The Myth of “The Economy”

Posted: November 3, 2013 in Powerful Ideas
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A few weeks ago I was having lunch with one of the most successful real estate brokers in Canada. At one point, she asked me what I thought of the economy. My instinctive answer was that there is no such thing as “the economy.”

What do I mean by this? Simply that we are fed on a day to day basis by the media, financial advisors, politicians, business leaders, etc., that the economy is growing, or shrinking, or whatever else economies are supposed to be doing. This attitude discounts the particular experiences and realities of individuals and organizations, the fact that for every person and business in a country, economics is a concrete concept. GDP, employment and interest figures represent a highly abstract averaging of economic and social activity; each person and organization has its own particular growth figures, interest rate, and supply and demand curves.

I have come to appreciate that each one of us is our own economy. In Canada there is something like 34 million economies. Add in businesses, corporations, associations, various levels of government, including municipalities and government agencies, and there are millions more. In the US there are probably at least half a billion economies by that measure, and in the world as a whole, perhaps 20 or 30 billion, if not many more.

As an example, Sears Canada has just announced the selloff of the company’s flagship location at Eaton Centre in downtown Toronto, in addition to many other prime real estate locations across the country. The company has been struggling for years in Canada and the US, while other retailers have been expanding and making a killing. Sears is in full retreat in Canada, but Target is expanding here. Two similar companies, two completely different economic realities. There may be some general retail trend in Canada, but how should we interpret it in the face of such different micro-economic realities? The same applies to every specific micro-economy, whether an individual, a small business, or a large corporation.

Gross economic measures are just that—gross averages and metrics that subsume millions of subtle factors, inputs, and outputs that impact on individuals and groups working to earn a living, generate wealth, improve their clients’ conditions, and deliver value. These metrics may be useful for macro-economic management at the political level, but do they really have meaning for people and executives trying to make their way in the world?

One of the limitations of macro-economic measures is that they become a ready excuse for under-performance and lack of productivity, innovation, and customer satisfaction. If someone can’t meet their sales targets, it’s because the economy has slowed, or people aren’t spending, or government policies are hindering growth. These all may be true to some extent, but the overall trend in an economy is just one factor to be considered among many.

The average person and business has much more control over their economic conditions than is conventionally recognized. Employees and job seekers must be willing to upgrade their skills to remain relevant in the job market. Businesses and entrepreneurs must be willing to innovate and take prudent risks to change their products and services, to reach out to new customers and to develop leaner and more effective processes and systems.

Each company and person has its specific credit rating, interest rate, and risk level. We all have different and constantly morphing opportunities and threats. One size does not fit all. We have to be aware of our particular situation and create plans and actions that will help us meet our goals. It’s not enough to blame “the economy,” because in that case you have to look at yourself in the mirror and ask yourself if you’re doing everything possible to create demand for your services and products, and to be economically valuable.

Richard Martin is a consultant, speaker, and executive coach. He brings his military and business leadership and management experience to bear for executives and organizations seeking to exploit change, maximize opportunity, and minimize risk.

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