Who Will You Blame for the Next Recession?

First, apologies for the long absence. It’s likely to be a very busy next 6 months for both Xander and Erik—we aren’t gone, we aren’t giving up, but we are incredibly busy. Luckily, what we’re up to has serious long-term positive implications for ReConsider, both in terms of resources and reach.

In the meantime, wanted to share a thought.

Bear Market Coming?

Erik, at least, has been predicting a bear market for a long time. If you listen to the podcast, you’ll know I happen to think the next one is a doozy, and Xander sees some structural reasons for concern as well. Certainly I’m not certain of when it will come, and that’s certainly not the point of the article. The point is, the next recession will come.

One of the reasons I’m particularly concerned about the next recession—besides the obvious negative implications for many people in America and around the world—is that American and many other citizens are already quite frustrated, dissatisfied, worried, and feeling insecure. The conventional wisdom is that at the “height” of the business cycle (the good part), people are happy; during a recession, people aren’t. If people feel dissatisfied at the height of the business cycle, what’s going to happen when things turn south?

But enough about my worries. On to you for a quick question.

Who Are You Going to Blame?

Let’s say a recession occurs in the next year. Ask your inner self: who have you already decided to blame? Who are you ready to pounce on, before it’s even happened? Let’s look at a few of the usual suspects:

  • The current president: probably his fault, since recessions come from current policy and I don’t tend to vote his party. We’ve got tax cuts, government shutdown, trade war with China—we can blame all sorts of stuff. No need to think too hard on this one, we can just start tweeting.

  • The former president: actually his fault, as bad policy takes a few years to bear poison fruit. Talking points here include historically-long low interest rates (see: FA Hayek) and inflationary policy such as QE3 that drove a bubble / unhealthy recovery.

  • The government generally: Maybe you’re one of those “just leave the market alone” folks, or one of those “the market will always break itself and we need more regulation” folks, and you can just lament the avoidable yet inevitable economic collapse as due to a systemic misunderstanding of economics or mismatch of incentives at the helm of government.

  • Corporations in general: Maybe they lobbied for something, maybe they are just overly exploitative, or irrational, or exuberant, or not doing their part for the nation, or moving overseas, not creating enough jobs, and the like.

  • Certain misbehaving corporations: When recessions occur, we tend to find some corporations participating in criminal behavior to try to make money. If we look back to 2008, some people blame corporations who got caught doing no good on the way down for the recession itself—without them, things would have probably been fine. You’ll probably find a few such corporations to go after this time, as well.

  • The rich in general: If they had less money, everyone else would have more, and that would kick up consumer spending (see: JM Keynes) and keep the economy afloat. If they didn’t hoard so much, we’d be fine.

  • Speculators in specific: In the housing market, speculators drove a bubble and killed the whole economy in 2008, Like lemmings, they just kept buying without good reason. Whatever market goes first in this next recession, there’s your bad guy.

  • Greed in general: If only people were less greedy, the economy would be great.

  • China and other developing nations: If they didn’t take so many of our jobs and undercut our economy, we would never have had a recession. Let’s double down on that trade war.

  • Immigrants: If we had less immigration, we wouldn’t have an oversupply of labor, and the unemployment rate would plummet to the point that wages go up, letting people save for the natural downturns in the cycle. We need to stop letting everyone in that just shows up.

  • Technology in general: It’s disruptive, and corporations use it to drive down their labor costs at the expense of the American worker. That disruption and displacement burns out the middle class and makes the economy volatile and weak.

Maybe one of those is pre-resonating with you. Maybe a few are, together. Someone’s going to write an article or a book or make a youtube video about each one of the above. You will be able to reach out and pluck some media that is going to 100% confirm what you’ve already decided is the cause of the next recession. You have plenty of opportunities for the world to confirm exactly what you believe, so you can ignore all the datapoints that point in other directions.


Or, you could choose to walk in with “beginner eyes,” and ask, “what drove this? Is the obvious trigger the cause, or just the most immediate starting point? How many factors had to line up to drive this recession? Is it natural or manmade? Is it preventable or inevitable? Was it exacerbated, or perhaps could it have been worse were it not for XYZ? How is it like or not like previous recessions?”

Economists with steady jobs will enjoy studying this with the same morbid fascination that geopolitical analysts study wars. They’ll have a lot of ink to spill. How willing will you be to absorb that ink before you have made up your mind?

1 Comment

Erik Fogg

We do politics, but we don't do the thinking for you.