Subtle threads tying quantity to quality

Abundance need not always result in lower value; used well, abundance offers tremendous benefits.

Anything available abundantly generally loses appeal and value. This is true from vegetables to electronic goods.

In the agricultural production centres, vegetables and fruits are strewn all around and a lot of them go waste as not much value is attributed to them. A fisherman who is back from the ocean hauls the net out of the boat and many fishes fall off. The fisherman makes no attempt to collect the fish that have fallen off the net as that is but a miniscule portion of his large catch.

But that does not happen with gold. The gold ore is processed and even the last vestige of gold is carefully extracted and not a milligram is allowed to escape during the extraction process. That is because gold is a precious metal and hence very valuable.

So we can certainly conclude that the scarcer something is, the more precious it is deemed to be. Or to put it the other way, the more abundant something is, the lesser we value it. Or is it?

Quantity has a quality – During the times of war, having enough equipment is of paramount importance. Even if the equipment is not the best, having a good number confers that side with an advantage.

For instance, if one side has advanced fighter planes but in limited numbers and the other side has less advanced fighter planes but in much larger numbers, the latter will have an advantage. For one, even advanced fighter planes can get destroyed in the air or even on the ground due to missile hits. Fighting with depleted numbers is challenging and enemy with even somewhat inferior equipment but in greater numbers will be able to prevail.

This is true of population as well, though this is actually a double-edged razor. With very low numbers, you will neither have the market nor have enough people to work.  Good population numbers can be an advantage, especially if they can be trained and deployed. That is touted as the demographic dividend, though it can morph into a demographic disaster if the population is not skilled well and cannot find jobs.

More gives both power and control - Having more of something can be very valuable, if we know how to play it.

U.S. mostly does not use its strategic oil reserves and is buying crude oil from various sources. They plan to use it when fossil fuel becomes scarce or extraction of what is left becomes costly. They are using their abundance strategically.

China is using their hold on rare earth deposits and capacity to process it strategically and is using them as leverage in their global dealings.

De Beers used to control the Diamond trade tightly through alliances and control over availability. OPEC controls oil trade and influences the crude prices through its control over a major share of world oil production. Many companies resort to hoarding at certain times and control the flow thereby profiting from the heightened prices.

The power of networks– When there is a system and many people use it, the system becomes very valuable. Take the case of Railways. The more the railway lines and trains connecting places, the more will be its popularity. Similarly, air travel took off when enough number of airports and the ground infrastructure became available, across the planet.

We have all heard the term Network Effect in connection with social media platforms. The more people on the network, the more valuable the platform becomes for those using it. This is quantity having a quality in its extreme form.

The wealth effect - Wealth abundance also has a positive impact on those financially well-endowed.

When the wealth pile is big, they worry less about expenses, goal achievement and in general about money. Their wealthy status gives them excellent bargaining power, access to better products that only they will be able to invest in and even have access to high quality advice.

Wealthy people have higher risk capacities as they have the ability to absorb volatility and losses much easier than someone with limited wealth, for whom these can even prove catastrophic.

For this reason, wealthy may be able to take risks for the prospect of better returns. The wealthy also have time on their side; they need not cash-out investments prematurely for contingencies or meeting goals as there would always be other monies designated for these. This enables them to stay invested for the desired period, ensuring best potential returns. In addition, volatility and risks associated with investments normally goes down with time, which again helps the wealthy.

All these cumulatively ensure that the rich do quite well indeed. It is a truism when they say the rich get richer.

In conclusion, quantity itself can be a major mechanism for leverage, in almost all spheres of life, including with our finances. Abundance need not always result in lower value; used well, abundance offers tremendous benefits.