Market Commentary for the week of February 14, 2011

Oasis.

While many are transfixed by the chaos and confusion in Egypt, Tunisia, and Yemen, it is important to recognize that such unrest is not uniquely Middle Eastern, nor is it caused specifically by unruly despots.  Indeed, the root cause of social upheaval usually lies in the breakdown of social institutions whose function is to provide, or create, fairness and opportunity amongst the citizenry.

The deficits we see are not structural treasury deficits, but rather the deficits from unequal distribution of education, social access, financial equality, religious opportunity, and basic freedoms.

That is why we in the West should heed the elementary message of these demonstrations and apply their implications to ourselves.  Without sufficient access to opportunity, and a level playing field upon which to implement that access, no society can truly be invulnerable.

Moral ingredient.

While America describes itself as the “shining moral beacon upon the hill,” let us look carefully at the landscape of our own social network.  No child should go to bed hungry.  No child should be denied access to educational opportunity.  And no citizen should be meant to feel that the “haves” have acquired their well-earned fortunes through devious manipulation of unfair access.

To that extent, the revolution in the Middle East is a capital revolution.  Not just a fiscal capital revolution but an intellectual capital revolution in which each citizen aspires to the same opportunity to be free, be a teacher, become a president.

In addition, secondary issues exacerbate the dangers.  As the global food chain becomes stretched, increased demand creates upwards pressure upon prices, forcing many to make choices that are without a logical moral basis.  Rioting for self preservation reeks of a perfidious choice.  How long these danger signs linger is not a matter of days, but years.

Are we really prepared to answer this great moral question of our time?

It only seems a million miles away to us because shortages haven’t hit our shores.  Developed countries have created the infrastructure to distribute and supply its citizens with enough raw materials and processed product to avoid falling victim to global idiosyncrasies.  “If it’s not in my neighborhood, why should I care?” one hears.

Stretching the limit.

But not only do shortages affect less-developed countries more because of price constraints, but also because the societal infrastructure has been disposed and broken for so long.

If we expect global standards of living to rise, we not only have to finance connectivity of the internet, but also distribution channels for knowledge, faith, food, and capital.

Being thrifty simply to create more immediate profit is a shortsighted view of a capitalist utopia.  Our leaders should know better, that a well educated, health-conscious, fully employed populous stimulates more investments, more growth, more optimism, than simply hoarding a dollar.

At some point, the moral value of capital reserves must be stronger than an engorged bank account, alone.