Tuesday, July 05, 2016

It's about the journey not the destination

What happened after Toni Ko sold NYX Cosmetics to L'Oréal for $400 million. And an idea that's true for most entrepreneurs I suspect (Inc.com):

The next morning, I was a little bit confused. My life for 15 years had been waking up in the morning and getting ready and going to work. But I opened my eyes that day and realized I had no place to go and no reason to wake up. I just went back to sleep. That went on for several days. Soon, I was bored out of my mind. I didn't know what to do with myself. How many days can you spend on the beach? How many times can you go shopping? My life became very redundant. It was meaningless. I felt like I didn't have an identity. I felt like I wasn't adding value to my life or to society. I just felt like a loser, almost.

Eventually, I started an investment company, and then I started to build a real estate portfolio. I was never not doing something at any given moment. But nothing was very exciting or meaningful to me. I'm a products person--I need to be in an environment where I create products. That's when I have the most joy, fulfillment, excitement--everything.

Literally three days later, I started dreaming up other businesses. Eventually, I settled on sunglasses and, within months, launched a company called Perverse. It made me feel whole again. It gave me a reason to wake up in the morning.

Fallacy: Economic prosperity doesn't come from encouraging consumption

Nor should advocating for free(er) markets be conflated with arguing for more consumption (FEE.org):

The great irony is that leftists frequently argue that capitalism equals “consumerism.” They think defenders of free markets believe that more consumption promotes economic growth; thus we are charged with providing the ideological cover that justifies the consumerism they see as deadening lives and wasting resources. What the leftist critics miss is that economists never saw consumption as the driving force of economic growth and prosperity until the Keynesian criticisms of free markets became ascendant.

Thanks to Keynesianism, manipulating the elements of total income (consumption, investment, and government spending) became the focus of macroeconomic policy and economic development. It was the Keynesians’ theoretical framework that led to the development of the relevant national income statistics and that implicitly informs the popular arguments for more consumption.

For over 150 years defenders of free markets saw consumption as destroying wealth, and saving and production as creating it. They never argued that “stimulating consumption” was the path toward prosperity. Therefore they cannot be charged with justifying the “consumer culture.” And the same is true of twentieth-century defenders of free markets such as Mises and Hayek.

China's transition to higher value manufacturing

I'm skeptical that China's government(s) will manage this transition successfully (WSJ):

At the same time, however, China is pushing its companies to automate, boost research budgets and make more higher-value products. It has also encouraged companies to acquire European and U.S. rivals with advanced technology. Beijing has targeted 7% annual growth for manufacturing and a 15% jump in corporate investment to support industrial upgrades between now and 2018.

Its success so far in moving upmarket is seen in its machinery and transport-equipment exports, which grew to 46% of the nation’s total exports from 21% between 1995 and 2015, even while its share of lower-value exports declined, says HSBC.

If China succeeds at encouraging more-advanced industries, it could subject companies in developed countries to growing competition in once-secure markets. But the strategy carries risks. If China fails to shift from basic industry to high-end manufacturing and its costs continue to rise, it could get stuck in what some economists refer to as the “middle income trap.” That in turn could fan social tension in a one-party system that has staked its legitimacy on rapid growth and upward mobility.