Economic Reccessions and the Tragedy of the Commons

[Lemniscate]

The actions of the consumer shape and define an economy. When spending is up, the economy is good, when spending is down, the economy is bad.

 

Economic reccessionary times show the real effects of consumer spending.

 

During a reccession, consumers will save money, fearing that the economy will go further down. This becomes a self fulfilling prophecy as the economy worsens due to lack of spending.

 

It is in the collective best interest of society to spend more in order to avoid a depression.

But it is in an individual's best interest to save, because they cannot be sure whether others will spend. And if they do spend but no one else does, then they are at a disadvantage further down the road.

 

This shows the Tragedy of the Commons, as no one will move to help the economy as an individual, due to uncertainty as to the actions of the collective.

 

Discuss.

[Pikachu]

http://news.yahoo.com/s/ap/20090114/ap_on_re_as/as_china_economy

 

It shall recover in two years, believe me.

[CrabHelmet]

And soon the economy will be so bad that forums will cost money to PLEASE INSERT TWELVE QUARTERS FOR THE NEXT HUNDRED WORDS OF POSTS

[Lemniscate]

*Puts in quarters*

[「tea.leaf」]

http://news.yahoo.com/s/ap/20090114/ap_on_re_as/as_china_economy

 

It shall recover in two years' date=' believe me.

[/quote']

 

Impossible.

 

I say that because there is no way YOU of all people would have any idea what the future holds when not even the most brilliant economists in the world has any real clue.

 

Two years is definitely too brief of a period to expect the economy to recover.

 

I project about three to four, pushing on five if this worsens to the Great.

[Lemniscate]

This is exactly the Tragedy of the Commons.

Confidence is down, so economy is down.

If everyone believed like Pikachu, the economy would have a much better chance.

[Wyhe]

...and so...if we don't want a second Depression, we need to still spend money...but what if we spend all our money & the economy is still getting worse...

[「tea.leaf」]

This is exactly the Tragedy of the Commons.

Confidence is down' date=' so economy is down.

If everyone believed like Pikachu, the economy would have a much better chance.

[/quote']

 

It's not just about confidence.

 

There was no panic precipitating this recession.

 

Things have been going very wrong for a good while now.

 

Make sure you know what you're talking about before you open your mouth.

[Lemniscate]

This is exactly the Tragedy of the Commons.

Confidence is down' date=' so economy is down.

If everyone believed like Pikachu, the economy would have a much better chance.

[/quote']

 

It's not just about confidence.

 

There was no panic precipitating this recession.

 

Things have been going very wrong for a good while now.

 

Make sure you know what you're talking about before you open your mouth.

 

Confidence becomes important after a reccession begins.

First bankers and investors begin the downward movement, but then it goes on to consumers to decide the next move.

[「tea.leaf」]

This is exactly the Tragedy of the Commons.

Confidence is down' date=' so economy is down.

If everyone believed like Pikachu, the economy would have a much better chance.

[/quote']

 

It's not just about confidence.

 

There was no panic precipitating this recession.

 

Things have been going very wrong for a good while now.

 

Make sure you know what you're talking about before you open your mouth.

 

Confidence becomes important after a reccession begins.

First bankers and investors begin the downward movement, but then it goes on to consumers to decide the next move.

 

Consumers are only consumers when they have capital.

 

Consumers only have capital when they are employed.

 

Consumers are only employed when their companies have capital.

 

Consumers' companies only have capital when they are profitable.

 

Right now the entire economic engine is falling apart.

 

It matters nothing how much faith you've got in it; it's malfunctioned and expiring.

[Cin]

Tea Leaf, predictions are from previous recessions.

 

Its a good set of points. In the UK its hardly worth saving....my dad put £10,000 in a Six Month Bond, his interest would have given him.....£94 extra. Of course now he has declared that money he needs to make it disappear before the government rob him of his well deserved Job Seekers Allowance. (He's debating taking an early pension.)

 

Its harder and harder for people to get money, the banks don't want to lend despite huge cash injections, and (UK) employers especially in the car industry and building industry have hacked up working week (Some are working 2 day weeks. Honda shut down for 4 months at the end of work today (they get full pay until the end of March, then 60% the rest of the time)). People can only spend what they have, and the people who want their money back aren't holding back. People don't spend in fear of losing their jobs and having no money.

 

Getting a job is near impossible, too many more experience people out of work. One job I applied for through a recruitment agency had 127 applicants before I applied to it.

[Lemniscate]

This is exactly the Tragedy of the Commons.

Confidence is down' date=' so economy is down.

If everyone believed like Pikachu, the economy would have a much better chance.

[/quote']

 

It's not just about confidence.

 

There was no panic precipitating this recession.

 

Things have been going very wrong for a good while now.

 

Make sure you know what you're talking about before you open your mouth.

 

Confidence becomes important after a reccession begins.

First bankers and investors begin the downward movement, but then it goes on to consumers to decide the next move.

 

Consumers are only consumers when they have capital.

 

Consumers only have capital when they are employed.

 

Consumers are only employed when their companies have capital.

 

Consumers' companies only have capital when they are profitable.

 

Right now the entire economic engine is falling apart.

 

It matters nothing how much faith you've got in it; it's malfunctioned and expiring.

 

If all consumers begin spending, using their capital, they create opportunities to obtain more capital, allowing more spending, and helping the economy. When no one spends, nothing gets better.

Look at FDR's federal works program during the Great Depression. He gave people jobs by having them build roads and bridges, which gave them capital, and confidence, so they went out and spent, and slowly the depression went away.