Denmark and the Financial Crisis…. (the sky is not falling)

October 29, 2008

Today Sterling.dk has bankrupt. On Friday, Martin Profesional lights, in Frederikhavn, laid off 140 employees (of 500), etc. These are the consequences of the financial crisis of 2008. In mid 2007, business analyst, started feeling it, although it was not until late 2007 that media started to report about it heavely. So some people now are getting surprised, but I, and many business/economics students are not getting surprised at all. This affect us all, but I have to say that the sky is not falling. It’s part of the creative destruction. Of course, now it’s WAY easier to say it, now that I’m working for the public sector, instead of private consulting, but it’s the truth.

For example, I’m involved in the experience economy. Many are worried about the current financial situation. Ok, here I would like to share something I wrote in April 2008. In a nutshell: We need to see the big picture.

The issue of how recession can affect experience activities is not trivial. Many consultants and entrepreneurs specialized in the experience economy have started to worry. For example, in February, Stephanie Weaver ( 2008 ) in her blog “Experienceology” dedicated the whole month to explore the question, “What happens when the experience economy meets the recession economy?” Specialists and bloggers were invited to share their views. The public took the question seriously. Even Joe Pine (co-author of “The Experience Economy”), who was invited to participate was actively involved in sharing his opinion. They all probably have some bias and tended towards easing people’s fears. This is understandable since these people have allocated years of learning this subject. In Weaver’s blog, all answers defending the importance of the experience economy were quite reasonable (I also participated); however it seems that at the moment participants have forgotten to take into account the importance of the big picture. Andersson and Andersson (2006), give clear examples to explain the demand for the arts and entertainment products through time. Although it is quite hard to make economic comparisons over time, when looking at the economic trends during the last century, it seems clear that “the impact of economic growth on the consumption of recreational goods and services has been substantial” (ibid).

One issue is to look at arts and entertainment consumption, as percentage shares of the total consumption expenditures in developed market economies. From 1975 to 2002 there has been a considerable increase in arts and entertainment consumption in all countries* surveyed (OECD, 2004). Another main factor chosen by Andersson & Andersson (2006), are the annual hours of work from 1870 to 1979. Western Europe and North America have a strong increase in leisure hours, “the most pronounced case being Sweden where the number of working hours decreased from 2.945 hours to 1.461 hours after a century of industrialization.” (ibid.) An increased life expectancy must also be taken into consideration. In 1900 it was 49,2 and in the year 2000 it is up to 77,3. By 2050 it is calculated that the average life expectancy will be 81,9 years (ibid).

These and other factors, such as the progressive increment of years people spend on education before working, show that in the earliest phase of industrialization 30% of a person’s lifetime was spent working, and 40% of one’s time was spent sleeping and eating. Therefore “little free time remained for entertainment, the arts and other recreational activities for members of the working class. A young person can today expect, after education, to work less than 9% of the total expected lifetime.” (ibid)

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2 Responses to “Denmark and the Financial Crisis…. (the sky is not falling)”

  1. Jason Says:

    The whole world will be unemployed before the year is out. Then a black hole will swallow the earth and everyone will still be unemployed.

  2. carlos9900 Says:

    Some people say this the worst crisis in the century of course they have a short historic memory. Let us worry but not panic. Later I thought about when would it finish and who dit it started https://carlos9900.wordpress.com/2009/01/17/the-economic-crisis-when-will-it-finish-and-how-it-started/


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