eKourier July 2012

Nevs Notes... Prosperity vs Growth

Nev enjoyed expressing his ideas in this section of the Kourier. These little gems have been appreciated by many in KSS. We will continue to publish his ideas that we have in stock. Enjoy!

prosperity than a strained growth. If an individual pays off his house, reduces his debt, lives more frugally, he may become more prosperous. The western world has been through a period of extraordinary growth over several decades and we may all be somewhat addicted to the feel-good of such apparent prosperity. For many now, this period is at an end for some time as the borrowings get repaid, the malinvestments corrected, the spend-thrift habits changed. It is time now to become prosperous. Growth can wait. “Relax, kick back, economise, save, invest and become property prosperous.” While politicians and their big government departments want “growth” and exhort us to spend, if we each become prosperous instead, accumulate capital, concentrate on quality of life and have the choices that prosperity brings, we may be less fooled by their promises. Economic growth can be good and bring benefits to many, but not if it is an artificial growth, growth for growth’s sake, rather than founded on sound underlying prosperity. The next several years will bring, I believe, a correction of malinvestment in “growth” and a return, eventually, to real prosperity. Relax, kick back, economise, save, invest and become properly prosperous. Prosperity first, growth second.

But what about “prosperity”? What if “growth” may actually at times reduce “prosperity”? An investment should be made not out of some growth imperative, but out of a hard-nosed financial assessment. An individual, for example, may want to “grow” financially with more assets, but if this requires lots of borrowing it may actually come at the expense of prosperity. He may buy an investment property, borrowing to do so, and be financially stressed for years; he may actually be less prosperous. In the long run the investment property may increase in value, produce good income and relieve

the stress. It may be a good idea, but such an investment should be made not out of some growth imperative, but out of a hard-nosed financial assessment. It should have the prospect to lead to real

prosperity.

W e hear much these days about the “need for economic growth”, who often don’t know much about business, or about proper economics, and they don’t know much about prosperity either. They want growth for the sake of growth, but I am not sure why. They love the economic growth buzzword. Perhaps it is because economic growth papers over the cracks and flaws and blemishes in the system. For a politician, a government -The State - economic growth means more taxes and more spending, the stuff they love. They blindly and positively want economic growth. While the Greens blindly, negatively, want no growth. They don’t even like prosperity. Businesses too, mostly want to grow. There seems to be an unquestioned growth imperative. especially from politicians

A business too, a small company or a big corporation, needs to watch that it is not driven by the growth imperative that actually reduces the prosperity of its owners and investors. Accumulating capital, rather than growing with borrowings, may bring greater prosperity, albeit at the expense of growth. “An individual, for example, may want to “grow” financially with more assets, but if this requires lots of borrowing it may actually come at the expense of prosperity.” But when it comes to governments, to The State, they seem to be driven by the propensity and encouragement of their constituents to spend. Politicians want spending, and borrowing, even though it may reduce the comfort and real prosperity of the wage-earners and businesses in their Nation State. It is prosperity that is important. Lower growth, no growth even, may bring more

September 1st, 2011

Nev Kennard

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Kennards Kourier July 2012