What's the fastest way for a government to cause a recession without being blamed?

Question

I need a large recession to hit my small country of 4.5 million people.

It's similar to New Zealand, similarly developed, also an island nation, and a GDP around 150,000 million USD.

Most importantly, it needs to not be obvious that the government caused it. Essentially, high unemployment within months, which the government will "fix" with massive job creation - effectively turning the government into the largest employer in the world, and the country into a massive company.

I play Cities Skylines, and the fastest way to loose money there is to cut the electricity off, but that is clearly linked back to the government.

How can they cause this recession without it being obvious it was them?

Answer 1

Raise the minimum wage.

By increasing the minimum wage the government will put swaths of low-skilled low-earning poor people out of a job by making it illegal to hire them. The businesses that depend on these types of workers will have trouble staying in business and will either have to increase prices (and lose customers) or cut back on their work force. Or go out of business altogether.

All the while, the government can claim the high moral ground of being "compassionate" towards the poor by raising the minimum wage. And, according to the government, it's only because of "all the greedy business owners that people are being laid off, raising prices and closing down completely."

Bonus points to the government because the business owners will complain; then the responsible politicians can respond to the complaints by claiming they need to be re-elected in order to continue to further protect the poor and the public against all these evil, greedy rich business owners who want to raise prices and cut wages.

Answer 2

One way to cause a recession without much suspicion on governments part would be to pour in a lot of fake paper currency, coins or any kind of currency that can be easily faked.

You can't blame the government becuase

Those poor servants of the people would be trying their best to root out the currency and unfortunately have no idea where the fake currency came from. Also your government could simply blame a rival country to make matters worse

And its pretty grim recession because

Your government's currency is now devalued because there is a lot of fake currency in the market. It leads to high inflation kind of like the German economic crisis which occurred between the world wars. Which was like very bad with 350% extra bad.

To conclude

For every two currency notes or coins or anything else you make, make one counterfeit and smuggle it through bribing or any other creative way and make sure it reaches the public hands and when enough counterfeits have been printed or counterfeit notes have been exposed simply try Your Best to root them out and blame your rival for basically everything that's happening in your country so that you now can potentially have a war and an economic crisis to worry about at the very same time. Looks pretty bad to me

Answer 3

Implement something that causes a brain-drain, like to-the-letter Communism.

Equality up to a point that it's just not economical/logical to put in the extra work and study to become high-end professions such as doctors, scientists or someone in IT (and whatnot). Why would you study for 7+ years if you're going to earn just the same as anyone else who haven't (and who don't need to do a double shift).

A system like this will cause a brain drain. Dumber, less critical people, or those biased in your favor, will believe that you are indeed changing the system for the greater good and that they're going to be end up the better for it.

People who are ambitious and want to take initiative will leave, without them you will no longer have the economic and scientific leaders that you need to keep your country progressing, so you will collapse into a recession.

No one will blame you if the remaining populace supports you and your decisions.

Especially if you cultivate a culture in which bright people are condemned as traitors by default, consider Pol Pot's regime in Cambodia.

Answer 4

Someone mentioned communist brain drain, but let's look at something more specific: the brain drain the Soviets created by purging the engineers. Solzhenitsyn goes into a lot of detail in Volume 1 of The Gulag Archipelago, but the basic idea is this:

Accuse your country's engineers of "wrecking," or intentional sabotage of critical infrastructure and industry. Put the leaders on trial publicly, detailing their treason and malevolence. (Minor figures like good foremen can be dealt with in smaller and less well-broadcast trials.) Then exile, imprison, or execute them all.

Now everyone who knows how to run a power station efficiently, repair a drill press, or build a road is in [Siberia|Gitmo|the grave]. Things start to break down, and there's a massive recession.

You see, these terrible engineers! They damaged our country's factories so badly, look what they did to the economy. If the glorious government hadn't rooted them out and dealt with them, think how much worse it could have gotten! Now every good citizen has to pitch in, take a government job, and do your bit to repair the damage those evil engineers did!

Answer 5

Corruption is an easy way of doing it (and since that seems like the end goal anyway, it is a good place to start).

Take the sub-prime crisis for example. Removing of some financial regulations (which people were actually supportive of happening) resulted in, a handful of years later, a debt crisis that threatened the collapse of the entire economy and huge unemployment rates (for the US at least). If the gov't hadn't stepped in, and supported the banks and the auto industry, things would have gotten very bad in the US (relatively speaking). The tricky part? The only people who got blamed for it were politicians who had, at the time, voted on the measures to remove the regulation, and even they got off light. Those in power during the crisis weren't the same group of legislators, so they didn't get blamed for it. Your government could, for example, let their opposition party get something they want (like the conservatives wanted the regulations removed) and let it come full circle into a catastrophe.

Another good way to cause a recession is international trade. If, for example, your government (A) convinced another country (B) to take a protectionist stance and raise tariffs, it could ruin the manufacturing industry of country A. Country A could then have state run manufacturing that is subsidized or wholly owned by them. They could then negotiate removal of the tariff, and restore normalcy to the economy, but with the government owning most of the factories that were shut down before.

Answer 6

The government could hire a group of mercenaries to take out the electrical system, creating a similar environment you described in the question. Then the government would be the only ones with electricity because they 'protected' those towers from the terrorists.

Answer 7

A island nation is going to have imports and exports upon which it depends, drastically slowing down those shipments would cause a recession. Produce "credible" evidence of terrorist activity or a health scare so that the shipments get delayed, then put in enough reasonably seeming bureaucracy regarding releasing the shipments and suddenly prices at the grocery store are going up while employees are being furloughed. (Obviously, having black ops sink a bunch of shipments would have similar effect, but that is a more direct uncover-able action that would probably be considered treason if discovered).

Answer 8

Edit

Not sure exactly how you would go about it quickly, as you requested, but diverting the flow of money that the government has control over is a sure fire method.

Some things could take months to accomplish (doing the ground work), others perhaps years in this way (as it applies in practice). For example, raising interest rates too high will limit borrowing between banks and cut off the flow of money in the economy. This would threaten the banks as well as almost all other industries that need money to keep going and it would perhaps cause runs on banks which subsequently makes markets unstable. Banks make money through lending. Making them unable to do that is a serious problem and would perhaps lead to effects in the amount of time you are interested in. Another point worth noting is that most people do not understand how these things work, so it would take time for people en mass to "catch up", which usually happens long after the fact.

And now for the ranting, more protracted and slower moving version. Maybe the two could be combined to good effect.

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Well let's go down the list of "mistakes" (not accusing just, hmmm) that the US has made.

1. Reducing taxes, across the board, but mostly for the wealthy and putting lots of money into military development reduces the effectiveness of the GDP which makes a country poorer.

2. Borrowing lots of money to go to war pays off, it makes a lot of money indeed, but this usually happens when the wealthy are not being taxed as much and the money mostly goes to the top anyway and the country is still poor.

3. Huge debt accumulates and the government has little choice but to raise taxes on everyone, but not as much on the wealthy.

4. The crooked leaders get voted out because everyone hates everything, regardless of who is to blame, but the leaders are easiest to place the blame on.

5. New leadership finds ways to implement programs and tax accordingly but not threateningly and the economy starts to grow again, wages go up and people are happier.

So to put it all together:

1. Lower taxes to get everyone's support for anything stupid that you choose to do.

2. Stop spending money on infrastructure and programs for folks in need.

3. Divert that money into military development.

4. Start snooping around a smaller country, spread rumors, then go to war with them, beat them up, put new leadership in place there and make their government (essentially their people), pay for a portion of you having to go to war with them.

This solves 5 problems:

1. It creates a recession.

2. It deepens the recession.

3. It set the scenario for the next time you want a recession, because you've meddled in another country's affairs to a high degree, and they will probably break and start acting up again in a decade or two.

4. It provides a mechanism for pulling back out of the recession.

5. Greedy jerks ridiculously increase their wealth, but nobody else does, in fact it makes it worse for everyone else, and the greedy jerks matter most because they support the government and often provide the economic support structures that allow the government to function as it does, e.g. private industry is the backbone and the jerks run private industry.

P.S. Screw the government and the jerks.

Answer 9

The value of currency needs to be based on something, (or the people need to think its based on something) for it to be worth anything to a population. For example, gold. If the value of gold suddenly decreased, because say somebody discovered that if you dug down a few feet you could find an inexhaustable supply of gold, then your currency would suddenly become meaningless until your government determined some other way to represent the country's wealth.

So my suggestion is something to the effect of:

"Foreign powers are no longer interested in our currency/goods (for whatever reason), so we're unable to make essential imports/exports. Our most valuable commodity is now our talented young people and highly skilled workforce, which the government will train, and contract out to other nations, to ensure the country continues to run in the manner to which you have become accustomed."

EDIT:

Have a referendum à la Brexit.

Answer 10

Give yourself to the Dark Side

False-Flag terrorist attacks on infrastructure

In the first day of trading after the September 11th attacks in the US, the stock markets plummeted. This accelerated an already rumbling recession, and kept it going much longer.

Now imagine if instead of one extremely dramatic attack, you had a series of attacks that collapsed bridges, cut canals, and destroyed power stations. Economic activity in many areas would grind to a halt; many other areas would lose access to the national economy and be reduced to a purely local economy. You'd have shortages of food, fuel, and medical treatment. All in all, a bad day to be living in that country.

Blaming the attacks on external terrorists would give the government an excuse to declare a state of emergency and vote itself sweeping powers to resolve the 'crisis'. They could immediately hire people to start infrastructure repairs, nationalise important utilities and industries, etc, then arrange more 'foreign terrorist attacks' to maintain the status quo.

This also has the advantage of allowing the government fairly granular, detailed control over exactly how bad things get. In an election year, you can "capture" a terrorist cell and publicly execute them; If private enterprise is rebuilding, you can destroy their supply lines, forcing them into bankruptcy.

This is essentially the method used by Supreme Chancellor Palpatine of the Star Wars universe to get himself named Emperor - he ran both sides of the Clone Wars, using the ebb and flow of the conflict to gather more and more power to himself.