Do you want to be important?
Psychologists tell us that everyone needs to be needed. Indeed, among our hierarchy of needs, belonging and significance come just after basic wants like food, shelter, and safety.
Of course in the marketplace, firms all want to be part of their customers’ lives. Businesses are looking to grow market-share, mind-share, and wallet-share. When it comes to marketing, more is better.
But there can be too much of a good thing.
Since the Financial Crisis we’ve decided that some companies are systemically important—too big to fail. They’ve become so central to the economy that their failure would have massive ramifications. So we saddle them with additional regulations: more capital, regular stress-tests, living wills, and so on. Now no one wants to be that important. It’s too costly.
But we see this in life all the time. Parents are financially significant to their children, so they pay for disability or life insurance to provide for them financially if something goes wrong. People who are dating become emotionally significant to each other and have to decide if they want to make that deeper commitment. Sometimes they back away. When you become essential to someone else, that has a cost.
Calvin Coolidge once said, “Men do not make laws. They do but discover them.” The idea of systemic importance seems to be one such discovery.
Douglas R. Tengdin, CFA
Chief Investment Officer
Leave a comment if you have any questions—I read them all!