Will Marre’s Radical Solution to Health Care

How does paying $25,000 a year for health care sound?  According to the Consumers Union that’s what the average family will be paying in 15 years if we don’t do something now (See Myths on Health Care in USA Today).

Some issues that impact our lives and our children’s future are so big that it takes an extended article to say what needs to be said.  Health care is one of these issues.  I worked in the health industry for eight years consulting with two multibillion-dollar hospital groups with sterling reputations.  I worked with many great people who wanted to do the right thing in the right way.  But our health care system is so goofed up and so internally competitive with doctors, hospitals, drug companies and insurance companies all hammering each other for a piece of the hurricane of money blowing through health care.  I use the term ‘hurricane’ because the money we spend is a storm of waste.

According to the Consumers Union, $500 billion/year is wasted in ways that frequently hurts our health instead of helps us.

I present my idea as an idea-starter rather than a complete plan. One thing for sure, tweaking the status quo will not work.  We need something far more radical….

Yes, according to our Congressional Budget Office, the biggest threat to American’s quality of life is…you guessed it…our bizarre health care system.  We all know by now that the U.S. has the most expensive, least effective health care system among all developed nations.  In the richest country in the world, we all too frequently see canisters in grocery stores asking for hand-outs to pay for cancer treatments for a child whose working parents’ insurance doesn’t cover treatments.

With 47 million uninsured and at least 100 million more of us increasingly under-insured, no fair-minded person can claim our current system works.  The cost of inadequate coverage has reached the ridiculous.

My own family’s policy, which is a high-deductible monstrosity full of coverage limitations, has increased in cost by 40 percent in the past 2 years.  And no we haven’t had any major illness or accidents.

Although there are many players in health care we could blame for contributing to our problems, the private health insurance industry is the one that is most problematic. That’s because our large health insurers are worried that their core business model is ill suited to help today’s consumers.

They have already spent $22 million trying to scare the public into thinking that socialized medicine is coming with its inevitable mediocre care.

Meanwhile Congress is coming up with some super-expensive half-baked compromise that is likely to make things more complicated, more expensive and subject to future corruption in ways currently unimaginable.  Either way, the middle class is likely to wither due to massive taxes or massive direct costs that may even be more than taxes.

What’s needed is something far more radical, daring innovation that revolutionizes health insurance as it reduces cost and complexity.

1. First we must bury the idea that health insurance is an “industry” or a business. The profit motive works great for giving incentive to commercial genius to create iphones but it gives incentive to all the wrong behavior when we’re trying to create an all citizen access to health care.This isn’t hard to understand.  Profit arises from the difference between premium income and overhead costs and health claims.  Thus insurers are rewarded for only insuring the healthiest people and paying as few claims as possible.  So that’s exactly what we get.  Today our health is brutally rationed by the insurance industry.  Increasingly numbers of people simply can’t get health insurance ironically because they need it.  We also get claims denied and benefits arbitrarily limited after we’re ill by armies of insurance company employees who earn bonuses by keeping payouts limited.  It’s called mis-aligned incentives.  The companies selling insurance profit the most when they deny me the benefits I thought I was buying.  That is unfixable.  No amount of regulation will match the problems that mis-aligned incentives cause.
2. Government cannot effectively administrate an expanded Medicare-like bureaucracy to cover all American’s in an effective way. Government bureaucracies grow proportionately less efficient and effective with size.  Costs will soar and service decline.  Government bureaucracies are exceptionally poor at promoting high operating performance because individual workers are not systematically incented to excel. We all know this.  I am not suggesting all government workers are lazy, rather that all bureaucracies, public or private, are poor at rewarding merit.
3. The solution is something new.  Something called Civic Enterprise. A Civic Enterprise uses the efficient disciplines of business to achieve social goals at the highest possible quality at the lowest cost.  This is achieved through totally aligning incentives.  Here’s how.A Civic Enterprise for American health care would function as an all citizen non-profit co-op we all own.  It would operate the way large corporations self-insure.  Every citizen would be eligible for a universal level of humane benefits.  Every person would have a deductible equal to 3 percent of their income so they would seek the lowest cost provider for minor sicknesses and injuries.  This would motivate low-cost, high volume free market providers like Minute Clinics to thrive.  (This 3 percent is not a tax.  It wouldn’t be a cost to people who didn’t get sick or injured.)The co-ops insurance benefits would be administered by regional centers whose employees would be incented to get the most people enrolled and well served with the specific treatments that conform to best practice guidelines.  Six sigma measures for quality and efficiency would be embedded into the system so co-op employees could earn substantial bonuses for providing excellent and timely service.  Good performers would be rewarded and poor performers weeded out. The main business driver would be to provide the best coverage to the most people to increase citizen health.
4. All citizens would have the opportunity to take online or in-person health education classes. Doing so would result in lower deductibles.
5. Funding would come from dismantling our Medicare bureaucracy and new health taxes on all products that contribute to poor health. These include manufactured food and beverages whose primary ingredients make us fatter, clog our arteries or trick us into thinking we’re hungry.  Also taxing polluters who contribute to lung disease and cancer also puts the tax on the modern sources of environmentally caused illness.

Yes of course there will be screams from the businesses that profit and prosper from promoting risky behavior, make fake food or foul our air and water.  These taxes are not anti-business.  They simply reflect the real economic costs of producing certain products.  Government’s legitimate responsibility is to tax private companies for the social costs caused by their operations.

In a market economy everyone needs to take responsibility for their impact on the health of the total marketplace and that means the impact their product or their production process has on society’s health.  It’s only fair.  So go ahead and make your cigarettes, Twinkies and coal plants, but you and your consumers must pay for the health consequences you are creating.  That’s as pure a market-based economy as I can imagine.

The bottom line:

Let’s all get on the same page.  If we align our economy and our incentives toward promoting health, self-reliance and taking responsibility for all our actions, we can solve our health care crisis.  We need to focus on performance rather than profit.  If we let business-as-usual cut off real innovation that we need, we’re headed into a Grand Canyon of quick sand.

What’s the best thing we can do? Get in our Senator and Congressman’s face and demand real solutions that improve effective care, universal access and hold down costs. ( Write Your Representative or Contact Your Senator.) Engage with the White House and President Obama in today’s Town Hall on Health Care Reform.

Postscript:
Some Things that Make No Sense

1. That we get health insurance through our employment.  It’s a burden to our economy and few of us work for companies that provide insurance.  Get employers out of the health insurance system.  We need to get our insurance directly and everyone should be covered.
2. Don’t pass a law requiring we individually buy health insurance from a private, profit-motivated insurance company.  None of them put my interest first.  Comparing this to mandatory car insurance is absurd.  I choose not to have a car.  I can’t choose not to have a body.  Enroll me in an effective non-profit Citizen Enterprise plan.

So what do you think?  The more constructive ideas that bubble up, the better our solutions will be.  So let’s hear your ideas.

You can also read some of your ideas/comments on my previous post, “Who Will Pay for Healthcare.”  Thank you for your insightful thoughts.

Engage with us by posting your comments/ideas.  Engage with us on Facebook and Twitter

Sustainability and A Launch Pad for Growth

A Sustainable America and a Launch Pad for Growth by Will Marre

When do we realize that the greatest good does not arise from a mythic invisible hand balancing out our short-term selfish acts and unquenchable greed?  That is the wrong-headed story of kings, aristocrats, industrialists and lately Wall Street bankers who have been selling the man-on-the-street America for the past 50 years.  But we all know trickle-down economics doesn’t work very well.  In fact, it’s what brought us to our current catastrophe.  This is what I mean.

A friend of mine is supplying tile and granite for a new 40,000 square foot $20,000,000 mansion.  That is supposed to be good news for all of us because after all my friend has a job as well as all the carpet layers, carpenters and landscapers employed by Mr. Big Bucks to build his industrialized-sized house.  Not only that, when he moves in he’ll hire nannies and servants.  That’s job creation you see.  That’s why whenever anyone brings up taxing the wealthy their front-men scream we’re destroying the economy.  It’s the rich and successful that creates jobs they tell us.  It’s the same argument that whatever is good for the nobleman is good for his peasants that work his farm.  Whatever.  Of course that’s true.  It’s just not relevant.  You see it’s not true enough.  We know that 80% of new jobs are created by entrepreneurs on fire with a new idea and small business owners growing their core business.  Trickle-down doesn’t build broad based wealth or a thriving middle class.  It doesn’t spur entrepreneurialism or new job creation.  Trickle-down stagnates the status quo and creates a nation of servants.  We used to know better.  When I grew up no one had butlers, drivers or nannies.  Our country had different goals.

So what does work?  Well consider the same $20,000,000 loaned out as micro loans among the world’s poor.  Grameen Bank tells us that it takes about $200 in borrowed capital for a dirt-poor entrepreneur to become self-sufficient.  The repayment rate at 8% interest is 98%.  This means $20 million launches 100,000 people into self-reliance who pay back their loans launching another 98,000 entrepreneurs in a virtuous explosion of decent lives.  80% of children of micro-entrepreneurs become literate.  Some become doctors or engineers in a single generation.  As opposed to trickle down economics, it’s called launch-pad economics.  So there you have it.  We can either celebrate the super-consumption of the super wealthy or celebrate the creative capacity of individuals to become self-reliant.

Don’t you think it’s time for a new launch pad in the good ol’ USA today?  Times of high unemployment stimulate lots of entrepreneurism.  If no one will hire you, hire yourself.  But starting a new enterprise takes money.  Money that family and friends don’t have anymore.  We need to free up credit for Main Street instead of pay bonuses to the creeps who sold out our economy for 30 pieces of silver.

How about this:

1.    Break up the Big Banks. Four big banks control 50% of all bank assets in the U.S.  Four CEOs plus a few leaders like the heads of AIG and Wall Street investment banks, less than 10 people, held so much concentrated economic power that all of us have become vulnerable to their greed and misjudgments.  So now we have banks that are too big to trust.  Our society cannot afford to allow the concentration of economic power to create banks and insurance companies that are too big to fail.  Community and regional banks are thriving and more and more are making attractive loans to small and medium sized businesses.  Their balance sheets are strong.  So instead of bailing out the very clowns that have crushed the economy, break up the Citi’s and Bank of America’s into 20 or 25 smaller regional banks that have to live or die based on sound business practices.  Doesn’t this make more sense than flushing more of your and my money down a financial toilet?

We learned this lesson the hard way once.  Teddy Roosevelt ushered in an era of trust busting to end the oil cartel of Standard Oil.  Franklin Roosevelt passed regulations to separate investment banks from commercial banks.  But over the past 30 years our anti-trust laws have withered and unrest rained mergers and acquisitions have led to Frankenstein companies like AIG.  So these monster financial firms allowed by our mad scientist congress have created a horror movie we can’t escape without lots of financial violence.  Let’s get it done.  If not now, when?

2.    Don’t be afraid to invest in our future. Lots of loud voices are trying to scare us that running a deficit that’s the same percentage of our economy as World War II’s will bury our future.  It didn’t then because those dollars were invested in the productive capacity of our nation.  World War II didn’t drive us to the poor house. Just the opposite.  It ignited post-war growth and productivity that launched an economic miracle.  The World Bank has studied what brings debtor nations out of debt over the past 50 years, and guess what?  It’s investments in education, access to health care, access to capital and infrastructure…every time.

So yes.  I believe our current direction is the only direction that will lead us to a sustainable future.  What worries me is the asymmetrical power of the power and greed lobby who are throwing millions at our congressmen to shake and bake instead of provide real leadership. As a nation we voted for change.  Now it’s time to make change happen.  Not some watered-down fake change but real fundamental launch-pad change.  Like change that re-sizes our banks and gives entrepreneurs a chance to get the money we need to create new solutions and new jobs.

So we must decide what we all want.  It’s time to quit flirting with our mutual commitment toward building a sustainable future and start doing it.  It’s time to build a launch pad for the real strength of any thriving society.  It’s time to re-democratize economic and political power so that good ideas can live, great ideas can prosper and no one ever again is too big to fail.

So what do you think?  Do you think Obama’s policies are the best way to re-invent America?  Are they focused enough, efficient enough, tough enough…what would you do?

Make Yourself Depression Proof in the Economic Crisis

This feels like an economic apocalypse.  Everyday we are being psychologically carpet-bombed with news of job layoffs, foreclosures and bailouts.  And whether we’ve taken a direct hit with a job loss or are only suffering the collateral damage of stress and worry, it’s time to move from the war zone.  There is a land of hope and opportunity just beyond this stormy sea and you will see it clearly when you quit looking out and begin to look in.

We must create our own opportunities.  Now more than ever.  It’s the nature of industrial capitalism to make all jobs generic.  That way labor is just a unit of cost.  Nobody’s special; everyone’s replaceable.  Humans are made cogs in a giant worldwide money machine.  This is the major issue of our career future.  A study from the University of California at Berkeley estimates that as many as 14 million current U.S. jobs could be lost in the next 10 years.  Such a job extinction could increase structural unemployment to nearly 12%.  That’s more than a recession; that’s a tragedy.  The biggest body count is likely to be among the young (ages 15-40).  They are coming into the workforce with little experience and often with inadequate education.  Not much to trade in the swap meet of hyper competitive world labor.

Many business leaders, economists, and the business press say such a job destruction is healthy, as if human lives are ripe for pruning like a fruit tree.  They tell us, grow up, face reality.  It’s the business cycle at work.  Well, it’s not inevitable.  It’s a choice.  It’s the result of economic, trade, education and tax policy.  It’s a choice today’s leadership class is making.  After all, their kids will have trust funds.  So, not to worry.  In the large sweep of history, change always creates casualties they tell us.  It even has a name…creative destruction.  It doesn’t sound so good if it’s your life that’s being creatively destroyed, however.

Such thinking is wrong.  The companies that are growing most profitably are those that conduct business differently than their competitors.  Fortune Magazine recently published its annual list of the 100 best companies to work for.

Mostly they have one thing in common, they put employees first and rely on those employees to come up with constant innovations to reduce costs and increase value.  Companies like Costco, Southwest Airlines, Starbucks, WL Gore, Netflix, eBay, Google, SAS Institute are not just great places to work, they are great engines of human capitalism.

When we face the truth we understand that no matter who signs our paycheck, we are all self-employed.  All jobs are contingent.  If you are going to work for someone, only work for the industry leaders who are successful by not competing on price, but creating new, mind blowing value for customers.  These are companies that have few direct competitors.  They’re different.  They have leaders who embrace social responsibility and environmental sustainability.  They are both large and famous and small and unknown.  They exist in nearly every city and town in America.

But whether you work for a great enterprise or for yourself, the future of jobs is going to look like a war.  Huge explosions of new technology and new competitors that will obliterate companies, change industries and create un-thought of opportunities.  My message is don’t be a casualty.

But there is an answer.  As far as I can tell, the only answer.  It has three dimensions:

1.    Express your design. What makes you different is what makes you valuable, irreplaceable.  Self-knowledge is essential to your future.  Ultimately we are valued for who we are (traits and talents) more than what we know.  If we find ourselves in jobs where we cannot positively express our unique gifts; if we are only valued for our generic skills, the clock is ticking.  It’s only a matter of time before someone hungrier, smarter, and cheaper will take your place.  Only you, the unique you, can’t be duplicated.  Be you.

2.    Pursue your desire. Excellence at any endeavor requires strategic persistence.  This is consistent striving combined with readily embracing feedback, results and reality so that successful adjustments can be made.  If we are trying to achieve someone else’s goals that don’t give us a personal buzz, we will not excel over time.  We simply won’t do what it takes to be amazing.  Being amazing requires inner motivation.  Competing with someone else’s frantic ambition is not a serious problem if our motivation is intrinsic.  We will do well because we enjoy doing more than necessary.  If we are just racing to win a medal, we will lose to many who will simply out train us.

3.    Make love your prime motive. Daniel Goleman has shown that Emotional Intelligence is essential to career success.  Emotional Intelligence is a fancy term for understanding our design and being clear on our desires combined with emotional maturity, empathy and collaboration.  Emotional maturity frees us from acting on fear and fires us with love.   Empathy and collaboration are the pillars of social wisdom.  Empathy and collaboration are not primarily skills, although lots of company training programs try to teach you how to listen empathically and behave collaboratively.  But like words without music, the outer action without inner conviction is empty.  Love makes the quality of empathy and richness of collaboration work.  When love is your prime motive, everyone feels it.  They act better, think better and do better.

In today’s hyper collaborative world, people with high social wisdom are the first hired and the last fired.  They are the connective tissue of enterprise, the glue between company and customer, management and workforce.

Although the power of love can be expressed over fiber optic cable through voice (telephone) or data (email), there is nothing more powerful than personal presence. Thus, the most global proof jobs of the future are those that require us to be in a specific place with specific people to express our design.  Often, these careers combine personal service, high skill and individualized creativity.  If you want to be indispensable, make your personal presence a central part of the value you bring others.  Engage people with love.

The answer in a nutshell:  Don’t compete, be unique.  You already are.  Just turn up the volume.

Sustainable Abundance and Our New Economy

Winston Churchill was always big on planning for the worst.  He advised something like,

“Imagine the thing you most don’t want to happen and plan for that.”

Good advice.  Most of the voices we hear talking about our economy are polarized.  Doom-sayers talk in words of deep depression and total collapse.  While others see a “bottom” to our economic downturn in mid 2009 and then steady progress ahead.  Well, fine and dandy.  The fact is no one knows.  The vast interconnected global economy is relatively new and the scale on which assets have evaporated is huge.  So everyone is guessing.  Perhaps the most important thing to do is to take the economy personally.  That is, make personal plans to “prosper” no matter what.  More on that in a second.

Consumer Economy is Unsustainable

First I, although like everyone doesn’t really know what’s going to happen, will tell you how I am planning on things being and what I am doing about it.  The core problem we face is that we built our prosperity on a consumer economy built on a scale that it is unsustainable.  For instance, in Italy there is 1 square foot of retail store space for every citizen.  In Britain there is 2.5 feet of retail shop space per person.  In the U.S. there is 20!  Maybe, just maybe we have too many stores.  Surveys show most Americans only wear 20% of the clothes and shoes we own.  We have more TV sets in a typical home than we have people living in the house.  The picture is clear.  Americans spend 40% more per person on consumption than the number two consuming nation.  That’s just not the way to build our future.

Now here’s the economic pie in our face.  We financed all this consumption with debt.  Even though American workers capitalized on technology to become far more productive since 1995, nearly all these gains showed up as increased business profits rather than increased wages.  So to keep the consumption machine rolling Mr. Greenspan lowered the cost of borrowing, deregulated credit rules and inflated real estates and said buy, baby buy.

That’s our old economy.  That’s over.  I don’t see how it will be revived.  Now as economist Jeffrey Sachs points out,

“Every major part of our economy—health care, energy, transportation, food and finance—is deeply troubled.”

And we’ve got another problem.  The largest group of consumers, baby boomers, is going to be increasing their savings and reducing their consumption.  We should.  We have no other choice. But the result will be an anemic consumer economy with lots of closed down stores.

Economic Crisis

Now our government is going to do everything it can to keep our boat afloat by spending and investing.  We are going to spend money on unemployment insurance and lots of other emergency safety nets to keep the out-of-work going.  We also are going to rebuild our roads, bridges, sewers, and grids.  And I think we should.  Heaven knows our infrastructure is blown-out, old, and creaky and millions of paychecks will keep otherwise unemployed families doing productive work.

But after a few months of Obama optimism, I think we’ll all get a big dose of the deeper reality.  I believe we’ll see we’ve got a long road ahead.  Years of work to re-invent our economy to be a primary producer of value instead of a consumer of stuff.  During that phase it’s quite likely most real estate will be finally valued at 50-60% of its price in 2006.  It seems inevitable because fewer people will qualify for loans and incomes will not be sufficient to pay bloated mortgages.  This will be hard, but the sooner we get “real” with real estate the sooner we can recover.

But the real economic engine of the future will come down to developing the technologies of sustainability.  Everything human beings use has to be re-invented to use less raw materials, less energy, and be recyclable or reusable or the earth will simply run out of minerals, water, and clean air.  Not to mention trees, oil, and fish.  If we focus on developing the processes, the products and the technical education for workers to invent and maintain and repair the technologies of sustainability, then the U.S. can be the world leader in creating a future of sustainable abundance.  If we do this right we may be able to get beyond grasping to increase our standard of living and truly increase our standard of life.  I believe this is our best shot at our best future.  If we fail we have to face a future of competing for scarcity that inevitably leads to mass suffering and eventually war.

So what’s the best thing you can do? Become engaged in the economy of sustainability.  Advocate it at work.  Learn about it, become an expert in it.  Re-train yourself.  It’s an opportunity for all of us.  It is a new way of looking at every profession, every industry, every job.  From accountants to actors, waiters to welders, all of us can up level our work to create sustainable strategies that save money, save resources, and create value.  That’s the mindset we need.

As for my personal quest, it’s to change the objectives of business leadership from personal wealth to create the greatest sustainable value for all.  Don’t be cynical.  It can happen.

How do you see the future?  What are you doing?

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.

Oil Dependence and the Energy Crisis

Oil. Oil. Oil. According to Oil Industry Profit Review 2007, “in 2007 the oil industry recorded revenues of approximately $1.9 trillion, of which 78% was accounted for by the five major integrated oil companies. Profits for the industry totaled over $155 billion, 75% of which were earned by the five major oil companies, with the largest, ExxonMobil, earning over 25% of the total profit.” Isn’t it outrageous that they’re making billions – record profits – while our monthly gasoline bill has doubled?  You’ll be comforted to know that a spokesman for the American Petroleum Institute has stated that the oil companies have a fiduciary responsibility to make as much money as possible.  And they take that responsibility very seriously.  Nearly five hundred billion oil soaked profit dollars over the past five years.  Wow, I feel better already.

Why are we dependent on foreign oil when we had a major energy crisis in 1973?  Why does our economy still run on oil?  How could we allow ourselves to be so dependent on Middle Eastern oil when we have to worry about who is running those countries?

Because there is money to be made.  Our continued dependence on fossil fuel is the single greatest leadership failure of the past three decades.  Almost no progress has been made in our country.  And yet, wind energy supplies nearly a quarter of many European countries’ energy and within a decade will supply half.  There is enough wind blowing in Texas and South Dakota to supply all U.S. energy needs at a current cost of 4 cents per Kilowatt-hour.

Why don’t we change?  Are we really afraid the short-term costs of change are greater than the long-term benefits of fossil fuel free renewable energy?  Is our current stumbling and bumbling really the best we can do?

How can such leadership blunders happen?  Are we really too stupid to see that a reliance on oil and building bad cars is going to hurt all of us?  No.  Corporate and government leaders are smart people.  But we can never underestimate the capacity of smart people to act stupidly if money is to be made.

Who’s really crazy?  We are.  We created this poison and continue to drink it.  We all know the answer and have for a long time.   Some of us are taking matters into our own hands.  A friend of mine, just a regular guy with a small chemical business, just started Pirate Oil.  It is a bio-fuels company supplied with used vegetable oil by In-and-Out Burger and Taco Bell.  It gives a whole new meaning to “trans-fats.”  He already has contacts with local truck fleets for thousands of gallons a week.

But we need more than just wringing oil out of french fries to solve our problems.  We need a full-tilt, no-holds barred national commitment to convert our civilization to renewable energy.   Our current effort is a joke.  Small window dressing.  All we really have are PR announcements and pleas for conservation.  In reality, we have done nothing in decades.  It is time for bold, big action.

So what do the presidential candidates propose?  Here is a brief overview of Obama’s plan.

• Enact a windfall tax on Big Oil, and use money to provide an Energy Rebate to Americans
• Get 1 million plug-in hybrids on the road by 2015, and provide a tax credit for buying these cars
• Ensure 25% of our energy comes from clean, renewable sources by 2025
• Implement cap programs aimed at reducing greenhouse emissions 80% by 2050

Here is a brief overview of McCain’s energy plan.

• Expand domestic oil and natural gas exploration and production
• Focus on wholesale reform of the transportation sector, and enforce current CAFE standards
• Expand “clean coal” programs, and build 45 new nuclear power plants by 2030
• Implement programs aimed at reducing greenhouse emissions by 66% by 2050

So what do you think?  Is it enough?  Can it be implemented?  The imperative for this commitment is beyond question.  Anyone with children knows this.  Of course there are a million “hows” to be answered.  But the “what,” the conversion of our civilization from bad energy to good, is an outrageous emergency.  The only thing at stake is everything we value.

What’s the Greatest Thing We Can Do?  Yes, we must conserve, but also we must make noise.  We must demand our leaders do something real, do something big.  Now.  It’s time to end the energy crisis.

Made in China

A huge part of America’s economic insecurity stems from the fear of our jobs being offshored.  And this fear is very, very real.  What happens when you suddenly add three billion educated, extremely ambitious people to the world economy?  China, India and Eastern Europe are just warming up in the world economic game.  Half the world’s population wants to live like wealthy Americans as fast as their computers, cell phones, and PDAs will let them.

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Taken from Will Marre’s,
The 4th American Revolution: What We Can Do Together

DOWNLOAD PDF: Made in China

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This creates some major problems.  Since the demands of the American economy alone are using up vast percentages of the world’s resources, with only 300 million citizens, just imagine what ten times that number of people will consume.  We’ll need 9 new planets just to supply the raw materials!

But not to worry, we’re told.  Free trade and the magic of free markets will take care of everything.  Technology will invent new ways to multiply the earth’s resources and purify our land, air, and water so that all of us, everywhere, can live like happy condo owners in South Florida.

But that doesn’t seem to be happening.

I first did business with a mainland Chinese factory in 1992.  I was importing hand painted furniture with Italian Renaissance art motifs.  The quality, even then, was astounding.  I sent them photos and they sent furniture that looked at least as good.  I learned a lot from my experience with Chinese manufacturers.  First, the Chinese are very nice.  They really want to please.  But never at their own expense.  Ever.  Second, they will agree with you on any demand you make.  Their willingness to make good on their promises, however, all depends on what they think is practical.  Third, they will never give up an advantage without gaining a bigger one.  Fourth, they will outlast you no matter what.  Fifth, their morality is simply pragmatism.  Whatever works is right.  It’s right because it works for them.  Of course these are whopping over-generalizations, but they capture the ethos of my experience.  And I continue to see these “values” played out 15 years later on the world stage.

Few economists doubt that China will become the dominant economic world power of this century.  China is growing in ways that are impossible to digest.  Its population is 1 billion more than ours.  And she doesn’t just make running shoes anymore; she makes the highest technology equipment on the planet, including supercomputers, plasma TVs, medical devices and, no doubt, components for the automated cashiers that are replacing all the live human beings at your grocery store.

For most of its history, China has been a world leader in education, culture, philosophy, commerce, and warfare.  She is now hell-bent on becoming the largest industrial economy in the world. Most estimates say that she is second or third right now. And China has a world-beating history of innovation.  They invented gunpowder, rocketry, and moveable type before the West did. This is a major economic earthquake that is shaking world commerce to its socks.  Brace yourself.

• Imagine a country where more people  (320 million) speak English  than Americans do.

• Imagine a country that has nearly 125 cities with more than a million people.  (We have nine.)

• Imagine a country where universities brim with motivated students who crowd into libraries every Friday and Saturday night, desperate to excel and to launch themselves into the next great enterprise.  Where creativity is taught in grade school.

• Imagine a country that graduates one million new engineers every three years.  We graduate only 50,000 and that number is dropping.

• Imagine a country whose economy now attracts more foreign investment than ours does.

• Imagine a country that has business development teams, funded with hundreds of billions of U.S. dollars, combing the Middle East, Africa, South America, Canada, and Australia buying all the oil, natural gas, and metals they can get at whatever price it takes.

• Now also imagine this.  This country is run by communist dictators who imprison and torture tens of thousands of people because of their beliefs about free speech, religion, economics, and environmental issues.

• Imagine a country that has the largest army in the world and the nuclear weapons and missiles to send them anywhere they want.  Imagine a country that has recently peacefully taken over a world center of finance and commerce (Hong Kong), and continually threatens to subsume one of the largest high technology manufacturing economies, Taiwan.

• Imagine a country that is so economically powerful and politically paranoid that it intimidates some of our largest U.S. technology corporations into helping them censor news and information about freedom.  With our help, communist leaders use U.S. developed Internet software to identify computer users who are searching for information or sending emails or writing blogs they view as threatening to their established rule.  Big Brother, powered by Microsoft.

China is a country that promotes stealing all the technology, patents, copyrighted works, and branded consumer goods it possibly can.  The cost of this piracy to the U.S. alone is in the trillions of dollars.  Decades of research and know-how stolen as fast as reverse engineers can unravel it.  China is a country that keeps its money artificially low to make its exports cheaper, causing millions of U.S. jobs to be lost.  She lies about her military build up and promises to play fair, control pollution, and increase political freedom, but never does.

China is the country upon which our consumer economy and standard of living has become completely dependent.

China is a country that makes so much surplus from their trade with us, they own $1 trillion in U.S. treasury debt.  You and I are now dependent upon the good graces of Chinese politicians to keep our interest rates low and our economy going.  And now with the Wall Street economic crisis, America is more dependent on China than ever before.  Yu Yongding, a former Chinese central bank adviser, even said in light of the crisis that since “China is helping the U.S. ‘in a very big way’ that China should get something additional in return for taking so much extra risk!” (Paulson’s Bailout Money = Asia’s Extortion Money)  Many of our leaders claim this is not a problem because the U.S. economy is vital to China’s growth.  So they will continue to want to help us buy their gadgets and parts for our cars and jets.

That is what we hope, because it’s nice to believe.  It’s also nice to believe in Santa.  But eventually, most world powers develop their own domestic consumers.  And China has so many people; it is hard not to believe that all the growth it can support will soon come from bringing its own population into the 21st century middle class.  Chinese leaders recently announced they’d become so good at building airplane parts for Boeing that they are going to start building entire planes to compete with Boeing.  Whoever believes that China needs us now and will continue to need us in the future is smoking more than cigars.

Should we worry?

What’s the Greatest Thing We Can Do?

Question #12: As Americans, what’s the greatest thing we can do for ourselves and our country if America is so dependent on China than ever before?

Economic Insecurity…Does Made in the U.S.A. mean anything anymore?

When I go to the college campuses I find many students shell shocked by America’s economic crisis and the fear of their future jobs being offshored.  They think it’s the new normal.  But I remind them that the future can be different.  The idea that the “Flat World” is inevitable and that all high-paid manufacturing jobs are destined to go to low-wage countries is nothing but corporate propaganda.  It’s simply the easiest way to lower costs and juice profits quickly.  There is another way to achieve economic success.  It’s called quality.  Remember, we used to lead the world in it.

While our children are quaking in their Nikes, Germany, the country that exports the most industrial goods in the world, is a great example of what a commitment to quality yields.  With only 82 million people, Germany continues to expand its exports to over 100 billion dollars worth of extremely well engineered cars, precision tools, and advanced technology products.   Their total manufacturing employment has been reduced by only 2% over the past 15 years, while their wages and benefits are high and their 7-week vacations legendary.

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Taken from Will Marre’s,
The 4th American Revolution: What We Can Do Together

DOWNLOAD PDF: Economic Insecurity

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How do they do this?  Well, according to the OCED, Germany’s manufacturing productivity per hour is higher than ours.   But the real reason is that they make great stuff that the world wants.

Common sense tells us our economy is rotting.  GM’s collapse isn’t due to labor costs.  Aug. 2008 marked the 10th straight monthly sales decline for U.S. automakers.  GM dropped 20% and Ford was down 27% whereas Toyota and Honda fell less than 10% (GM, Ford Drag U.S. Car Sales to 10th Straight Decline).
GM just isn’t making quality cars people want.  Japan is doing that instead. While Asian automakers continue to grow, U.S. manufacturers shrink faster than Custer’s army at Bighorn.

Common sense tells us something’s up, and it isn’t good.  Is this really the best American industry can do?  Five years ago America’s top auto executives told Congress we didn’t want hybrids and never would. That’s just stupid.  Common sense tells us that when the once world’s largest corporation reduces its work force by almost 50% in a growing market, something’s wrong. Wall St. thinks layoffs are necessary, even healthy.  But it’s only necessary because of years of leadership failure.  Today, GM claims to make great cars, but if they were, wouldn’t they be exporting Buick’s and Chevy’s the way BMW and Honda export their cars?

Of course we’re busy creating new jobs at McDonalds.  “Service worker” is code language for low-paid folks selling junk to other low-paid folks.  We are world class at that.

Meanwhile, even with our dollar’s value shrinking, making our goods cheaper for the rest of the world, “made in the U.S.A.” is not as impressive as it once was.  Perhaps it’s because much of what is “made” in America is constructed of cheap parts made in Asia. Of course, our research and development jobs are moving to China as fast as we can buy plane tickets.

What’s the Greatest Thing We Can Do?

Question # 11: Is the gutting of American industry inevitable, as Darwinist industrialists claim, or is it a lack of vision, lack of leadership, lack of will?

Economic Crisis is Destroying the Middle Class

Our current economic crisis is destroying the American Dream. America now has the smallest middle class, by percentage, of any developed nation on Earth except Russia.  For thirty-five years there have been no real wage gains in America. Household incomes have gone up only by the addition of another breadwinner, usually mom.

The average male between 25 and 34 earns 17% less than his father did.  Thanks, Dad.

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Taken from Will Marre’s,
The 4th American Revolution: What We Can Do Together

DOWNLOAD PDF: Middle Class and the American Dream

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Over the last 25 years, income of the top 20% of our population grew by 75%.  Real income for everyone else stopped, and reversed.  The average American household now sees $2000 less in real income per year than in 1975! Today, 60% of Americans own only 5% of the assets.  Half of all Americans have a net worth less than $1,000.

This is the worst disparity in wealth we’ve seen in one hundred years. As of 2007, 12.5% of Americans (18% of children under 18) or 37.3 million live under the poverty line.

Our founding fathers set out to escape a society of bloated aristocracy and despairing peasants.  Isn’t the 21st Century just giving us a new version of the same old story?  When our country was newborn, Jefferson wrote that one of his fears was that men of wealth would accumulate so much land, we would leave hard-working people underemployed and land uncultivated. James Madison also wrote passionately about using a “silent operation of laws” to reduce “extreme wealth” of a few and eliminate the “unmerited accumulation of riches.”

This is not surprising.  Thomas Jefferson feared the institutionalization of power in too few “American aristocracies.”  He deeply worried that “banks, speculators, politicians,” the powerful investor class of a new American aristocracy, would try to take back freedom given to the common farmer of his day.  He complained that “these conspirators all lived in the cities” and were disconnected from both the people and the ideals that were central to the birth of our nation.”

Jefferson and Madison were not communists, socialists, or whiners but pragmatists who understood history. Both were concerned about the concentration of wealth that might occur when people’s natural differences in ability would combine with an unfair access to power and opportunity. Finding ways to intelligently limit the effects of “unequal opportunity” should be an important role of government, they felt. They understood that when society becomes economically bi-polar it becomes inherently unstable. At worst this can result in bloody revolution, at best, stagnation. And the weakness of stagnation will eventually lead to a society ripe for decline or domination.  Smart guys, those forefathers.

It turns out that Jefferson and Madison were right.  The evidence of a two-class society is all around us.  While 80% of Americans are fighting a personal economic war, battling for a reasonable standard of living and hoping for a decent future for their children, the people who run things tell us it’s no war at all.  It’s the new order of things.  “The world is flat.”  Get used to it.

The wealthiest among us are building a separate infrastructure for their lives because the public one no longer works.  When education breaks down, they send their children to private schools.  When airport security becomes too inconvenient, they take private jets.  When our police force is unable to protect us, they hire their own bodyguards.  Did you know the fastest worldwide growing industry is private security forces?  These are all signs of a crisis, a breakdown. But it is morbidly short sighted for us to think that the only way out is to get rich.  Trying to build a financial fortress around our families to insulate us from the suffering of everyone else is no answer at all.  We cannot build walls of trust funds that will save our children from the suffering of society that refuses to face its problems or live up to its primary purpose.

It’s time for America and the American people to face the problems.

What’s the Greatest Thing You Can Do?

Question #10: How can America solve society’s refusal to face the current economic problems?

Solving the Housing Crisis

I just flew home tonight from Greenville, South Carolina where I spoke to a large group of community leaders and students.  It was sponsored by the Clemson University Capitalism Institute.  The format was to give a short opening statement and engage in a discussion with John Allison, the CEO of BB & T Bank, a large regional bank in the Southeast.  The topic was values-based leadership…what I call socially-strategic leadership, which is business leadership that creates sustainable value instead of just short-term profits.

Initially I was wary of John.  After all I am an aggressive critic of most commercial banks because they make so much profit from charging overdraft fees and immoral rates of interest to their customers.  Any industry that makes $40 billion a year charging fees for their customers’ mistakes is a sick, sick industry.  I don’t know first hand how BB & T handles that, but John was a very impressive advocate for the American taxpayer.  As a high level insider he took no prisoners criticizing the investment brokers of Wall St. and the sub prime games of Wamu and Wachovia.  (His BB & T bank didn’t offer or buy any sub prime loans.)

He said the core problem is not a so-called credit crisis.  It was an illusion caused by the investment banks themselves.  In fact, he said his bank had just borrowed a billion dollars for less than 1%.  I said the problem is overvalued real estate that has been the personal ATMs of the American consumer.  He confirmed that the house-of-cards financing of nothing down real estate was created by the Wall St. greed machine.  And that Hank Paulson’s friends at Goldman Sachs and J.P. Morgan will likely make billions from this bailout.  Meanwhile our economic crisis will continue.  We simply cannot electric-shock our economy into resuming consumer spending when consumers don’t have the income to support credit-based purchasing.  The problem is the nation’s net-worth has been hammered while our debt has soared.  But he did have an amazing idea about how to work out of the housing crisis very quickly.

He said right now we have about 1 million too many houses for sale with very few buyers.  In order to adsorb that many excess homes for sale we need to stimulate buying without waiting for home prices to fall whipping out more of our net worth.  His solution is for the government to offer a 10% tax credit based on the purchase price of the home you want to buy.  This means a $30,000 tax credit on a $300,000 house.  This would effectively lower the price of the house to $270,000 without destroying the values of equivalent houses in the same neighborhood.  It’s a sort of blue light special that would only be available for 120 days for the first million homes sold during that time.  John believes it would create the bargain-hunter energy we need to get credit-worthy homebuyers back in the market.  What’s worth considering this idea is that when the sale period was over home prices should stabilize.  Once consumers were confident we’ve reached bottom and reasonable 30-year mortgages were available the devastating drag of collapsing real estate should subside.  Yes it doesn’t solve all the deeper issues such as our lack of a productive economy, the corruption in Washington that enabled financial services lobbyists to buy Congress’ vote on the bailout.  But, hey, it is a creative idea that is far more interesting than most of the babble coming at us.

As for every single person who voted for the bailout that will create more Wall St. billionaires with our money, I have lost respect for all of them.  To say it was the only way to solve this crisis is a damn lie.  To say it is the best we can do means we’ve lost our moral imagination.

Everyone who supported this solution, Obama, McCain, and all the rest, have lost my respect because this was a crisis that called for leadership; it called for the authentic change we desperately want.  And what did we get?  What we always get.  The best government money can buy.  It was time to step up.  Instead, nearly everyone stepped down.

Over 95% of community banks and credit unions are financially healthy.  They represent an alternative financial system.  A good one.  If we severed the connection of these institutions to the octopus of Wall Street and created a responsible credit market the bailout could be buried under the weight of our will.

So what is the Greatest Thing We Can Do? Continue to bombard congress with a message that we need to rebuild our nation on real values.  And we, all of us, need to take total control of our economic lives.  Deposit your money in a local credit union.  Plan for a future in which you are self-employed in case you become unemployed.  That means know what your gifts are and become an expert at what you are interested in.  Spend your free time educating yourself, learning new skills.  Set personal goals that are both practical and inspiring.  In crisis there is always opportunity.  My grandfather started a trucking business in the Great Depression.  He built it into a great company by taking on difficult jobs and charging a little premium for it.  Don’t panic, but be decisive.  No one else will solve your problem.

Don’t forget, if you’d like to read my daily pre-election blog called the “Daily Revolution” based on my book, The 4th American Revolution, subscribe now.  We’ll send it with your comments every day to all of Congress.  Why am I doing this?  Because I have nine grandchildren and I am not going to just moan and complain.

Let’s offer real ideas for a future we can look forward to.

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