Best columns: Business
What’s so bad about a recession?
Even Federal Reserve Chairman Ben Bernanke is now acknowledging we’re heading into a recession, said Lawrence Kudlow in RealClearPolitics.com. This naturally has sparked even more hysterical calls for bailouts, more regulation, and other forms of federal intervention. But before we lose our heads, it’s worth noting that recessions are neither rare nor apocalyptic. The economy has undergone 10 recessions since 1947, with an average duration of less than a year—10 months, to be exact. The most recent two recessions, in 1990–91 and 2000–01, were even shorter, each lasting only eight months. Yet as brief as most of them are, “recessions are therapeutic.” They cleanse the economy of built-up excesses and bring sky-high asset prices back to earth. That’s what’s happening now, as overextended lenders go out of business, borrowers file for bankruptcy, and real estate prices descend from the stratosphere. All of these are healthy developments and “create the foundations for the next recovery.” Still, there is cause for concern. With corporate profits down, some companies are laying off workers. Sorry, Democrats, but the best way for Washington to prevent more layoffs is to cut corporate tax rates, which helps businesses prosper and grow, not to try micromanaging the economy. If Washington wants to help in these recessionary times, the best thing it can do is get out of the way.