Ever since I was in charge of the economics desk of a newspaper in The Netherlands almost 20 years ago, I have been convinced that recessions are substantially a product of fear. There are always objective factors like supply and demand. It is a fact that Greece has borrowed too much money, which the Greeks may never be able to pay back. It is also a fact that certain banks have lent far more money to Greece than is healthy for their own balance sheets. But it is, for instance, also a fact that Greek gross domestic product represents just over 3 percent of the GDP of the European Union. It is just impossible that Greece can take the EU down, let alone the world economy.
And yet it is still very possible that the western world will enter a new painful recession. And if that happens, we will have created that disaster ourselves.
Biologists tell us that our bodies are ruled by a delicate balance between genes pushing for growth and genes pushing for protection. We need mostly growth, reproduction and expansion, but sometimes, in dangerous circumstances, we need to protect ourselves. In such circumstances our bodies automatically close down and move away from the threatening stimulus. Biologists talk about the “flight and fight response.” There is one critical point: We cannot be in the growth and the protection modes at the same time. Once we are in the closed protection mode, our bodies don’t grow anymore. That is why it is so difficult to breed animals in zoos. That is also why it is very important for our long-term health to not be in fearful and stressful situations. Such situations threaten our health because they close down the productive processes in our bodies.
In societies it is not very different. Like cells dance between growth and protection within our bodies, we as individuals interact within society and the economy. So when fear spreads in society, individuals tend to close down. It is very simple: If I keep hearing that a Greek default may cause a new recession, I become fearful and I may decide not to buy the new car I was planning to buy despite the fact that I still have the same amount of savings in my bank account.
Even worse, my neighbor may come to exactly the same decision driven by the same fear. And so we create a recession where none was necessary.
Media play a critical role in this as they bombard society with bad news about Greece and other bad economic numbers and facts. But the good news is that we share more and more news ourselves through social media. And research is showing that we are far more likely to share an uplifting, inspiring, positive story than a doom and gloom story.
And that makes me think that there is a very healthy response possible to the current economic fears. Let’s create a new website: wedontwantarecession.com
I checked the domain is still available.
Let’s share stories about why we continue to live the way we like it best. Why we continue to believe in progress and positive change. Why we choose hope over fear. And, I predict, we may send this looming recession away.
By Jurriaan Kamp
Jurriaan Kamp founded Ode magazine in The Netherlands in 1995 with his wife, Helene de Puy. Before founding Ode, Kamp was an editor, correspondent in South Asia and Chief Economics Editor at the Dutch daily newspaper NRC Handelsblad. He is the author of Small Change: How Fifty Dollars Changes the World and Because People Matter.
Photo: Johnathan Nightingale via Flickr.