Are homeless immune to economic decline?

By DAVID MOON, Moon Capital Management, LLC
June 29, 2008


Amid all the worried discussion about the recent economic malaise, there is one often-overlooked group that seems immune from the effects. This enviable segment of the population is unbothered by rising gasoline and food prices. Subprime and other mortgage problems? Not a problem.

Many of these folks are even unaware that First Horizon (First Tennessee) stock has declined 80 percent in the last 14 months or so.

Who is this apparently fortunate crowd? The homeless.

Before you accuse me of being crass and insensitive, I hadn't considered this silver lining to the crossroads of $4-a-gallon gas and sleeping under a bridge until seeing the wisdom of our Knox county government at work.

When this serious and cerebral deliberative body halved the $100,000 expenditure on the joint city-county 10-year Plan to End Chronic Homelessness, I thought that the need must be easing. If the homeless suffer in prosperous times, they must be prospering in a recession.

Call it a reverse wealth effect.

Maybe the program is stupid and wasn't doing any good. If so, then why not cut it completely? It seems that you would either fund it or not.

This cut represents 0.0083 percent of the county's annual budget. If you make $50,000 a year, it is like reducing your spending $4.15 ' a year, not a month.

Don't get me wrong; $50,000 is real money and I appreciate my elected officials trying to ferret out waste at every opportunity. I just have to wonder if this is the first (or next) place to find a meaningful expense reduction.

In reality, I don't feel strongly about KnoxCounty reducing its funding for this specific program. I don't know much about it, so I'm not arguing in favor or against it. The city government is going to pick up the county's slack, so assuming the program does good work, it will continue to.

To be fair, I don't really believe that the Mayor commission cut the homeless program funding by $50,000 because they believed the problem is being solved. Nor do I think they were passing judgment on the merits of this particular program. Their primary stated goal was to reduce a $600 million budget. But they were focusing on little things that would never achieve that goal.

It's a common human failure. We often don't focus on the things we say are most important to us.

Steven Covey wrote about it in his book First Things First. We should spend our time and energy on the things that matter most. Being busy is not the same thing as being productive. Do you spend half of your 'investment time' on the smallest part of your investment portfolio? Or conversely, do you spend three hours a day watching CNBC or reviewing your online accounts when you could make more money concentrating on your main job or career?

Are you wasting all of your time with $50,000 debates when you could be looking for $5 million sources of revenue?

What are the most important things and major goals in your life that you can influence? Why spend time working on anything else?

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

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