Once, in response to a friend lamenting how so much effort and exertion in light bulb experiments had resulted in so little success, Thomas Edison said:
“I have not failed. I’ve just found 10,000 ways that won’t work.”
We have all heard this quote.
Abraham Lincoln, who many would argue to be the greatest president in United States history, was successful because of his previous failure. He failed in business twice, his sweetheart died and he lost eight elections during his political career.
We have all heard this story.
The start of 2016 has been bleak. America bemoans its candidates for the impending presidential election. The Middle East is still in tatters. China’s economy is reportedly coming apart at the seams as its government tries to stay one step ahead of catastrophe. North Korea ran a nuclear test, inciting governments across the globe. But success, as often cited in the opening examples, is repeatedly the fruit of failure. Good can still come of this young year.
Let us use the U.S. economy as a test case to examine if and how the early wrongs of 2016 can be made right. January 2016 is likely to crack the top 10 worst months for stocks since World War II. Stocks are down about 11 percent, a figure similar to September 2008. Though opinions vary, many experts predict that 2016 will be the first recession America has seen since the Great Recession of 2008-09. This story fits right in with the “Eeyore” sentiment that 2016 has catered. But is a recession in the U.S. an inherently bad thing? I propose that it is not.
First, the word “recession” is prone to scare people in the wake of the Financial Crisis of the late 2000s. When people hear “recession,” their minds immediately trigger memories of massive losses in savings, banks failing and government bailouts. 2008 will probably not happen again. The Great Recession was the worst economic shock since the Great Depression. During the 75 or so years in between, the US survived many small-scale recessions. A recession in 2016 will most likely follow a similar, tame trend. The fear of a recession is blown out of proportion because of the proximity of the last financial shock, which was an anomaly. A 2016 recession will look meager in contrast to the prior decade.
Second, a recession is not a bad thing because recessions are natural. Recessions are a normal part of an economic cycle, and while they aren’t always pleasant, the economy has always rebounded, even after the Great Depression (though admittedly that took some time). In addition, the U.S. is due for a recession. While our current seven-year gap in between recessions isn’t inconceivably large, it is a relatively long length of time between recessions. The U.S. is due for a natural dip in the economy.
Finally, we need to fail -- in order to succeed, of course. Failure is a critical part of improving. If one does not fail, what incentive does one have to improve? If one does not fail, how does one know what to fix and what – as Edison so famously said – not to do? The answer is simple: they can’t. Failure leads to new ideas, new innovations and inevitably someone’s success. In order for the U.S. economy to grow and succeed, it must first recede – it must fail.
Commentary is not all gloomy for 2016; some experts expect February to be a great month for stocks. Yet, January of 2016 will not be remembered for its cheer. Rather, it’s a somber dawn for the new year. But January does not have to set the course for the rest of 2016. Success can be borne of the gloom; improvement can conquer failure’s initial thrust. The question for 2016 then is not how can we stop the bleakness, but rather how can we make the most of it?
