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What is the best way to deal with a recession? Invest for the future, or cut back on expenditure? In the UK in the 1980s, the decision was taken to cut like never before, and as the industrial base shrank and shrank. Suddenly, it was realized that it might be time for investment.
Despite all the rhetoric about the free market, markets need the right conditions to flourish, and cutting too deeply, or punitive interest rates, are not always the right way to go.
This is a discussion that continues in many countries today. Can Greece possibly cut any more deeply? There may well be a need for more fiscal discipline, but when families are living without electricity and talent and money is heading overseas, the pace of cutbacks, it could be argued, is perhaps a little too fast. A topic of conversation in London is that one of the reasons that house prices continue rise there, when the UK really is only spluttering along economically, is that money is pouring of Greece, where it really needs to be invested, and finding a safe haven in London bricks and mortar.
And against this background, there will always be those that are investing. Take for example the recent announcement from Embrapa Suinos e Aves, the Brazilian government pig and poultry research company. The organization has announced investments of R$3 million (US$1.75 million) in new facilities this year and seven new works are currently underway.
Among these new projects are a genetics and animal health laboratory, a pig and poultry waste disposal unit, and experimental poultry slaughter facilities. These investments come on top of R$5 million worth of investments in infrastructure made by Embrapa Suinos e Aves over the last two years. So while some nations are cutting back, others are investing.
Not only does this mean that some are going to have the latest technology while others fall behind, but there are other less obvious changes that cause disequilibrium in investments. If you were looking to move to where opportunities were greatest and wanted to feel good in your working environment, would you choose somewhere that is reining back expenditure and possibilities, or go somewhere that is looking to the future and investing?
Of course, you cannot live beyond your means, but at the same time, there are occasions when risks need to be taken and investments made. Reducing budgets, cutting wages and closing facilities are perhaps not the obvious ways to stay ahead of the competition - and staying ahead of the competition, ultimately, is what makes us rich and allows us to invest in our futures.