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Prosperity

The Hidden Meaning of the 2016 Election

November 15th, 2016 // 7:43 am @

The election is over. Now comes the truly important part.
And it depends on you, more than you realize.

 1. The Two Nations in the U.S.

america_crumblingForget everything you thought politics were about in America. The Bernie Sanders and Donald Trump revolution of 2015-2016 taught us something very important about our country. We sort of knew it already, but now the evidence is clear.

We are two nations. Not one nation, but two. Distinct. With different goals and dreams. With a different view of what is good and bad. And with almost opposite beliefs about what we want in the next four years, and beyond.

Regardless of how the media has portrayed things during the long months of the election, this great national division isn’t Red versus Blue states, Republicans versus Democrats, or whites versus minorities. It isn’t the same old battle between conservatives and liberals. Something new is afoot.

We are a nation divided. A nation split–fractured, in fact. In 2016 this division came to a head, but the election didn’t put an end to it. Not even close. We are a nation split between the political class, the elites, on one side, and the great mass of citizens on the other. But the differences between these two classes are significant. Specifically:

  • The masses want to put the election behind them and get back to their daily lives. They hope the agents of change they elected will make things better, so they can focus on their families, jobs, and hobbies.
  • The political class from both parties, Democrat and Republican, feels slapped in the face by the 2016 election. In every way they were put in their place by the voters. They’re not used to this. In fact, they’re used to sneering at the regular people in the nation, the people who live in rural towns and flyover states (the states “important” people fly over when they travel from one coast to the other). They’re used to laughing at the idea that the masses run this country. So now, with the fresh sting of the election driving them, they’re going to go to work every day to get their power back.

These are the Establishment of both parties, the elites in finance, academia, media, Hollywood, and lobbying. Many of them live in the Boston/New York/Washington D.C. corridor, and a lot of them live in the largest 100 U.S. cities that are home to the elites in each of the 50 states.

These Establishment members, the political class, care little for the struggles and challenges faced by the regular people. This group strategizes, debates, plans, and implements its policies, while routinely telling the masses to leave politics to the experts. “We’re the adults,” the elite class smugly tells the rest of us on any major issue of politics and policy. “Leave governance to us. Only we really understand what you need.”

The masses are, naturally, upset by this approach. But the problem is much deeper than the elites admit. The political class is now angry. The elites lost the battle in the recent election. But they are committed to win the long-term war.

Two Americas indeed.

2. The Political Class versus The People

The political class includes elected officials, federal government employees and bureaucrats, the media, academia, Wall Street, Hollywood, celebrity athletes, and anyone who lives in the elite, big-money bubble that insulates them from the daily struggles of the working class in this sputtering economy. This group benefits from the way Washington has done things for the past thirty years. They are wealthy and influential in the current system. They don’t want change. They are shocked by what happened on election night 2016.

They want higher taxes and even more regulation, a bigger Washington, bigger government, bigger programs, more bureaucracy.

This isn’t what the masses want.

But as mentioned, the masses see the election as over. They want to go back to work, hoping their newly elected leaders will fix things. In contrast, the political elite class is now ready to go to work winning back their power—to do whatever they can to block the revolution that put Trump into office, to do whatever they can to keep things the same in Washington and around the nation.

And the political class does this full time. For most of them, it is their job, their career, their work—and they’re at it 60-80 hours a week, day after day, month after month.

3. A New and Different Culture War

As part of this trend, more of the regular people will find themselves feeling less tolerance for celebrities, actors, singers, sports figures, news pundits, and professors trying to use their fame or authority to influence politics. The whole elite class is now considered suspect at a deeper level than ever before. “We’ll attend their movies and watch them play basketball,” the masses now say, “but we don’t care what they say about politics. They’re part of the Establishment. What could they possibly know about what’s best for me and my family?”

The elite class hardly knows what happened on election night. They are shocked. They loved their life of influence and prosperity. They struggle to believe that others don’t love what America has become as well. They don’t quite realize that much of America doesn’t like them anymore—that, in fact, lots of Americans see them as part of the problem. This is bewildering to them. They thought they were part of the “in crowd.” Now they discover they are seen as insiders by most Americans, but that this isn’t a compliment. It’s a term of derision.

On election night, one pundit on a major news channel told how he went to the gym during a break in election coverage and heard two men talking about politics. One of the men was elated that Trump was winning, and the second man asked him how he felt about a certain Trump policy. The first man quickly replied, “Who cares? At least Trump isn’t one of them.”

The reporter immediately grasped that the man wasn’t referring to Democrats as “them”. He was talking about politicians—from both parties. “One of them” meant anyone in the political class, be it Dole or Gore, McCain or Obama, Hillary or Jeb Bush, Romney, Rubio, Sanders, or Cruz. All of “them.” Then, later, it dawned on the reporter that he was one of the “them” too.

Imagine his surprise. Was it followed by feelings of defensiveness? Was he offended? Did he want to distance himself from the “them” crowd? It may have been the first time in his adult life that he felt like he was suddenly out of the popular clique and one the outcasts. “Them! Me? Wait…”

But how did a billionaire from New York City convince the nation that he wasn’t one of “them”? The answer is amazing. He did what pretty much nobody in the elite class ever does—in Boston, New York, Washington, L.A., or the smaller state-capital elite cliques around the nation. He did something very simple: he talked off-the-cuff, like the regular people. He made regrettable gaffes and misspoke from time to time – more like a high school football coach or a construction crew foreman than a polished banker, lawyer, or doctor. He called names, pointed fingers, talked back in bombastic tones and used colorful language. Nearly every time he went on TV or gave a speech he proved that he wasn’t one of “them.”

In fact, this very behavior made him one of the most despised presidential candidates ever—in the eyes of the political class. It made the college-educated embarrassed to support him, and it made Millennials loathe him as a virtually monolithic block. To the regular people, however, it did the opposite. It gave them hope. He acted like one of working class. Their response? “Who cares. At least he’s not one of them.” And they elected him.

This is a cultural war that most elites don’t understand. They are widely socialized in college, corporations, meetings, boardrooms and other air-conditioned settings where oxford collars and blue blazers are universal, and the elite code of manners is ubiquitous. Anyone who doesn’t meet their code of behavior is quickly ostracized, not out of malice but usually just for comfort. This becomes part of their culture, their ethos.

When elites (gently socialized in this way) encounter people dressed like workmen, speaking with a regional accent (any region), they too often make certain ingrained assumptions: “slow, hick, uneducated, inferior” or something similar. It’s not meant to be a bias—the political class works very hard to never show any bias, and in fact to avoid bias at all costs (or, at least, the politically incorrect biases). But it is a bias nonetheless.

It was, in fact, this very bias that made almost all newsrooms on every national network laugh at the preposterous thought of Donald Trump actually trying to run for president. His ball cap worn with a suit, his bluster, his pugilistic stance in every conversation. All of this communicated “unworthy, inferior, lower class” to the political elites. “Buffoon” they told each other.

What they missed, what they can still hardly even fathom, is that at the very same time millions of working-class Americans were taking notice and thinking that Trump might just be for real. Those ball caps with suits looked an awful lot like prosperity to them. The brash attitude and demeanor felt authentic and unrehearsed, and made them feel like “he’s one of us.” When he attacked the media, or lashed out at “the potential Trojan Horse” of Syrian refugees, or said mean things about opponents, the elites and college-educated saw crassness while much of the working masses saw unpracticed transparency. The masses may have been wrong about this on numerous occasions, but the elites didn’t even realize what was happening. They were oblivious, smugly sure that they were still the undisputed rulers of the nation.

In short, elites and the masses read the entire election very differently right from the beginning. Elites saw a national joke, and called him “Orange” and “clown”; the masses watched the same interviews and speeches and saw one of their own who had achieved success.

As an article in The Atlantic put it, elites didn’t take Donald Trump seriously, but they did take him literally; working people took him seriously but not literally. They didn’t see his extreme remarks as racist or misogynist, they just saw him as a villain on a reality TV show—the villain says extreme things, and this makes him/her the most popular character on the show (meaning: the villain seldom gets sent home; it would hurt ratings too much). They’d seen the same plot on Survivor, American Idol, The Bachelor, and yes, The Apprentice.

4-The Real Solution for America

But, to repeat, the masses now have a problem. The election is complete, and for the masses this means turning politics over to their newly-elected leaders and getting back to the things they really care about in life. What the working-class people of America don’t quite realize is that for the elite class the end of the election means putting their full-time work into making sure the election doesn’t change things very much at all. They want things to stay the same. They like the world where they are the elites, with special perks and higher pay than the rest of us.

They prefer ruling from the Capital while the masses work for them in the Little Towns and Villages (see the Hunger Games series). They don’t want this latest election to be a revolution, a movement, or bring about any serious change. And they don’t want the anti-Trump protests to bring about any real change either. They want exactly the opposite. And they’ll spend their full time days and evenings working toward this goal.

In other words, if you dislike Trump, don’t expect the protests (including those that will probably sweep the nation again at inauguration time) to bring any real change. The elites don’t want change. And if you like Trump and want him to fulfill his campaign promises and really change things, expect the elites to block as much change as possible. Repeal Obamacare? Trump has already started talking about keeping parts of it. Expect the elites to do much to tone down and water down Trump promises. Will a lot change? Not if the elite class can help it.

So what can the regular people do? First, we must admit that the right kind of leaders can do exactly two things to really help us: (1) get Washington appropriately out of the economy and out of peoples’ business, and (2) keep our nation safe. This bears repeating: the government is needed to keep our nation safe, and to change the regulations so this once again becomes a land of real economic opportunity. This is exactly what the recently-elected leaders have promised.

But that’s only the starting point. The rest of the work can’t be done by any elected official, any Senator or President, any Governor or Judge. It can only be done by the people themselves.

This is the hidden truth behind the election, and if we fail to grasp this one great principle, the elites will win their way because not much will actually change in Washington or around the nation. If the new leaders make our nation safer and free our economy from the crushing mountain of government red tape that has hampered small business success for the past thirty years, they will accomplish everything government can and should do well.

The rest is up to us. The American Dream has always been a two-fold reality:

  1. The government protects our national security and maintains a nation of economic, religious, and other freedoms. This is the “free” part of free enterprise.
  2. The people widely engage entrepreneurial ventures and voluntarily build millions of small businesses around the nation. This is the “enterprise” part of free enterprise. If a lot of people don’t take the initiative to fix their nation, one business at a time, the politicians will never make our nation great.

A huge surprise-Freedom WorksFreedom only works if the people—not the government—figure out what needs fixing and fix it, and what needs to be built and build it. If government is in charge of such things (beyond protecting us from attack and overregulation), then freedom is always diminished. To cite Hemingway, freedom is lost a little bit at a time, and then suddenly all at once.

We’ve been experiencing the loss of our freedoms “a little bit at a time” for decades. Now we need to change things before the “all at once” kicks in.

Again, the solution won’t come from politicians. That’s what happens in monarchy or aristocracy. For real, positive change to happen the right way, the free way, it has to come from the people. And this means entrepreneurship: building businesses. The term for this in our history is “The American Dream.”

Only a refocus on entrepreneurialism across the nation will actually make America great again. Nothing else will do it. Nothing else will even come close.

The 2016 election could turn out to be a positive step in this process, because this time the masses (hopefully) put leaders into power who actually see the importance of free enterprise. But, to repeat: The elite class wants to stop this approach at all costs—they really do want a few elites (them) to run the show. This keeps them in power, in wealth.

So, whatever you feel about the elections, one thing is certain: The rest of us have a vitally important job ahead. If we want to remain free, and to actually benefit from the possible changes that hopefully come from the election, we’ve got to figure out how to get the regular people in America to stop waiting for a fix from Washington, and also stop waiting for jobs and better employment to fix things for them, and instead get to work building the kind of nation we really want—in families, communities, and mostly in small entrepreneurial businesses.

We can do it. But “we the people” must do it, or it won’t get done. Whatever deregulations and increased encouragement to small business Washington can provide in the months and years ahead will be helpful, but the future doesn’t depend on elections. Elections can help, but real success depends on whether we as a people reboot the American Dream by engaging an Age of Entrepreneurial Small Businesses—and the impact such free enterprise culture always has on families, morality, communities, jobs, and prosperity for all.

This has always been the key to American greatness.

It still is, whether we realize it yet or not.

As goes small business entrepreneurialism, so goes America. And this doesn’t mean someone else needs to be entrepreneurial. This is about you, me, and any person who actually cares about our American future.

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“Attack Business, as Usual”

November 2nd, 2016 // 6:58 am @

Washington’s Current Slump
(And the Solution)

Growing or Shrinking?

decline_graphTo pay for the national debt, including the unfunded mandates and entitlements ahead, “Uncle Sam needs more than $429,108.73 per person.”[i] To figure out how this directly impacts you, just write down how much you make a year—and multiply it by the number of years you plan to keep working. (Not a perfectly precise approach, but it will get us in the ballpark.) Then multiply $429,108 by the number of people in your family. Find the difference between the two numbers, and that’s how taxes will impact you in the years ahead.

For many Americans, the taxes in this reality are higher than the total amount of money they’ll make. Which is why politicians want to take most of it from the rich. But when they do, the wealthy find ways to move their businesses and savings abroad or into other financial vehicles—hurting jobs, investment, and making the economic struggles of average Americans even more difficult.

However we slice this, it’s a massive problem. It is already hurting almost all Americans (as seen in the Great Recession beginning in 2008, and growing ever since). Government stimulus, printing of inflationary money, and low gas prices have dampened how deeply we feel this problem right now—but these aren’t going to last forever. At some point the bubble will burst, and the economy is in for a tough time. All of us will be directly impacted.

But Washington hardly seems to notice. During elections most candidates promise real change, but it seldom materializes, at least not in positive ways. In fact, since 2008 we’ve seen a stubbornly sluggish economy. Washington puts out positive statistics each month, but most people aren’t feeling any kind of economic boom. And 90 days later Washington revises its past statistics—they are routinely much worse than originally announced.

Yet for some reason, the initial positive announcements make big headlines, while the revisions are usually buried in fine print. It’s almost as if the mainstream media is trying very hard to make the current Administration look as good as possible, and sway the election in their favor as well.

Safe and Secure

It may also be that Washington actually doesn’t notice how hard this economy is for most Americans. As “Phillip Longman recently noted in the Washington Monthly, the per capita income of Washington, D.C. in 1980 was 29 percent above the average for Americans as a whole; in 2013 that figure was 68 percent.”[ii] That’s 68 percent more! To put this in concrete terms, a person making $15 per hour would be compared to a person making $25 per hour. Or compare a person making $4000 per month to the 68% increase: $6720. Is it any wonder that Washington doesn’t feel the pinch quite so much as Joe American?

Compared to average Americans, Washington is doing a lot better. So why would they worry? For many in the nation’s capital, it must feel like time to fiddle, not worry that Rome is burning. Imagine how you’d be doing with 68 percent more money each month. (68% more of any amount seems fantastic. I’d be fiddling, too.)

Along with the struggling economy—largely a result of Washington’s increasing mountain of red tape that is choking American businesses—the U.S. is continuing to spend a lot of money on national security programs that aren’t working. “Since 9/11,” an investigation in The Atlantic reported, “the United States has spent $1 trillion to protect the homeland. The new security state is vast—and growing.” But “are we any safer?”[iii]

The experts answer that yes, we are a bit safer in some ways.[iv] But not even close to $1 trillion worth—and besides, we are less safe in a number of other ways.[v] Less safe, in fact, than we were when Bush won his second term or Obama was elected the first and second times. Specifically, Al-Qaeda and the Taliban are still around, Iraq is a mess, ISIS is growing, our privacy is dwindling (along with our spending power), and the threats from places like Russia, China, North Korea and Iran have actually increased, along with the growing dangers of cyber and other non-traditional attacks (chemical, biological, lone wolf, dirty bomb, etc.).

It seems the more we spend, the more vulnerable we are. Our lack of a coherent and widely-supported national grand strategy has made things significantly worse over the past decade.

As if this weren’t enough, we are also now facing a growing threat of serious economic conflict with China, which is buying up contracts and supply chains for natural resources around the world. Unlike U.S. firms that work largely on their own capital or that borrowed from banks or investors, all governed by boards and shareholders, Chinese firms are managed by a central government approach—even more controlling than British mercantilism in the 18th and 19th centuries.

Circling Closer

We’re right not to follow the Chinese model, since central controls undermine freedom. But the differences between our system and theirs skew the way economic statistics are reported, meaning that few Americans realize how bad our economic outlook really is. For example, in the latest Fortune 100 rankings of the biggest businesses in the world, the U.S. has 38 companies on the list, all of which are private.[vi] In contrast, China has 18 companies on the list; 16 of these are owned by the government.[vii] Combine the totals of these 16 businesses, and the Chinese government owns by far the biggest business in the world.[viii] Nobody else is even close.

Here’s another way to look at this: of the biggest 5 businesses in the world, one (Walmart) is a U.S. company and the next three are Chinese—all owned by the government in Beijing.[ix] The combined revenues of these three Chinese businesses are double that of Walmart, and over three times the revenue of the fifth biggest company in the world, Royal Dutch Shell oil.[x]

In comparison, Europe is home to 29 of the biggest 100 businesses in the world, 28 of which are private, while 1 is owned by the government of France.[xi] Furthermore, Japan, South Korea, Taiwan and Singapore are home to a total of 11 of the 100, and all are privately owned.[xii] Together Russia, Brazil and Mexico are home to 4 of the world’s largest 100 businesses; 1 (in Russia) is private and the other 3 are government owned (one from each of these nations on the last list).[xiii]

In short, of the world’s biggest 100 businesses and largest producers of global wealth and prosperity, 20 are owned by a government, 16 of them by one single government: China. Yet Washington keeps hobbling American entrepreneurs and investors with increasing regulations that stifle our ability to compete. Yes, China’s economy has slowed a bit this year, but their growth is still way ahead of the United States—and their slowdown will likely mean they’re less willing to keep carrying our debt load (very bad news for our economy).

It’s time for Washington to take note of our gloomy economic outlook, addiction to government overspending and growing debt, and a very expensive and bureaucratic national security apparatus that is more hat than cattle—as the saying goes in Texas. For this vitally important change to happen, we’ve got to stop expecting so much from the White House and demand a lot more from Congress. Until this occurs, we will keep declining in an “attack business, as usual” approach to the economy.

Forward or Back

All this that I have described here is a recipe for major American decline. And it is our current path.

With all that said, I’m an optimist. I believe the best years for America and the world are still ahead. But how soon we initiate those “better years” largely depends on the Congressional elections in 2016. We need a Congress that will finally stand up for the American people (against the executive and judicial branches) and get serious about creating a truly free, booming economy.

We haven’t had such a Congress for decades—and we’ve been in decline ever since that trend started. Such forces of decline are now snowballing, meaning that the actions of the next Congress will largely determine America’s trajectory for the 21st century.

 

[i] Harry S. Dent, Boom & Bust, July 2016

[ii] Cited in The Atlantic, September 2016, p. 102

[iii] Steven Brill, “Are We Any Safer?” The Atlantic, September 2016

[iv] Ibid.

[v] See ibid.

[vi] See Fortune, August 1, 2016, 110-119

[vii] Ibid.

[viii] Ibid.

[ix] Ibid.

[x] Ibid.

[xi] Ibid.

[xii] Ibid.

[xiii] Ibid.

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Don’t Worry, Be Happy! by Oliver DeMille

June 8th, 2016 // 12:08 am @

Washington’s “Grin and Bear It” Message About an Economy that’s Still Struggling

The Need/Desire Question

decline_graphIn a 1927 issue of Harvard Business Review Paul Mazur of Lehman Brothers wrote the following prescription for the nation: “We must shift America from a needs to a desires culture.” How? “People must be trained to desire, to want new things, even before the old have been entirely consumed. We must shape a new mentality in America. Man’s desires must overshadow his needs.” (Cited in The Happiness Equation by Neil Pasricha, p. 78.)

What a thing to say! And it has happened, just as Mazur recommended. But in the process, something else happened as well. Not only were people convinced to want more and newer things, but government got caught up in the same quest. And people began desiring many more and new things from government as well. This changed our entire culture.

More recently, President Obama has assured the nation that a slow growth economy is the new normal. But is this good news? Or very bad news masked by a smile? Truth: it’s certainly not good news. (See the new report: “The World is Flat: Surviving Slow Growth” in the March/April issue of Foreign Affairs)

But before we address this, let’s take a little quiz. Just for fun.

Messages and Meanings

The following quote is about what nation?

(1) “_____________ will not be able to grow its economy…without…privatizing state-owned companies, [and] loosening regulations…”

Or consider this:

(2) “It may have…an undervalued currency, a debt-to-GDP ratio of 250 percent, and an average annual GDP growth rate over the last decade of less than 1 percent…. [but] Life expectancy is among the highest in the world; crime rates are among the lowest. The…people enjoy excellent health care and education.”

One more:

(3) “Middle-class wages stopped rising more than 30 years ago, but…low interest rates…and easy credit obscured the problem, allowing people to bridge the gap between their stagnant incomes and their spending.” How? By going into massive debt.

What is most interesting to me about all three of these quotes is how applicable they are to the United States today. Just re-read item 1 above. It could be a very realistic (and important) “To Do” list for Washington in 2016. Yet it was written about today’s Russia under Putin. (Foreign Affairs, May/June 2016, p. 20)

Still, Washington does need to heed its message:

  • privatize state-owned companies that are a drain on taxpayers and gum up the free market
  • loosen regulations that are killing small business and sending investment capital to other nations

Item 2 above could also seem to be about the United States, but in fact it describes today’s Japan: “It may have…an undervalued currency, a debt-to-GDP ratio of 250 percent, and an average annual GDP growth rate over the last decade of less than 1 percent…. [but] Life expectancy is among the highest in the world; crime rates are among the lowest. The…people enjoy excellent health care and education.” (Foreign Affairs, March/April 2016, p. 50)

The intended message here is clear: “If the people have good health care, education, and a stable economy, everything is good. A growth economy isn’t necessary.”

Starts and Stops

In fact, in the United States, “Middle-class wages stopped rising more than 30 years ago, but…low interest rates…and easy credit obscured the problem, allowing people to bridge the gap between their stagnant incomes and their spending.” (Ibid., pp. 50-51)

But how have Americans masked falling wages? The answer is illuminating:

  • By going into massive mortgage debt (eventually leading to the housing bubble crash and the Great Recession).
  • By using credit cards, car loans, student loans and building up major consumer debt. The average U.S. household has over 97 thousand dollars of debt and growing. (The Motley Fool, January 2015)
  • By more than doubling the amount of work they do, with both parents typically now in the full-time workforce, instead of just one breadwinner.
  • By working longer hours. The average workweek in the United States is now 46.7 hours, not the 1950s model of 40 hours and a crisp 9-5 workday. (USA Today: Modern Woman, Fall/Winter 2015) Over the course of a month, that’s an extra 29 hours—almost an extra workday every week compared to American workers of the 1950s.
  • By depending on increasing amounts of government support, including “free” public school education, “free” health care for those who qualify, and a number of even more direct government programs and assistance.

In all this, according to Gallup, less than 20 percent of U.S. workers love their job. Around 80 percent are in jobs they hate, dislike, or feel less than passionate about. Moreover, most Americans don’t believe that their current job will ever get them ahead financially. They’re just barely paying the bills—if that.

Still, the current message from Washington and labor experts is that things are fine, that the economy has improved under president Obama’s leadership, and that we should be grateful. Most people won’t see financial increases anytime soon, “but don’t sweat it.” Like people in Japan, we are assured that we should just be happy for general stability and get used to a stagnant economy.

Fewer jobs, more college-grads who are unemployed or (underemployed) and living with their parents, more three-generation households, falling home values, rising costs of food and necessities—these are the new normal. “And it’s okay,” Washington assures us. “If things get really bad, there are more government programs than ever to help you make ends meet.”

Don’t worry, be happy.

Regulations or Solutions

“Don’t desire so much anymore,” we’re told. “Make do with less. Except when it comes to big government. We’ll give you more of that!”

But how does this message from today’s Washington jive with the reality? Truth: “An economy that grows at one percent doubles its average income approximately every 70 years, whereas an economy that grows at three percent doubles its average income about every 23 years—which, over time, makes a big difference in people’s lives.” (Foreign Affairs, March/April 2016, p. 42)

Factor inflation into these numbers—on the basics like food, housing, education, and transportation—and one percent growth means the average household falls further behind each and every month. At three to four percent growth, in contrast, like the overall average from 1945-2005 in the United States, families can improve their standard of living over time—and even help their kids do better than themselves.

Right now this level of growth is found mostly in Asia, certainly not in North America or Europe. Thus the increasing American realization that our children and grandchildren are likely to be worse off than we are, while their Chinese counterparts will probably experience upgraded lifestyles and standards of living in the decades ahead.

But this isn’t a static reality. It is based on the current policies and agendas of Washington. These can be changed. For starters, just adopt the suggestions Westerners often give to Russia, as outlined above:

  • reduce/remove numerous government regulations that are killing small businesses and driving investment capital and high-growth corporations—and jobs—to other nations
  • stop federal overspending in so many government agencies by simply cutting their budgets—significantly—to spark increased investment and business growth

Just these two changes would significantly reboot the U.S. economy.

Americans can become a more frugal and a resilient people once again, no doubt. But they would rather be a more innovative and entrepreneurial people—and they have proven that they are incredibly good at it—if government will just cut away the red tape and let free enterprise thrive again.

(Read a lot more on this topic in Oliver’s latest book, Freedom Matters, available at The Leadership Education Store)

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The Hillary/Trump Dilemma by Oliver DeMille

May 25th, 2016 // 6:12 am @

Parties, Issues, and Funds

Donald Trumphillary ClintonMitt Romney was right about a number of things. One of the most important, even though it got him trouble with some voters, is that a solid 47% of the nation is against the Republican candidate for president (whoever he or she is), simply because a large group depends on government programs to financially make ends meet. In fact, the number appears to be increasing.

According to one report, “Nearly half of Americans would have trouble finding $400 to pay for an emergency.” The same article notes that “47 percent…would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all.” (“My Secret Shame,” The Atlantic, May 2016)

Indeed, in 2014 only 38 percent of Americans thought they could come up with the money for a $500 car repair. (Ibid.) In other words, the number 47 percent (who needed government help to survive in 2012) may now be closer to 62 percent.

High and Low

This is a challenging dilemma. On the one hand, those with a sense of needing more government support and programs to make ends meet are a lot more likely to vote for Hillary Clinton or even Bernie Sanders than for any Republican. As the electorate becomes more financially strapped, it tends to swing to candidates promising more government help.

On the other hand, it is the liberal (Bill Clinton/Barack Obama) and moderate (Bush I/Bush II) policies—growth of government intrusion in the economy and poorly-constructed education, health care, banking and other programs—that have brought our economy to this point. As more people vote for bigger government, the government naturally grows and the economy further stalls. It’s a self-fulfilling negative cycle.

In a truly free enterprise economy, entrepreneurship would create a lot more jobs and prosperity. It brings approximately 80% of new jobs in the United States—but the sheer mountain of red tape a business start-up now faces (based mostly on the policies of the four presidents just mentioned, and more from Obama than the others), has significantly gummed up the economy. Obamacare is making it even worse, with the most damaging (job-killing) parts of the Affordable Health Care Act still slated to go into effect in 2017.

Between 2003 and 2013 the median net worth of Americans dropped an amazing 38%. (Ibid.) And it’s still going down.

In short: Big government isn’t helping—it’s adding to the problem.

Beginnings or Endings

Remember the 2012 presidential debates where Romney suggested that Russia is a major strategic threat to the United States and Obama scoffed and lectured Mitt about not knowing what he was talking about? Three years later, guess what? Russia a major strategic threat. (See Foreign Affairs, May/June 2016: “Putin Returns to the Historical Pattern,” “The Revival of the Russian Military,” “The Quest to Restore Russia’s Rightful Place,” “Why Putin Took Crimea.”)

The same is true in economics. Bigger government, thousands of additional business- and job-stifling regulations on the books, and more red tape, don’t help the economy. They hurt it.

And a majority of Americans are now feeling the effects. Fifty-five percent of households don’t have enough savings to make it for even one month. (Op Cit., The Atlantic) If the middle twenty percent of households, the true middle class in America, lost their income right now, they could, on average, continue their current lifestyle for just six days. (Ibid.) That’s six days!

The sudden 2016 “defaults on subprime auto loans indicate that the American willingness to just keep buying…can’t lift us out of this [economic] pickle…. The general default rate for all subprime auto loans jumped from 11.3 to 12.3 percent in just a month—exactly the kind of ‘can’t pay my bills’ phenomenon that triggered the [2008] housing collapse.” (“The Portfolio,” Esquire, May 2016)

Recently announced: Sports Authority is filing chapter 11 bankruptcy, Staples is closing 50 stores, Fairway is near default, American Apparel filed for bankruptcy, and even Walmart is closing 154 stores. (Ibid.) The list of other companies on the brink or downsizing and cutting jobs is long.

The economy is sputtering.

All this in the midst of a presidential election year. I don’t know what Donald Trump will or won’t do in the Oval Office (whether he’ll be just another politician or really lead out and reboot the economy). But one thing is very clear: If Senator Clinton is our next president, the number of Americans who require government support to make ends meet by the year 2020 probably won’t be 47 percent, or even 62 percent, anymore.

It will be a lot higher.

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3 Things We Aren’t Talking About Enough by Oliver DeMille

May 19th, 2016 // 8:19 am @

Drone w PowerlineThese three things are big deal. A very big deal. They’re floating around there in the back of our minds, but we don’t talk about them very much in our current society.

We need to start.

I

First, it is clear to almost everyone that the Drone Revolution has drastically changed the world—probably in ways that we can’t really undo. Whatever other functions they’ll eventually fulfill, drones are the ultimate war machine. They can be programmed to do things unimagined in earlier wars, like search out specific people from certain races, religions, viewpoints, business or educational backgrounds, etc.

They can be programmed to target a specific person. And all his/her friends. Everyone he/she loves. Those who agree with him/her on political issues. Governments can use drones on their own people, as well as in battle.

Very few people are taking this very seriously. On the one hand, it’s so potentially monstrous that we don’t like to think about it. Imagine drone technology in the hands of a Stalin, a Hitler, a Nero, Caligula or Mao, Saddam Hussein or an ISIS sympathizer in your neighborhood. If history has taught us anything, it’s that bad guys do sometimes rise to great power.

It will happen again, and drone tech combined with computing power is a recipe for disaster.

On the other hand, if we did want to stop it, what would we do? Most people believe it’s a fait accompli. No chance of turning it around. They’re probably right.

II

Second, the Crowdsourcing Revolution isn’t over—it’s just beginning. It has largely put the newspaper industry on the ropes, and the book industry is also now under the gun as Amazon grows. In fact, many brick and mortar malls are increasingly empty as Internet sales on many types of products and services soar. Education at all levels is facing serious competition from free online learning sources, and big swaths of the health care sector are being crowdsourced as well.

The good side of crowdsourcing makes a lot of things less expensive, easier to find, and quicker to obtain (or learn). The downside is that the large companies that control the data have algorithms that can influence us in ways we never imagined. For example, a man texts his wife to find out where a certain kind of cereal is in the pantry, and within minutes his smartphone chimes and offers him a coupon for the same cereal—from the supermarket closest to his home. Or if he texted from the office, it lists the grocery store nearest to his work.

This kind of data-mine-marketing is becoming a commonplace experience for those who use certain apps, and while it might feel a bit creepy at first, over time people get used to it—and even grow to expect it. Very Minority Report. How much governments and private organizations are using this kind of tech is unclear, but it’s growing. Add personal location tracking technology to the mix, and we really are living in a surveillance state.

III

Third, there’s a new buzzword floating around in economic circles: “Crowd-Based Capitalism.” The idea is that in the emerging 21st Century economy we’re evolving a whole new economic model. Not socialism. Not capitalism. Certainly not free enterprise. A new approach. As one book from MIT put it, we’re moving into a “Sharing Economy,” where “the end of employment” is being replaced with “the rise of crowd-based capitalism.”

The idea that employment as we’ve known it for the last six decades is increasingly outdated. For example, in the May 2016 issue of The Atlantic an article showed how one couple used up their entire life and retirement savings—and the entire life savings of the husband’s elderly parents—to put their two daughters through college. The idea of college training being essential is now being taken to incredible levels: The savings of two couples wiped out, just so their offspring could graduate with a degree—in an economy that doesn’t value degrees like it used to. (See “My Secret Shame,” The Atlantic, May 2016)

A truly new economy is emerging, but most people haven’t realized it yet. They’re still caught in the old—and paying for it in tragic ways.

Another example: When 2016 presidential candidate Ted Cruz said the following, “The less government, the more freedom. The fewer bureaucrats, the more prosperity. And there are bureaucrats in Washington right now who are killing jobs…”, the response was immediate. Two professors, one from Yale and the other from Berkeley, replied that the opposite is true: The bigger the government, the more freedom, and the bigger the bureaucracy, the more prosperity. (“Making America Great Again,” Foreign Affairs, May/June 2016)

A lot of people actually believe them.

But reality is still reality. Crowd-based capitalism means more government, and this isn’t the path to a great economy. The thing that is actually rising to replace the 1945-2008 era of employment it is a reboot of entrepreneurship and small business ventures.

The new economy can go in one of two directions:

  1. Government reduces the amount of anti-business and job-stifling regulations, and spurs a major entrepreneurial boom. This will create a lot more jobs, opportunities, and incentives for increased global investment in the U.S. economy.
  2. Government keeps increasing business-stifling regulations and takes the profits from businesses (big and small) to create a “sharing economy.” This will create a much higher rate of dependency on government welfare and state programs, reduce the number of people fully employed (making enough to live in the middle or upper class), and drive investment to other nations.

How the so-called “sharing economy” differs from socialism is actually academic. Yes, on paper it has a somewhat different structure than Marxian socialism. But for the regular people it’s going to feel pretty much the same. A few wealthy and powerful elites at the top, a small middle class of managers and professionals who work mostly for the elites, and a burgeoning underclass living largely off government programs.

Two books* on this topic are: (1) The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism by Arun Sundrarajan, and (2) Saving Capitalism: For the Many, Not the Few by Robert Reich.

For the other side of the argument—why freedom and free enterprise are the real answer—see my latest book, entitled Freedom Matters.

Middle America is still experiencing a serious economic struggle. Things are getting worse, not better. As one report on the heartland put it: “On every sign, in every window, read the vague and anxious urgings…Remember the Unborn; …Don’t Text; Don’t Litter; Buy My Tomatoes (Local!); Let Us Filter Your Water; We Can Help With Your Bankruptcy. Then bigger gas stations sprawled on crossroad corners, unoccupied storefronts…another consignment store.” (“The Country Will Bring Us No Peace,” Esquire, May 2016)

As an ad for Shinola products reminds us: “There’s a funny thing that happens when you build factories in this country. It’s called jobs.” We haven’t seen very many factories built here for a long time. Crowd-based capitalism isn’t a solution.

Conclusion

Together, these three changes in our world are a very big deal:

  • The Drone Revolution
  • The Crowd-Sourcing Revolution
  • The Post-Employment Economy

If you have more ideas on these important developments, share them. If not, learn more about them.

The future can be determined by a few elites who think about such things, or by all of us. The more regular people engage such important topics, the more influence we’re likely to have.

The truth is, we’ve forgotten Watergate and Kent State. (See “The Cold Open,” Esquire, May 2016) We’ve forgotten Nixon and that the 2000 presidential election was decided by the intervention of the Supreme Court. (Ibid.) We’ve forgotten a lot of things.

As one report put it: “We’ve forgotten how easily we can be lied to.” (Ibid.) If we let them, Washington and the media will just tell us what the elites want us to know—and think.

 

*affiliate links

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