With talk of recession in the UK and US, the outspoken chairman of Ryanair, Michael O Leary, recently suggested that recessions actually have many advantages. His argument was that recessions encouraged greater efficiency and forced inefficient firms out of busines. In this essay “Is a recession a good thing?”, I argue that broadly speaking he is wrong; recessions tend to undermine economies and create unnecessary unemployment.
Nevertheless are there some people who benefit from a recession.
- People producing inferior goods like Tesco value bread and Buses. Demand for these goods may rise in a recession.
- Pubs and Betting shops. It is alleged that in a recession people like to drown their sorrows and bet on winning a few pounds. I don’t know how true this is; to be honest is sounds like an old wives tale.
- Economists. Everyone wants to ask economists why we are in a recession and how to get out of a recession. Generally speaking economists are very good at answering the first question.