Resilience.
List the Causes.
September 10, 2020
Transition from Income to Capital.
September 10, 2020
We have been talking about self-reliance; reliance on one’s own powers and resources rather than those of others, and I have come to the conclusion that our culture has moved people away from self-reliance towards almost total dependence on institutions.
What we are seeing now is a lack of resilience; the capacity to recover quickly from difficulties.
On self-reliance, I concluded that over parenting and over governing have been the major contributors to lulling generations into a false sense of security.
The real problem is that in a supposedly risk-averse environment Australians and their companies do not appear to have a risk management strategy in place. Daily in the media, there is a call for help indicating no self-reliance. Whole industries are screaming for help after a week. Shame on them. If you cannot get past the self-reliance stage what hope is there of resilience.
Resilience requires stamina, planning, courage and fortitude but most importantly it requires a change to habits, processes, and strategy.
If you do what you did before you will just go back to where you came from. And once again language is the problem.
The dictionary has two meanings for the word resilience.
- The capacity to recover quickly from difficulties; toughness.
- The ability of a substance or object to spring back into shape; elasticity
Hence the language issue. Too many people are talking about the second definition which refers to a substance or object and not enough are talking about the first definition which refers to, amongst other things, people.
It was not many years ago when our factories would shut for 5 weeks over the Christmas period. 4 weeks annual leave plus numerous public holidays. There were times when there were no orders and people were asked to take long service leave. Companies seemed to be able to survive in downturns for several months. Today we have businesses crying poor after a week or 2. Where was the planning?
The vast majority of families are going to have a reduced income in the next 12 months. It appears some expenses, such as mortgages, leases, or contracts will be funded by loans from banks and government. Those loans are going to have to be paid back. That means when things return to the new norm your old income will have to pay for your old loans plus the new ones. That is going to require a new budget. For those that were in front, it will not present a problem, for those already in stress the problems will be great.
On the other hand, the savers will have accelerated the rate at which they have paid off their mortgage. Some by 6 – 9 months and others by years. These will be the self-reliant people that have their financial life under control.
Companies that have been struggling need to be put out of their misery. This was the big mistake Japan made after the crash in the ’90s. They let the weak live and the result has been no growth for three decades.
The weak must die because the strong are not strong enough to bounce back themselves and carry the weak with them.
Resilience is about changing shape in order to recover quickly. Courage, stamina, fortitude and planning do not constitute resilience.
On resilience, I am concluding that over parenting and over governing have not required our culture to be resilient because they do not demand change.
The tide has gone out and many have been found out with poor balance sheets or no possibility of making profits. They can’t be allowed to yell COVID-19 did this to me. On the other hand, if you tax the strong to reinforce the weak we will start running around asking Who is John Galt? Ayn Rand wrote this so explicitly in 1957, how good was that?
