“Tradition is a set of solutions for which we have forgotten the problems. Throw away the solutions and you get the problem back. Sometimes the problem has mutated or disappeared. Often times it is still there as strong as it ever was.”
Shortly after writing my first draft of these thoughts, I saw the above quote in a tweet from Shane Parrish of Farnam Street. He mused that we used to have traditions of fiscal responsibility, balance sheets with lots of capital, domestic manufacturing capabilities for critical components, and larger levels of inventory.These traditions are alive and well here in Pittsburgh. That others are waking up to this reality means what was sold to us as a hindrance to our growth in the old paradigm may be a tailwind for us moving forward. It could be our equalizer. What are we going to do about it?
The world just changed. In some ways, quickly, while other changes will take time. But make no mistake, it has changed. In an instant, it was no longer taboo to genuinely ask someone what they are feeling and experiencing. We are all in this together. It impacted us all, at once. In ways, it has been a great equalizer.
“An unlikely event is likely to happen because there’s so many unlikely events that could happen” – Per Bak
It is striking how much slack has been wrung out of our system. Over the last few decades, we have tirelessly toiled to over-optimize our lives. We have done this to our supply chains, our balance sheets (both business and household), and our business models. We have optimized how we shop, feed ourselves, clothe ourselves, where we live and how we move about the world. Through our actions, we have helped to build a system. In some ways, it feels like we are uniquely able to weather this storm (Zoom calls, food and grocery delivery, etc.). Still, in other ways, it feels like we have set up a system that is fragile and more susceptible to exogenous shocks. What is happening now could be laying bare what we have sacrificed at the altar of growth. Build fragile systems - don’t be surprised by fractures.
Events like this are hard to stomach but they bring to light trends that were slow moving and harder to recognize. The hollowing out of middle America was difficult to comprehend because it was a long and slow walk. It was hard to fight the trend of local businesses closing. Over the last few decades we lost neighborhood businesses like family owned hardware stores, restaurants, grocery stores, etc. We helped where we could, but what could we really do? Today, in the face of the rest of them being wiped out, we are fighting to keep our sense of place. It seems that we all of a sudden have a clear and present understanding of how dire our situation is. What if this recent event wipes out the rest and we are left with Amazon and Applebee’s? Recently people are stepping up to financially support independent business. Where were we 5 years ago while countless businesses buckled and family businesses sold to global private equity?
In many ways, this event is the great equalizer and may be a rallying cry for our country. While things were good, we scoured the globe looking for the highest returns possible. Globalization was happening and money was more fungible than ever. The focus was where can we get the best return. Now we have quickly snapped back to taking care of our neighbors. The best part about places like Pittsburgh is that we have a head start. So many independently minded business owners didn’t chase returns around the globe, haven’t over-optimized their businesses, and have continued to invest in the region.
Let this be a rallying cry for us and our region. We can do more to invest in our future. We can find ways to support and invest in local businesses. For the first time in decades, we may not be fighting a global trend of offshoring. The wind may be at our backs. We may no longer rely on a medical supply chain that originates in China. American companies are answering the rally cry by retooling. Manufacturers are making medical masks. Local distilleries have retooled to make hand sanitizer. People are questioning cutting the slack from our local economies and shipping work and production elsewhere for the sake of price, ease, and comfort. Confidence in dependence on a complex system that is not nearly as adaptive as we have led ourselves to believe is leaving us feeling that the world just changed. Let us recognize it, prepare for it, and make the most of it to build the future we want.
It is understandable, given the recent shock to the economy, to recoil and take a wait and see stance. If in fact this recent shock is going to drive the United States to onshore more manufacturing and businesses core to our well-being… if in fact we recognize that a world without locally owned family businesses and restaurants is not a place we want to live… if in fact we want more young to leave overcrowded and expensive coastal cities to live in all of the new apartment buildings we have built over the last decade… if in fact we want our local economy to embrace our goals of building a regional economy that is less susceptible to the over-optimization of the parts of the system and the fragile system at large… we must not recoil and take a wait and see stance. We should rally around finding ways to take action to invest in local business and industry to the extent that they are building things that are not overly optimized for quick value extraction and the game as it has been played. This global shock may have finally put some wind in our sails. Make it a priority to seek investments locally in businesses and people who haven’t forgotten or have rapidly been reminded of our proud business traditions.