A Zero Sum Future? | Value Research Businesses and investors are slipping deeper into pessimism and it’s hard to find fault with their attitude...
First Page

A Zero Sum Future?

Businesses and investors are slipping deeper into pessimism and it’s hard to find fault with their attitude...

When Margaret Thatcher passed away last week, the disagreement among various commentators about her place in history were as sharp as one could have expected. One of the more interesting things I read were three lines attributed to Abraham Lincoln that she used to carry around in her handbag, according to The Economist magazine. These were, You cannot strengthen the weak by weakening the strong. You cannot bring about prosperity by discouraging thrift. You cannot help the wage-earner by pulling down the wage-payer.

A little Googling turns up a few more from the set, which were apparently not actually said by Abraham Lincoln at all. One of the interesting ones is ‘You cannot help the poor by destroying the rich’. There are about six more such homilies, all along the same lines. Of course, in India, being an avowedly socialist state, we do not officially believe in such nonsense. That the weak can only be strengthened by weakening the strong and the poor can be made less poor by impoverishing the rich is practically the state religion.

But the sad part is that even though this is the state religion, all the parties mentioned in this homilies now consider the government to have committed apostasy in all but name. The rich thing that the government is destroying them to help the poor while the poor think that the government is destroying them to help the rich. The same goes for the weak and the strong as well as the wage earner and the wage payer. Perhaps they are all correct--they all really are being destroyed, and to no one’s benefit at all.

But there’s one more curiosity in these little sayings. There is one that doesn’t fit the pattern, which seems to be actually about an entirely different subject matter and that is ‘You cannot bring about prosperity by discouraging thrift.’ Once upon a time, it was native wisdom that people should save and should do so with as much of their income as possible. Somewhere, this idea mutated.

Nowadays, when wise people talk about the economy, they talk about consumption as the most desirable thing. Brows get furrowed when consumption drops and people start buying less of things, be it clothes or holidays or cars. In fact, cars are the latest worry. There’s been a lot breast-beating lately about the fact that for the first time in the more than a decade, Indians have bought less cars this year. But why worry? Maybe everyone who wants a car already has one. Maybe the cars that are being sold are no good. Or maybe everyone’s buying SUVs instead because they look so manly and they run on diesel so the government pays part of your fuel bill.

But it isn’t easy to save and invest. Increasingly, savers who have their eyes and ears open can see that grounds for optimism are now getting fewer and fewer. Forget about what’s in the papers and TV and definitely forget about what the high and mighty in the government say. People can now see how things really are in their everyday lives. Everyone seems to know several young people who have completed their educations months to years ago and are still looking for jobs. Ask anyone who runs any small or medium business how things are and wait for a really pessimistic picture of everything from costs to sales. And ask anyone working in a big company and they’ll tell you about cost-cutting and stagnant salaries and resource squeezes.

If the Lynchian idea of investing by walking around and observing and by using what you already know has any validity, then it’s hard not be pessimistic today. Of course, we all know that it’s good to invest in bad times. The only problem is if what looks like bad times might turn out to be good times compared to what the future holds.

Other Categories