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Aristocracy

The Death of The Middle Class

July 19th, 2013 // 10:51 am @

Columnist Joe Klein said on The Chris Matthews Show:

“This is the biggest problem that we’re facing going forward. We were a homogenous, middle class country, by and large, for the fifty years after World War II.

“Now we’re no longer homogenous, and there’s a good aspect to that in that we have become a true multiracial country. But there’s a bad aspect to that, in that the middle class, which was the heart of this country, is beginning to fracture, and to panic, in many ways.

“And unless we figure out a way to find jobs for the vast middle class in this country, it’s going to be really hard to sustain democracy. We now have a plutocracy in this country.”

This is exactly true, and many Americans feel Wall Street and Washington are working together against the middle class.

Worse, many people aren’t sure that any solution is ahead.

Many experts suggest that education can solve the class divide, but the people realize that most schools are actually increasing the gap between elites and the rest.

Modern schooling has become a huge part of the problem, not a solution.

The only real solution is a widespread shift from the employee mentality to entrepreneurship.

As David Ignatius points out, many immigrants to America see the United States as a great place to start businesses.

Sadly, most native-born Americans are afraid of entrepreneurship and feel that jobs should be plentiful—as if it were a birthright.

The future of American freedom hinges on this question: will the current generation of Americans embrace entrepreneurialism, or will we keep whining about Washington while waiting for more jobs to somehow appear?

Is the American spirit dead, or is free enterprise still one of our greatest American traditions?

Only the regular people can make this choice.

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odemille 133x195 custom Egypt, Freedom, & the Cycles of HistoryOliver DeMille is the chairman of the Center for Social Leadership and co-creator of Thomas Jefferson Education.

He is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

Category : Aristocracy &Blog &Business &Citizenship &Culture &Current Events &Economics &Entrepreneurship &Featured &Leadership &Producers

A Tale of Two Spending Sprees

July 9th, 2012 // 9:25 pm @

Matthew Dowd said on ABC that for the last twenty years both parties have been big spenders.

One, he summarized, is the party of cutting taxes and spending more from Washington, the other is the party of raising taxes and spending more from Washington.

This says just about all we need to know about the problem.

Government is too big, and though the parties debate about where to spend more money (international affairs versus domestic entitlements), both keep pushing for more spending.

The current attitude in Washington reminds me of an old story told in some economic circles about the young man who grew up in the lap of luxury created by his father’s lifelong hard work.

As the man reached adulthood, his father cut him off from family money and told him he’d have to get a job or start a business and make his own way.

The boy approached his best friend, who with his own parent’s money had participated in the wasteful spending sprees over the years, and together they strategized how to get his father’s money without the “ridiculous” idea of going to work.

They settled on a plan, and on the day the boy was cut off from Dad’s money he went to his friend’s house, they went mountain climbing together, then swimming, and at 5:30 pm the friend handed the boy $200 and he went home to show his father.

When the dad asked how the first day of work had gone, the boy said work was hard but he had earned some money—then he showed off the $200.

The father walked over to the boy, took the money from his hand, turned, walked over to the fireplace and threw the money into the fire.

The boy was surprised, and didn’t know what to say.

“You are lying to me,” the father said. “You didn’t earn that money. Now go get a job.”

The boy and his friend brainstormed what to do. “Maybe you didn’t look like you had really worked,” the friend suggested.

So, the next day, the boy left early in the morning and the two friends went boating for the day.

At 5:30, the boy dressed in old work clothes, wiped dirt on his face and hands, and took his friend’s additional $200 to show his dad how hard he had worked.

The father listened to his son’s story, then walked over, took the cash, and threw it into the flames.

“You are still lying,” he said. “Now, grow up and go get a job.”

After a fruitless planning session, the friend told the boy in frustration, “I don’t know how he knows, but maybe the only solution is for you to actually get a job.”

The boy was getting hungry, though he ate during the days with his friend, and his dad mentioned that he needed to start paying rent or move out. So, the next day, the boy went out to found a job. He walked to the industrial side of town and stood in a line for odd jobs, and ended up shoveling gravel for nine hours.

Exhausted when he got home after 7 pm, the boy dragged his body through the front door and headed for bed.

“Come here, son,” his father called, so he walked into his father’s office.

“How was work today?” his father asked.

“”Good. I earned $85.”

“You’re still lying,” the father said.

Then he walked over, took the money from the boy’s hand, and turned toward the fireplace.

The boy leaped in front of his father, grabbed the cash from him, and said firmly, “Don’t you dare burn that money!”

The father smiled. “Ah…you actually earned this, didn’t you?”

Thomas Paine famously said that heaven knows how to put a proper price on its goods, and that something as valuable as freedom must have a very high cost.

The same is true of money.

Ten dollars that a person earned through hard work has much more value to him than ten dollars somebody else just gave him.

Government money is other people’s money, and until the citizens fulfill their role (far beyond voting) of closely watching government, the spending will continue.

Category : Aristocracy &Blog

Next…?

May 14th, 2012 // 10:16 am @

THE NEXT BIG TREND: Pooled Sovereignty
by Oliver DeMille

I recently spent two days in a Barnes and Noble reading the bestsellers on current trends and issues. I do this as often as I can—at least three times a year.

Sometimes I emphasize business bestsellers, and other times I focus on political books.

When I was too ill to do these visits for a time, I used Amazon to order the bestsellers every four months. But I prefer the bookstore, because in addition to books it has all the leading periodicals.

How to Read a Book(store) in 4 Easy Steps

I usually find a comfortable chair and stack 20-30 volumes and magazines on the table or floor next to me. Then I skim everything that looks interesting. That’s Step 1.

Step 2 consists of reading the books and articles that really pique my interest. I read them closely, and take notes in my notebook. Step 2 takes at least three hours and sometimes a lot more. If needed, I go back for a second day of reading.

Step 3 is buying the books and periodicals I want to have in my personal library, and Step 4 is re-reading them and organizing my notes from the trip and writing as needed.

On this trip, my travel plans got delayed, so I ended up staying longer than expected. I perused the business bestsellers and added more books to Step 2. Then I skipped to Step 4 and studied three books I’d already read over the last two days.

When I do these bookstore research trips, I’m always looking for something special. I want to see developing trends, new directions, and significant key words that signal where cutting-edge thought is headed. Only once in a while do I find a truly Big Trend, one which promises to remake the future. “Pooled Sovereignty” is just this kind of trend.

Sovereignty Broken Down

Sovereignty is the final say on something, or, having the ultimate power. The American framers were so concerned with the abuses caused by the limitless power of the British government that they established America with split sovereignty.

This meant that the federal government had just twenty powers, all listed and numbered in Article I, Section 8 of the Constitution. The final say, or sovereignty, over everything else was left to the states, or to the people – and the states were limited in their respective constitutions.

The people were ultimately sovereign.

Moreover, just in case the federal government tried to ignore the Constitution and usurp sovereignty from the states and the people, the framers divided the smaller portion of sovereignty given to Washington D.C. into three branches and established checks and balances to keep too much power from accumulating in any one place.

For decades scholars, students and interested citizens from both Left and Right have warned that sovereignty is centralizing in Washington, that split sovereignty is being replaced by a massive centralized sovereignty—all power in one place.

Pooled sovereignty is even worse. This occurs where international organizations or treaties make the final decisions for the people, regardless of what national governments say. Indeed, some of the most damaging choices being made today are decided without the consent of Congress or the Supreme Court – not to mention the states or the people. They are made by treaties, the United Nations, G-20, World Bank, International Monetary Fund and other international organizations.

Most Americans turn off their thinking when they hear this list of international agencies—but the elite perk up with interest. This is where the buzz is.

The breeding ground for a global system that supports pooled sovereignty is found in top universities, and it is promoted by the bureaucratic elite in many nations. Much of what occurs in Washington only makes sense to those who understand this drift toward globalization.

The Grand Design

For example, a push for increased government spending, debt and regulation on small business (even in the face of recession and a struggling economy) make perfect sense if the goal is to shift the American economy away from international leadership to global participation—to make the U.S. economy and government more like those of Europe and Asia.

Stimulus, universal health care, less entrepreneurship (through increased levels of government regulation)—all are necessary to create an American economy that can fit seamlessly with the industrialized European/Asian nations.

Another step in this process is to end the use of the U.S. dollar as the world’s reserve currency and replace it with an IMF or other currency. The IMF has already proposed this change, and international support for it is growing.

Just to be clear: When the dollar replaced the British pound as the world’s reserve currency in the 1970s, the average net worth of nearly every home in Britain fell more than 30% the day after the change. The British economy has still never fully recovered, nearly forty years later.

If the same change comes to the U.S., we will likely experience a worse economy for the next four decades than we have over the past four years.

Unfortunately, as Forbes reported, “It’s hard for the State Department to imagine an international agreement to which America is not part.”[i] Republican and Democratic presidents since FDR have drastically decreased American freedom using treaties. This is bad for Americans, good for pooled sovereignty.

Ultimately, there are two types of leadership that can turn this around: presidential leadership, and citizen leadership.

We Need You to Lead Us

Sadly, few presidential candidates (from either party) and exactly zero elected presidents since 1959 have effectively pushed back against this growing threat.

As for the American citizenry leading the charge: find out what percentage of your friends can tell you the details in the Law of the Sea Treaty, the Rome Statute, or UN Agenda 21, and that is a predictor of how likely the people are to effectively lead.

In fact, this lack of citizen leadership means there is little incentive for presidents to take action against pooled sovereignty. Or to put this in practical terms, a half-century with a bad economy is likely ahead.

Unless something changes…

We need citizens who study what our government is doing, who read treaties and court cases and executive orders, etc. Without this, the age of American prosperity will continue to decline.

Where to start? The three books I closely studied at Barnes and Noble are an excellent beginning. If you are liberal, try Drift by Rachel Maddow. Conservatives will probably prefer Dick Morris’s book Screwed. If you’re an independent, read them both. In addition, everyone should read How Do You Kill a Million People by Andy Andrews. Just reading these books and the documents they cite would be a great study on current America.

The future belongs to our citizens—and the level of our citizenship will determine what happens in the years and decades ahead. If we are Type B citizens (who vote, go to jury duty, and watch the news), we’re going to witness the decay of American freedom and prosperity.

We need Type A citizens, who in addition to voting and jury duty also deeply study the issues, government documents and decisions our government officials are making. We can only influence things if we know what’s really happening.

And: Next?

The second day at Barnes and Noble, the intercom announced that children’s reading time was starting. I took a break from reading and walked over to see America’s future. One mother brought her small son, and she read a thick book while he enjoyed reading hour alone. I was surprised they went ahead with the reading hour when only one child showed up. I don’t know why others didn’t bring their children, and I wonder what kind of America this boy and his peers will inherit.

I asked his mother what book she was reading. It was titled—no lie—City of Lost Souls. I wish that boy had been joined by an army of his peers—preparing to lead.

All through history, free people have been nations of readers. When the people oversee the government, they remain free. When they don’t…

Category : Aristocracy &Blog &Book Reviews &Citizenship &Constitution &Current Events &Foreign Affairs &Government &Independents &Leadership &Statesmanship

The Amazing (Ironic/Tragic) Debate

November 19th, 2011 // 2:15 pm @

There is a truly amazing debate happening right now in the United States. It would actually be comical if it weren’t so potentially tragic for America’s future. This debate is not any—or all—of the Republican Presidential Debates. Nor is it some formal debate taking place on television, the Internet or a university campus.

It is a cultural debate, a large-scale argument playing out in millions of discussions online, thousands of opinions and rants from the talking heads in the media, and – most dramatically – fought indirectly between the Tea Partiers and the Occupy Wall Street crowds.

Most of this debate is taking place in emotional and passionately charged ways, rather than in clear, concise intellectual dialog. Still, a quick look at the two intellectual arguments is instructive.

Some say that the divide between the rich and the rest is increasing each year. More to the point, the structural division between the upper classes and the other classes is becoming less porous and less elastic. Social mobility—which was once the American keynote—is steadily eroding.

A majority of Americans now feel that their children will have a lower standard of living than they did; many feel that the rising generation in China will have more opportunity than our American youth. The American Dream is over in this view, and things seem likely to get worse before they get better—if they ever get better.

I wrote about this reality a few years ago in my book The Coming Aristocracy, and it remains one of the most significant challenges of our time. It is presently a major catalyst of current trends and of our evolving future. Unless things change direction, an aristocracy is coming to America. Indeed, it is already almost entrenched.

In a typical debate, the opposing view would argue that such a divide is not occurring, or that it is a good thing for America – or even that it is a minor trend that will be offset by some larger reality. But this is no typical debate. In an interesting twist, all sides of the current amazing debate accept this truth—the divide between the rich and the rest is real, and it is a major challenge in our century.

The debate is about how to fix this problem.

One side of the debate wants government to solve the problems, the other side wants government to get out of the way so the people can resolve things. It’s More Government against More Free Enterprise.

The More Government side argues for higher taxes, more government relief, increased government spending, more government jobs programs, increased government training options, improved government education, and more regulations. It is summed up in the title of Thomas Frank’s recent article in Harpers: “More Government, Please!”

In contrast, the More Free Enterprise side promotes fewer government regulations, reduced or at least no hikes in taxation, lower corporate rates to boost America’s competitiveness in the world economy in the, decreased government spending, less government borrowing and printing of money, and smaller government.

This side wants the era of big government to truly, finally, be over,[i] or, at the very least, for us to realize that our government must stop shutting down or undermining the free enterprise incentives that are the basis of all historical prosperity and freedom.

The More Government side tries to convince the nation that the Free Enterprise side “Hates Government,” or “Hates the Poor.” Too many on the Free Enterprise side characterize the ideas of the More  Government side as “Hating Freedom” or “Hating Small Business.” Both of these characterizations are flawed.

Many who argue mainly for government solutions also feel deeply the need for government to be checked and balanced, while many who support answers mainly by private enterprise feel great pride and trust in the potential for good by our government and consider its success vital to society. Most people on both sides care about freedom and also want to help the underprivileged and struggling. Most people on both sides want government and business to be successful. Most people from both sides want the government to be fiscally responsible. They just have an honest disagreement about the best way to do these things.

Some want to label one side of the debate Democratic and the other Republican, but this simply isn’t the case. Government spending, government programs, and the regulatory load increased drastically—drastically!—under the Republican administrations of Eisenhower, Nixon, Ford, Bush and Bush and also under the Democratic leadership F. Roosevelt, Johnson, Carter, Clinton and Obama. Note that these things also increased under Truman, Kennedy and Reagan, but at least these three presidents made a loud and energetic case for proper limits on government. In short, both political parties have proven effective supporters of the More Government side of the debate.

The one big difference, the most fundamental divide, between the More Government and More Free Enterprise sides is this: one believes we need more government force right now, the other that we need more freedom and incentives right now.

For this reason, I am on the side of free enterprise.

The government has a vital role to play in our society. Without it, none of our freedoms will last. But government power must be wisely limited, and the best articulation of the right level of limits on our government is found in the U.S. Constitution. More to the point, the government today may or may not be too big, but its massive regulatory load and anti-business policies are clearly hurting the economy and fueling an increased class divide in society. They are keeping our economy down because they don’t incentive economic innovation or growth.

The reason I call this debate “amazing” is simple: It is both surprising and indeed shocking that anyone who has read history can believe that force is a more effective way to freedom than free incentives. One side of this debate seems committed to using government force to fix our economic problems, even though all through history free economies, minimal regulation and limited governments have consistently been the forerunners and partners of economic success and high economic mobility.

It is simply amazing that we still haven’t figured this out. Perhaps the most astonishing thing about this debate is that anyone still argues that more government force in our current model will spread more freedom, prosperity, or social mobility. There is no historical evidence for this, and overwhelming evidence of the opposite.

Freedom works. Why is anyone arguing that we give more support to government force? If the Republican Presidential Debates, and the ongoing responses from the White House, are about real solutions, they will be all about the government effectively incentivizing free enterprise. If the Tea Party and Occupy Wall Street events are about real solutions, they’ll promote ways to more effectively incentive free enterprise.

As long as government force is the dominant factor in our economy, things are going to get worse. The Bush-Obama economic environment we live in combines stifling regulations with massive government spending and uncertainty about what Washington will do next. This dis-incentivizes growth, hiring, and investment in the U.S.; meanwhile, business moves to foreign economies with better incentives.

Unemployment lingers above 9%, and the real number when we include all who are underemployed is pushing 20%. The mortgage bubble may not have reached its lowest collapse, and inflation or deflation appear imminent. In response, the White House now recommends more government spending, regulations and programs.

This is a truly amazing debate. The more the government regulates and spends, the worse the economy fares. As a result, the government seeks to spend more. And a lot of the American people think this is a good idea.

Many Americans were shocked into political activism by the Great Recession, where the average household lost 3.2% of its income.[ii] Since the Great Recession ended, during the so-called Recovery, the average household has lost an additional 6.7%.[iii] Are we simply scared into submission? Are we crying out to the government to fix things, because we are deeply terrified that nobody else will? Is that why so many people believe that government force is more likely to boost our economy than free enterprise?

The amazing question remains: Given all of history, how can anyone take the Force side of the current great debate?

Seriously?

 Endnotes


[i] Bill Clinton, who said that the era of big government is over, has addressed a number of these same challenges in his book, Back to Work: Why We Need Smart Government for a Strong Economy. There is much to agree and also disagree with this book, and it is an important read for interested Americans.

[ii] Harpers, December 2011.

[iii] Ibid.


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odemille 133x195 custom Egypt, Freedom, & the Cycles of HistoryOliver DeMille is the co-founder of the Center for Social Leadership, and a co-creator of Thomas Jefferson Education.

He is the co-author of New York Times, Wall Street Journal and USA Today bestseller LeaderShift, and author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

Category : Aristocracy &Blog &Current Events &Economics &Entrepreneurship &Generations &Government &Prosperity

American Decline

November 3rd, 2011 // 3:00 pm @

Is it Avoidable or Inevitable?

“We’re not going to bail our way out of this crisis, we’re not going to stimulate our way out of this crisis, we are only going to educate, ultimately, and imagine and invent our way out of this crisis.”
—Thomas L. Friedman, Meet the Press

 

“By 2020, the U.S. will be spending $1 trillion a year just to pay the interest on the national debt.
Sometime between now and then the catastrophe will come. It will come with amazing swiftness.”
—David Brooks, The New York Times

On the same week[i] the White House released its prediction that unemployment will get even worse every year in 2012, 2013 and 2014, Friedman and Mandlebaum’s book entitled That Used to Be Us focused the national dialogue on the deepening decline of the United States.

Fortunately, Freidman and Mandlebaum also outline a plan for how America can come back soon.

Harry S. Dent’s newest book, The Great Crash Ahead, further elaborates on this topic.

Friedman and Mandelbaum’s argument goes something like this: the United States is in serious trouble because of four great trends that are bringing massive change.

Our decline didn’t start with the housing crisis in 2008, but back in the late 1980s at the end of the Cold War.

 

Four Trends

First, according to Freidman,[ii]

“We made the worst mistake a country or species can make, at the end of the Cold War, when we misread our environment. We interpreted the end of the Cold War as victory…not understanding that it was actually the onset of one of the biggest challenges we’ve ever faced as a country.

“We had…unleashed two billion people just like us. But the nineties turned out to be quite a party thanks to the peace dividend, thanks to the massive productivity boost of the Internet and thanks, most importantly in many ways, to the collapse in oil prices, which was like a huge tax cut.”

Second,

“9/11 set us on a really bad course. We spent the last decade—in many ways necessarily, in many ways excessively—chasing the losers from globalization rather than the winners.

“And we made up for a lot of the fall behind…by basically injecting ourselves with steroids. Just as baseball players did it to hit home runs, we injected ourselves with credit steroids, creating a huge housing boom and construction boom to create jobs.”

Third,

“The number of people who can compete, connect and collaborate exploded in the last decade. You know,”

Freidman continued,

“I wrote a book in 2004 called The World is Flat, which was about this connecting of the world. We’ve gone from connected to hyper-connected…. When we sat down to write this book, I actually went back to The World is Flat, I looked in the index, and I realized that Facebook wasn’t in it.

“When I said ‘the world is flat,’ Facebook didn’t exist, or for most people it didn’t exist, Twitter was a sound, the Cloud was in the sky, 4G was a parking place, Linked In was a prison, Applications were what you sent to college, and for most people Skype was a typo…

“That all happened in just the last seven years. And what it’s done is taken the world from connected to hyper-connected. And that’s been a huge opportunity, and a huge challenge.”

Fourth, we’ve witnessed a huge generational shift.

“We went from the Greatest Generation, whose philosophy was basically to save and invest, and we are still living off their saving and investing, to basically the Baby Boomer generation, whose philosophy turned out to be ‘borrow and spend.’

“And we’ve really shifted from a generation born in the Depression, World War II and the Cold War—these were serious people, they wouldn’t think of shutting down the government for a minute—to a generation…that is much less serious.

“We’ve gone from basically the values of the Greatest Generation…to a Baby Boomer generation whose values are situational….

“You put them all together, and I think you really account for a lot of the hole we’re in right now…”[iii]

The book goes in more depth on each of these themes. More importantly, the book outlines some well-considered solutions.

For example, major employers, according to Friedman, are “all looking for the same kind of employee now: Someone who can do critical reasoning and thinking…who can adapt, invent, and reinvent the job, because in this hyper-connected world change is happening so fast. You know, there are companies now in Silicon Valley that do quarterly employer reviews…because their product cycle is changing so fast. You can’t wait until the end of the year to find out you have a bad team manager.”[iv]

Clearly, Freidman argues, education has got to change—it’s been too rote, and now it needs to prepare thinkers, leaders and innovators.

This is a hard job for an industry made up of mostly non-entrepreneurial, deeply security-minded types.

“What we argue in the book…going forward there really are just going to be two kinds of countries in the world: HIEs and LIEs: High-Imagination-Enabling countries and Low-Imagination-Enabling countries.

“Forget Developed and Developing….

“We’re not going to bail our way out of this crisis, we’re not going to stimulate our way out of this crisis, we are only going to educate, ultimately, and imagine and invent our way out of this crisis.”[v]

Friedman and Mandelbaum’s analysis is much needed in our current nation.

We train our youth not to take risks, and to get the “right” answer rather than the wise answer.

These two big problems are a serious challenge.

Without wise risk, prosperity and leadership are impossible.

Friedman’s 5 Pillars

The authors of That Used To Be Us note that the United States won at every major historical turn because we followed what Friedman called “the 5 Pillars”:

1-“Educate our people up to and beyond whatever the level of technology is…

2-“Immigration. Attract the world’s most talented and energetic people…

3-“Have the world’s best infrastructure…

4-“Have the right rules for incenting, capital formation and risk taking…

5-“Government-funded research.”[vi]

Note that these five form a powerful private society where the government maintains the right rules and incentivizes free enterprise.

All five have significantly decreased since the year 2000, really since 1989, and today the Right is strongly against 2 and 5 while the Left is adamantly against 4.

Both are caught in the trap of trying to accomplish 1 and 3 using the same old methods that haven’t worked for over two decades.

No wonder we’re in decline.

We’ve stopped doing the most important things that brought America’s original and lasting successes.

The Left pushes too strongly for government-only solutions while the Right rejects any government role.

As journalist Paul Gigot noted,

“The irony is, of the past thirty, forty years, that the prestige of government has collapsed most rapidly when government has tried to do…far more than it is capable of doing.

“Government prestige increased under Ronald Reagan, the great supposed enemy of government, because he showed when you focused on a couple of things and did it well, and got the economy growing, that people said, ‘You know what, they’re competent there. It’s working.’”[vii]

We need government.

We need it to protect equal rights for everyone and maintain a system where all are treated equally before the law.

This encourages free enterprise, economic growth and improved prosperity.

Societies without such governments have little freedom.

Of course, the danger is that good government can become overbearing and put a damper on economic growth and success.

Today we have government that has clearly over-reached in a number of ways, and a backlash from the Right that wants little or no government.

We need to adopt a middle approach, good government that is, in a phrase used in the American founding, “strong and limited.”

Actually, in The Federalist Papers the term was frequently “vigorous and limited.”

We want a strong government, and at the same time we want a limited government. That is what good constitutional government is all about.

Many from the Right may consider the Friedman/Mandlebaum book a push for too much government just as many from the Left will wonder that it doesn’t push for more government solutions.

American citizens should take a step back and consider the proposals on their merits, however.

I don’t agree with every suggestion in this book, but I find a number of them to be well considered.

On the big topic, the broad concept that both government and the private sector must work together in their proper roles in order to get our nation back on track, I think the book is right on.

On the subject of education, this book is especially valuable. In truth, as the authors affirm, bailouts and stimulus packages—as necessary as they may be in certain crisis situations—will not solve America’s problems.

Real solutions depend on wise policy from government and mostly from innovation and leadership in the private sector.

Indeed, the best government can do is remove the current regulatory pressure on small business and allow the entrepreneurial American spirit to get our economy growing again.

Another recent book addresses these same issues from a different perspective.

 

Doom-and-Gloomers

I have long been a fan of the work of Harry S. Dent because his predictions, like those of John Naisbitt and Alvin Toffler, have been strikingly accurate even though they have been more specific, and therefore more likely to fall short, than those from most other forecasters.

Dent argues in his latest book, The Great Crash Ahead, that “the great economic crisis of 2008 will likely return in 2012, or 2013 at the latest, and will be even worse.”

His analysis is alarming, but interesting. Note that Dent is not a doom-and-gloomer.

Remember, when multiple authors in the mid-1990s were predicting a major crash ahead, Dent published The Roaring 2000s, which forecast that the stock market would boom for the next decade.

He also said that the boom would increase until a shock and downturn in 2008.

For most of his career, Dent has taken on the doomsayers and offered a counter-intuitive forecast of economic boom ahead.

The fact that he said the cycles would turn in the other direction in 2008, and that now he says they’ll get even worse, should concern every American.

Dent wrote:

    • “Debt and stimulus is like any drug: it takes more to create less effect.”
    • “Deflation is the only possible scenario in the decade ahead.”
    • “The U.S. Dollar will appreciate and be the safe haven—not gold, silver, the Euro or the Swiss Franc.”
    • “Home prices will fall by 55% to 65% from the top before this crisis is over.”
    • “Stock [will] crash to between 3,300 and 5,600 on the Dow by the end of 2013, or 2014 at the latest.”
    • “Also, the crash will be worldwide, not just in the United States and Europe, as the dramatic China bubble comes to an end.”
    • “The trends for the coming decade are crystal clear: we are going to experience a deeper downturn and deflation in prices, not inflation. We call this the Winter season; it comes predictably once in a lifetime, currently every 80 years, which means that very few people will understand what is happening.”[viii]

Whether we face massive inflation ahead, as Ken Kurson has argued,[ix] or the deflation Dent predicts, the economic future promises to be challenging.

As Dent notes, from 1775 to the year 2000 Americans accumulated $20 trillion in private debt.

From the year 2000 to 2008 (latest numbers), we accumulated $22 trillion more—for a total of $42 trillion.[x]

No doubt this trajectory has increased since 2008.

Since the economic difficulties ahead follow patterns that we haven’t witnessed since the 1930s, most of the current common wisdom on economics is lacking or just plain wrong.

Unlearning is the key to times of change and transition,” Dent wrote. “What worked in a boom does not work in a downturn.”[xi]

Here are some of the things which have changed:[xii]

    • “It is your father’s economy”!
    • Don’t buy a bunch of new stuff—get out of the spending habit.
    • Make do with what you have.
    • Expect lower wages and lower prices.
    • Realize that debt is going to get a lot more expensive than it used to be.
    • Realize that assets and savings will be worth more over time.
    • Start thinking in terms of multiple streams of income.
    • “In the new world, management is the problem, not the solution.”
    • Entrepreneurship is in: “the coming decades and century will be seen as the age of the individual and the entrepreneur.”
    • Keep your business “lean and mean.”

Dent’s charts, arguments and analyses are a great read.

Add to this view the following thoughts from Friedman and Mandelbaum’s book, and we have an important look at the probable future in the years just ahead:

“No one should ever have to say ‘I am moving from America to Singapore because it is more hospitable to innovation and entrepreneurship.’ Just the opposite should be true. ‘You will know you’re successful,’ said PV Kannau, the India outsourcing entrepreneur, ‘if new companies in China and Brazil say, ‘We want to move our headquarters to America because that is the best place in the world to do business.’’

That’s not happening right now, because our regulatory and tax scheme is far from the best in the world….

“Twenty years ago, even ten years ago, a report such as this one would never have been commissioned. The United States was the best country in the world for business of any kind, the one with the largest and most open market, the most transparent legal system with the strongest property rights, the biggest and most efficient financial system, the most modern infrastructure, and the most dynamic ongoing research and development in almost every field. It was a magnet for capital and talent. No company of any size, indeed no company that merely aspired to international growth, could afford not to operate there, and none needed a consultant to tell it that.

“Now, alas, things are different. Over the past decade especially, American has changed, and not for the better.”[xiii]

How many more voices need to say the same thing before Washington listens?

Until we free up the American economy, reduce the red-tape and taxes on small business, and become the most inviting economy on earth, our economic problems will continue.

Many believe they will get worse—much worse.

The real tragedy is that all this is avoidable.

Free enterprise works.

America knows how to incentivize and encourage business growth. It’s time to get serious about restoring our free-enterprise economy—and soon!

The United States has one of the highest business tax rates in the developed world, and one of the most burdensome regulatory schemes.

Of course we can’t compete in such circumstances.

The question every American should ask is simply, why?

Why would the country that stands most for freedom in all world history now turn its back on the principles of freedom that made it great?

Why would we put our trust in bureaucracy, regulation and government rather than the proven dynamism of American enterprise?

We Can Only Ask, “Why?”

Whatever the answer, unless we make changes quickly the economic forecast ahead is dismal.

Friedman said America is like a nation turned upside down.

At the bottom is an enterprising people passionately seeking to overcome economic challenges with innovation, ingenuity and tenacity, while at the top is a government consistently blocking the entrepreneurial efforts of its people.[xiv]

Again, we can only ask, “Why?”

When Paul Kennedy wrote The Rise and Fall of the Great Powers over two decades ago, many scoffed at his prediction that American hubris was leading to our eventual downfall—in the way so many great nations and empires of history have declined.

Even the leading voice of anti-decline, Joseph S. Nye, has suggested that many of Washington’s policies are making it difficult for the U.S. to remain the world’s economic leader.

Hopefully the solution won’t be as drastic as Friedman, Mandelbaum and Dent predict.

“Shock therapy,” they suggest, may now be the only effective way to change our country.

If this is true, we are in for rocky times ahead.

One thing is certain.

Friedman and Mandelbaum rightly argue that the best way out of this is not so much to study the fall of Rome, the Ottoman Empire, or other historical examples of what not to do, but to make a national focus of studying what worked best in our own American history.[xv]

We know the answers, because they are part of our national heritage.

It is time to put aside our modernist sense of superiority and admit that we want what past generations had economically and learn what worked for them.

It will work again, if we are willing to learn and make the needed changes, because the principles of freedom are timeless and powerful.

Decline is not inevitable, but only a wise people well-studied in the principles of historical success can avoid it.

We must become such a people.


[i] September 1-7, 2011

[ii] Meet the Press, September 4, 2011

[iii] Ibid.

[iv] Ibid.

[v] Ibid.

[vi] Ibid.

[vii] Ibid.

[viii] From Harry S. Dent, The Great Crash Ahead.

[ix] See Ken Kurson, “Let Them Eat iPads,” Esquire, May 2011.

[x] Op. Cit., Dent.

[xi] Ibid.

[xii] Ibid.

[xiii] Thomas L. Friedman and Michael Mandelbaum, That Used to Be Us.

[xiv] Op. Cit., Meet the Press.

[xv] Op. Cit., Freidman and Mandelbaum.

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