Debasement and Devaluation

When something is debased, it becomes less valuable for its purpose. Because it is less valuable, we trust it less and desire it less, and we seek alternative forms of satisfying the purpose that it used to fulfill. There is a natural, even if gradual, flight away from what brings less of the value we seek to what brings more. 

In finance, for example, we see the impact of currency exchange. For many US-Dollar denominated investors, investing in the Philippines entails more risks, and one reason is the fluctuating currency that tends to lead to a devaluation of the Philippine Peso. For example, someone who invested $1,000,000.00 at a time when the Peso was at P50.00 / $1.00 would take a 16% FOREX charge when converting back from PHP to USD, assuming no increase or decrease in the principal investment. Before: $1,000,000.00 = P50,000,000.00 at P50:$1 which, when converted back, equals $833,333.00 at P60:1. The total value of the investment in USD has decreased significantly even without the investment going badly simply because the currency used, the means by which value was stored, measured, and exchanged, lost its value. While I’m hoping things improve from a foreign direct investment perspective, I can understand that there are less risky alternatives for investors. 

Debasement is similar to devaluation that both entail the lessening of value. But while devaluation is simply the actual lessening of the value, debasement is the act of it. Devaluation is what happens when something sees its value drop. Debasement refers to actions and activities performed by the custodians of that thing of value that lead to its devaluation.

An example of debasement is when the value of money used to be tightly associated to the precious metal contained in its coinage. When a government would start decreasing the percentage of precious metals in their coins, let’s say for cost issues or production issues, the less people trusted the coinage and it became less desirable (or less valuable to those transacting with the coins). The act of lessening the precious metal content is debasement. The falling of the value caused by the debasement is devaluation. 

Debasement in Institutions

There has been a great debasement across once great institutions by the custodians of those very same institutions caused by a greater focus on the survival of the institutions, the preservation of accepted dogma, and the entrenchment (and many times enrichment) of incumbent custodians. (I’m obviously generalizing with this statement as there are many institutions that continue to thrive and deliver great value.) My point is that those institutions that have focused more energy on institutional survival, preservation of dogma, and party entrenchment, will naturally debase the value of their offering and fail in their mandate, causing the people seeking the value they promise, to go elsewhere.

Devaluation is what happens when something sees its value drop. Debasement refers to actions and activities performed by the custodians of that thing of value that lead to its devaluation.

When I think about very important institutions such as a church for our spiritual health, a hospital for our physical health, a bank for our financial health, a school for our intellectual health, as well as other institutions , I find that many of the people I know are not only getting by without them but are thriving with alternatives to them. People are finding that it is possible to enjoy a healthy spiritual life without top-down hierarchies and messianic leaders. There are many people, through better lifestyle practices and proper diets, living healthy physical lives while rarely seeing a doctor. We see more of us turning to alternative sources for financial wisdom and financial products and services, seeking new ways to build wealth beyond the inaccessibility of a traditional bank. And how many of us gain and apply so much information from non-degree or non-certifying but still educating sources?

This is not to say current institutions are horrible or incumbents are malicious. This is why I refrain from criticizing specific organizations or people. I think, like everyone else including me, we are working with what we know and doing what we can. This is simply an observation that people are finding less value from the institutions whose mandate it is to provide value and are turning to other sources – and finding satisfaction. 

Any institution that channels more and more of its and its stakeholders energy at maintaining a bureaucracy, ensuring compliance, and getting the approval of its leaders will lack the necessary energy required for the greater understanding, the greater execution, and the greater innovation required in greater value creation.

Being able to balance a necessary level of controls and continuity with progress and growth is difficult but not impossible. I think the key to this is being more committed to providing and improving the value of one’s offering over other things, which may also be important, but are subordinate to the value of one’s mandate. 

Reflection: Leadership is a Mandate

At times in my life, I’ve followed the wrong people.

While I can’t really say I followed “bad” or “evil” people, I can easily admit that my judgment about the motives, character, and capabilities of many leaders I looked up to was off and impacted my life negatively. While I don’t blame them (I was the one that chose to follow them), I have learned to not follow others like a simpleton. I’ve learned to be wary of so-called great leaders. 

I realize now that I did not understand that leadership is a mandate, which is the authority and obligation to perform a duty. The word duty comes from an Old French word which means “what is owed”. This perspective on leadership understands that every leader takes on an obligation to deliver a defined value within a certain period, and he or she should be evaluated by their actual delivery of that promise. 

In areas that I have delivered on the promise, I was a good leader because I fulfilled my mandate. In areas where I have failed to deliver, I was a bad leader because I did not fulfill my mandate. In areas where I have yet to fulfill or fail on delivering, the jury is still out. And in infinite areas of life that are not time-bound, the quality of leadership will be judged by the people who have gone on that journey with me. It doesn’t matter how many people respect or admire me. It doesn’t matter whether I can say I tried my best. It doesn’t matter what great excuse I can come up with. It doesn’t matter if I’m better or worse than the other guy. It doesn’t matter if I have starting advantages or disadvantages. If I take on a leadership role, I take on the corresponding obligation.

If someone is not committed to fulfilling their obligation to me, they should not be my leader. If someone is not able to fulfill their obligation to me, they should not be my leader. Because the commitment (not just willingness) and the capability (not just effort) of someone to fulfill obligations will determine the quality of their leadership’s impact on my life.

And if I’m to be a good leader, I need to bear the weight of obligations – and I need to continuously improve myself to be excellent at fulfilling them.