I've been listening to the recent debate on "fair trade", the minimum wage and illegal workers.

As an investor, you look at a company and you demand revenue growth and profit growth - every year if not every quarter. As a company, you can grow in two ways:

• you can get more customers or
• you can get existing customers to consume more.

If you raise the minimum wage, you will raise costs which will raise prices. People who argue against raising the minimum wage or against a "living wage" point out that increasing prices will decrease consumption and hurt everyone.

So be it.

If you look for an example of continuous growth in nature, you find cancer. Our model of continuous growth is flawed and the sooner we deal with it the better. A sustainable solution implies that you can reach a profitable state and size and stay there, not growing and not shrinking. Our current system of investing and business thinking does not accept this as a viable or even desirable outcome but it needs to.

Let's look at the growth issue more closely. I dont have a problem with growth by finding more customers. If you have every customer in the USA, you can go abroad to other countries. There are so many people in the world, global expansion can go on for many years yet.

The real problem comes from increasing the consumption of existing customers because there is a limit to what a customer should consume.

Let's say you sell Coke. Your customers consumes 1 can a week. You chant the "growth growth GROWTH!" mantra and you work hard to get that consumption to increase. And it does increase. To a can per day, then a liter per day, then 2 liters, then 3 liters...

Im sorry but people should not be consuming that much of your product every day. It's not healthy for them. Your company many be reaping profits but you are a net drain on your country, your culture and humanity. Drinking 3 liters of Coke per day is sick, and you probably know that. 300lb or 400lb people are clearly unhealthy and your product is a major contributor.

Given the amount of sugar in the product, one can per day and one can per week for children is a better amount. (In an interesting side-note, I recently heard an interview with the CEO of Jones Soda. He openly admitted that people consume way too much soda and that he limits his daughter to one soda per week. In his works, soda should be a "treat" not a staple of daily life. Impressively forward-thinking talk from a CEO.)

This issue of over-consumption is easier to see with food but it applies to many if not most other products. The amount we ought to consume is personal and different for everyone but there is a limit. If you have no savings for retirement, you dont NEED that 5th TV or a new car or a bigger house. As a society, we have all succumbed to short-term thinking and a confusion between needs and wants which is ultimately going to be very bad for us and bad for the businesses that are profiting today.

Businesses should focus on a size and consumption level that can be profitable indefinitely and on increasing the number of customers instead of on increasing customer consumption. This is doable, even desireable, but we need to adjust our investing expecations to make it a reality.

In the old days, we valued companies by the value of their future cash flows or dividends. Since the 1990's, we have simply focused on growth and company valuations have increased exponentially. You cannot justify P/E rations of 40+ without the expectation of explosive growth. Unfortunately this valuation method does not work for large, mature companies nor does it set reasonable, long-term expectations. Maybe some things were actually better in "the old days."