Something Wrong

Consumer spending goes down....what is the natural reaction of corporations across the United States? Fire more consumers and cut their own business spending.

When consumer confidence decreases.....create more consumer fear by firing more people and decrease the earnings of other corporations by slashing your own spending. It is a built in negative feedback loop that increases the depth and duration of a recession. It is the symptom of a flaw in the system and a lack of imagination.

The way the system is arranged, you can't blame a corporation for acting in its own short-term financial interests...even though those individual actions poison the entire business environment when viewed holistically. Companies are caught in a Prisoner's Dilemma with their competitors where they must be the first to slash and burn.

What we can blame corporations for are their actions during the "Boom" portion of the "Boom and Bust" cycle. When a recession comes and you must lay off thousands of workers.....chances are that you did not manage your workforce correctly during the good times. When a recession comes and you must slash costs......you were probably not managing your costs appropriately during the good times. If your earnings collapse at the start of a recession.....chances are you did not plan appropriately for a downturn. During the "Boom" its an orgy. During the "Bust" its a bloody massacre. That is not leadership.

Most companies have learned the hard way to develop a good plan for emergency disaster recovery. Similarly, every company should have a good emergency economic preparedness and sustainability plan designed to weather an 18-24 month economic downturn with minimum impact to itself, its employees, and its community. If every company in the United States adopted such an effort I guarantee that it would lessen the depth and duration of a recession to some degree and help everyone.

If corporations are unwilling or unable to work in concert to recession-proof themselves and their workforce then it should be required as a Generally Accepted Accounting Procedure, or encouraged by government.

Every CEO who hopes to sell products or services to someone has a direct interest in not seeing unemployment rise throughout the system.

A commitment to recession-proofing, combined with lean management during the "Boom" part of the cycle would go a long way toward dampening the "Bust" part of the cycle. If you keep inefficiencies out of the the system during the binge times...you have less to purge during the bad.