[cj]

Stupid question:

Are recessions a healthy part of a normal economic ebb and flow? (Over the long-term)

I suppose an extremely long recession/depression (e.g. 5-10 years) would obviously be bad. But are recessions that last 1-2 years really something to panic over at a macro level?

My (less than informed) assumption is high growth followed by a slight contraction/recession isn’t objectively bad if it helps an economy consolidate and become more efficient during the period of contraction before the next upswing.

[hikingsimulator]

In economic theory, it is seen as a fact of nature -- moreso the evidence of economic cycles of varying lengths.

So in a sense, yes, one could consider it to be healthy -- like an economic animal shedding some fat.

But I wouldn't personally. Recessions have deep cultural, social and political impacts that, if not dealt with properly, lead to long lasting adverse effects: rise of extremisms, lower social mobility, increased intergenerational poverty and so on.

Because of 2008, millenials lost about 5 years of savings, skill accumulation, etc. they will never earn back.

[jonahx]

> Are recessions a healthy part of a normal economic ebb and flow? (Over the long-term)

Ray Dalio discusses this in his video here: https://www.youtube.com/watch?v=PHe0bXAIuk0&t=483s

And basically the answer he gives is "yes".

[rcarr]

I look at recessions as being analogous with a bodybuilding cut cycle. You go through a bulking cycle to build muscle and to do so you consume a calorie surplus. Because it's difficult to tailor your macros precisely, you most likely put on a bit of fat at the same time. So after a period of bulking you undertake a cut cycle, where you burn off all the fat you don't want.

In economic terms, in the bulk cycle there's lots of resources sloshing around so it's easy to start a business, get finance and grow. Then in the cut cycle, the businesses that prove their value remain and we collectively dispense of the ones that don't.

Whilst it is healthy for the overall group, it's not much comfort for the individual humans on the losing end and we should probably do more to help them rebuild their lives afterwards.

[Phurist]

Cringe

[rcarr]

Either state what you dislike about the analogy or simply say nothing and downvote the comment if you dislike it. Statements like this add nothing to the debate, enlighten nobody, and are not welcome on this site which strives to minimise such trolling.

[ramblerman]

It's not a bad analogy. But When your analogy projects an oiled up, banana hammocked, mr olympia in the reader's mind it might detract from the original point.

[rcarr]

I’ll substitute bodybuilder for athlete if it ever crops up in conversation again but it seems like the issue is more to do with personal prejudice against bodybuilders than the actual similarities and differences of the respective economic and biological processes.

[tejohnso]

I share your intuition.

I don't think many people panic about a recession though. Maybe make some adjustments. Panic only comes across from media outlets.

[Xelynega]

The problem with even short recessions is that we should question whether or not we really need actual people to endure actual hardships while worker efficiency continues upwards for the sake of imaginary numbers.

[bratbag]

The demand for the work some of those people were doing only existed because of fantasy estimates of the value of a market.

When that fantasy evaporates, people face hardship.

Worker efficiency makes that more likely, not less.

The real question is if 10 years of fantasy chasing growth followed by a year or two of reality, is better or worse than constant hardship where we never allow the fantasy of chasing growth.

[lp4vn]

It turned out to be a stupid question indeed.

People have not been able to afford rent and food in rich countries to the point of creating social unrests, let alone in poor ones. Unironically check your privilege, man.

[adra]

Your response is unquestionally a bad one. If someone is desperate and on the edge during economic good times, then they're going to fall off the chart when the economy falls over. Don't blame the economy. It isn't the "economy's" job to keep a population fed and content, this is for socialized economic policies to backstop, not some delusion that good times will always be good times any any policy that adjusts against bubbles and inflation are anti-poor.

[lp4vn]

Look, I'm not advocating an attempt to keep the economy perpetually good.

The fact is that we have the world in a terrible economic situation. We have an editorial baffled at the state of the things. And we also have an user saying that in their understanding a depression on the top of the current situation would be "healthy part of a normal economic ebb and flow" and "not objectively bad".

I tried to tell the user in question that a recession right now might not be a problem for people in a good financial condition, but for sure it's an object of concern for the majority of the population who can't pay the bills and the people in charge who will have to deal with the revolt of such population.

[hikingsimulator]

You do not help, either your case or that of the people that do struggle.