Jim Lee, Ph.D., College of Business, Texas A&M University-Corpus Christi, had some very insightful comments about the economy in APICS e-news (get subscription at www.apics.org- otherwise no link available). His “constructive destruction” concept was one:
Not all businesses are created equal. Some businesses will lose, while other businesses will win—in good times and bad. Economists have found strong cleansing effects in the marketplace during the recent two U.S. recessions of 1990 and 2001. Businesses failed, of course, but the surviving businesses turned out to be leaner and more efficient. This constructive destruction process has contributed to productivity growth in the United States that is higher than the rest of the world.
The idea of constructive destruction contributing to productivity AND improvement in our economic stability is proven and one way to view the future of our economy. Those who view our economy as either “bad” or “good” are usually political or shallow analysts looking for a story. Economics may be complex but analyses like Jim’s tend to clear the air on vital issues we should all be paying attention to.
What do you think? Is this economic downturn a constructive destruction? Do you think that this is a more reasonable way to view the economy vs. lamenting about oil prices?
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