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Episode 9
Opening – Good Day everyone. In my last Episode 8, I spoke about Darren Shearer’s 4 indispensable qualities that a spiritual entrepreneurial leadership should have. Today, Episode 9 titled “Biblical Entrepreneurial Leadership in Crisis Management”.
Entrepreneurs will inevitably encounter crisis in business ventures from time to time. Risk exposure comes from various sources such as geopolitics, domestic social politics, and financial meltdown due to economic slowdown, cash flow lockdown from financial institutions, supply / demand chain disruption, natural disasters and so forth. All of these will have great impact on enterprises. Although a crisis may come in various forms, the impact is still the same. First and foremost, the employment and livelihoods of citizens are impacted when companies suffer losses. There is a chain of economic reaction.
Using the scenarios from two real cases: Let’s begin with the fairly recent memory of the global financial crisis (GFC) in 2008 which originated from the Western nations. Before then in 2006, housing prices started to fall for the first time in decades. At first, realtors applauded. They thought the overheated real estate market would return to a more sustainable level. They didn't realize there were too many homeowners with questionable credit. In addition, banks had approved loans for 100% or more of the home's value due to low interest rates. This snowballed into a bigger overheating of the real estate bubble as many people were chasing after the ever-increasing price of real estate assets. People became greedy, thinking that the real assets will provide future financial security. Unfortunately, the economy structure as in 2008 could no longer be sustainable and the bubble burst, causing a global recession. As a result, the GFC meltdown brought almost the entire world to its knees for many years. Many people lost their means to earn a living, if not losing their dream houses. The poor became poorer and the rich became richer as the latter bought up the unserviceable mortgagees’ assets.
Even more recently, the COVID-19 pandemic crisis has shown that there is literally no one single country in the world can escape from this disaster. Millions and millions of the world’s populations were affected. The high number of fatalities caused the whole world to be locked down in various levels. Interstate borders were closed to prohibit movement both domestically and internationally. Conceivably, this pandemic was much more damaging to the entire world. This coronavirus pandemic threatened to make an already bad situation even worse due to the on-going trade and technology war between USA and China. Worldwide unemployment caused the outlook for many people’s livelihoods to become ever darker. This crisis struck both the rich and poor – all genders, all ages, all races, all cultures, and all corners of the world alike.
Some people called it “the great equaliser”. However, here are some of the ways that the pandemic would probably exacerbate inequality. Research by economists has found that income inequality would rise for few years. Unemployment and loss of livelihoods caused the bulk of it bringing about unprecedented times. Low wage workers tend to be first losing their jobs and the last to be hired back. The economists found that workers with lower educations suffered much more from unemployment after this pandemic because a new norm that depends on technologies emerged to replace lower-educated workers after the pandemic is over. Unemployment also hurt lower income people more because they are not financially equipped to manage it. Higher earning people who get laid off usually have cushion of savings they can rely on. In this spell of unemployment and credit restrictions, it means that there will be long-term financial damage, which will prevent them from bouncing back at all if not in a slow pace. Though governments were throwing some forms of lifeline to the unemployed and badly affected business entities, those governments will cut back on wealth redistribution after the pandemic. This is because ad-hoc policies to support the unemployed and business entities are only a temporary bailout relief which comes with a heavy fiscal cost. The loss of tax revenue from this depression persists after the immediate danger is over. Rightly or wrongly, many governments will probably try to tighten their belts, meaning fewer social non-essential services and less transferred payments for the poor and middle class.
From these two scenarios of crisis, besides unemployment and less goods and services distribution, there will be also lack of asset-market support. Stocks, real estate and other financial assets tend to fall in value at the beginning of recession, because companies’ earnings and tenants’ ability to pay rents will take a hit. Increasingly the banks concerned will prop up asset values by acting as buyers of last resort. As long as there is downward pressure on prices, the central banks can create money and buy stocks. As stocks are disproportionately owned by the rich, this yields greater wealth inequality. Therefore, the rich become richer and the poor become poorer.
In the example of COVID-19 pandemic, there will be many aspects of inequality uncovered. Geographic inequality - the pandemic has struck some states and cities much more than others.
The measures to suppress the outbreak have been varied. Some implemented total borders lockdown, some used wide-spread testing and contact tracing to control the spread, while others re-opened business pre-maturely with limited suppression measures for one reason or another. The economy and incomes will suffer more in the former option than the latter with a heavy price. Lifestyle inequality – the coronavirus has imposed great changes on the way people live and work. Many knowledge workers are forced to work from home or remotely, while lower skilled workers have to choose between risking their health or losing their incomes or jobs. This created inequality in safety and convenience, and caused further widening if the disparities in income and wealth. International inequality – globalization will decline and each country will be left on their own to do what they can to generate / re-generate its own domestic economy. Those countries which depend on exporting natural resources will see their commodity prices collapse. And those countries which depends heavily on trading and have no natural resources will certain suffer even more.
In view of all of these scenarios of crisis and impact, as a Christian entrepreneur, would there be a solution for him or her? Could a Christian Entrepreneur afford to practice the Biblical Law of Gleaning, or other biblical principles of grace while their company is suffering financially? Christian values of honesty and integrity will be tested when his/her business is badly affected with business down by 90%. There will be tough questions to be asked, and the response needs to be considered and responsible. It may be easy as said by Xi Jinping (1953 – present), “We should not develop a habit of retreating to the harbour whenever we encounter a storm, for this will never get us to the other side of the ocean.”
But, can this be done? As Darren Shearer pointed out earlier, seeking out accountability to godly advisors will provide some help if not all of it. As Prov. 11:14 points out clearly, “Where there is no guidance the people fall, but in abundance of counsellors there is victory.” Moses faced many a crisis in the beginning of the Exodus journey when people were grumbling against him for putting the former life away for the punitive Exodus journey. After he took on the advice from his father-in-law Jethro (Ex. 18:13-26), he properly trained to manage the affairs of the one million Hebrews in the Exodus endeavour. Again Christopher Columbus (1451 – 1506) said, “No one should fear to undertake any task in the name of our Saviour, if it is just and if the intention is purely for His holy service.” He said rightly and biblically, that any ultimate decision made will be centred around our Lord Saviour with sincerity and justice in God’s righteousness.
Ending – Thank You for listening and please stay tuned with us in my next Episode.
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