Preserving Value for the Next Generation
For 300 years, we've extracted value from society—natural resources, wealth, or property. Anything that could be taken has been taken. Once these corporations corner the market on these resources, regulations are often implemented to prevent new participants from entering these industries and even attempt to disrupt broken, outdated, and flawed systems. This cycle allows those with power to maintain it, effectively keeping others out. After all, inefficient systems mean someone is making money off those inefficiencies. If you ever wonder why something that is so painfully frustrating and doesn’t make sense? It’s probably become someone who is blissfully happy to extract value from a broken system.
As a result, we’re now facing some of the largest gaps in societal equity we've ever seen, particularly in terms of wealth and health. The divide between those in power and those who are not continues to grow, creating an increasingly inequitable world. This dynamic is a classic example of the "tragedy of the commons," where individuals, acting in their self-interest, deplete shared resources, ultimately harming the entire community.
Examples of the Tragedy of the Commons
Air and Water Pollution
Over the past centuries, industrial activities have led to significant air and water pollution. The unchecked release of pollutants into the atmosphere and waterways has devastated public health and the environment. The Great Smog of London in 1952 and the Cuyahoga River fire in 1969 are infamous examples of how industrialization, without regard for environmental stewardship, can lead to catastrophic outcomes.
Overfishing
One clear example of this tragedy is overfishing. For centuries, the world's oceans were viewed as an inexhaustible resource. However, without proper regulation, fish stocks have been severely depleted. This threatens marine ecosystems and the livelihoods of communities that depend on fishing. The collapse of the Atlantic cod fishery in the early 1990s is a stark reminder of how short-term gain can lead to long-term loss.
Deforestation
Deforestation is another instance. Vast tracts of rainforest have been cleared for timber, agriculture, and development, often without considering the environmental consequences. This has led to loss of biodiversity, disruption of water cycles, and contribution to climate change. The Amazon rainforest, often called the "lungs of the Earth," has suffered greatly from this exploitation, impacting global ecosystems and indigenous communities.
Financial Commons
An example of a financial commons is the 2008 financial crisis. The global financial system, a shared resource underpinning the world's economies, was exploited by a select group for short-term profits. Irresponsible lending practices, lack of transparency, and excessive risk-taking by financial institutions led to major banks and financial markets collapsing. The repercussions were severe to everyday citizens, with millions losing their homes, jobs, and savings. What are the repercussions to those in the banking system who caused this mess? A mere slap on the wrist in the grand scheme. This exploitation of the financial commons created long-lasting economic disparities and showed how the unchecked pursuit of profit can lead to widespread social harm.
During the 2008 financial crisis, billions of dollars were allocated to bail out major corporations and financial institutions, while relatively little was directed to help ordinary citizens directly. The U.S. government’s Troubled Asset Relief Program (TARP) spent $700 billion to stabilize banks and other large corporations, ensuring they could continue operations. A lot of that money went to bonuses for the leadership teams. Meanwhile, homeowners facing foreclosure and individuals losing their jobs received far less support. This disparity highlighted the prioritization of corporate welfare over the welfare of the general populace, exacerbating the gap between the wealthy and the economically disadvantaged.
Health Commons
The health commons is another crucial area often exploited. For example, the opioid crisis in the United States reveals how the healthcare system, a shared resource meant to protect and improve public health, can be misused for profit. Pharmaceutical companies aggressively marketed opioid medications, downplaying their addictive potential and incentivizing doctors to overprescribe them. This led to widespread addiction, overdose deaths, and significant public health costs. Communities, particularly those already vulnerable, bore the brunt of the crisis, while pharmaceutical companies reaped substantial profits. This exploitation of the health commons underscores the need for better regulation and ethical practices in healthcare to protect public well-being.
Social Media and Mental Health
In the digital age, social media platforms operate as modern-day commons where users share and consume content freely. However, the design of these platforms often incentivizes behaviors that can harm users' mental health. Features like likes, comments, and shares create a feedback loop where users seek validation and approval through engagement with their posts. This can lead to addictive behavior as users constantly check for notifications and updates, seeking the temporary gratification of social validation.
Social media platforms' algorithmic nature prioritizes content that generates engagement, often promoting sensationalist or polarizing content. This can contribute to the spread of misinformation and exacerbate social divisions, further impacting users' mental well-being.
Collectively, this constant pursuit of validation and the negative effects of algorithmic content promotion contribute to a decline in overall mental health across society.
Educational Commons
The educational commons is a vital resource for society, yet it too can be subject to exploitation. One example is the rising cost of higher education. Over the past few decades, the cost of college tuition in the United States has skyrocketed, far outpacing inflation. This has made higher education increasingly inaccessible for many students, particularly those from low-income backgrounds. While education is crucial for economic mobility and social advancement, the commodification of education has created barriers for those seeking to improve their lives through learning. By treating education as a commodity rather than a common good, we risk excluding talented individuals from accessing the knowledge and skills they need to succeed, ultimately hindering societal progress.
Investing for Good and Financial Return
This is about preserving value for future generations. Focusing on these areas is beneficial for society and the planet and has tremendous financial upside. Investing in innovation and resilience in these sectors can unlock value in the trillions of dollars.
Importantly, investments that are for good do not have to mean below-market returns.
I Repeat: Investments that are for good do not have to mean below-market returns.
There is a strong business case for supporting companies that drive positive change. We can achieve financial success and societal impact by aligning our investments to create long-term value.
Areas of Focus
Investing in Health
The health sector offers incredible opportunities to make a difference. Investing in companies that develop innovative healthcare solutions can improve the quality of life for millions of people. This includes advancements in medical technology, telemedicine, and personalized medicine, which can make healthcare more accessible and effective. Furthermore, it's crucial to address mental health and wellness alongside physical health. Companies that offer mental health services, stress management tools, and holistic wellness programs are essential for creating a healthier, more balanced society. Not only do these innovations have the potential to save lives and reduce healthcare costs, but they also present significant financial returns for investors.
Building Wealth
Creating wealth is another key area of focus. This involves supporting businesses that promote financial inclusion and provide opportunities for economic mobility. For example, Fintech companies are revolutionizing how people access financial services, making it easier for underserved communities to secure loans, save money, and invest in their futures. A critical aspect of building wealth is enhancing financial literacy. Investing in companies offering financial education platforms and resources can empower individuals with the knowledge and skills to manage their finances effectively, make informed investment decisions, and achieve long-term financial stability. By backing these companies, we can help bridge the wealth gap and generate substantial economic growth.
Enhancing Resilience
Resilience is crucial for the long-term sustainability of our communities and the planet. Investing in companies that focus on renewable energy, sustainable agriculture, and climate resilience can help us mitigate the impacts of climate change and ensure a healthier planet for future generations. Additionally, Edtech is vital to building resilience for the next generations. By investing in improving the education system, we can provide better opportunities and resources, making future generations more adaptable and capable of overcoming challenges. Change only happens if we focus furthest upstream.
A Vision for the Future
For 300 years, we've been extracting value from people and the planet. We must spend the next 100 years finding solutions that help replenish and restore for future generations. By investing in these high-potential areas, I aim to bridge the gap and ensure that all share the benefits of progress. Let’s focus on building a world where value is not just extracted but created and sustained for everyone. By prioritizing investments that enhance health, build wealth, foster resilience, and empower through education, we can create a more just and prosperous world for future generations. It's essential to work on problems that matter and are hard. By tackling these challenges, we can drive meaningful change and create a more sustainable future for all. Whether addressing climate change, advancing healthcare, or promoting education, we must address these complex issues with determination and ingenuity. Build solutions for problems that matter.
The Double Bottom Line: Doing Good While Making Money
The status quo must be the double bottom line of doing good while making money. Prioritizing profit at the expense of people and the planet is a 1900s way of thinking. Businesses and investors must recognize their role in creating a more equitable and sustainable world. By aligning financial goals with social and environmental responsibility, we can create lasting value for future generations.
Funny enough, pursuing sustainability, social impact, and ethical practices in today's world is a moral imperative and a smart business decision. This shift is driven by a growing consumer preference for sustainable products, regulatory pressure favoring sustainable practices, and increasing recognition of the financial opportunities in sectors focused on sustainability and social impact. Clean energy, healthcare, and education, among others, address critical societal issues and prove financially rewarding. This shift highlights the interconnectedness of doing good and making money, where businesses and investors can create a positive impact while securing profitable and sustainable futures.
It’s a tagline I’ve tried to live by for a while now.
Be Good. Do Good. Feel Good.
I need to add one more line to that phrase.
For the Future Good.
