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GP4Dec: Optimism Unbounded

Inspite of the Present Difficulties.  A few years back a chap at Oxford spent a decade putting together a global collection of art prints he called “The Hope and Optimism Portfolio.”  Surely its values have held up much better than the hope and prayer tech stocks of the 1990s.  It’s named after a work by one of his Namibian countrymen, John Muafangejo (see www.btinternet.com/~hopeandoptimism/muafangejo.htm).  The full name is “Hope and Optimism Inspite of the Present difficulties.”  If you can exude optimism in the face of Africa’s AIDS epidemic, overwhelming hunger, and insistent poverty, then you possess the stuff of heroism.  The spirit unbent. 

Three Quarters Full. The ultimate contrarian is the optimist (not the pessimist) who just doesn't know how to fall down. In some instances, rose-colored glasses are used to put a bloom on events. A coterie of economists even now are telling us how good things are, no matter our pain. Until this year, they could not quite admit the economy had hit a speed bump. This year they are sort of saying we had a recession maybe but that whatever it was is over.

None has been as relentlessly upbeat as James F. Smith at the University of North Carolina's business school, who cannot understand why the media has so ignored all the good news he trumpets about our 2002 economy. He is living proof that economics is not entirely a dismal science, and his cup is always 3/4 full. Yet he does remind us that there always niches that merit investment even if many industries have fallen off a cliff. Not a bad thought during this period of disinvestment. Smith will appear on the Global Province soon.

Scotty.  A new book is out about James Reston, who was for decades the powerful New York Times columnist and Washington bureau chief and confidant of presidents, senators, and a host of world leaders.  The book is Scotty:  James B. Reston and the Rise and Fall of American Journalism.  It was during his tenure that the New York Times counted politically, and it's never been as important since. He was civil, a middle-of-the-roader, discreet enough to realize he did not have to tell all. For this he is somewhat disparaged now. Throughout he was an optimist about the American society in which he lived. Clearly no newsperson has come along who enjoys the same power and influence. One of the uses of affirmation and optimism, forgotten by the distrustful, catty scribblers of the present day, is that it lets you sway history as well as report on it. Too clever, acerbic journalists only strut at the margins of life well away from the playing field.

Greater China. Business Week (December 9, 2002) has a lengthy article on Greater China that dwells on the growing economic integration of the People's Republic, Hong Kong, and Taiwan. It reminds us of what an economic colossus China has become and is becoming. What's implied but unsaid here is what sets China apart from the United States and Europe. In the face of all their very considerable problems (bankrupt banks, horribly run State-Owned-Enterprises, rural poverty, a growing AIDs crisis, a high suicide rate), the Chinese have hope and optimism, something currently absent in the West. Business travelers who step off the Dragon Air plane in Beijing or Shanghai sense the go-ahead spirit of the country. Optimism keeps Greater China moving forward, and it is the only major mega-growth economy in the world

Sine Qua Non. Jack Stahl, once of Coca Cola, now heads run-down Revlon, drained of energy by Ron Pearlman and stooped over by debt. Once the country's leading cosmetics company, it is now is a very weak number 3. Stahl is bringing it back through marketing, which means brand investment, not cost cutting. At the heart of his relentless attention to every marketing detail is the belief that there are enough customers out there who want what he's got if he can rebuild the company's relationship with them. Already he has picked up a little market share by spending enough bucks to give the company a future. Without such belief and investment, soon enough there is nothing.

Likewise, Bill McLaughlin came into cash-dry Select Comfort Corporation and rebuilt its marketing by adopting a Sleep Number Index as its key selling tool to reach a much broader audience for its mattresses. Tumultuous changes in our markets call on all of us to reinvent the way we go to market. Sales are well up in 2002. As Stahl, he invested in marketing even in roiled markets. Aggressive marketing, when the cash is low and the economy is slogging, is optimism in action. Lesser men would dress their companies up for sale and give up the ghost. We will discuss Select Comfort on the Global Province in December.

Churchill Got It Right. He said, "The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity." We're at that time when it's easy to be blinded by danger. Those too put off by danger are simply suffering further losses. It is this risk-averse tendency that economist William Baumol has warned us about (see Big Ideas #122 on the Global Province).

Best of the Week. Last week we had Bay scallops for lunch, just taken from Nantucket waters the night before. Wonderful kinfolks had sent them our way. They are better than the scallops found in the marketplace by at least a factor of 5. Nothing like fresh Bay scallops, cooked for no more than a minute in a cast iron pan, to bring a smile to our faces and optimism to our hearts. Similarly we believe our economy will be cured by good, new products and optimistic spirits. We may even have more scallops tonight.

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