Pronouncements of Recessions End Rival Disneys Fantasies for Believability
Insurance Experts' Forum, September 27, 2010
My colleague Joe McKendrick seems to have created a bit of a stir among readers with his blog: “The “Great Recession” is Over: Now What?” When I read that headline, I wondered how I had managed to miss the grand moment of the recession’s demise, but to give Joe credit, he acknowledges that while the National Bureau of Economic Research (NBER) may believe the recession ended in June 2009, many of us in the real world are still suffering its effects—continuing rampant unemployment, distressed businesses and government program cuts, not to mention state and local government bankruptcies.
Certainly, the aftereffects are still being felt in our own industry, where insurers and brokers can no longer count on significant earnings from financial markets to bolster their bottom lines. In the IT sector, repercussions include more outsourced jobs and fewer opportunities for American IT pros.
So maybe some economic indicators have been on a slight uptrend over the past 15 months, but you couldn’t prove it by real world experiences. And what exactly constitutes “over,” anyway? When a football game is “over,” the clock expires. That’s the end of football activity between those teams, until and unless they meet again. No further plays can be run, no more points will be scored and no further harm can be done. Yet, the economy of our nation seems to still be taking vicious hits where we can all see them. Someone apparently has sent this game into overtime.
When “the fat lady sings,” the opera is “over.” There are no additional arias or armies of Vikings. All we are left with are the memories—happy or not—of what has been. Of course, we could go see that performance again or watch it on video, but the original opera is done, rehashing and nostalgia aside.
Joe goes on to give some very good advice to insurers and others who want to leverage technology to improve their competitive position, and much of that advice may be helpful even if the recession isn’t actually “over.” The danger, however, is that some companies could take significant actions based on their belief that because someone says the recession is done, they will feel no more of its wrath. It’s a bit like putting your exquisite glass collection back on the shelf when the earthquake tremors have subsided, little realizing that the whole thing may be wiped out later by aftershocks.
In the end, when some authoritative-sounding group like the NBER tells us the storm is over, we really want to believe them. If it’s over for them, it must be over for us, right? Unfortunately, too many of us would rather believe in what therapists call “magical thinking”—the idea that if we wish and believe hard enough, it will really be true and all the bad times will be gone.
You can thank Walt Disney for that one, but don’t be foolish enough to bring it into your business. You should more properly thank that great philosopher Yogi Berra for a much more practical view: “It ain’t over till it’s over.”
Ara C. Trembly (www.aratremblytechnology.com) is the founder of Ara Trembly, The Tech Consultant, and a longtime observer of technology in insurance and financial services.
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