Thursday, August 06, 2009

Diary: Getting On With Recession

Recession seems to be booming. Just the roles are reversed: the naysayers are saying that the state of affairs is going to continue and the more bullish ones are saying that the end is around the corner. We are battling the despair with hope, denials with dreams. Things were never better than this, we were never more optimistic - just that no one wants to spend, unless someone has other people's money.



Like the government. Today the Bank of England Monetary Policy committee will meet to discuss whether to continue monetary easing, which means to supply more money in the economy. Basically to boost up demand, which seems to be failing to pick up despite all efforts. One can indeed say that overall statistics is looking slightly better now than it was at the beginning of the year, but that was because all governments together pumped an enormous amount of money to keep the things together. Or keep the things going as usual. So, now, what we see in statistics may not be normal or real, but some one's heart beat on life support. So, even the Bank of England's apex committee does not know, or at least does not agree upon, whether the economy still needs the support or not. The objective will be to return to business as usual as soon as possible, and they don't want an inflationary run to ruin the celebrations.



The problem, in my eyes, is this great desire to return to business as usual. The business as usual has got us here and it will bring us here again, in future. But we seek equilibrium all the time and even when it is not good, we seek to get back home. And, this seeking equilibrium is possibly the key reason why we see this repetitiveness in history, we keep making the same mistakes again, and again, and again. This is not to say we did not progress, but it seems that progress is what the natural flow points to, but our seeking equilibrium pulls us back in terrible crisis, bloodshed and yes, periodic recessions.



I was also wondering why we seek equilibrium, and the root lies in each one of us. Because we are inherently uncomfortable with the idea of progress, because all progress must deal with some unknown. And we hate unknown. We started agriculture thousands of years back and built homes, to keep the unknown and the unfamiliar out: we wanted to have a familiar cycle of day and night, of birth, growth and death, of ideas. The journey from planting of those first seeds to today's office goers may have been torturous, but linear; it is a continuous saga of our fear of progress and our incessant search for business as usual.



I have known people who have lost their jobs for this recession. At one hand, you celebrate the free market economic theory of recessions as the necessary spring cleaning of capitalism, of getting rid of the inefficient and the weak, and the advent of the new and the innovative; on the other hand, we see the terrible social cost that we must pay, and the human tragedies, because we are not as flexible as the world needs us to be. Yes, possibly we would have been both more realistic and more successful if we could pathologically accept the inherent ups and downs of life, if we were ready to move from mansions to hoovervilles anytime required, if we were okay to mop the floors the day after losing the job as an executive director. But the idea is Utopian, and till the day we live as personal wealth = personal worth, this is never going to happen.



But I know this recession is significant, a watershed event, and this will leave its imprint on a whole generation. We shall soon see its movies, literature and philosophy, and it will hopefully lead us to new thinking about history and economics. And, someday, a recession, may be more catastrophic, will rid us of our habits of seeking business-as-usual, and push us on the path of unbridled progress.

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