There is a well-known fable from Aesop concerning an ant and a grasshopper. You may have heard of it:
One fine summer day, a grasshopper was hopping about, happily chirping along without a care in the world. An ant passed by, bearing a large ear of corn to its nest.
As the grasshopper continued singing and dancing, it watched the ant scurry back and forth, carrying large burdens on its back. The grasshopper couldn’t understand why the ant would toil on such a beautiful day.
The grasshopper teasingly asked the ant, “Why not come and sing with me, instead of working so hard?”
“I am storing food for the winter,” the ant replied to the grasshopper, “and think you should do the same.” Without a moment’s rest, the ant quickly rushed back to work.
The grasshopper still didn’t see the point. “Why bother? It is such a beautiful day and there is plenty of food,” the grasshopper said with a laugh and spent the remainder of the day singing and dancing.
But as it normally goes, summer soon ended and winter crept over the lands. It turned bitterly cold and frost covered the formerly green fields. With nothing to eat and nowhere to hide, the grasshopper felt the painful pangs of hunger.
Shivering, it looked sadly at the ant inside its cozy shelter, eating comfortably from the stores of corn and grain it had collected in the warmer months.
There are many morals to this fable, but my favorite one comes from a 1768 retelling:
“And in your frolic moods remember,
July is follow’d by December.”
What Happens When the Tide Goes?
The fable of the ant and the grasshopper is a famous one. It’s a simple story that delivers a strong message to readers. While the lesson may seem an obvious one, many of us still fall prey to a lack of preparation when times are good.
It isn’t simply the average individual who forgets to prepare for difficult times. Corporations, banks, and organizations deemed “too big to fail” do exactly that – they fail, massively.
On numerous occasions, Warren Buffett, chairman and CEO of Berkshire Hathaway has said, “It’s only when the tide goes out that you learn who’s been swimming naked.” The investor has written this line through the years in his letters to company shareholders.
By this phrase, he refers to how financial companies have a habit of overextending when the economy is booming, only to lament their decisions when the tide turns the other way. This habit became painfully clear in August 1992, when a powerful hurricane swept through Florida, Louisiana, and the Bahamas.
Hurricane Andrew was the most destructive hurricane to hit Florida. It destroyed over 63,500 houses, left 177,000 people homeless, and caused $27.3 billion in damage. Along with the physical damage that the hurricane caused, it also swept away much of the insurance business.
Over 930,000 policy holders in South Florida lost coverage after 11 insurance companies went bankrupt. Over 600,000 claims were filed, but the insurance companies didn’t have adequate insurance against catastrophe. Other insurance companies scraped by solely because of an infusion of capital from a wealthy parent company.
Had the hurricane not happened, these insurance companies would still be thriving. They would continue to deliver large profits while boasting of their strong underwriting services. But Hurricane Andrew did happen, exposing which insurance companies were swimming naked.
Are You Swimming Naked Everyday?
In your everyday habits, are you swimming naked underneath the tide? Or are you preparing for the inevitable winter season? Are you ready for the worst?
When times are good, it’s easy to take things for granted. You simply assume that conditions will remain the same. But there will come a time eventually when you hit a rough patch.
When that time comes, all the holes in your current situation become apparent. You might face exposure in different areas of your life, such as:
- Personal finances – You spend lavishly when your income is high because you figure that more money is coming your way. Having one strong source of income feels good when you have it, but it can quickly turn to zero when you lose it. That’s why it makes sense to create multiple revenue streams.
- Relationships – It’s easy to believe everything is going well when everyone is having fun and things are going according to plan. But once there is hardship and conflict, relationships get put to the test. You see where other people’s priorities lie and whether they consider your well-being.
- Adaptability – Are you used to being in adverse conditions and thinking on your feet? Or are you so accustomed to being in one place that a sudden change throws you off guard? Knowing how to adapt is a skill you learn by being exposed to environmental changes.
It’s tempting to slip into complacency when everything is well. We’re creatures of habit. We react to our environment.
If our environment stays the same, we don’t feel the need to do something different. In the back of our minds, we may be aware that a situation can change at any time. Yet despite this knowledge, we don’t feel the need to pivot.
Once something bad does happen though, it’s enough to shock us into action. It makes us realize that the ground beneath ourselves was shaky, and we weren’t prepared for it.
For instance, insurance companies in Florida have substantially changed the way they operate since Hurricane Andrew. The Florida legislature created the Florida Hurricane Catastrophe Fund and various underwriting associations to ensure there would be adequate insurance in response to future hurricanes.
On an individual level, it can be beneficial to experience an unfortunate event – one that causes us to worry and make contingency plans, but not catastrophic to the point that we have difficulty recovering from. Take those minor events as warning signs. When you turn a minor event into a learning lesson, you can prepare yourself for the worst case scenario.
An unfortunate incident can turn out to be a blessing in disguise years down the road.
What Adversity Reveals About You
There is an interesting quote about adversity attributed to novelist James Lane Allen: “Adversity does not build character, it reveals it.”
How you handle a crisis is a test of your character. In the story of the ant and the grasshopper, winter’s arrival only revealed what was already there. One was prepared for the imminent difficulties ahead, while the other learned the lesson too late.
If a component of your life unravels, it’s important to think about what happens next. When you are prepared, you can bounce back. If not, you end up scrambling around frantically and realizing it’s too late to make plans.
A storm will arrive someday. It’s not a question of if, but when. When that time of adversity arrives, what will it reveal about you?
Collapse: How Societies Choose to Fail or Succeed by Jared Diamond – In Diamond’s follow-up to Guns, Germs, and Steel, he takes a look at the patterns of catastrophe throughout history, and how some societies cope while others collapse.