In 1798, economist Thomas Malthus predicted that, “the world would face inevitable famine and a subsistence standard of living because food production will not keep up with the growth of the world population. In his essay, he explained,”population multiplies geometrically and food arithmetically, therefore whenever the food supply increases, population will rapidly grow to eliminate the abundance.” This was scary news when Mr Multhus shared his essay with the public. However, two hundred and twenty two years later, with advances in seed breeding, soil nutrient replenishment (such as chemical fertilizers), irrigation, mechanization and more, the food supply has stayed well ahead of the population curve.
In 1894, the British Newspaper, The Times, predicted that, “In 50 years, every street in London will be buried under nine feet of manure.” At the time, there were approximately 50,000 horses in use in London, each producing 15-35 pounds of manure per day (along with 2 pints of urine) The Times reporter explained that with a quickly growing London population, there would be a need for thousands more horses in the years to come creating very unhealthy living conditions, terrible diseases and eventually nine feet of manure everywhere you look. As we all know, the prediction did not come to fruition because of the automobile.
In 1909, the Titusville Herald predicted that the supply of oil will last for only 25-30 years. In 1937, The Brooklyn Daily Eagle claimed oil would be ‘gone in 15 years”. In 1956, the Corpus Christi Times reported that peak oil production will occur within 10 to 15 years. In 1977, the US Department of Energy stated that oil production will peak in the early 1990’s. There are many more predictions I could share but I think you get the point, so far none of the predictions have come to fruition due to technological advancements but that doesn’t prevent people from creating the attention-getting news stories.
Necessity is the mother of invention and it always appears that the combination of human ingenuity, technological advances and resourcefulness solve the world's biggest problems. However, that narrative doesn’t sell papers or air time so even as far back as 1798 when Thomas Malthus was predicting worldwide starvation, that’s what gets remembered, scary news sells.
Fast forward to today, the news has mastered the art of scaring us into watching to a point where news is becoming a place for affirmation, not information. The news is helping to create the divisiveness because divisive topics get attention and that generates money through advertising. The problem with focusing on divisive topics is that they are random which means the topic may work for you today because the focus is on a group or issue you don’t agree with but may work against you tomorrow. Who would have thought something as innocuous as buying a can of Goya beans could become a perceived statement about our political beliefs. Whether you’re a fan of Goya beans or not, it’s getting out of hand.
English philosopher, J.S. Mills said,”He who understands only one side of the argument, not the other, understands little of both.” I love this quote. It’s important for me to research and understand the other side of every divisive topic - coronavirus, no matter what you believe, I can argue the other side, defund the police, same thing. It doesn’t matter what I believe on these topics or any others, as long as I follow J.S. Mills philosophy and research the other side so I can be empathic and humane. It’s the right thing to do and (by the way) it’s good for business too!
Speaking of business, the recession (defined as two negative quarters in a row) is official. The US GDP dropped a record 33% annualized rate in the second quarter after dropping 4.5% in the first quarter. The significant drop was probably no surprise to anyone considering we were all in covid-19 quarantine. The good news, we will see an increase in GDP in the third quarter as we all get back to work now that the quarantines have been lifted. However, with the expiration of the CARES benefits and the incredible amount of uncertainty that remains, the rise in GDP might be short lived.
July 25 saw the end of federal eviction protections and July 26 was the final payment of the $600 enhanced benefits. Before the CARES act was enacted, we saw miles long food lines, more than likely, we will see that again considering that 49% of Americans expect to live paycheck to paycheck in 2020. We may also see many evictions considering almost 40% of renters are at risk of being evicted. The HEALS act (or some form of it) should pass considering this is an election year but it appears it won’t be as generous as the CARES act. Part of what is preventing the HEALS act from passing is the argument over the $600 per week which is making it very difficult for small business owners to keep and find employees willing to work.
My clients are still very uncertain about the next few months and are having a difficult time forecasting beyond 90 days however most have told me that post quarantine, they are operating close to prior year activity and feel that they have ample backlog for the remainder of the third quarter. The trend I’m hearing from many of these same clients is that activity seems to be drying up for later in the year making many of them very concerned about the first quarter of 2021 therefore, cash remains king. You have to assume this recession will last and I believe you should expect it to get worse after the election when the “free” government money stops flowing.
Some advice I am suggesting to my clients, especially for the ones who are in industries that have RFQ’s (request for quotes), begin tracking and graphing on a monthly basis the total value of all the quotes that you are sending out. This will help you create a leading indicator for future sales. Think about it, a percentage of quotes become orders which become sales which become cash flow. Also, take a cut in margin and lock up as many jobs as possible. The customers with RFQ’s are customers that have projects available today. Lock them up! I teach my clients to have their finger on the financial pulse, they know the margin cut they can take and still make a significant profit - I’m proud of that. My clients appreciate the value of understanding their financials and understand them well enough to manipulate their margins and still make money - they have come to appreciate the value of a bean counter!
Speaking of beans, a recent TED talk by physicist Riccardo Sabatini, mentions that of the 3 billion genetic base pairs (building blocks) within our body, only a tiny amount are unique to us, making us about 99.9 percent genetically similar to the next human. We have almost everything in common with each other. The divisiveness culture focuses on the .1 percent - the very small differences and the news picks up on those issues, amplify and magnify the stories because scary news sells and next thing you know it feels as if the world is about to end. Unfortunately that news isn’t worth watching. There’s no value - divisiveness news isn’t worth a hill of beans.
Divisiveness ends with you, focus on harmony, the 99.9 percent of humanity we have in common, then and only then, we can get back to buying our beans based on the way we have always bought our beans - by choosing the ones that happen to be on sale.