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Scarcity and growth: Our world’s contradictory terrors

Business

In 1933, ground-breaking British economist John Maynard Keynes wrote: “[Individualistic capitalism] doesn’t deliver the goods. In short, we dislike it and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed.”

At that time, the world was deep in the Great Depression. But it is a sentiment shared by many attendees at last month’s 50th Annual Meeting of the World Economic Forum.

Anne Richards, chief executive of Fidelity International, says our job as investors is becoming less about finding the best short-term returns and more about discovering sustainable businesses in which to invest.
Anne Richards, chief executive of Fidelity International, says our job as investors is becoming less about finding the best short-term returns and more about discovering sustainable businesses in which to invest.Credit:Bloomberg

In the world of investment, those 50 years have been defined by two dominant ideas. First, from a corporate perspective, that shareholder interests matter above all others; and second, from an economic perspective, that the relationship between money supply and inflation is a stable and predictable one. Those ideas, largely established by Nobel Prize winning economist Milton Friedman, have come into question in recent times. Once again, we are “extremely perplexed”.

You only have to look at the headlines of other articles to get a sense of it.

Klaus Schwab, executive chairman of the World Economic Forum asks “What kind of capitalism do we want?”  while Nobel Laureate Joseph Stiglitz poses the question: “Is growth passé?”

Such fundamental questions have no easy answers. But to find out where we’re going, we should take a look at where we’ve been.

The new scarcity

Economics is the science of scarcity.

Friedman’s ideas solved the scarcity problems of his day – a lack of price stability and the difficulty of accessing financial capital. By bringing inflation under control and freeing up the flow of capital, he made them less scarce.

The world has made undeniable strides in the past half century. We have fed and clothed most of a world population: Malnutrition has plummeted and living standards have risen.

But the cost has been high. We have choked the oceans with plastic, burned our forests and altered climate patterns. As a consequence, we have changed the nature of scarcity.

Now positive yield, societal stability, and environmental capital are scarce. These are things that Friedman might have considered inexhaustible. But they, too, have their limits.

The certainties of previous age have given us a conundrum today: the prices of financial assets have risen steadily, the world is running out of things that we need, and yet we are struggling to dispose of the things that we don’t.

Paradoxically, this has led to both the economic fear that growth will soon come to an end, and the ecological fear that it will not.

Circularity

As investors, we must adapt to the realities of today. We have to re-imagine what defines economic success. That is where the concept of the circular economy comes in.

Circularity means moving from a linear world in which we make, consume and then dispose of products, to one where waste can be fed back into the system as a raw material. Success isn’t just measured by growth. It’s measured by effective re-use. Eventually, this shift won’t be a matter of choice. History is littered with species and civilisations that stayed linear and ran out of road.

Just 9 per cent of the world’s economy can now be considered as circular – being recycled and re-used. However, this new economic philosophy is beginning to take hold in the minds of policymakers and the public.

Today’s young are weighed down with concerns about whether there will be a planet left to inherit from their parents. They will ask questions like why, when 92 per cent of cars in Europe are empty and parked at any one time, according to an HSBC research note, people don’t just share.

Corporate future

Just as consumers are asking questions about the sustainability of their own habits, so investors must ask questions about which business models are best placed to weather this change.

Since Friedman developed his ideas in the early 1970s, the role of corporations has transformed. As a result, even the chief executives of the world’s biggest companies have said that running them solely for the benefit of equity owners is no longer an option.

Businesses don’t exist in isolation – they have multiple stakeholders, from employees, to the communities in which they work and the planet as a whole.

Our job will become less about finding the best short-term returns and more about discovering sustainable businesses and industries in which to invest.

Shareholder value is still a vitally important driver of corporate behaviour but it is not the only one that matters when you look at the longer-term horizon.

The circular economy is a starting point to help solve today’s problems of scarcity.

Our capital markets will increasingly reward companies and investors that are positioned to rise to the challenge.

Anne Richards is chief executive of Fidelity International



66 Comments on "Scarcity and growth: Our world’s contradictory terrors"

  1. world grater supremacist muzzies assn on Wed, 4th Mar 2020 12:03 am 

    why muzzie san berdanio no amputated and dried feed to fish and sell fish to muzzies

    mind boggles

  2. world grater supremacist muzzies assn on Wed, 4th Mar 2020 12:09 am 

    200 million muzzies in india refused to go to muzzieland paki and bangadesh
    amputate all 200 million, dry up muzzies and feed to fish then sell fish to muzzies

  3. Davy on Wed, 4th Mar 2020 3:17 am 

    “Davy, same old putdowns. Same old ineffectiveness.”

    Who attacked first and now is whining? Yea you hypocrite.

    “ Yes, I am old. I will celebrate my 76th birthday this summer. You will never see that age, and will likely suffer from all the unhealthy things you have done to your body over the years before you die. I look forward to at least another decade or two. You will be lucky to see 2030. LOL”

    This is the internet stupid so you don’t know who I am for sure. This is life and you have no clue how long you are going to live or I am going to live. You live in a fantasy world like others here. I doubt you have two decades more being old in a third world country without health insurance. Your days probably are numbered but maybe you get lucky.

    “You know that the Amerika you wave the bloody terrorist flag for,is dying. Must be terrible to be stuck between a rock (US) and a hard place (dying Italy).”

    Spare me the drama, queen! LOL. Your AsiaUp is dying before your eyes yet you still live in a delusional world of fantasy.

    “Your delusions and hypocrisy are flashing red lights to all here. You live in Davyland, not the real world.”

    Projecting old man!

    “Another beautiful day here in the land of eternal summer. Sunny and 87F with the birds singing and a gentle breeze blowing across the porch. I can occasionally hear karaoke from the local community center. A good day. ^_^”

    How boring. This week I am experiencing some of the finest weather in the world dry 40-60’s. Peeper frogs are going wild and animals are everywhere. Spring is here. I love the season change so screw your eternal summer.

  4. world grater supremacist muzzies assn on on Wed, 4th Mar 2020 3:19 am 

    juanPee, why are you such a superturd and Davy a supertard? Is it because you secretly want to be Davy? Is that why you constantly steal his identity?

  5. Davy on Wed, 4th Mar 2020 4:36 am 

    I want my mommy!!

  6. Davy on Wed, 4th Mar 2020 4:43 am 

    Oh boy, juanPee is up. LOL

  7. makati1 on Wed, 4th Mar 2020 4:52 am 

    Davy, you would not have a life without PO and the ability to post arrogant,delusional bullshit. The rest of us have real lives. Sorry if you are stuck in the Police State Gulag, called “Amerika”. NOT! LMAO!

    BTW: I did not read your latest rant, as it is just echos of all the others, worth nothing.

  8. juanPee on Wed, 4th Mar 2020 4:56 am 

    Oh boy, widdle davy is
    up. LOL

  9. Davy on Wed, 4th Mar 2020 5:12 am 

    “Davy, you would not have a life without PO”

    You are here more than I am plus you can’t even tell what is juanPee ID theft and what is not. This is because your mental faculties are in decline

    “ and the ability to post arrogant,delusional bullshit.”

    I post the truth which you can’t stand and what results is your emotional outburst like the last two comments

    “ The rest of us have real lives. Sorry if you are stuck in the Police State Gulag, called “Amerika”. NOT! LMAO!””

    Sure makato, an old man slowly dying in a 3rd world country is a life? WTF, try again senior!

    “BTW: I did not read your latest rant, as it is just echos of all the others, worth nothing.”

    Sure you do or you would not have responded

  10. I Am the DavyScum Lyrics off of Magical Mystery Tour on Wed, 4th Mar 2020 6:10 am 

    Simon says……..Scumbags of a feather always troll together.

    I am DavyScum as you are Scum as you are me and we are all together.
    See how they run like DavyScum from a gun, see how they fly
    I’m crying.

    Sitting on a DavyScum, waiting for the van to come
    Corporation tee-shirt, stupid bloody Tuesday
    DavyScum, you’ve been a naughty, naughty boy.

    I am the DavyScum, Davy is the DavyScum
    I am scum, goo goo g’joob

  11. Davy on Wed, 4th Mar 2020 6:16 am 

    “FEMA Is Preparing For Coronavirus “Emergency Declaration””
    https://tinyurl.com/syanunb zero hedge

    “FEMA’s disaster relief fund has a current balance of $34 billion, according to the latest agency update. “It’s money that’s sitting there and ready,” said another former FEMA official, who declined to be identified”

    LOL! Like the virus cares about money. The only way to stop the pandemic is marital law and a complete lockdown of America. Just like how they stopped it in China.

    dumbasses

  12. Coronavirus Update on Wed, 4th Mar 2020 6:32 am 

    Infect the DavyScum with coronavirus and send him to MAGA rallies!!!!!!!

    That’s solid thinking.

    Purge the Scum, now.

  13. Davy on Wed, 4th Mar 2020 6:35 am 

    An other reason money won’t help:

    “WHO Urges People To Go ‘Cashless’ Because ‘Dirty Banknotes Can Spread The Virus’”
    https://tinyurl.com/wy837zp zero hedge

    “That the WHO is telling the public to avoid cash is hardly a surprise: research has found that coronaviruses have been found to live on surfaces for as long as 9 days. The WHO’s warnings follow the People’s Bank of China last month started disinfecting currency deposited at Chinese banks using ultraviolet light, before quarantining the bills for a week before releasing them back into circulation. Studies have shown that 90% of US $1 bills had bacteria present.

  14. Davy on Wed, 4th Mar 2020 7:52 am 

    JuanPee is upset because he can’t be Davy except in his delusions. What a lunatic. LMFAO

  15. Simple Simon Says on Wed, 4th Mar 2020 8:08 am 

    Davy,

    Stop presenting yourself in such a scummy manner.

    You have all enemies and ZERO friends except your motley collection of well-worn sock puppets (ex. Sum, supremacist muzzies jerk).

    p.s. You announced that you wouldn’t be replying to messages. I see your latest “promise” was honored all of 3 hours-lol. What an honorable-I mean scummy-guy.

  16. Davy on Wed, 4th Mar 2020 8:17 am 

    Poor guy, juanPee, the virus is in your urban area now. A dumbass like you is likely fucked! LMFAO. The fever make be good for a mental case like you.

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