Jim Hlavac
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Economic Theory
| Economic Theory |
Recession is nothing more than a reallocation of resources in ways not
planned and in such a manner as to lessen the amount of economic
activity desired, and an increase in the amount of undesired economic
activity. The amount of wealth may actually increase in a recession,
it just goes where people haven't planned. Contracting economic
growth rates are one sign of a recession, but the measurement of this
growth, or lack thereof, is always faulty. Recessions are often used
by politicians to extend certain businesses favors or tax breaks or
other legal help, or to use legal means to impede certain businesses.
During recessions some businesses will always expand, and some
will contract, and the over all effect is nearly impossible to measure.
Recessions are good for politicians, and hence declared often,
because it allows the forces of statism to cry out that government
intervention is required to "save" certain industries. Recessions often
accompany major changes in technology applied in the work place.
As the old technology shrinks or disappears, there is a natural and
measurable contraction in those industries. The new technology,
always more efficient, and hence less costly, is growing -- but they
have no political power because they are too new. It is this point
that politicians use to grab more power. Because it is easy to show
actual businesses shrinking, but almost impossible to show new
businesses and their technology growing. The improvement usually
comes in productivity, which is nearly impossible to measure.
planned and in such a manner as to lessen the amount of economic
activity desired, and an increase in the amount of undesired economic
activity. The amount of wealth may actually increase in a recession,
it just goes where people haven't planned. Contracting economic
growth rates are one sign of a recession, but the measurement of this
growth, or lack thereof, is always faulty. Recessions are often used
by politicians to extend certain businesses favors or tax breaks or
other legal help, or to use legal means to impede certain businesses.
During recessions some businesses will always expand, and some
will contract, and the over all effect is nearly impossible to measure.
Recessions are good for politicians, and hence declared often,
because it allows the forces of statism to cry out that government
intervention is required to "save" certain industries. Recessions often
accompany major changes in technology applied in the work place.
As the old technology shrinks or disappears, there is a natural and
measurable contraction in those industries. The new technology,
always more efficient, and hence less costly, is growing -- but they
have no political power because they are too new. It is this point
that politicians use to grab more power. Because it is easy to show
actual businesses shrinking, but almost impossible to show new
businesses and their technology growing. The improvement usually
comes in productivity, which is nearly impossible to measure.