The relationship between optimism, pessimism and the economic downturn is a fascinating one.  I’ve blogged before about how some American thinkers have tried to blame the recession on a surplus of optimism, untempered by the sense of realism that pessimism brings.  But it now seems that too much pessimism is bad for you too.  In fact, increasingly, the US is positively – or should that be negatively? – drowning in it.

A recent article in the business section of the Wall Street Journal warns that a polarised and pessimistic US is a big threat.  Hardly a major insight.  What is informative, however, are the reasons why US economic pessimism is on the increase.  Two reasons are suggested:

“The big question is why have Americans become so pessimistic? The most striking explanation is political polarisation. Many Americans at both ends of the spectrum are actually hoping for a double dip, since this will discredit the Obama administration … Another reason for US pessimism is that national prosperity is dependent on the world economy as never before, and acknowledging this is proving traumatic.”

National party politics and American stress due to globalisation – not much we can do about either of these, is there?  Go here to read the perspective of British journal Mark Mardell.  If you want to get a taste of how sharply divisive all this is, take a read at the hundreds of comments.

Or maybe not.  Reading the might make you, well, pessimistic…

Whatever, it seems that from the far side of the Atlantic, we’re not done with (the) depression yet.

Image credit: Beverly & Pack.

It’s not often one gets to say it but… I feel sorry for the Germans.  Why should they have to pay up billions because the Greeks want to retire at 53 and get paid extra for arriving at work on time?

I’ve listened to and read some pretty intricate analyses of how the Greeks got themselves into this mess and whether their contagion risk will spread to the UK.  I’ve learned new phrases like junk bonds and austerity measures.  Cool!  There’s a fairly good explanation of the whole thing in Q&A terms here.

I’d like to put past you my take on it and hear what you all think.  Now I’m not an economist but I’ll try my best.  Here goes.

Greece was spending more than it made.  That’s it really.

Greece is like a dude who is earning ten grand a year, spending twelve, and making up the rest on his credit card.  This can’t go on indefinitely; somewhere down the line he’ll go bust.  Then he’ll have three options.  Borrow.  Cut his spending down to his earnings.  Increase his earnings.

Greece has to do all three.  Unfortunately, in this story, Germany is like the dude’s responsible, high-achieving brother who has to bail the loser out.  One-for-all, and all that.

I wrote a blog early last year called Cutting the Crap of Recession-Speak (Part 1).  In it, I argued that what is good for individuals is good also for nations.  Save.  Don’t spend more than you earn.  Don’t borrow more to pay off debt.  Yes, there are short-term exceptions to these rules, but in the main they are sound.  It’s not rocket-science.  Or brain-surgery.

Here’s my prediction.  The UK will follow Greece unless we cut public spending way beyond mere efficiency savings, clear our debts quickly and forever, and lay long-term plans to encourage entrepreneurship like never before.  We need to discover the virtue of profit and a free-market customer service attitude.

Otherwise, this is one Greek tragedy in which we will find ourselves unwilling actors.

Image credit: Lawrie Cate.

I spoke last week to a teacher whose husband’s employer was dealing with the recession by avoiding making excess stock, but taking real stock of staff training needs and using the down time to cater for them.  At a time when training budgets are being cut along with everything else, I was dead impressed at the far-thinking of an owner killing two birds with one stone, as it were, by developing his existing staff at the same time as keep unnecessary production down.  But, how else can businesses survive?

So, how else can businesses survive?

Watching Alone in the Wild a few weeks ago, I wondering how Northern Ireland organisations are coping when stripped of all our usual comforts.

The premise of the documentary:

In this remarkable documentary, Ed Wardle is dropped into the unforgiving Yukon wilderness with just basic provisions and cameras to film himself as he attempts to survive completely alone in the wild.

Find a Safe Place to Camp

What part of your business is working?  Which product is selling best?  Which market is requesting what?  Which customers are remaining loyal?  Stick with that.  To rework an old saying, if it’s not broke, now’s not the time to fix it.  Avoid experimenting with new products or new markets.  This is not a time for market expansion

For those of you who are self-employed, this may mean working for someone else for a short period, until you feel things are straightening out.  The bottom line for many of us is a regular income to cover costs and wages.  Just now, you need one less thing to worry about.

Ration Your Provisions

Ever wondered how long the stock will last?  Or, how long the staff will continue to get paid before you have to make redundancies?

• Watch those figures like you were McGyver defusing a bomb.  Ensure you receive more regular updates from your Financial Person.
• Ditch costs that are window-dressing.  Reduce costs that are unavoidable.  Are the new cars and furniture essential this quarter?  You may find that you continue this prudent mantra well into your recovery period!
• Decide now, who would have to go.  Have a plan in place, if the bottom falls out of the boat.  Don’t be taken by surprise.  Some employers have little finesse when it comes to redundancy; make sure your staff leave on as good terms as possible, with all legal and contractual requirements adhered to.

Explore the Territory

Don’t just sit there and stew in your fear.  Start exploring.  What a great opportunity to conduct market research for your next product or a new foray into a different market!  If your staff have time on their hands, make them productive.  Get ahead of the competition by becoming aware of the mood out there and continue to monitor even as you put new plans in place.

Oh, and by the way, this is something that should be conducted on a regular basis anyway.  Now, you have more time to dedicate to not only collecting information but analysing it in a meaningful way and applying any wisdom gained to your procedures and plans.

Start a Fire

By now, almost all the basics are in place, so you need to start a fire.  Comfort or action?  Only you can decide when to start a fire that will catch hold of your customers and consume the attention of new ones.  Get the business news on an RSS reader and watch your competitors too.

Perhaps even experiment, but without putting the entire Camp at risk.

Don’t Be Afraid of the Bears

Ed Wardle, the hero of the series, developed a paranoid fear of bears.  So did I, at the thought of being strung up in a hammock, covered in animal blood from gutting earlier in the day, waiting for bears to come exploring.  It was tense to watch!

That said, I’m heading alot of bear growls just now.  Negative thinking, depressive attitudes, overwhelming put-downs, discouraging talk.  For alot of small business owners in Northern Ireland, the recession can be a lonely and frightening wilderness.

Like I tell my Assertiveness Workshop attendees, maximise your time with maximisers and minimise your time with minimisers.  Now is the time for encouragement and support, not fear and paralysis.

What are your survival techniques?  Comment at will.

An Australian psychologist has claimed that feeling grumpy ‘is good for you’.  At least that’s the spin the popular media put on the findings of Professor Joe Forgas of the University of South Wales.  What the guy actually says is a little more nuanced.  His claim is that there are some advantages to negative moods, just as there are to positive moods.

For instance, negative moods foster these sort of effects:

• attentiveness
• careful thinking
• paying greater attention to the external world

Positive moods are valuable to promote:

• creativity
• flexibility
• co-operation

He actually claims that mildly negative mood may promote

“…a more concrete, accommodative and ultimately more successful communication style… Positive mood is not universally desirable: people in negative mood are less prone to judgmental errors, are more resistant to eyewitness distortions and are better at producing high-quality, effective persuasive messages.”

This is interesting to me due to my recent rant on one Americans journalist’s attempt to blame the recession on optimism.  It seems she might at last have some scientific backing from this study.

My own viewpoint is to wonder whether there is a key distinction missing here between optimism as an emotion and optimism as a thinking strategy.  Forgas talks about mood, which is nothing other than a relatively long lasting emotional state.  Martin Seligman’s version of optimism is as a habit of mind that is learnable rather than an emotion.  In the jargon, optimism is an ‘explanatory style‘ or a way of explaining your successes and failures to yourself.  The opposite of this learned optimism is learned helplessness rather than pessimistic feelings.

It’s worth noting that Seligman recognises the limits of optimism by itself and prefers to advocate what he calls and flexible optimism.  John Braithwaite, an academic at the Australian National University, suggests that in modern society we undervalue hope because we wrongly think of it as a choice between hopefulness and naivete as opposed to scepticism and realism.  It depends how you define your terms.

So perhaps we can admit that a naive optimism, with its risk-taking abandon, unbalanced by realistic worst-case scenario planning and black-hat thinking, might have been a factor in the recession.  (My money is still on a mixture of natural economic cycles and the emotion of greed as the prime causes.)

It hardly follows from this at all optimism is bad, or that optimism has no part in getting ourselves out of recession!

True, optimism doesn’t in itself change reality.  But it does help your resilience to reality, and drive your motivation to go on and change it.  Pessimism asks ‘why?’  Optimism asks ‘how?’  There’s a worldview of difference between the two.

Image credit: dabert.

A few weekends ago I happened across an article called Positive thinking is positively bad for you so always look on the glum slide of life by Virginia Ironside.  In it she gave a positive review for a book entitled Bright-sided: How the Relentless Promotion of Positive Thinking Has Undermined America.  The author is Barbara Ehrenreich, an American journalist, socialist and political activist.

I haven’t got a chance to read the book yet so I’ll try to keep my mind open until I do.  All I can do is comment on the article by Ironside and some other stuff I’ve read on the Internet.  What I do know is that Ehrenreich claims overly positive thinking had a part to play in the recent financial collapse.  More tellingly, she is happy to lump together academics like Martin Seligman with health-and-wealth prosperity preachers like Joel Osteem and New Agers like Oprah Winfrey.

• I find the first of these claims overly optimistic for an anti-capitalist like Ehrenreich.  The socialist solution of borrowing and spending our way out of recession is suicidal; the entrepreneurial method of small-but-optimistic thinking is the way ahead.  Even the socialists of the British Labour party admit the need for economic optimism, now more than ever.  It’s a shame that some of our well-heeled American cousins seem determined to cut down the first shoots of  recovery as they sprout.
• And the second of her claims is plain sloppy.  I’ve blogged before about the important distinction between positive thinking and positive psychology.  Positive thinking is a pseudo-scientific sentiment, while positive psychology is an academic movement encompassing some of the greatest minds in modern and contemporary psychology.  Ironside and Ehrenreich display their ignorance here big-time!  I might as well condemn all journalism as vulgar and populist because I’ve glanced at The Daily Sport!

Anyway its an interesting debate.  Here are some other articles for those who want to read around the topic.

Singin’ in the Wane: The positive thinking movement — panacea or national addiction?

Bright-sided: Is feel-good actually bad?

A personal trainer for your happiness

Learned Optimism: How To Change Your Mind And Your Life

Image credit: gwydionwilliams.