In times of crisis... spend more

I am not the one who says it. I have read it from two different fronts in the last days:

Bruce Nussbaum has hammered repeatedly in the last weeks his 'business' readers with advices on what CEOs should not do, in the more than probable event of a recession in 2008.

To-not-dos

• Fire talent
• Cut back on technology
• Reduce Risk
• Stop new produce development
• Boards replace growth-oriented CEOs with cost-cutting CEOs
• Companies retreat from Globalization
• CEOs replace innovation as key strategy
• Performance metrics are changed
• Hierarchy is reinforce over collaboration
• Retreat into walled castles

Summary: put more efforts, and money, on innovation.

And he finishes the article mentioning the uber-referenced Apple as the ultimate example of a company that survived the last recession (early 00s) with more innovation. Not that I am against the example, but maybe I would appreciate more data points to support his 10-point list.

Usually, I take everything Nussbaum writes with a pinch of salt. My impression from reading him for the last years, is that he has the tendency to exaggerate, and talk in absolute terms to reinforce the impression that he has a point of view of an expert and he is confident about everything he says ('perception is reality' is key when you are in the business of selling yourself as speaker by means of just words in a blog).

But, my personal consideration of Nussbaum got completely restored when I read today that Robert Barro, acclaimed economist from University of Columbia, recommends exactly the same: in times of war, recession or disaster, the worst thing governments can do is to increase taxes. Instead, what they have to do is to temporarily increase public spending (without increasing taxes) and avoid the temptation to spend less in times of economic hardship. This recipe, Barro advices, will help nations cope with recessions with greater success.

Million dollar question: What economics books has Nussbaum been reading lately?