Most of us take a pretty simple and straightforward view of economic conditions: expansions are good and recessions are bad. But the reality is more complicated. More than 300 years of capitalism have taught us a few things. One of them is that recessions are a normal part of the business cycle. You have winter and summer in the natural year, and you have recessions and expansions in the economic cycle. In expansions, both businesses and individuals tend to get a little bit lazy. If something worked last year, we are ready to try the same thing this year. Banks get careless making loans, because in good times almost all loans are likely to get repaid. But bad times often bring out the best in people. People have to be smarter and come up with new ideas. Workers who have lost their jobs may try to start a business. Or, as we can see from this story in the BBC, people try to invent things.

(Dr. Benny Peiser)