GLOBAL PROVINCE - Home - About This Site - Agile Companies - Annual Reports - Best of Class - Best of the
- Big Ideas - Brain Stem - Dunk's Dictums - Global Wit & Worldly Wisdom - Gods, Heroes, & Legends -
Infinite Bookstore  - Investor Digest - Other Global Sites - Poetry & BusinessScenes from the Global Province
A Stitch in Time - Two Rivers


Return to the Index of Letters from the Global Province

GP13Nov: Fear Itself

The Election of 2002. We’ve all heard a bunch of Monday morning quarterbacking
about the recent elections, all the more pronounced from the many journalists, pollsters,
and political hangers-on who called it all wrong. Bush’s magnetism, Republican get-
out-the-vote efforts, a poor Democratic message, gerrymandering, and a host of other
things are supposed to have accounted for the outcome. None of the above seems to tell
us why the impossible happened. We ourselves would look to Kahneman to get hold of
the elections and to grasp what’s up for society in general.

That is, America has been sideswiped by 9/11, the sniper shootings, and a deep and
difficult recession that is much worse that our economic analysts understand. Since the
macro-numbers do not seem too dramatic, they miss the terrible pain running through the
workplace as well as the structural revolution coursing through the marketplace. The
populace, we would guess, has a broad perception of dangers so great that it fears loss of
life or property. For some, the opposition party is taken to be part of the danger. Others
(in line with risk psychology) demand a huge assured premium if they are to turn the
party of government into the streets. We would say that the perception of clear and
present dangers is coloring our politics, our companies, and our consumer behavior.

MicrotooSoft. On 15 January 2002, Bill Gates sent out an email to all his Softees
announcing a new call to arms. It was entitled “Trustworthy Computing,” and it said it
was high time to pay attention to security in the computer world. As we all know,
Microsoft provides unstable systems that crash all too easily and that are too easily
attacked by virusmongers the world over. Microsoft, however, is just the best example of
the widespread focus on risk we predicted in our Annual Report on Annual Reports 2001,
which you can find on the Global Province.

Risk-Free Products. On 29 October 2002, the United Nations Economic Commission
for Europe held a forum—“Towards Risk-Free Products: Balancing Consumer Safety
with Trade Opportunities.” This, of course, is only a bureaucratic example of how the
quest for security is coloring everything we do. Isn’t it interesting, too, that GM’s one-hit
parade vehicle at the moment is the ungainly Hummer, everyman’s very expensive
chance to tool around in a let’s-pretend defense chariot, this being an adaptation of an
unwieldy and probably unnecessary military utility transporter? Then too, there’s an
experiment some utilities are trying whereby they give consumers one guaranteed rate on
their monthly electricity bill, a way to reduce uncertainty about future expenditures.
Cable news, maybe all the news, now depends on terrible crises to sustain viewership,
first offering up some gore to get us excited, and then dishing out some silly soporifics to
free our minds of the scenes we should not have viewed in the first place. In 1,000
ways, the marketplace is offering ways to battle perceived risk, even as substantial risks
continue to increase, without control. This leads to a fortress mentality.

Best of the Week. Our thesis, then, is that fears aplenty are driving people to strange
places and resulting in surprising, unpredictable behavior. Mark Twain must have known
about such fears when he offered his healthcare advice: “Be careful about reading health
books. You may die of a misprint.” That said, we will not counsel you to be careful,
mindful of FDR’s admonition that “We have nothing to fear but fear itself.”

On the Cheap. So there are all sorts of things to do and investments to make and actions
to take, because others won't. There’s a nickel to be made in buying second mortgages,
because investors shun them in good markets, and detest them in bad markets. Small
manufacturing companies don't get the attention of institutional investors--too small and
supposedly too risky--but offer superior rewards because they are perceived as too risky.
The trick, it seems, is not to flee to safety, but to go places that are not as risky as they are
cracked up to be.

Back to Top of Page

Return to the Index of Letters from the Global Province

Home - About This Site - Contact Us

Copyright 2004 GlobalProvince.com