Economic Fundamentals Are Just That: Fundamental

In an opinion piece for the New York Time, Mihir A. Desai writes:

Embracing novelty and ambition in the face of huge problems is to be lauded, but the unhinged variety of these admirable traits that we have seen so much of in recent years is counterproductive. The fundamentals of business have not changed merely because of new technologies or low interest rates. The way to prosper is still by solving problems in new ways that sustainably deliver value to employees, capital providers and customers. Over-promising the scope of change created by technology and the possibilities of business and finance to a new generation will lead only to disaffection as these promises falter.1

A whole generation has seen exploding home prices, outrageous explosions in the costs of education, deeply challenging labour markets, and is facing down ecological catastrophe. These changes have taken place during a time of unprecedented financial gain for an older segment of the economy while the younger generations is, also, being routinely told that it is the first that will generally live a worse life than their parents.

So, in the face of ‘fundamentals’ falling apart a whole range of people—often though not always younger—have sought to find new ways of generating wealth in the face of the exploding challenges to living in Western society. Shockingly, the new companies that depend on exploiting regulatory blind spots to ‘find value’ (or, instead, just act illegally and dare governments to take the time and effort to rule that their operations are illegal) or that offer new lottery-like “currencies” have become popular as ways that may enable younger people to generate wealth and enjoy the (perceived) good life of their parents.

The fundamentals of businesses, and currencies and interest, however are just that: fundamental. The effect, however, is that while the promised wealth-generation opportunities may in fact be dead in the water, the explosion of costs and challenges to younger generations are not. Under-regulated capitalism has, also, become a fundamental of business with the effect that unless new regulations are developed and deployed we can expect further, and ongoing, attempts to evade the fundamentals of business if only so as to overcome the fundamental unfairness of capitalism and its logics of accumulation.

All of which is to say: sure, business fundamentals are just that. But an increasingly desperate and younger population will keep throwing fundamentals to the wind in the face of a business systems that is fundamentally and structurally designed to inhibit that same population from enjoying the Western ideal of the good life.

  1. 1: Emphasis not in original. ↩︎

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