Past performance is not indicative of future results,” as everyone who invests in stocks or funds will know, or even if he just listens to the pitch from well-meaning advisors. It’s the federal regulatory version of “Your mileage may vary,” or to go way back to Roman law, “Caveat emptor.” The point is that there are risks all around us, and it is one’s own responsibility to recognize risks in the decisions we make.
That does not mean we like it. Or that this responsibility makes sense to us. I am persuaded that most people would prefer not to take risks and that the desire for certainty, stability, and predictability is fairly ingrained in human nature.
Not in everyone, of course. We admire people called risk-takers for just that reason – because they can foresee outcomes most of us cannot, or they can overcome obstacles most of us will not attempt. It’s that quality that makes us admire or envy the risk-takers. That awareness is human nature too. And there is more… we’re inherently curious to know what others know and we do not.
These facets of human nature are displayed all around us. In addition to cautioning us about risks, the federal Securities and Exchange Commission has defined what public companies must disclose about their actions and plans, because it was established to protect investors, maintain fair and efficient markets, and facilitate capital formation.
Curiosity leads us in the opposite direction too, and apparently there’s not enough information available now for many businesses, resulting in a fair outbreak of uncertainty in the manufacturing economy.
“This summer, everyone is playing wait and see,” according to an official with one manufacturing trade association. “No one is investing in new production unless they have the security of a long-term project, such as for the defense industry, where cost is less important than delivery. Demand from the automotive market is weak, and the supply chain is getting squeezed by tariffs while vehicle manufacturers protect their bottom line.”
Import tariffs are the proximate source of their uncertainty, which is understandable if we review the record back to February or March. But ‘uncertainty’ clouded manufacturers’ decision-making over electric vehicle subsidies, over labor disputes at Boeing in 2024 (and the Big Three automakers in 2023), and over the prospect or expectation of Federal Reserve Bank interest rate cuts through almost every quarter of the inflation-ridden economy of the past five years. That takes us back to the uncertainty mandated on the public in 2020, roiling supply chains, and coupling public doubt and suspicion with people’s inherent curiosity.
So now, disclosure is not enough. We demand certainty. Risk-taking is for fools, it seems. Private transactions dominate manufacturing markets, with increasing numbers of manufacturers controlled from a distance by limited partnerships, dictating policies and defining strategies based on financial models rather than the particular realities of an industry.
Certainty is a very high standard, but for many investors it’s seemingly the only thing that will grant them the confidence to keep their lights on in the present economy. What does this mean for the future? Shrinking productivity? Less innovation? Those would be logical developments if everyone stopped trying new things, different approaches to set routines, or new formulations for established functions.
Those businesses demanding certainty are simply reflecting the thought processes of their managers – but for how long? Individuals increasingly depend on Artificial Intelligence, versions of which answer their most mundane and arcane questions, but profiling each one in ways that will make it more effective and efficient, collecting insights that define a market of one. Thus each one become a more and more demanding consumer, but also an increasingly dubious and doubtful individual.
There are a lot defects in human nature that are not corrected by increasing customization of information and individualization of products and services. There are a lot of doubts that are not resolved by accepting the outcomes we preferred from the start. We may demand to know more than we do – but if we do not accept the consequence of the answers how can we improve?