The Simple Truth About Economics

We have the potential to do great things, amazing things in fact. Each man and women, represents the currency of that potential. Each of us has skills, knowledge, and abilities that can be used to work wonders if given the opportunity.

The economic down turn that we are experiencing represents a failure to tap that potential. As a matter of fact, the solution is quite simple when one boils away the complications, and excuses that allow it to persist. It can be described in the following equation:

Identify needs – put a sufficient number of people to work producing those needs – put the remainder to work producing wants and improvements = healthy economy

If we were to do just that, everything we needed, and much of what we wanted would exist in abundance, and (in a healthy free market) exist at reasonable prices. Unemployment would be practically non-existent in terms of people who were willing and able to work, and we could achieve remarkable prosperity as a society.

Too simple you say?

Why? Does it have to do something with the infusion of capitol, or the circulation of money?

If it does, that is rather revealing of a fundamental problem with our economic belief system. It assumes that we are trying to produce money, and that our wants and needs are a by product of that money. Think about this for a moment. Is money what you really want to produce? Does the money have any intrinsic value beyond the paper it is printed on? Beyond that, money is only as valuable as the general public believes it to be, and in the wrong hands it can be used as a tool to deprive people of the real resources they need to survive, while producing nothing of real value in return.

Don’t get me wrong, money is a great tool to facilitate trade. But money is after all, only a tool. In reading “The Forgotten Man”  Amity Shlaes insightful look at the great depression, I was amazed by the manner in which some communities responded to the onslaught of the depression. As the local banks went dry, or shut down all together, they did not crumble in to despair or stop working all together, but reached deep in to their own innovation and set up small local economies to meet their basic needs. Many of those local economies began with basic bartering, and some even developed their own local currencies. They understood the need for self sufficiency, and went about the work of meeting their needs.

Each of our communities today should look to that example, and insure that there is no essential need that can not be met locally. Certainly our lives are deeply enriched through outside trade, and it is difficult to imagine a life deprived of things as simple as bananas or any of the many gadgets, brought to us from over seas, that make our lives simpler or more enjoyable. But we must stop to ask if we really want our lives, not only to enriched, but to depend on that trade? In many ways we have done just that through our dependence on foreign oil, and it has left the United States vulnerable in many respects.

We have the people, the resources, and the potential to do great things. We can create innovative new sources of energy, abundant housing, truly advance medical science in to the 21^st century, or any one of a thousand noble goals. That or we can worry about how to produce more money. Which one would you prefer?

It begins with a vision; it begins with you and me pushing to make that vision a reality, and with leaders who have the courage to point the way and give people the opportunity. We can turn things around by producing real things to meet real needs. It is, just that simple.

What is the Greatest thing we can produce to give people better lives?

How to Save General Motors

It is time to think differently.  The argument that all our large enterprises, banks, insurance companies and automakers are too big to fail is simply a way of rewarding failure.  And the rewards are large.  Giving billions to bankroll the leaders who created failure to keep them gambling with our money is stupid.  Outrageous.

In the late 1980’s I led a retreat of executives from General Motors.  At the time their manufacturing quality was in crisis.  They were literally re-assembling Buicks in the parking lot of the Flint Michigan plant because the cars coming off the assembly line were not screwed together.  I said to them, “What unique value do you bring?  If you went out of business, would anyone care?  Or would they just buy Toyota’s?  They looked at me as if I was from Mars.

I also worked with executives at Saturn just previously to its initial launch.  Expectations of the car were very high.  It was touted to be revolutionary as sort of a Jetson’s speeder.  The cars’ production had been delayed and delayed and the GM brass was agitated.  The problem was they hired 700 engineers to design one economy car.  Sure there were many innovations especially in the manufacturing of the car but 700 engineers?  So Skip, Saturn’s CEO, finally selected 22 engineers to finish the project.  It was a last second act of common sense.  In 1993 when oil was $22 a barrel Toyota decided to build a hybrid Prius.  With the same facts GM decided to build big SUV’s.  Today, Toyota is the world’s largest automaker and GM is burning through cash faster than a teenager with her mother’s credit card.  What’s wrong with General Motors is the inbred thinking.  They live in an unreal world.

Here are some problems and solutions:

1. New car development, manufacturing, sales, use, and disposal are some of the most wasteful industrial activities in the world.
2. Consumer research says buying a car is one of our least favorite activities.
3. Nearly all safety, efficiency and anti-pollution improvements in domestic autos have been mandated by law.  Without regulations we wouldn’t have seatbelts and we would have smog belching exhaust pipes guzzling more gas than we can import.
4. The U.S. auto industry has been failing since the oil embargo of the 1970’s.  Market share of GM, Ford, and Chrysler has steadily declined as consumers have found better value from foreign markets.  (Internally, Saturn’s goal was to make a car almost as good as a Honda Accord.  No, I am not kidding.)
5. The J.D. Power Quality ratings are twisted.  Last year Buick was rated top in the first 90 days of customer quality as rated by customer complaints.  But the average age of Buick buyers is somewhere close to 100.  And guess what?  Older folks drive less and complain less.  A Buick has higher quality than a Lexus or a Toyota?  (Actually the two car companies that have the fewest repair technicians per car on the road is Toyota and Honda.  No surprise.)
6. General Motors is loaded with talented design and manufacturing people.  They are strait jacketed by incompetent leadership and a stifling and non-sensical bureaucracy.  The biggest problem is that GM leaders think they’re entitled to succeed simply because they’re General Motors.

Solutions:

1. First of all no government loans should be offered without the top management fired without financial parachutes.  They have failed miserably in virtually every way.  In fact I would start with the top 10% of GM management being fired with an invitation for those who are most competent to reapply.
2. Revolutionize the way cars and trucks are designed to be light, safe and efficient.  Cars and trucks don’t have to be tiny to be efficient.  Actually according to safety experts, the safest vehicles are big and light.
3. Make the car buying process and supply chain more efficient.  A lot of people would hate this, but we ought to buy cars directly from the manufacturers and cut out the wasteful overhead of an old fashion dealer network.  We simply don’t need big dealers with acres of cars that require financing and take up space.  What if instead manufacturers had smaller showrooms in malls or mall parking lots with a few cars to test-drive.  Then we ordered our cars from the showroom or our homes via the web.  Our car was then made and delivered to us in 10-14 days and our trade-in picked up.  Our cars would be serviced by independent, certified repair centers.  The amount of wasted overhead we would take out of the business process could reduce the cost of cars by about 20% while increasing profits and consumer satisfaction.  (Of course we’ll need to re-train all the people who lose their jobs to do something productive.)
4. Finally, we need to think about personal transportation in new ways.  The world cannot sustain billions and billions of people motoring around ribbons of concrete wrapped around our planet like a ball of string.  But one thing is for sure.  It’s stupid to give more to failed leaders.  Stupid.

So what’s the greatest thing you can do? Drive less.  And when you do buy a car, buy the safest most fuel-efficient car you can.  If you want your Congressmen to know how you feel, it only takes a minute. We have a new feature on the home page of the American Dream Project site powered by Congress.org.  Enter your zip code to retrieve your elected officials contact/email information.

Also…comment on our blog, and we will send the best ideas to Congress each week.

Observations from the Voting Booth

As I left the voting booth my mind was filled with a myriad of thoughts. This election was different, not just because of the historic ramifications, but different for me as well. For me it carried with it a sense of great importance, like no other in which I have participated, and I sensed that many people felt much the same way. I was struck by three thoughts in particular:

1. Voting requires the courage to say yes and the wisdom to say no.
   At least one of the propositions (dealing with criminal justice) on my ballot expressed (in essence) reforms that I have long felt are needed in this country. I was surprised to find that it was very difficult to vote for. There were of course, the typical concerns about the implementation, and if it would be done correctly. What would the consequences be if it were not implemented correctly? I hesitated, and then asked myself, will change ever occur in this country if we are not brave enough to take the first step, and voted yes. The proposition failed, and I may never know for sure if my decision was the correct one, but sometimes positive change requires the courage to say yes.

   In yet another case, one of the propositions on my ballot (dealing with alternative energy) attempted to enact reforms which I feel are vital to this country, and I found the opposite approach to be necessary. I agreed in great detail with what the proposition was attempting to do, but I felt the cost was much too high in a time of economic crisis. I looked at it over and over, trying to find a realistic justification that the benefits which would be derived would more than cover the cost, and for all my effort, I could not. Ultimately (for me) it required the wisdom to say no.

   One person’s courage to say yes may be another’s wisdom to say no. What is important is that we vote with courage and wisdom, regardless of how we might feel that they apply.

2. Know what you vote, vote what you know.
   It is of vital importance that we exercise our right to vote. It is the first step in alerting our elected officials that we care how the country is run, and we are a voice that should be listened to. Beyond simply voting however, we need to be informed and to know what we vote. The political process preys on the uninformed with brief descriptions that hide the real intent and cost of the propositions we vote for. When I first started to vote, I felt that I had to vote in every category, no matter how informed or uninformed I was. I have since come to understand the subtle damage that comes from voting in that way. While it is important to vote, and preferably on a wide range of issues, there is wisdom in passing on those issues in which we feel we are largely uninformed and letting more informed voters control the outcome on those particular issues. Know what you vote, vote what you know.
   
3. Democracy doesn’t sleep between elections.
   The greatest thing about the electoral process is that it inspires people to stand up and be counted like nothing else. The more heated or passionate the election, the greater the number of voters. Far too often however, we (as a society) cease to exercise our democratic rights in the wake of those elections. We let the process run itself, content to wait for the next election, frequently ignoring the lesser elections that do not involve a presidential candidate. Democracy does not sleep, and we should not sleep in our exercise of it. As we move in to a new chapter of history, make sure your elected officials know what you want.

   Now is the time for revolution! A revolution, fought not with weapons, but with words and ideals. Fire the first shot by making sure your elected officials know what you expect of them.

   Many of you have seen Will’s letter to President Obama, or perhaps you have seen my previous post If I were President. I will be sending the contents of that post out to my elected officials as well. Whether you choose to copy and paste, or write your own, I urge you to do the same. Write your President, your Congressman, even your city and county officials and let them know what you expect.

What is the greatest thing you can do to influence the direction of our country?

Letter to President-elect Obama

Dear President Obama,

First of all, congratulations on your historic victory.  Your election is a vivid affirmation of the American Dream.  Anything is possible in America.  Truly.

Now let me offer you a word of caution.  Please don’t misread your election as a mandate for the traditional Democrat liberal agenda.  What we want is real change.  Change that is not a swing to the left.  We don’t want a refried “Great Society.”  We just want change that gives everyone an honest chance to be self-reliant and contribute to our common good. We want change from the increasingly narrow and corrupt view that creating a class of super-rich would somehow benefit all the rest of us.  We don’t want to have a foreign policy based on fear.  We don’t want an economy based on buying stuff made in China.  We don’t want to be lied to.  What we do want is a President we respect.  We need to trust your judgment and your character.  We hope we can.  Just be what you say you are.

Here is what I’ve heard from Americans across the country over the past five years:

1. We want an economy built on innovation, production and creating a sustainable future.  We want to lead the world in invention and quality.  (We are sick about leading the world into a world-wide recession based on a few people’s greed.)
2. We want universal health care for all Americans.  We don’t want a European or Canadian version.  We want a uniquely American best-in-the-world answer of quality, affordability health for all.  Of course it’s going to be hard, but that’s why you were elected.
3. We want a strong, wise and good foreign policy.  We want the world’s respect.  We want to be moral leaders with moral authority.  We want to respect all cultures and promote local solutions to local problems whenever possible.  We want real strength against terrorists, sound intelligence and a campaign to promote pluralism, tolerance and civilization around the world.
4. We want clean, renewable energy now.  We want you to promote a broad-based investment to create a world-wide solution.  We should lead the world to sustainable non-polluting energy.
5. We want a fair, legal and smart immigration policy.  We don’t want to exploit undocumented workers or build an economy that requires us to.
6. We want free, quality education for every child and every student in high school and college.  This is the greatest investment in our future we can make.  We want education that is efficient, relevant, and engaging.  We must have the best education in the world.  No excuses.
7. We want wise regulation to promote the healing of our environment, corporate governance, safe food and drugs and protection from financial corruption.  We want to trust our banks and business leaders.

Well, we are pretty sure you know what we want.  Now that you’re off the campaign trail and the immediacy of voters in your face, we want you to remember our voices.  Please resist the pressures of special interests.  Don’t listen to those who agree with you.  Least of all those who praise you.  Always reach for a higher solution.  Please bring us together to create a new future.  This could be a great new era for America if you make it so.

Please be the leader you’ve promised to be.  You simply must.  Our future depends on it.  If you do your part, believe me, we will do ours.  That’s something you can depend on.  “Yes you can!”

It’s a great time to be an American if we make it so!

Will Marre

Feedback or additions before I send it off?

If I were President…

There is no job in all of the United States as closely scrutinized as that of President of the United States. Even the celebrity scandals with which much of the country seems to be so completely obsessed at times, can not compete with the scrutiny on this one job. Leadership is the glue that binds us together. Whether or not we realize its value, the effects of its absence are unmistakable. Leadership is more than a title, and there are many who have held the title but failed to lead. Since I, like many others, will be closely scrutinizing the actions of the next President, it is only fair that I answer the question.

What would I do if I were President?

Domestic Policy

The establishment of an aggressive national energy policy.

1. An aggressive national energy policy would be the keystone to my administration. Americans believe in and want clean renewable sources of energy that can be produced here in the United States, but the government needs to create an environment that is friendly to innovation and provides incentives to buyers and producers to make this happen. Up to $700 billion dollars a year would be brought back in the U.S. economy (potentially more with the sale of clean energy technology overseas), jobs would be created, the environment would be cleaner, and we would eliminate the threats to national security that are inherent to depending on foreign nations for a vital resource. Perhaps, most importantly of all, however, is that this is really something we could use to energize the country to work towards a common goal. For more information about the need for a vital new energy policy consider Will’s post Oil Dependence and the Energy Crisis.

2. Formation of a service for education program.
   America has earned its economic standing in the world through innovation: electricity, the automobile, the computer, and the Internet to name a few. We also have a need for educated individuals to serve the community as doctors, nurses, and teachers to name a few. Throughout the years, many young men and women have turned to the military as a way to build a future for themselves. Service to country has prepared many of our youth to become responsible citizens and instilled in them a love of country that is necessary in a healthy society. Education, when offered openly to all who will take advantage of the opportunity, has the potential to be the keystone to balanced equality in our nation. Expanding the definition of service beyond the military and creating structured opportunities for community service in exchange for education would be a priority in my administration. For other great ideas about expanding education, see Will’s “Free Education for All.”
   

3. The establishment of a state/locally run national health care program.
   In a country like the United States, it is inexcusable that working men and women are unable to obtain quality medical care for themselves or their families. If a man or woman works to be a productive member of society, surely they have earned the right to real medical care. We are not talking about taking from the rich and giving to the poor; we are talking about giving people what they have justly earned. Such programs have met with tremendous opposition because we have lost faith in the government to spend our money wisely. I am very sympathetic to this argument.  In order to ensure that people have the kind of medical service they deserve without another bloated federal program, I would work to ensure that the program was implemented at the state or local level. The federal government would require a program meeting basic standards and would provide oversight, training, and support. There would obviously be expenses associated with such a program, and extensive research would be conducted to ensure that they would be minimal and fairly divided. It would replace the Medicare program, and the expenses which currently go to that program would help defray the cost. Participants in the service for education program listed in item 2 would also play a key role to keep expenses down.

Foreign Policy

1. Push for massive reform in the United Nations.
   The U.S. can no longer afford to be the world’s police force. Our adoption of this role has placed an unfair economic burden on U.S. citizens and has done unnecessary harm to our relationship with the global community. Although we can not, and should not govern ourselves by foreign opinion, we should try and maintain fair and amicable relations wherever we are able. We need a global body that attempts to resolve disputes between countries, and that when required, can act to enforce the peace between them. These actions need to be a community decision and need to respect the sovereign status of each of its members. I do not believe that the U.N. is currently up to the task, but I believe the answer is to push for reform that puts reasonable bounds on their authority and seeks to remove corruption from that body. A well run United Nations will free us to focus on making a better life at home, while discouraging the types of aggression that led to World War I and World War II.

2. Heavy reduction in non-humanitarian foreign aid.
   According to the National Debt Clock, the current debt of the United States government is $10, 542,780,984,853.05 or approximately $34,563 per person. I have intentionally left every digit in the sum to convey just how enormous that debt is. Foreign Aid spending adds approximately $15 Billion a year to that sum, with the Cato Institute estimating that number at closer to $50 Billion and heavily opposed by the American people. The United States should be a good neighbor, particularly where disaster relief is concerned, but it is irresponsible to spend such a large sum of money on foreign aid while we are so deeply indebted. This is especially true in those situations where the aid is being used to buy influence. I would not eliminate foreign aid, but I would cut it deeply.

3. Heavy reduction in U.S. military presence abroad.
   The purpose of the military is to defend our way of life. It protects our freedoms, and in a larger sense, our prosperity. Its ability to perform these actions is vital to our well being. Economic vitality is also of fundamental importance to our well being and we must be careful to balance these two competing priorities. $644 billion was requested for military spending in 2008, more than the next 10 highest spending countries combined based on a Reuters release and can be seen clearly on this Wikipedia chart based on the 2006 budget. The military plays an important role in protecting our economy, but we must avoid the danger of the military becoming the economy. Economic instability poses a serious threat to our national security. Heavy reduction in U.S. military presence abroad would be a good start at bringing these numbers under control.

Government Reform

1. Tax Reform
   Taxes should be simple, and loop holes found in fine print should not exempt people from paying their fair share. One solution which has been proposed to this dilemma is the implantation of a flat tax. A true flat tax seems like a good idea on the service but lacks fundamental fairness. Taxation should never cut in to the ability of a person to provide for their most basic needs, and those who are fortunate enough to reap the greatest benefits from our economic system should have a greater share of the responsibility. In accordance with this I would seek the implementation of a three tiered flat tax. I would also seek to identify non productive behaviors that distribute wealth upward, not by productivity, but through control of markets and money flow. The non productive upward distribution of wealth takes hard earned money out of the pockets of working Americans and needs to be stopped. Special taxes, not applicable to most Americans, would be applied to those behaviors in order to discourage them and repair the damage they cause. Every American deserves a chance at the American Dream, and our taxation system should help, not hinder, their efforts. Check out Will’s Voting for the American Dream and Business Model for Corporate Social Responsibility. I would also commission comprehensive studies to look for innovative ways of taking income tax out of the hands of the federal government while still allowing it to function effectively and meet its obligations. I do not know if a workable strategy could be found to do this, but it is worthy of exploration.

2. Massive reform to the U.S. banking system. The current Federal Reserve System gives private banks far too much influence over U.S. monetary policy. Thomas Jefferson so feared the role of banks in the U.S. economy that he uttered the following words:

   “The [privately-owned] Central Bank is an institution of the most deadly hostility existing against the principles and form of our Constitution…if the American people allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.” Current events are bearing out his words.

   There are those that would like to return to the gold standard, but I do not believe this is an accurate reflection of our productivity. Our money supply needs to be tightly affixed to a set standard that allows it to maintain equilibrium in the world currency market, thus protecting the buying power of private citizens. I suspect that government and private banks are guilty of abuses in this area. Our currency needs to be released in a manner that provides strict safeguards to keep private banks, corporations, and the government itself from skimming off the top. I would assemble a team of visionary economists to advise me on how best to go about this reform. Also check out Will’s ideas on the Financial Bailout and Slaves to Debt.

3. New ethics rules to eliminate special interest money from the political process. Money and politics do not mix. A system that requires candidates for Federal office to raise millions or even hundreds of millions of dollars from private contributions, compromises them from the very start. A system would be set up whereby candidates are blind to the identity of their financial contributors, and strict penalties would be imposed if a candidate took money directly from a contributor. Tight limits would also be imposed to the total amount of money a candidate would be allowed to receive as an added precaution. In light of the strict financial cap, Presidential candidates who are able to demonstrate broad based support for their candidacy, based on pre-determined criteria, would be given a forum upon which to make their case to the American people. The parameters on this process would be constructed so as to insure that leading candidates from independent parties are included in the process and are able to run on a level playing field against Republican and Democratic candidates.

4. Establishment of new vehicles to remove ineffective politicians.
   The voice of the people must be first and foremost on the minds of our elected officials. We honor them with the offices which they hold to represent our needs and our dreams, and they must be held accountable. We deserve not only good leadership, but great leadership, and I would work to make sure that happened, but giving people the ability to get rid of ineffective leaders. For further information on this subject check out my earlier post, Removing Ineffective Politicians from Office.

5. Reform the Electoral College to give citizens a greater voice.
   I do not believe that the Electoral College works as intended. The number of electoral votes that is carried by powerhouse states such as California, Texas, New York, and Florida dwarfs that of most other states in a winner takes all contest, with no consideration of those who cast the losing vote (http://en.wikipedia.org/wiki/Image:US_Electoral_College_Map.PNG) . The electoral system was initially implemented to keep the voice of smaller states from being overwhelmed by their more populace neighbors. The voices of the smaller states have dimmed as our population as migrated toward coastal states and large population centers. I believe that we might be better served by constitutional reform that breaks those votes down into their respective congressional districts. Smaller states and individual voters, would have a greater voice in government as a result of this action, and events such as the 2000 Florida recounts would have had significantly less effect. In light of the fact that this would be a Constitutional reform, it would have to be considered with great care, and with great attention to the voice of the people and the states.

6. Establishment of a decentralization program.
   The federal government has an important role to play in the well being of its citizens, but it was never intended to wield massive power over the states. Centralized power in heavy concentrations is an ideal environment for waste, inefficiency, and corruption. The federal government should lead, but it has no business managing the states. I would carefully examine each federal program, cut wasteful programs and spending, and return the implementation and management of several of them over to the states, provide training, and ensure that they had the resources and skills to do so. In a decentralized environment, some states would develop innovative ways of dealing with problems that centralized control does not allow. Effective strategies could be observed and taught to other states and the government as a whole would benefit.

   My administration would be one of innovation, guided by the people, visionaries, and philosopher kings. It would seek to make sure that the voice of the people was heard above all others. Each committee and cabinet would have a citizen’s advocate who could be depended on to be strong and impartial, who would interface with real people and represent their voice in each meeting. It would not be afraid to take bold new steps, but would do so with due caution. It would lead through inspiration and post these words prominently throughout the walls of the White House, so as never to forget its responsibilities:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.” – The Declaration of Dependence

What is the Greatest thing you could do, if you were President?

**Special thanks to the Dan Carlin’s common sense podcast Episode #136 Confronting The Hydra for his insights on Medicare and military spending.

Voting for the American Dream

This election has the promise to be truly future changing.  But only if the winner seeks a dramatic new course from the wrong-headed assumptions both parties have been operating under for a very long time.  Our nation is the first in human history founded on the ideals of a government designed to constantly promote life and liberty so that all our citizens could pursue genuine happiness.  This is the root of the real American Dream.

I was raised on a ranch where the ideals of rugged individualism and personal responsibility were emphasized.  Those principles are the engine of a strong productive society.  But it’s not all there is to it.  As I’ve spent the past three decades helping leaders and organizations link fundamental values to their decisions it has become clear to me that the questions of the purpose of life and society must be answered or our unbridled individualism will degrade into selfishness and yes, greed.

The idea that our society exists only to enable its strongest individuals to amass power and wealth is a new spin on history’s oldest story.  It’s always told by the people in power.  The higher ideal our founders fought for is a society in which our common responsibility is to help people we aren’t related to, don’t even know, or more importantly the unborn next generation.  It was based on the inspired belief that the best society is one in which all of us help ensure that the most people have a full opportunity to achieve security, dignity and contentment.  This is the vision that inspires me.

I believe that the American Dream has little to do with money.  The dream is not so much materialistic as it is spiritual.  By that I mean the promise of America is the promise of an equal chance to make something of our lives.  The freedom and responsibility to give our gifts and express our most noble desires.  If that sounds corny, maybe it’s because we’ve become so cynical.  That’s a shame.  Our founders were anything but cynical.  They were perhaps the greatest group of practical-idealists in history.

I was reminded of that when I read Dean Calbreath’s column in the San Diego Union Tribune titled “Spreading the Wealth.” Calbreath reminds us that Jefferson and Madison were insistent that significant financial inequality not become life-as-usual in America.  They were escaping a smothering aristocracy in Europe and England and they knew that if the wealthy interests controlled the government, the banks, and the land a new aristocracy would pass laws to insulate themselves from competition and protect their wealth and their children’s wealth in a thousand different ways that would cripple opportunity for the rest of us.  Neither Jefferson nor Madison were socialists but as Calbreath reminds us, Jefferson proposed “taxes could be used to reduce enormous inequality,” and Madison proposed policies to limit “extreme wealth” and promote a broad middle class.  Calbreath also points out that none other than Abraham Lincoln instituted America’s first income tax.  It only taxed the more prosperous.  And Teddy Roosevelt proposed a graduated income tax and inheritance tax.  The motivation of these great presidents was not to punish the hard working, inventive risk-takers and reward the slackers; rather it was to use the taxes raised to create a civil society where the infrastructure of universal education, roads, bridges, and later power, water, and communication would reinforce the force of liberty for all of us to pursue our own dreams.

Our great presidents were trying to create a society that presented the greatest opportunity for happiness and least avoidable suffering possible.  They realized that liberty is not simply an absence of laws and regulations, but rather it is a system of laws and regulations that promotes the common good for us.

Today, those who believe that the opportunities for a well-educated suburban high school student whose parents can help him pay for college, buy a car or a down payment on the his first home and the opportunities for a fatherless inner city girl attending a violence-drenched high school are anywhere near the same are simply ignoring another inconvenient truth.  And any self-made millionaire that thinks they achieved their wealth and advantage solely through their own hard work is as deluded as Donald Trump.

To create our best society those of us who are blessed to have had responsible and loving parents, good teachers and a dose of good fortune have the responsibility to use our considerable resources and innovative minds to provide an infrastructure of education and opportunity for those who aren’t so lucky.  We all know direct handouts weaken and embitter the recipients of no-strings-attached charity.  But that’s not what the real American Dream’s promise is.

Our real dream is based on a mutual promise to give everyone an honest chance at a decent life.  But our pursuit of the common good has been lost in a chorus of “tough luck—it’s your own damn fault” social and economic policies.  I am not proposing we bailout irresponsible behavior of anyone, rich or poor.  Everyone should be responsible to clean up his or her own messes.  But the self-serving belief that wealth is a sign of virtue and that financial struggles are proof of laziness is obscenely wrong.  What kind of a society have we created?  For me what I see is a society that has parachutes and bailout plans for the rich and well connected while everyone else gets pushed out of the airplane and told to roll when they hit the ground.  This is not the best we can do.  We need wisdom, morality, fairness and dignity rather than slogans, selfishness, self-righteousness and nastiness.   To get it we’re going to have to vote for it, from the President to your City Council candidates.

When I look at the example of some of our best presidents, I am inspired.  Inspired by their belief that the best society is one in which those with the most advantages and resources help strengthen the means to rise up the opportunities of all.  For me that’s a renaissance of practical-idealism.  Isn’t our best society one in which the most citizens are empowered to do their best and be their best?  It’s time we vote for the American Dream.

What’s the Greatest Thing We Can Do? So what do you think?  What is the point of society?  Were Jefferson, Madison and Lincoln wrong?  How do we avoid turning a commitment to the common good into a welfare state?  What mutual obligations should we embrace? What can we do as individuals for each other right now?

The American Dream and the Pursuit of Happiness

The Pursuit of Happiness is the third pillar of the American Dream.  It’s the payoff for a secure Life and the benefits of Liberty.   Until recently, the “pursuit of happiness” sounded a little airy-fairy.  A little “let’s hold hands and sing from sea to shining sea.”

That’s because the idea of happiness has always been subjective.  It has meant different things to different people.  No more.  The past twenty years have produced mountains of worldwide research on human happiness.  Over 500 studies in the past five years alone.  We have also conducted our own research at American Dream Project. Now we actually know what happiness is and what produces it.  Understanding happiness is one of the great breakthroughs of the last decade.

Happiness is measurable, observable, and verifiable.  Through brain scans we now know that feelings of wellbeing occur when our left frontal lobes, found above our left eye, are stimulated  (Happiness: Lessons from a New Science by Richard Layard When we are anxious or unhappy, our right frontal lobes have their lights on and we are mentally “pacing our cage.”

Happiness is a persistent feeling of wellbeing, despite the challenges and the ups and downs.  Happy people remain generally content and optimistic.  Happiness also requires an absence of anxiety, stress and depression.

We also know that personal happiness has two drivers: inner and outer.  The most powerful is our own inner landscape.  How we think, approach problems, and bounce back from troubles.  But we don’t live in bubbles, so we are greatly affected by the outer “weather” as well.  Jefferson, Franklin, and Madison had it right; society and government have a big impact on how we pursue happiness.  It turns out the societies that have the greatest equality of access to health care, education, and economic opportunities are the happiest.

But, that’s not all.  Societies that have sticky social glue, meaning high family solidarity, low divorce rates, and broad membership in social and civic groups tend to be much happier. Belief in God, participation in religious organizations, and high optimism are also strongly tied to happiness  (Authentic Happiness and Martin Seligman).

The research comes at just the right time because, as a nation, with all our advantages, wealth, technology and power, we seem to stink at the Happiness game.  We’re not even in the top 20 on the first ever World Map of Happiness.

It turns out two of the greatest causes of unhappiness are divorce and job loss.  We are world class at that.  We’ve come to expect regular turnover in our jobs and marriages.  In fact, we now lead the world in those categories. We’ve been led to believe “creative destruction” is a good thing.  Evidently we’ve gotten a little carried away.  Trust, the measure of how much we can count on each other to keep commitments, is half of what it was in 1950. We don’t trust our leaders, our bosses, our government, our schools, our religions, our neighbors, our spouses, our kids, our working colleagues, or the evening news.  When trust in society is shot, social friction slows everything down, makes everything cost more and puts us on guard.  Distrust is the dance music for unrelenting stress.

We’ve been lulled into measuring happiness with a dollar symbol.  The quality of our society is now equated with the activity of our economy.  Our national policy makers worship at the altar of our Gross Domestic Product (GDP); our nation’s health is determined by dividing the total amount paid for all goods and services by the number of citizens.

As an indicator, though, the GDP is both amoral and illogical.  All expenditures are counted as good.  So all the costs of lawsuits, divorces, pollution and disaster clean up, car wrecks, crime, prisons, cigarettes, and even the price rise in health care, college tuition and gasoline add to our GDP.  Does that make any sense to you?  Or is the Gross Domestic Product as Robert F. Kennedy challanged just gross?

According to economists, our standard of living may be rising on paper, but our real standard of life is falling.  When we account for the true economic costs of environmental destruction, urban sprawl, depletion of resources, crime, poverty, illness and education failure, we find our per capita standard of living is declining.  That’s why we somehow feel poorer and more vulnerable even though our house prices have risen and we can buy SUVs with zero percent financing.  Our garages are full, but our souls are empty.

So, what’s the Greatest Thing We Can Do?  Everything.  Happiness is personal at its core.  So in spite of our stress-crazed society, we can all make individual choices that matter.  And these choices, our choices, will change the world.

Elect Yourself President

It’s time to elect yourself PRESIDENT of your life.  All the fake security we thought we had is gone.  The world’s economic downturn may be a humdinger.  Factories are closing all over China.  Europe is buying its banks as fast as we are.  We can be confident that many of the people who caused this catastrophe will end up being richer when it’s over.  When you spread $700 billion around the same folks whose greed drove this madness you can be sure they see this as an even bigger opportunity.  So what are we going to do?

Live our lives, that’s what.

According to the Census Bureau, 75% of all businesses in the U.S. are one-person enterprises.  That’s 17.5 million people (there are 24 million businesses) making their living from their own expertise (see also 8 Small Business Trends for the 21st Century)  What’s more astounding is that 90% of the 6 million businesses that employ people have 50 employees or less.  We are the backbone of our country.  There has been no net added jobs from the biggest 500 companies in America for the past two decades.  For everyone hiring more, we’re firing.  The truth is we’ve always been in business for ourselves and tough economic times have always been times when many of us start a business.

I was recently back at Clemson University in South Carolina where I met Bill Gartner, a foremost world authority on entrepreneurship. We had lunch and the conversation turned to the two ways most people start or don’t start businesses.

1. The first way is to just start. Start with your own money and anything you can scrape together through friends and family.  It’s called bootstrapping.  The success rate of bootstrapped enterprises is 50%.  By that I mean half the businesses started this way earn back their small initial investment and get to a positive cash flow—an operation profit.  Three of the five successful businesses shut down within five years because they find a better opportunity.
2. The second way is to get venture capital. Using this strategy entrepreneurs jump through big formal hoops doing detailed business analysis and business planning.  The most important thing is to have an “exit plan.”  This is how you are going to sell your business and make millions for your investors.  This model produces seven outright losers.  Seven owners fail.  Two survive but don’t thrive.  And one is a blockbuster that makes the investors big bucks.  It’s an interesting comparison.

I asked Bill why he thought the “professional” way of forming business with venture capital had a worse record of business survival than the amateur method.  We speculated that to generate wealth instead of a passionate vision the ingenuity of the entrepreneur is likely dimmed.  The idea of starting a business with your primary plan being to sell it may be what’s wrong with most businesses.  Whatever we do just for the money we do poorly.  Life is simply not just about money.  (I am just sick of greed.  I want to just kick it in the teeth.)  Doing what you love will not guarantee you riches.  But doing things you don’t intrinsically care about will surely put your business or your career at greater risk.

According to Gartner, the primary cause of work stress and failure is that the demands of the job are different from the skills and interests of the worker.  So what are your skills and interests?  Are you investing in yourself?  Do you know what you’d do if you were laid off your current job?

So what’s the Greatest Thing to do?  Become the PRESIDENT of your life.  America has always been a promised land to people willing to take control of their destiny.  It still is.  Be prepared.  It’s time for all of us to make My Life Inc. a going concern.

Removing Ineffective Politicians from Office

There are many problems facing us today, but the power is in us to create real change. In this post I will examine a possible solution to one of those problems. Like the prototype that an auto manufacturer might use, it is intended to provoke the imagination and provide a platform with which to produce a more refined idea. Whether it survives the test of scrutiny and becomes polished by the process or dies while giving birth to other innovative ideas that solve the problem, it succeeds. Its success is dependent on you however, so please provide your feedback, refinements, or alternative solutions.

Problem: Our elected officials do not listen to their constituents.

Nothing illustrates this as clearly as the recent bailout plan approved by Congress. Although some data does suggest that 78% of Americans were open to some form of bailout, Americans were overwhelmingly displeased by the bill as passed by Congress on October 3^rd. According to a CBS News Poll taken from October 3-5, 51% of Americans disapproved of the plan while only 31% approved. Despite such overwhelming disapproval, Congress overwhelmingly passed the bill with a vote of 263-171. Is it any wonder, that a July Gallup Poll put public approval of Congress at a record low of 14%?

Solution: Yearly confidence votes.

We live in a government which was designed to be “of the people, by the people, for the people” as so eloquently stated by President Abraham Lincoln in the Gettysburg Address. We elect our representatives to be our voice in government. If you owned a company and no longer had any confidence in one of your employees to do the job for which they had been hired, would you maintain him or her in that role? If an employee’s job was guaranteed for at least 4 years regardless of their performance, how might that affect their actions?

If “we the people” are to take control of our destiny, we must make it clear to our elected representatives that they serve at the pleasure of those whom elected them. Admittedly, the voice of the people is not always right, but our leaders should have the conviction, the courage, and the wisdom to persuade us to take a different path if they believe us to be in error. They should not simply supplant our desires with their own. To ignore the voice of the people breeds distrust, opens the door to corruption, and leads to anger. If our elected officials do not listen to our voice, whose voices are they listening to?

By implementing a confidence vote with the power to remove ineffective politicians from office we would give them a very real reason to listen. The persuasive whisperings of special interest would lose their seductive appeal in light of the constant reminder that a confidence vote would provide. Promises would need to be kept since they could not be swept aside for 2-6 years.  Confidence votes would ensure that we controll our destiny as never before.

Many details would need to be sorted out before confidence votes could be enacted. Even a good leader can have a bad year, and the criteria for a vote of no confidence would need to be considered very carefully. Each office has subtle differences such as term length that would need to be considered when defining the criteria. The removal of an elected official can be a very difficult event on many levels and should not be triggered casually. Issues of succession would need to be considered very carefully and mechanisms would need to be put into place to ensure a smooth and simple transition of power. Despite the challenges that removing an elected official from office could cause, I am convinced that the cost of maintaining a bad leader in power is a much higher one.

The destiny of the country is in your hands. Do not give your birth right away. This is your country, and you have the right to choose the course that it will take and the responsibility to choose wisely. I have the faith that given the opportunity, you will do so.

What is the greatest thing we can do to ensure we are listened to by those we place in power?

I look forward to hearing your solutions.

McCain…Obama…What debate?

As I watched the Obama, McCain debate Wednesday night it slowly hit me.  It was like a dimmer switch that someone had turned up bright.  Either neither candidate fully comprehends what the root causes of our problems are or they are not letting on they do.  I don’t think I am the only one saying,

“Come on, come on, you’ve got to have better ideas than this.”

My current feeling is this.  No matter what McCain says about being different than Bush, he’s still a Republican.  His cabinet will be mostly Republican and his approach to solving our problems will be Republican.  The Republicans approach is low regulation, no trust in government, and high trust in business.  They seem to believe that big business creates jobs, which it hasn’t for 30 years, and the best government is one they outsourced to private contractors.  McCain’s approach to health care is shocking.  It is guaranteed to transfer health costs from business to individuals and lead to tens of more millions being under-insured.  It will actually penalize business for providing insurance by taxing it.  It seems the exact opposite is what’s needed which is exactly what George Bush has been doing for eight grinding years.  Obama’s plan is like most of his plans, half-baked.  It’s a little of this and a little of that.  In Obama’s book The Audacity of Hope the idea is that government policy is usually like sausage making, meaning to get anything done a leader has to give everyone a little of what they want.  But now is not the time for sausage making.

In a true crisis a leader must make enough people see that compromise will not lead us to the top of the mountain.  In fact a crisis is where we don’t want compromise.  We want the very best solutions.  Solutions that get at the root cause of things.  To bring about change we need wise leaders who will stand for real solutions and enroll a super majority of us in support.  Abraham Lincoln was such a leader.  He was the master of timing.  He knew the moment when he could emancipate the slaves and retain the support of the majority.  But he had the courage to do it and the ability to inspire America to do what was necessary.  In the 1960’s we had to face the fact that the debate between property rights and human rights was over.  Finally we were going to promote a society that would no longer tolerate legalized racism.  No more separate swimming pools, bathroom, restaurants or schools.  Today is that day.

A few thoughts.

1. We need a comprehensive health care solution.  One that deals with both cost and access.  McCains plan would tax businesses for providing health care.  Go figure?  Obama’s plan is a little of this and a little of that.  We can’t fix the current systems.  It must be radically re-invented.  It may not be perfect, but it could certainly be much better.  First, everyone should have access to competent health care in this country.  That debate needs to end.  We need to increase the supply of competent health care givers, especially nurse practitioners and primary care doctors.  We need to eliminate the waste of private health insurance and rationing who gets care.  We need a non-governmental, non-profit system of insurance in which every American is covered.  We need to end the waste of expensive, duplicate services and reward healthy lifestyles with tax incentives.  How much will this cost?  No more than the 18% of our GDP it’s currently costing.  One more thing, Americans should not pay more for medicine sold in America than its priced in any developed nation.  It’s time to quit talking about this and start doing it.  Right now our health care system is as corrupt as Wall Street.  No other country in the world has a private profit-driven health care system because it is subject to corruption.  And we have proved that.
2. We need to re-industrialize.  Americans face a credit crisis in part because we have a personal income crisis.  Our pay stinks.  We need to become a manufacturing nation again like Germany is.  If we create highly automated, productive, flexible plants we can invent and produce zero-waste, recyclable high value products the world needs.  The point is every product in use needs to be reinvented if we are going to have a sustainable future.  We need a trade policy that allows free trade only when environmental laws and employer rights of the countries who want to export to us are on a par with our laws.  Otherwise we are just subsidizing their “dumping” into our market.  The world may be flat but it’s not a level playing field.  Until we make it so, our economy will be reduced to Wal-Mart meets McDonald’s.  When we change that we will create real jobs for real wages because we’ll be creating real value.
3. We need to re-educate Americans for the 21st century.  A recent study revealed 40% of Americans read at a 6th grade level.  30% of high school age kids never graduate.  But here’s the deal.  Not everyone has to go to college.  We completely lost our bearings when we did away with vocational-technical education.  Today this kind of practical education is called STEM (science, technology, engineering, and math.)  There is a huge current need for STEM educated workers in nearly every industry.  Auto technicians, oil field workers, power companies and utilities, healthcare, green energy, and even trained engineers all require STEM training and retraining.  21st century skills doing work that must be performed in person creates higher value and higher pay.  These kinds of technical courses can be completed in one to two years and lead directly to higher paying jobs.  As for college, that needs to be free again. If our nation is re-educated to create sustainable value, we’ll make the things and provide the services the world needs.  Then the majority of Americans may just make enough to buy a reasonable home.

Of course we need to build a renewable energy economy, declare victory in Iraq, eliminate lobbyists, secure our borders, regulate Wall Street, reject the tyranny of consumerism, eat right, exercise, and get eight hours of sleep.  Yes there are lot of things we need. But first we need a healthy, well-educated, productive America.  If we can get that right we can get the rest right.  If we don’t, the rest won’t matter.

What do you think?

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