A downturn wouldn't be a bad thing if we could clean up financial excess without returning to the early 1980sby David Goodhart / November 23, 2008 / Leave a comment
Is it possible that an economic downturn might raise public spirits? I don’t just mean the initial burst of schadenfreude as financiers become the first to lose their jobs and their silly salaries.
Rather, might the excessively gloomy view of the state of Britain, which has been hanging like a fog over the country for a couple of years, come to be seen as a top-of-the-market indulgence? When people do have something serious to be concerned about, the gap between feelings and reality will narrow—and miserabilism might mutate into a more attractive stoicism.
This raises the related issue of whether there could be such a thing as a “good” recession: one that blows away debt culture and financial excess without bringing back early 1980s joblessness. A good recession that makes us see things more clearly—both in our own lives and the outside world. Not so much a hangover as a cleansing.
So what might a good recession look like? Economically, it would require job losses to be concentrated among educated, entrepreneurial bankers who will roll out into the real economy and start new businesses employing the people who once served them in City restaurants. And it would mean all those City mathematicians and natural scientists going off to work in British industry. It would mean the public sector becoming a little less cowed and the private sector, particularly its higher end, a little less proud. (The public sector would grow as a proportion of the economy for a time, but eventually would need its own debt detox.)
Socially and culturally, a good recession would mean a narrowing of income differentials and a rebalancing of status between the business middle class and the public sector middle class. It would cut energy use and make people more open to arguments about constraints on consumption.
Politically, a good recession would make people realise that political institutions matter, and while they might not want to go as far as joining political parties again they would at least turn out to vote. It would mean an end to foreign military adventures. And the fragmenting logic of identity politics—particularly in Scotland—would be replaced by the broader, albeit thinner, certainties of national citizenship backed by the taxpayers’ billions.
So is it possible? Economists shake their heads and say that such a benign fallout is a dream, especially…