The meaning of business, the meaning of life

Either I’m a very sad fucker for equating the two, or there is a real connection. I’ll opt for the latter. For now.
But a quick look at any business paper will have the cheeriest of people depressed in no time. Automakers are faltering, company profits are being slashed, workers worldwide are being retrenched, financial markets are falling, and stimulus package after stimulus package has done little to staunch the bloodletting. Everything has turned sour at the same time.
But take yourself back to happier times, times when corporate earnings were soaring, commodity prices were stratospheric and everyone was expanding everywhere. How, you’ve got to wonder, did it all go so wrong?
Well, I think there’s a lesson we all forgot. Remember back to when you had yet to get your first real job. The thought of a halfway decent paycheck made one quite giddy. What, you probably wondered, would you do with all that money? Saving some of it looked incredibly easy. And at first it was – because your expenses were probably small. The trick, I once knew, was making sure my expenses never rose to meet or engulf my basic salary.
For a few years that worked, but then there were cars and mobiles and expensive holidays and insurance and medical aid and investments and houses to look after. I should have said “Expenses, meet salary” by way of introduction. Once the first greeting was done, it was all downhill. Expenses ate up salary like a hungry whore after a long night’s work.
Now I’m left dreaming of those simpler days and wondering how I could have been so stupid as to let expenses have their wicked way.
So it is in business. Companies like Citigroup thought endless expansion was prudent. The evil bastards in the Organisation of Petroleum Exporting Countries thought the oil price would never fall back to the $50 a barrel level. Automakers thought there was infinite demand for cars. Companies thought profit could grow every year.
How on earth did they all get so stupid? The simplistic answer would be greed. But I think delusion and pure foolishness played a role.
Imagine if Opec had decided that the fundamental value of a barrel of oil was $50 and said that any profit over and above that would be saved cleverly for a rainy day. Imagine if Citigroup had decided that no matter how good times got, it would always run a very lean operation. Imagine if automakers had decided that it was ridiculous to suggest that everyone in a country should have a new car every year. Imagine if companies had curtailed their expansion plans and realised that a certain level of profit was the base level and it should never count on making more.
This kind of thinking would have led to the accumulation of huge cash piles and a lessening of foolhardy ideas about business cycles that go everlastingly upwards. Now then, any clever financial advisor will tell you that sitting on piles of cash is not “efficient”. Bullshit. If everyone had large cash piles right now there wouldn’t be a credit crunch. And sure, maybe that cash wouldn’t have grown very fast and it would have been taxed, but at least it would still exist.
I don’t really understand business’ constant urge to get bigger and bigger and richer and richer. Why does SABMiller have to keep on buying breweries? Why does Old Mutual have to go to China? When is it enough? What happened to running a good solid business that stays home and pays out a good dividend every six months?
All these parties are running on a treadmill and the viscous trainer that is market forces keeps turning up the speed dial. And what happens? Those players start falling off. In fact right now they’re being flung off the back of the treadmill with the propulsion of a jet plane, landing in scraggy heaps.
It would seem they forgot not to introduce expenses to profit. And I’m not suggesting that we immediately change the world order and implore business not to expand, nor run on that treadmill. But I am suggesting that we think about it. That we get a bit more real about the fundamental value of items from oil to cars to bottles of beer.
When enough is enough, then let’s save the rest rather than chasing the unattainable dream of infinite wealth and infinite growth. If we don’t do that, it’s only ever going to end badly.