“We’re managing the economy”

This is a phrase we often hear on the lips of politicians, and it always makes me smile!  Why?  Because if they’re talking about the global economy (or even the national one) I’m inclined to believe that this is a force which cannot simply be managed or controlled by one individual or one entity. I’m reminded of that old definition of economics:

It’s the only examination subject where the questions remain the same but the answers change.

Why is this? Because the forces that govern economics at any one time are universal, diverse, constantly changing and intertwined. A change in the political situation in a country thousands of miles away can affect the terms of supply of vital import. Global climate conditions may change the availability of staple products. Socio-demographic changes may limit the size of the available workforce. Are we really imagining that these things are within our control?

What we do of course is react to events. So, when we talk about managing the economy, what we really mean is that we look at how we are going to cope with the changes.

Now, as you know, I’m very much in favour of a pro-active, rather than a re-active, approach. So is there any way in which this approach can be applied to economics. My view is that, on the world stage, there are very limited opportunities for this (whatever the politicians say). But in your own business and personal arena, you’ve a much better chance.

What you need to do is to model the future.  Think about the ‘what ifs?’ plan for contingencies. Don’t wait for events to happen, but be constantly alive to new opportunities.

It’s been said that to stay in the same place is in reality to go backwards – and there’s a good deal of truth in that. The modern world is constantly changing and we need to move with it.  But the real key to managing your economy is to spot the trend and move ahead of it.

Easier said than done – but what do you think?