Jumping To (False) Economic Conclusions – Week 3

David Packard once remarked that “More businesses die of indigestion than starvation,” and it’s easy to see his point. All around us, there are business managers, operators, and the general public who simply do not know how to read financial numbers – worse still, many do not understand the economic frameworks upon which our businesses and economy rest. And although there are all sorts of people who are nonchalant towards economics and finance, I have noticed a particularly disturbing trend of disregard among younger individuals. Granted, many of these people were not adequately taught economics in school (or the subject was not emphasized, as it should have been), but being in this age group myself, I wish that more attention would be given to the powerful forces that shape our economy – whether or not we acknowledge or have interest in them. As Winifred Holtby once said, “contrary to popular superstition, ignorance is not bliss. Ignorance is impotence; it is fear; it is cruelty; it is all the things that make for unhappiness.”

Gathering information before suggesting action

This behavior can be witnessed in many situations, including interactions where people feel as if they have been taken advantage of by a corporation.

“Contrary to popular superstition, ignorance is not bliss. Ignorance is impotence; it is fear; it is cruelty; it is all the things that make for unhappiness.” – Winifred Holdby
We hear it all the time: “Business X could pay their employees Y if they wanted to, but they’re too greedy.” Or “Business X could lower their prices if they wanted to.” But could they really? Of course, anything is possible – and it’s likely that Business X could do either of those two things. But what kinds of consequences would stem from those actions? Are we prepared to consider the ramifications that each action would have if worked out to its logical conclusion? Furthermore, are we aware of the specific financial information, metrics, and key indicators that Business X uses to determine its situation in the industry playing field? If we are honest with ourselves, the answer is no. When we do not have all of the facts, it’s easy to make grand and encompassing blanket-statements about a company. But as the facts roll in, I believe we would be much more hard pressed to offer such strict sentiments.

Would it make sense to say in our personal lives?

For example, imagine if someone told you “you could buy me that vehicle over there, and it wouldn’t even financially hurt you because you’re so well off.” At first glance, the people in the room might believe the statement. After all, you look to be generally well off, organized, and have some nice possessions, to boot. There’s only one thing that these people do not know, however: the numbers. From the outside, no one would know that you recently invested your money into a new company and that you had to take out a loan to do so. From the outside, no one knows all of the expenses and bills that you are responsible for. And finally, no one knows the specific things that you spend your money on or donate to. Once these facts are understood, however, it can be recognized that saying “you could buy me that vehicle – it wouldn’t financially hurt you” would be an extremely out-of-touch statement.

Caution against vilifying a system based on a few bad guys

As much as we would hate having people make statements about what we should or shouldn’t do without understanding the details of our situation, people all across the country still feel as if they can judge what a business should or should not do while being unaware of the specific situation that such a business is in. If we are honest with ourselves, I believe that we would be better suited spending less time complaining about corporations we know little about and more time building businesses of our own. For the unfortunate byproduct of this anti-business sentiment is that there is less public interest in creating value through business since they are often deemed as “evil” entities. We have to get back to a mindset that appreciates what businesses and corporations accomplish while understanding that just like anything else in this world, the operation of a business can be abused. Let’s just make sure we don’t call apple trees bad because of a few worms in some of the fruit.

What did you think? Leave some feedback! :)

6 thoughts on “Jumping To (False) Economic Conclusions – Week 3

  1. Hello Austin,
    I like the statement “you could buy me that vehicle over there, and it wouldn’t even financially hurt you because you’re so well off.”. Is that not what a wife should say to her husband? 🙂
    Seriously I related to the part of your blog that refereed to how you may perceived a business or someone perceived you because of one think or another. People will judge quick so it is something that you need to be careful with or even but very carefully use as a tool when you want to be seen as one way or another.
    For example if I want someone to look serious at my business I might speak of different placed I lived or visited in the world giving off that I might be a world traveler and this makes me better to run a business.
    Mary

  2. re: “Would it make sense to say in our personal lives?” I see the same problem in the field of obesity. Folks look at thin people and say “you can eat anything” you have it good. The ignore the fact that person works out 5 days a week, doesn’t drink anything besides water and shops carefully for high quality food. It’s easy for folks who are stuggling to see others as NOT struggling. It makes the mountain that much higher and the failure to change that much acceptable. If folks follow your excellent advice on perceptual change they would see that the mountain isn’t that high and that others have indeed already crossed it.

  3. Great post, Austin! I think as humans, we sometimes are quick to judge one another in our personal lives, but I never thought about it for business. But, yes I guess I do. It’s so easy to get caught up in what something looks like from the outside, that we never really stop and investigate what’s happening inside/behind closed doors. We don’t know the big picture, we just see some of the moving parts and are quick to make assumptions on half and not the whole situation.

  4. Great Post, Austin yet again you have provided a lot of valuable information. Your thoughts have made me think more about jumping to conclusion to economics.

    Eric

  5. Austin,

    Great post – everything that looks good and polished – isnt always the truth. When you start uncovering things – you may realized – they are in a lot of debt-
    Eyes can trick you- or deceive you!

  6. People often mistake the polished for gold, when it may be gold-plated. Our appearance and outward projection is to look polished and prosperous. But behind closed doors many are often a stones throw from and negative bank account or one life event from bankruptcy. Perception can sometimes be deceiving especially in the business/financial sector. Power suit, power tie but poor pockets.

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