We are growing out, but not growing up

By Frank-Jürgen Richter

Nikkei Weekly, May 14, 2012

“Panflation has dangerously deflated the world’s potential for progress” – By Frank-Jürgen Richter

A recent article in The Economist brought up a very serious issue for our time: panflation. According to the article, a size 10 dress in 1975 was for women with 24-inch waists. Today, a size 10 accomodates 28 inches of girth. The ‘same’ standardized size has suffered inflation.

In fact, all sizes for men and women have changed. People who are roughly the same build today as they were in the 1970s can wear sizes that are ‘smaller’ than they were decades ago.

This ‘size inflation’ flatters those who are putting on weight, even if is a natural consequence of becoming older. A surgeon once told me that older men naturally add about 3kg every decade. This is not because of obesity, but because of the natural tendency of people to lead a more sedentary lifestyle as they get older.

Size inflation can work as a marketing tool. It can help to sell clothes. Buying items in the same size for a number of years makes us feel better, and so we spend more.

But people do seem to be getting bigger, and at a younger age. We have all seen the stories of obese men having to buy two airline seats or to be winched out of their bedroom windows because they are too big to take the stairs, for example.

Media does not help. While some stories offer sound health advice, others scream at us to buy snake-all cures – dubious products that it is claimed are guaranteed to help us to slim.

The Economis article, titled ‘The perils of panflation’ noted numerous other effects of size inflation. Food portion sizes have increased, and wine as well be served in buckets. Hotels offer deluxe, rather than standard rooms. Airlines no longer have economy seats, they are now described in less honest terms.

Sadly, as The Economist piece released April 7 notes, panflation has even reached our education systems. While levels of intelligence have remained fairly constant, more students are achieving the highest grades. This is good for the students we are told. Yet when the new graduates enter the workplace, employers are aghast at their low abilities. And then there are the many youngsters who never get jobs, who just sit around getting fatter, literally, on the state.

We cannot affort to let his state of affairs continue, we are letting our young pour from schools without a real chance. This is becoming a burden. While youth may be pleased to fit into small jeans, they will not have the ability to question why their clothes sizes do not go up along with their weight. Poor education leads to poor analytical skills.

Light on truth Society’s increasing lack of analytical nous is reflected in the electioneering practices around the world. This phenomenon is easy to see in recent French and U.S. elections. The two nations are very different, but the populations of both countries look to their elected leaders to lead.

Under such circumstances, politicians try to probe to us they are the best people for the job. In the U.S., this led to cast sums of cash being spent on the primary elections as Republican candidates fought for the nomination to run for the presidency.

Trying to prove their worth, candidates spent millions of dollars on advertisements that focus on the qualities of themselves and the weaknesses of other hopefuls. Meanwhile, many nations are clamoring for financial aid.

Adding to the evidence that the campaigns may be wasting money, often election advertisements are salacious. But we fail to pass judgement, it seems. Perhaps today’s electorate measures a politician’s worth on public exposure alone.

The situation in France is also worth considering. There, campaigns were calm, but the population massaged by inconsequential stories.

There are risks around the corner, however. France’s leader-in-waiting, François Hollande, appears to disagree with European Central Bank on fiscal policy. Those disagreements could hurt the French economy. But there has ben little debate about the very messy financial situation that France could face within weeks.

There are hints of the simmering unrest that political change has brought about on financial markets. It is not just the crisis in Europe behind market instability thought. It is rather financial markets’ tendency to rush to move money at the slightest hint of new data. Some of these rushes are caused by automated mechanisms on software written by Wall Street programmers.

The software used on Wall Street lacks the ability to critically assess the economic situation. The people writing the software have top scores from top universities and have worked for top investment houses. But do they know much about the real world?

The same can be said of voters in the U.S. primaries and in France. Do they have the critical ability to cut through the subterfudge to ask the questions that will highlight who can lead abd who can only bluster? Probably not.

As we can see, panflation devalues everything it touches. Unfortunately, it also inflates our perceptions of our own prowess. This in turn conflates into our leader’s belief in the electorate’s abilities to chose politicians carefully.

But with a large portion of the electorate ill-educated and unemployable, unable to survive without state handouts, how long with this system survive?

Worryingly, financial markets sniff out signals about the direction of economies, and they are unemotional. They will shift their alleciances faster than voters, perhaps to the detriment of all.

There is no easy fix. Politicians are stuck in systems where voters cannot be told the truth. The electorate seems to want to live in a world of fantasy.

Frank-Jürgen Richter is founder and chairman of Horasis, a global business community. Horasis hosts annual meetings for senior executives.