This Is Not A Recession, But A Reset
December 13, 2009 at 2:36 pm
ChangeThis is like a pdf version of TedTalks. It’s on a mission to spread important ideas and change minds. They describe themselves as a ‘bunch of optimists’ who don’t believe humans evolved to be so bad at making decisions, so poor at changing our minds, so violent in arguing our point of view. People with ideas can submit their manifesto – it’s got to be short and to the point. Every so often a round-up of the best ones lands in my inbox. Last week I was moved to read the following manifesto by John Hope Bryant. I’ve copied the main bits and pasted them verbatim in here. If you would like to read the full thing – and I strongly advise you do – you can get it here. But I think this pretty much sums up my preferred way of thinking about the current crisis we are living in.
‘I keep saying that this is not a recession, but a reset.’
Society has a vested interest in “keeping the party going,” even if for only a little while, and even if that means fooling ourselves. With this seemingly insatiable need to “keep the party going,” the pundits start up again with how growth is returning, (some) consumers are spending again, and how financing (for those with an 800, near-perfect credit score) is available again.
Oddly enough, all of this propagating, by extremely intelligent people as well as the average willing consumer alike, is driven by one thing: fear. Fear that the party as we knew it, really is over, and fear that we might actually have to build something that has real and sustainable value. Fear that we may have to do the real work, and offer the real sacrifice, that love requires. Fear that we may have to once again define winners and winning as something other than the guy who makes the most money, accumulates the most power, or dies with the most toys, or worse, the guy who succeeds in fulfilling his own dreams only by trampling on the countless dreams of others. Wining in this vein is by necessity about creating losers, and over the long-term is not winning at all. Fear has the world in its grips these days, and fear is the ultimate prosperity killer.
I believe in a capitalism that goes beyond the question of “what do I get,” and focuses instead on creating real value for self, society and others—through the power of the idea, and a focus on what we have to give.
The world needed a dose of pain in order for it to change.
We will soon have to deal with the reality of a world not in a cyclical recession, but that has been fundamentally reset. If we handle it right, the next 30 years could easily become the most amazing in modern history. As with most things, the tide of history could swing either way. Depending on the decisions we make, and the reality we embrace, the next 30 years could be our best, or it could be the catalyst for 100 years of pure pain, and two generations of suffering—for our children and our grandchildren. It is up to us.
A compelling article in Asia recently confirmed that there are presently 500 container ships sitting idle off-shore of Malaysia today, waiting for orders and shipments that probably will not come. This represents an idling of 10% of the global force of container ships in the world today, and here is what is really amazing: South Korean ship building yards are operating at full-force today, cranking out orders for countless new $100 million container vessels ordered in 2007 and expected to come online in 2010 and 2011.
And to what, where? The Iranian government agency which handles maritime affairs has already indicated that it will not have the money to pay the remainder of what is owed on several new vessels it ordered 2 years ago when the world was different. South Korea put the Iranian vessels up for sale like you and I would do for furniture or clothes we no longer had a place for; a high-end, football-field length yard sale. And so, South Korea’s dream of controlling 40% of the ship building industry in the global economy means that you literally have “fully employed” cities and regions of the country that risk going completely off line in 2010 and 2011 unless we and they come up with a fairly good Plan B.
But instead, we all just keep plowing forward; building ships we have no use for on the right hand, and idling perfectly good ships with no conceivable destination on the left.
Don’t look to China to get us out of this mess. Yes, China is working to grow its own domestic economy and consumer base, but this is not akin to making a morning pop tart, and there are real risks to China in making this transition. If internal Chinese economic growth slows below 6% per annum, and it will, then they will be faced with an entirely new set of serious internal social problems to contend with, and the $3 trillion in cash reserves (the current estimate in China) won’t last long when faced with 1.6 billion not-so-happy people focused on the fact that they are not so happy.
According to the Bank for International Settlements (BIS), there are more than $1,400 trillion in derivatives sitting off balance sheets in the world today. To put this into context, there is less than $20 trillion in legal cash sitting around in sovereign reserves the world over today. This is not a problem you throw money at.
We will soon have to deal with the reality of a world not in a cyclical recession, but that has been fundamentally reset.
At its core this is not a recession, and it is not a classic economic crisis, but a crisis of virtues and values, underscored and made even more relevant by its global, one-world nature.
I am an optimist, a businessman and a social entrepreneur, and I believe there is such a thing as good capitalism. A version of good capitalism has helped to lift literally hundreds of millions of people out of poverty in China and India already.
Good capitalism helped individuals with a more just vision, individuals such as Nobel Prize winner Mohammed Yunus, give the poor (and particularly women) a hand up and not just a hand-out— in places such as his native Bangladesh—through micro-finance and micro-credit.
Good capitalism and responsible subprime lending (yes, there is such a thing as good and responsible subprime lending), leading to first time homeownership, has done more in the US to lift poor people out of poverty than anything else over the last 50 years. The problem has not been responsible subprime lending, but predatory lending, fraud based lending, preying upon financially illiterate borrowers and, of course, fear’s first cousin greed.
What got us into this position is something other than good capitalism. In the mortgage lending and banking industry of the last 10 years or so, we have been treating clients and customers more like transactions, and not like valued relationships. If we had made every mortgage loan like it was to our grandmother, we would not have a mortgage crisis with exploding foreclosures and landmark losses today. We would have made sure the loan made sense for her, and with a reasonable return and profit to the provider of capital—that it was something that would sustain and serve over time. We would have made sure that the product was rooted in dignity and not just a fee. But sustainability, service leadership and building real relationships were the last thing on the minds of many over the last decade or two. We have, simply put, been focused on the me, not the we.
Music icon Quincy Jones said it takes 20 years to change a culture. Well, over the last 20 years we have made dumb sexy. We have dumbed down and celebrated it. Over the next 20 years we need to “make smart sexy again”.
The power of an idea should be the focus of our creation, and ultimately the product, and not mere money.
Good capitalism builds value for society and serves individuals beyond those that provide of capital, while simultaneously speaking to one’s own personal and selfish sense of prosperity in the same breath. Good capitalism acknowledges that we are selfish, and advocates a “good selfishness,” one where we benefit ourselves by benefitting others. It is doing well and doing good, and doing well by doing good. Good capitalism is a sea where all boats rise, not just yachts.
Where there is no vision, the people perish
We talk about social networking as if it has been with us for all time, but a mere 10 or so years ago Google, Facebook, Twitter, Skype and the like literally did not exist. Today they are sweeping the world, sparking industry, creating wealth, banishing fear and dictatorial oppression based on a lack of information, and creating jobs and industry too. Former President Bill Clinton once said that every 10 years we must create an entirely new set of jobs. You cannot do that without the power of a new and inspiring idea that serves others.
Some people with good ideas:
Ted Turner and his idea, CNN. Steve Jobs and his Apple (and our cool iPhone). Or Bill Gates, along with Paul Allen, and the idea of Microsoft—and now his and his wife’s idea called the Bill & Melinda Gates Foundation. Or, there’s the example of arguably the greatest investor of our day, Warren Buffett, who’s worth tens of billions, yet still lives in the same home he lived in 30 years ago and has vowed to give most of his fortune away before he dies.
For those who have pioneered new ideas – most of these individuals who pioneered eventually become rich (financially or socially rich) and powerful, but becoming rich and powerful was never their primary goal or objective. What drove them at the start, and in most cases what drives them to this day, is the power of their ideas. Money should be the by-product of pursuing an idea of immense value. But, instead, for far too many today, it has become the principle focus and, worse, “the product” itself.
Fear fails
Over the past 10-20 years, we have had an entire generation of so-called “leaders” and business titans who have been entirely focused on one thing and one question: “what do I get, and how do I make money?” That’s the wrong question, which leads inevitably to the wrong outcome. This is a reset.
Let’s stop re-arranging the deck chairs on this Titanic, talking about a recession when we know this looks and feels like anything but one. By focusing on the 5 Laws of Love Leadership in our lives, in our businesses, in our communities and in our hearts, minds and our decisions, we can build sustainable wealth that will last over time and we can confidently embrace change and reset a future vision that speaks to the we, not just to the me.
About John Hope Bryant
John Hope Bryant is the founder, chairman and CEO of Operation HOPE, which empowers the poor and the under-served with financial literacy, teaching” the language of money”, inspiring hope, and providing access to capital, opportunity and ownership. Operation HOPE is the only national urban delivery system for financial literacy empowerment in the US, operating in 68 urban communities and 6 provinces in South Africa.
I am convinced that in this environment of global economics, if you don’t understand the language of money and you don’t have a bank account, you are an economic slave of the 21st century.
Download this brilliant manifesto and have your own colour copy. Visit The Hope Foundation and see what this guy does every day.
Comments (2 responses)
I am a businessman and have always called myself a Capitalist, while recognising that business and capital have a compelling duty to contribute to society. I am very struck by this article and perhaps will now call myself a “Societist”. Bit of a mouthful, I know, but if we don’t hang together we’ll hang apart.
Let’s do it.. let’s reset. One person, one step at a time.
@Brendan, I couldn’t agree more. I’m a trained economist and after recent events and having read the excellent “Shock Doctrine” book by Naomi Klein, I was beginning to feel ashamed of my learning. Having discovered the inspiring John Hope Bryant’s way of thinking, I see things in a new light.
I think a financial skills type organisation would be very useful here in Ireland too, don’t you?
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