alt Hacker NewsI feel uncomfortable the more we celebrate economic 'resilience' Recession avoided. Growth sticks. ~
Jobs remain. I've learned to differentiate survival from renewal.
Surviving is the ability to withstand shocks and not break. Renewing is the ability to rebuild and strengthen so that the next shock is less painful.
Most policies focus on the former. The latter is far more difficult. It is slower and easier to postpone. Protectionism is a classic example. It keeps the numbers stable in the short run but it means there is often less incentive to improve productivity, skills and supply chains. On the surface it all looks fine, but nothing gets better.
A new guide for me is if a policy makes it easier to be static, it is probably not progress. I wonder if others think the same. What signs indicate that renewal is underway? When has buying time worked? What is more important than growth?
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You've reminded me of the forest fire simulator[0], there's a potential second dynamic how reducing the occurrence of negative events might also increase their impact when they do eventually occur
Reduce lightning strikes and increase rate of tree growth, no idea if it applies here as much?
Black swan[1] talks about this and the housing crisis was a significant event, but you can make an argument against this position as well
-[0]: https://www.veritasium.com/simulation5
-[1]: https://en.wikipedia.org/wiki/The_Black_Swan:_The_Impact_of_...
What's more important than growth, to me, is adaptability. An economy that can reallocate people, capital, and ideas quickly will generate growth eventually. One that optimizes for stability alone may look fine for a while, but becomes fragile in ways the headline numbers won't show until it's too late
This is a wider concern. And partly the issue where economies have become very reliant on monetary policy being the controlling mechanism rather than a better mix of monetary and fiscal policy.
The fear now comes in the rock and a hard place issue that is ongoing here, whereby interest rates/monetary policy are arguably still not in restrictive territory enough that if a downturn was to occur, our coping tool is to loosen policy further but that would likely stoke further asset inflation and potentially general inflation compounding other issues.
It's why you get more leaning to the view that it might be necessary to just let things fail as a resetting mechanism, which I'm personally not sure about.