uniquely has the desire to create and invent which alone makes us rich. However we've all seen examples of unhappy wealth, so its logical to think we can have growth through pain.

    As for #4, maybe people think more clearly when hard times bring reality.

  5. Make that 11 positives:

    "Online and offline matchmakers are reporting that dating interest is up, way up., for instance, had its strongest fourth quarter in the last seven years, and brick-and-mortar outfits like Amy Laurent International, a matchmaking service with outposts in New York, Los Angeles and Miami, say business is up 40 percent among women over the last four months. Those in the online dating industry say the increased traffic can be explained by at least a few factors: unemployed and underemployed people have more time on their hands to surf the Web, and online dating is a relatively inexpensive way to meet people. Offline matchmakers add that organized dating events are cheaper than financing a series of potentially stultifying meals with blind dates. And some experts say singles seek the comfort of relationships during difficult times."


You are the reason why I do not write privately. I would love to hear your thoughts, whether you agree or not.