*Editor’s Note: CC Biz Buzz is a new monthly column series that will feature insightful commentary from a member of the Columbia College School of Business faculty.
We have been through various events impacting our economies, lives and emotions for the past 10 years. As we were coming out of the 2007-2009 Great Financial Crisis, the world witnessed the United Kingdom’s separation from the European Union in 2016. At the same time, our country went through a highly contested presidential election. In 2020, the COVID-19 pandemic caught the world off guard. As if these crises were not enough, in 2022, the Russian aggression in Ukraine gave way to energy and food shortages. To these events, we must add the threats of climate change, significant migratory movements, and local and international political tensions.
These events significantly impacted the global economies leading them through more valleys than peaks and affecting people’s emotions. Moreover, the economic conditions brought to the fore political tensions that polarized our societies. Today, we are facing what, by all indications, is a recessionary period accompanied by persistent inflation. Should we panic and brace for impact? Or should we draw on our economic and societal resiliency as part of our exit strategy from the current state into another period of growth and prosperity?
This note is an invitation to pause and attempt to think critically about the current state of affairs. It asks you to take time to form your opinion instead of repeating those coming from news outlets, the political noise, or even some of your peers.
Indeed, one of the objectives of studying economics is to help students develop critical thinking abilities. The expectation is that the students are not only able to describe an economic event but to analyze and have an opinion about it, supported by information and consistent deductive reasoning. The intention is to prepare them to make decisions based on facts and their knowledge of basic principles. For example, suppose the flood of information clouds our future outlook and we decide on a critical issue based on it. The likelihood of making a wrong decision is very high. An alternative would be to own the decision by doing our homework and critically arrived to conclusions.
Three questions may help turn a passive acceptance of today into opportunities for the future. The first question is to identify the issue of interest, or the “what.” Let us assume that we want a better understanding of what it means to have a low-growing economy with persistent inflation. The second question is to ask why we are in this place. To this end, the vast information available is helpful. Its collection, sorting, and organizing for analysis using our knowledge of economics while understanding that our personal beliefs and preferences will play a role, is of the essence. Then, through a deductive process, we will slowly arrive at our conclusions and form our opinion. Thus, we may better understand why we will have persistent inflation and the challenges our productive capacity is facing to secure growth.
To verify the soundness of our formed opinions, we must test them. We may contrast them against opposing or differing views. We explain them to others in simple terms, and we can even engage in arguments that often seem based on emotions more than reason. An open mind and self-criticism will help further our understanding of the issues under analysis and strengthen the influential power of our arguments.
In the end, we will be more conscious that our economy has faced several crises and has proven resilient at every step. We may accept that we are in a recession after years of an overheating economy; that inflation will be stubborn; that wars and famine will continue provoking massive migration; and that climate change is more a reality than a hoax. But we must also recognize that we have a market system that supports value creation and that opportunities are what we create through focusing on the future.
There is no denying that we have been through a lot. We can be passive consumers of news, biased opinions and insufficiently informed or emotional arguments, which may lead us to succumb to self-defeating thoughts. Or we can work on forming our opinion to lead us to conclude that this time is no different from others and that the future is the product of our decisions today. This independence of thought and action is what the author feels coming from the energy of our Columbia College students.