Sunday, 25 January 2009

Why the recession could be a good thing (part 2)

In my last post, I gave you reasons why I thought the recession could be a good thing for business in the long run. Now I'll do the same for individuals. Again, I recognise that for a year or three, a lot of people could be hit badly and go through a lot of suffering. But long term....

We will learn to live within our means. I think it'll be many, many years before credit becomes as freely available as it has been for the last couple of decades. This means we'll have to save up before we spend the money, which in turn means we'll think harder before making our purchases. The end of the instant gratification culture, maybe ?

We'll learn the value of money. With less people able to get any form of credit, combined with a long-lasting distrust of banks and increasing worries about online fraud, I see a shift back to a more cash based economy. This will probably happen despite the pressure from politicians and finaincial organisations, who are keen to get everything onto plastic - in both cases because tracking the use of plastic cards gives them information about our spending habits and movements.

The benefit culture will change or end. Those who lose their jobs because of the recession, those who are genuinely unable to work, and the people who keep their jobs but have steeply increased taxes to pay for others' benefits will become increasingly bitter about the types that make not working a career choice and play the system for every penny they can get. It will need a change of government (and government philosophy) but I hope we will move towards a culture where people get benefits because they truly need them, and only after contributing to society. However, I fear that unless we get a government that cares about the ordinary hard-working citizen, we'll end up with a damaging split between a permanent underclass supported by exorbitant taxes on (the few) who work.

With the pound at a lower value and the financial sector wrecked, if we get a government which cares for more than keeping their snouts in the trough, we'll see a move back to "Buy British", with support for UK-based manufacturers and technological innovation. This will create real jobs with real companies which make and sell tangible goods. Britain still leads the world in invention, but we have the opportunity now to use those inventions ourselves rather than just selling the patents off to the highest bidder.

Finally, we will learn to reduce waste. When things break, we'll fix them. When we buy food, we'll eat it rather than throwing 30% of it in the bin unused. This will do more towards saving the planet's ecosystem than any amount of green taxes, and we'll be making the best use of our money at the same time !

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