Is the glass half empty or half full?

By DAVID MOON, Moon Capital Management
November 25, 2001

Mark Twain was right when he said, 'few of us can stand prosperity. Another man's, that is.' Look around; you see people reveling in the failures and poor fortunes of others. For years, I suspected this trait was common across cultures and communities, but I am becoming convinced we have more than our share of negativism in Knoxville.

Recessions happen. Always have; always will. There are different types of recessions caused by different excesses. Each type requires its own purging process to prune the economy back to a state where it can once again be healthy and grow. It is a natural process.

Just as natural as the rhythmic oscillation of the economy is the Darwinian nature of business. There are successes and failures. This should surprise no one. Individuals have always been the visible, tangible focal point of these successes and failures. At the margin, it is easy to misinterpret the health of an economy or geographic region by focusing on the individuals involved with businesses at the margin. But this technique is no more valid than walking into a sports bar, seeing one play of a football game, then deciding who is winning on the basis of that one play.

In the last several months, economic growth has slowed in the US and in Knoxville. But consider this: our current unemployment levels are still lower than is typically seen at peaks of economic expansions. Just a few years ago, many economists argued it was structurally impossible to have as low of unemployment as we now do, without creating wage inflation.

When I drive down Kingston Pike, I have a choice: I can focus on the growing or the failing. In Bearden, three restaurants recently closed. Less than a mile down the road, Cha Cha's works with a 2 hour wait for weekend dinner. Less than 100 yards from one of the closed restaurants, Belleza Spa now operates in a converted and newly renovated facility. A couple of clothing stores closed in the area. Who is to blame: the economy or M.S. McClellan? Within 500 yards of that location, there are multiple class A office buildings under construction or recently completed. In fact, there are several large class A office developments currently underway in several parts of Knoxville.

Some of these developments and successful businesses will one day fail. It is an economic fact of life. But like a forest fire, the burning of undergrowth provides the fuel and freedom for something else to grow in its place. The original developer of Sequoyah Hills failed. The neighborhood turned out all right.

It all depends on your view of life. When circumstances are tough, it can be a challenge to focus on the silver lining. But in the aggregate, circumstances are not tough. We have more people employed in this country that at any time, up until a few months ago. We are wealthier and more literate than ever. Our nation's poor are the envy of much of the world's middle class. And the rich in our country are more wealthy than anyone could have imagined only a generation ago.

In times like these, it is easy to get into the 'glass is half empty or full' discussions. Don't get into that debate. Our glass in the US and Knoxville is so full that we spilled some of our water.

Enjoy the rest of your Thanksgiving weekend. We all have much to be thankful for.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

Add me to your commentary distribution list.

MCM website