It is not that this recession was bank led – that has happened before. It is not the speed of the decline – compared with some recessions, this one has been well signposted, with the original sub-prime issues first becoming clear in the early summer of last year.
Nor is it the degree of government intervention – the Depression of the 1930s was characterised by much greater levels of state aid, from Roosevelt’s dam-building to Hitler’s autobahns.
The thing that makes this downturn unique is the way in which some ordinary businesses have addressed it. After almost a decade of strong growth, many had perhaps begun to believe that the days of boom and bust were truly over, as our then-Chancellor famously stated.
But we learnt that they were not. And perhaps the next lesson to learn is that they never will be. Economic cycles are driven by human beings and human beings are creatures of oscillation. We have ups and downs: we can be confident to the point of arrogance and then insecure to the point of depression.
These variations in our nature – amplified by the fact that we are herd animals and take our cue from those around us – cause the ups and downs in our economy. And it is likely that they always will.
Knowing this and not ignoring it may perhaps help us deal better with the seven fat years and seven lean years that will always shape our future. Because the real harm in any recession is the amount of structural damage that is caused and that need not be.
And that is where I have been impressed with some of the innovative ways in which businesses and individuals have been dealing with this recession compared with previous downturns. The usual pattern in such times is that we cut jobs, knowing full well that we will need to be hiring again in two years.
So we pay redundancy costs one year and recruitment fees the next. We lose skills one year only to invest in training the next. Businesses go bust and value is destroyed only for someone to come along and buy the assets cheaply and build the business back up again. It is all unnecessarily wasteful.
But in this recession we are seeing many businesses learning that lesson. Many have offered their skilled staff sabbaticals, to lose capacity without losing skills. In some cases people have offered to take pay cuts to reduce costs but not lose the headcount that will be required when things improve.
There are many other examples of businesses and people doing all they can to minimise the structural damage caused by this recession. It is cyclical; it will end, and we need to make sure that as much as possible is left standing for when the next, inevitable, boom begins.