Forget Consumer Confidence

Today's dominant headline shouts that consumer confidence has slumped and with it, goes the global economy. Breath deep; let's pause to consider that this event reveals a correctable flaw in how we measure growth and prosperity.

If your objective is to skim a few cents from many transactions, like many insurance companies, investment banks, or big box retailers, then of course, you can't afford to have the flow of those transactions slow much before you have to cut jobs.

But if your objective is to build a solid economic foundation that can withstand the ebb and flow of paper trades, you'll forever forget the idea of skimming and focus instead on value creation, with value measured as quality of life.

In this way of thinking, consumption isn't the engine of economic growth, it's just fuel for volatility. Debt-fueled consumption is counter to economic health because always carries dire long term consequences. Alternatively, the wise investor knows that debt is appropriate if it returns a higher quality of life in the future. We've become acutely aware of this concept in just the last two months. If we remain aware of it for a time, then we can plan for some realities:

• Oversupplied markets will shrink to their appropriate dimensions. We can afford fewer investment banks, for example.
• Actual measures of competitive advantage will apply. Fast, smart, long-lasting, purposeful products and services will always win. It's only in the last 10 or 15 years that lesser quality has been perceived to be better. This was always false.
• Good ideas in green, lean and local will come together in innovation hotspots and create new jobs. Expect a retooling from auto to Internet, infused to fresh, silos to collaboration. Manufacturers that stay put but reach out and remain flexible, and continue to solve real problems will emerge stronger.

Now is precisely the time to ignore consumer confidence, and instead focus on the positive outcomes that we know always emerge from austerity, discipline and real human energy, ingenuity and effort; outcomes like time, health, character, safety and comfort.