Building With Kryptonite: Small Business “Bailout” and the Future of the American Economy
January 3rd, 2011 // 4:00 am @ Oliver DeMille
When recessions make things difficult for a lot of people across the nation — especially when accompanied by high unemployment — many turn against markets and seek government solutions to economic challenges.
This is both predictable and understandable.
But one group typically responds in a different way that is surprising to most modern Americans: Many small business leaders and entrepreneurs, instead of seeking government bailouts, turn instead to ingenuity, innovation and flexibility.
Small business people believe in the free market. They believe that when things change in the economy they need to change the way they are doing business to deal with the new realities.
They also believe in free enterprise: the idea that their work, resourcefulness and risk can turn any challenge into a positive.
As one report pointed out, General Electric, Hewlett and Packard, Microsoft and CNN all started (or were brand new and really got going) during recessions.
Small business people have gotten us out of nearly all modern recessions — not by waiting for others to fix things or turning to government, but rather by applying leadership, inventiveness, creativity and originality. They look around, assess the situation and the needs, and put themselves (and others) to work.
Those with little experience running businesses, establishing start-ups or meeting payrolls often think that what small business needs is easier financing terms, government credits or bonuses.
The truth is that what they really need is less government regulation to deal with and lower taxes on their profits (which makes the risk worth the effort).
So why did the Bush and Obama administrations try to boost small businesses by making credit more available but increasing regulations and (in the Obama era) seeking to raise taxes?
“Thanks,” many small businesspeople are saying, “but no thanks. Forget the government credits and loan programs, and just get rid of all the bureaucratic red tape and high taxes which make it hard to build businesses, hire employees and meet our payroll.”
The Problem With Washington
Small businesses need consumers to buy their products, and that means stability from the government — not an on-going agenda of governmental change, change, and more change that creates increasing uncertainty and kills investment and consumer confidence.
They also need investment. As Nobel Laureate in economics Joseph Stiglitz said, there is a lot of investment money globally right now, but as investors are asking where is the best place to invest, the primary answer is “not in the United States.”
The on-going stimulus programs and other over-use of government interventions in the U.S. economy are driving away capital.
Experts say the housing crash hasn’t hit bottom yet and the unemployment rate will increase. The real unemployment rate is actually over 12 percent.
Government intervention is not solving the problems, and in fact the governments around the world that are intervening the most in their economies are struggling more.
It may be argued that these countries obviously have a greater need for remediation; but it must also be acknowledged that government has been the go-to in the U.S., and its sound-bite friendly solutions have been conspicuously shy of either restraint or principle.
When the crisis hit, most experts agree that government intervention helped stabilize falling markets. We are all glad things didn’t get even worse.
Thank goodness for President Obama’s leadership aura at the end of 2008 and the first few months of 2009. We may well have been headed for a depression but for the positive sense of leadership he brought to the nation. It was short lived, it is true, but it helped when we needed it.
The McCain team at that point simply did not have the national support to lead us through that challenge. We needed a president-elect and new president with “the leadership thing,” and Obama had it. I think this is why so many independents supported the Obama campaign in 2008 election.
Now, however, we have now reached a point where, as Treasury Secretary Timothy Geitner said, we need business to lead out in healing our economy.
The best thing government can do now is get out of the way and let small businesses innovate, hire and grow. Unfortunately, this is unlikely to happen unless Washington stops increasing regulations, taxes and other blocks to business growth.
The recent growth of government spending has been drastic, and it creates a drag on growth in the private sector.
For example, Reagan increased government spending by 2.6 percent, the first Bush by 1.8 percent, and Clinton by 1.5 percent.
But since 2000 we have increased spending with Bush at 4.7 percent and the Obama Administration at a whopping 12.7 percent (actually 22.5 percent if you include money approved under Bush but spent under Obama!).
In 2006 and 2008 independent voters swept Republicans out of office as a response to high government spending and a loss of trust in the decisions of the White House. Republican leaders now concede that they “got fired” by independents largely because of overspending.
Now independents are deeply frustrated that Democratic leaders have spent even more. Not surprisingly, given the unpopularity among independents and moderates of massive government spending, Americans now rate Barack Obama and George Bush almost equally — a major change from one year earlier where Obama had a 23 percent lead over Bush.
Only 20 percent of Americans are now pleased with Washington; 80 percent of Americans are disappointed or upset with Washington. Time magazine recently ran a cover report on conversations with Americans across the country.
The reporter Joe Klein noted that “There was a unanimous sense that Washington was broken beyond repair.”
This is not surprising in a nation where every baby born today “owes” the federal government over $43,000 to pay off the debt. For the first time in generations, many [some would say most] Americans are concerned that their children will inherit a worse nation and economy than they did.
The Solution Class
With all this government spending and constantly increasing regulations on business, it wouldn’t be surprising to see entrepreneurs and small business simply giving up; no doubt many do.
Most big venture capital is going abroad to places like Brazil, Israel, India, Britain, etc. All of these places are cutting government spending in order to incentivize small business growth.
Even France, Germany and Sweden are following this strategy. Indeed, France’s financial minister said on October 10, 2010 that unless nations reduce public deficits through reduced government spending, consumers will buy less and producers will produce less.
Nations, including France, who are following this policy are now seeing unemployment rates decrease. And when such a central-control powerhouse as France has an admonishment for us on this point, we ought to take notice.
At the same time that our growth money is going abroad, the U.S. government is increasing its debt to other nations.
For example, China holds 11 percent of our Treasury debt, Japan 9.5 percent, OPEC nations 3.5 percent, Brazil 2 percent, Russia 1.4 percent, there are significant holdings by North American and European lenders, and domestic lenders carry about 52 percent of the government’s debt.
Imagine what would happen to our economy if the government defaulted — and it does happen. In fact, the cost to insure our debt against default has risen 30 percent since August — just two months ago.
In short, the government owes too much to too many, but instead of incentivizing business growth in America it is attacking the very ones who are trying to fix things — small business.
Still, the American entrepreneurial class is fighting to overcome any and all challenges — even those posed by their own government.
Ken Kurson wrote:
“Today’s brutal economy and credit freeze should have most entrepreneurs running for cover, or at last signing up for the 99 weeks of unemployment our Congress has generously provided, courtesy of our kids and grandkids. Instead, many steel-stomached small business people are using this crisis as an opportunity to expand.”
In order to overcome the downturn and slow growth, entrepreneurs are asking what will sell in this economy and going to work providing it.
If past business strategies won’t work in the new reality, they are changing their businesses and seeking what actually will succeed. They see the economic meltdown and its aftermath as an opportunity, not a crisis. Instead of whining about what they’ve lost or asking for more government help, they are tightening their belts and getting to work.
Our New Super Heroes?
But, amazingly, Washington seems determined to make it harder for the very small businesspeople who are most effectively taking on our national economic problems.
Government is rewarding those who are currently the least productive while making it more difficult for those who are actively fixing the problems.
Democrats want to raise taxes in order to avoid cutting hyper-regulatory government problems (and because regulating business is popular in this anti-Wall Street environment), while the Republicans are allowing the tax hikes in the name of facing off with the Democrats.
Democrats claim that only by raising taxes on the top 2 percent of earners can we balance budgets. But “…75 percent of the families that would be affected by this tax hike are making between $250,000 and $500,000 a year…A lot of these people are small business owners, and that would hurt job creation.”
By increasing taxes on the very group that creates nearly all growth in America — small business owners — we guarantee that unemployment will tend to rise. And as the two major parties fight in Washington, taxes are now set to increase for everyone.
Some say that a tax increase is required to pay down debts and balance budgets, but in a down economy the real solution is to leave taxes as they are and cut unnecessary government spending. Neither party seems willing to do this, despite paying lots of lip service to the idea.
And month after month, increased regulations from Washington make business growth, hiring and increased economic success more difficult for small businesses.
In the parlance of the Comic-Con generation, it’s like the government trying to shut down Superman when he is protecting us from the end of the world. It makes absolutely no sense.
This is the crisis! Difficulty getting credit, slow growth, high unemployment, low consumer confidence—these are challenges entrepreneurs can overcome with hard work, smart risk and tenacious teamwork. This is precisely what entrepreneurs do!
But in addition to these major difficulties, Washington is now requiring small businesspeople to fight the government too! Why? In what evil parallel universe does building with kryptonite make any sense?
It’s time for a true small business bailout — a drastic reduction in costly red tape and an easing up on the tax rates for those who pull success out of seemingly impossible circumstances.
We need Superman, and entrepreneurs are up to the task. If only the two major parties in Washington would get out of the way.
***********************************
Oliver DeMille is a co-founder of the Center for Social Leadership, and a co-creator of Thomas Jefferson Education.
He is the co-author of the 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 : Culture &Current Events &Economics &Entrepreneurship &Featured &Government &Leadership &Politics
The Big Crisis is Coming
December 2nd, 2010 // 4:00 am @ Oliver DeMille
Note: If you like this article, you’ll love Oliver’s latest book, FreedomShift: 3 Choices to Reclaim America’s Destiny, which addresses the future of American and what to do about it.
Click Here to Download a PDF of This Article
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, New York Times Columnist
A big crisis is coming. From the story of the boy who cried, “Wolf!” to the crime of calling “Fire!” in a crowded theater, our society has a pretty low tolerance for alarmists.
They’re irresponsible, sensational, not to be believed.
One sure way to be ejected from the “Inner Ring” is to promote theories of conspiracy, to predict disaster or to in any other way suggest that our Progressivist trajectory is gravely off-course.
But what about when there is a wolf? Well, sure; the idea that there really is a wolf has agitated the fevered minds of crackpots and fringies since–forever.
And their animated efforts to alert the world to the threats that supposedly imperil us, to “wake us up” (regardless of our disinterest or our criticism) is perhaps the best indication that there’s no merit in their warning–or so says popular opinion.
This makes it all the more curious, awkward and, dare we say, disturbing when a chorus of alarms is heard coming from the established intelligentsia, from the acknowledged “experts” and thought leaders–the most credible voices in The Great Conversation.
And this is exactly what is taking place right now.
History is, of course, full of cranks and doomsayers, and the wise learn to talk in moderated tones and look at the evidence with clinical objectivity.
And yet in our time even many of our most objective, credible, detached, understated, methodical and consistently rational thinkers are predicting significant difficulties ahead–often in dramatic and even sensational terms.
Twenty Quotes Every American Should Read Today
For example, consider the following thoughts from some of our most tempered and prudent authorities. I have arranged these in a Top 20 list of great quotes; all 20 are an important commentary on our modern world and the decade ahead.
1. Peggy Noonan, The Wall Street Journal
I think there is an unspoken subtext in our national political culture right now. In fact I think it’s a subtext to our society. I think that a lot of people are carrying around in their heads, unarticulated and even in some cases unnoticed, a sense that the wheels are coming off the trolley and the trolley off the tracks.”
2. William Strauss & Neil Howe, The Fourth Turning
Wherever we’re headed, America is evolving in ways most of us don’t like or understand. Individually focused yet collectively adrift, we wonder if we’re headed toward a waterfall . . . a decisive era of secular upheaval, when the values regime propels the replacement of the old civic order with a new one.”
3. David Brooks, The New York Times
Elections come and go, but the United States is still careening toward bankruptcy. 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. The bond markets are with you until the second they are against you. When the psychology shifts and the fiscal crisis happens, the shock will be grievous: national humiliation, diminished power in the world, drastic cuts and spreading pain.”
4. Niall Ferguson, Newsweek
This is how empires decline. It begins with a debt explosion.”
5. Roger C. Altman & Richard N. Haas, Foreign Affairs
The U.S. government is incurring debt at a historically unprecedented and ultimately unsustainable rate… As the world’s biggest borrower and the issuer of the world’s reserve currency, the United States will not be allowed to spend ten years leveraging itself to these unprecedented levels. If U.S. leaders do not act to curb this debt addiction, then the global capital markets will do so for them, forcing a sharp and punitive adjustment in fiscal policy. The result will be an age of American austerity. No category of federal spending will be spared, including entitlements and defense. Taxes on individuals and businesses will be raised. Economic growth, both in the United States and around the world, will suffer. There will be profound consequences, not just for Americans’ standard of living but also for U.S. foreign policy and the coming era of international relations.”
6. Joseph S. Nye, Jr., Foreign Affairs
The Congressional Budget Office calculates that total government debt will reach 100 percent of GDP by 2023…”
7. Roger C. Altman & Richard N. Haas, Foreign Affairs
The International Monetary Fund (IMF) staff paper comes closer to the mark by projecting that federal debt could equal total GDP as soon as 2015. These levels approximate the relative indebtedness of Greece and Italy today. Leaving aside the period during and immediately after World War II, the United States has not been so indebted since recordkeeping began, in 1792… State and local governments also owe huge amounts, on the order of $3 trillion.”
8. Don Peck, The Atlantic
The Great Recession may be over, but this era of high joblessness is probably just beginning. Before it ends, it will likely change the life course and character of a generation of young adults… It could cripple marriage as an institution in many communities… Ultimately, it is likely to warp our politics, our culture and the character of our society for years come…The economy now sits in a hole 10 million jobs deep…[and] we need to produce roughly 1.5 million jobs a year–about 125,000 a month–just to keep from sinking deeper. Even if the economy were to immediately begin producing 600,000 jobs a month–more than double the pace of the mid-to-late 1990s, when job growth was strong–it would take roughly two years to dig ourselves out of the hole we’re in… But the U.S. hasn’t seen that pace of sustained employment growth in more than 30 years…”
9. Ken Wilber, A Theory of Everything
We are awaiting the new global founding Fathers and Mothers who will frame an integral system of governance that will call us to our more encompassing future . . .”
10. Andreas Kluth, The Economist
And yet, who would be California’s ‘Founding Fathers’? Thomas Jefferson, absent from Philadelphia as a minister to France, called the 55 delegates chosen by the states ‘demi-gods’. These were men such as James Madison, deeply versed in Aristotle, Cicero, Locke and Montesquieu, who preferred the word ‘republic’ to ‘democracy’ for fear that the latter might evoke the chaos of ancient Athens… But can lay people be expected to assume the responsibilities of a Madison?”
11. Thomas Friedman, The New York Times
We are in a country in debt and in decline–not terminal, not irreversible, but in decline. Our political systems seem incapable of producing long-range answers to big problems or big opportunities.”
12. Larry King, Larry King Live
A recent CNN Opinion Research Poll [asked]: ‘Do you think the federal government has become so large and powerful that it poses a threat to the rights and freedoms of ordinary people?’ Fifty-six percent of Americans said yes.”
13. Joseph S. Nye, Jr., Foreign Affairs
In 2010, a poll by the Pew Research Center found that 61 percent of respondents thought the United States was in decline, and only 19 percent trusted the government to do what is right most of the time. In 1964, by contrast, three-quarters of the American public said they trusted the federal government to do the right thing most of the time.”
14. David Brooks, The New York Times
The essence of America is energy–the vibrancy of the market, the mobility of the people and the disruptive creativity of the entrepreneurs. This vibrancy grew up accidentally, out of a cocktail of religious fervor and material abundance, but it was nurtured by choice. It was nurtured by our founders, who created national capital markets to disrupt the ossifying grip of the agricultural landholders. It was nurtured by 19th-century Republicans to build the railroads and the land-grant colleges to weave free markets across great distances. It was nurtured by Progressives who broke the stultifying grip of the trusts…The task ahead is to save this country from stagnation and fiscal ruin. We know what it will take…The Democratic Party…does not seem to be up to that coming challenge (neither is the Republican Party).”
15. Fareed Zakaria, Newsweek
The world has shifted from anti-Americanism to post-Americanism . . . The distribution of power is shifting, moving away from American dominance.”
16. Philip Bobbitt, The Shield of Achilles
We are entering a period, however, when very small numbers of persons, operating with the enormous power of modern computers, biogenetics, air transport, and even small nuclear weapons, can deal lethal blows to any society. Because the origin of these attacks can be effectively disguised, the fundamental bases of the State will change . . . We are entering a fearful time, a time that will call on all our resources, moral as well as intellectual and material.”
17. Thomas Friedman, The New York Times
I heard a phrase being bandied around here by non-Americans–about the United States–that I can honestly say I’ve never heard before: ‘political instability.’ [This] was a phrase normally reserved for countries like Russia or Iran or Honduras. But now, an American businessman remarked to me, ‘people ask me about political instability in the U.S. We’ve become unpredictable to the world’….We’re making people nervous.”
18. Joe Klein, Time
Many Americans also were confused and frustrated by the constant state of war since the terrorist attacks of 9/11. But for every occasion they raised Afghanistan, they mentioned China 25 times…’The great fear is about American supremacy,’ said Anne Mariucci…’We all believed that if you followed the basic compact, worked hard and played by the rules, that we’d have the highest standard of living in the world. And we were always on the front edge of the next new technology–but we’re not anymore. We seem to be mired in mediocrity while China is steaming ahead.'”
19. Ken Kurson, Esquire
Today’s brutal economy and credit freeze should have most entrepreneurs running for cover, or at last signing up for the 99 weeks of unemployment our Congress has generously provided, courtesy of our kids and grandkids. Instead, many steel-stomached small business people are using this crisis as an opportunity to expand.”
20. Alvin Toffler, The Third Wave
There are powerful reasons for long-rang optimism, even if the transitional years immediately ahead are likely to be stormy and crisis ridden.”
One More Thing: The Rise of China
On the issue of China, Peggy Noonan said in The Wall Street Journal:
People are freshly aware of the real-world implications of a $1.6 trillion deficit, of a $14 trillion debt. It will rob American of its economic power, and eventually even of its ability to defend itself. Militaries cost money. And if other countries own our debt, don’t they in some new way own us? If China holds enough of your paper, does it also own some of your foreign policy? Do we want to find out?”
Also consider these quotes from my book FreedomShift:
Note that China, the second largest economy in the world, has huge savings (unlike the former Soviet Union or the current United States) and is a major buyer of U.S. debt. China has three of the world’s four largest banks, the two largest insurance companies and the second largest stock market. With all this, the Communist Party remains in control; it also remains firmly communistic in philosophy and is, if possible, increasingly totalitarian.”
China has a huge surplus of government and also private savings, and it wants to invest in the United States. Indeed it is our largest creditor now. Other nations may also be persuaded to keep supporting our spending habits. But one has to wonder why our philosophical opponent (communist China) wants to invest so much. Are its motives pure? What if they’re not? Is it a simple profit motive? What if it’s something more?”
And as Thomas Friedman said in the New York Times:
What does it mean when China’s communist business environment is more inviting to U.S. companies, more conducive to their growth, than the United States? When the regulations and taxes in the U.S. make doing business in China attractive? The U.S. now ranks #40 out of forty industrialized nations in appeal to business.”
As noted by Samuel P. Huntington and summarized by Richard K. Betts in Foreign Affairs:
Huntington also presents data showing China as the only major power that has been more violent than Muslim states.”
Columnist for The Atlantic (and 30-year expert living in Asia) James Fallows has argued that America can find ways to work with China so the 21st Century doesn’t become a time of big-power conflict, but few if any experts believe that the U.S. can ultimately keep competing with China unless we make major improvements at home.
It’s Coming
A big crisis is coming, and we need to prepare. I am an optimist, and I am convinced that the best years in America and the world are ahead of us.
I am also an idealist: I believe that we should clarify what we want for the world’s future and get to work creating it–however difficult the task.
As a realist I am convinced that unless certain things change very quickly (and perhaps no matter what we do) we are facing some major challenges ahead. Every generation faces its share of problems and gets to choose whether to be beaten down by them or to turn them into opportunities.
All of this said, my optimism still wins out. Our best is yet to come. And it will almost surely come as we face and overcome the major challenges ahead.
What are these challenges? I have no crystal ball, and my only certainty is that they will surely come–and probably very soon.
Many nations have been at a point with conditions similar to those we now face, and there is a preponderance of historical evidence that certain kinds of problems dominate in such circumstances.
The cycles and patterns of history indicate four major types of challenges for our situation.
Four Possible Catastrophes
Four possible catastrophes are suggested by historical analysis. Of course, any foray into prediction is based on educated guesses, and the one sure bet is that the future will present a number of surprises.
Along with the inevitable shocks that will no doubt disturb all forecasts, one or more of these great challenges is likely to come again soon.
These scenarios are a good indication of what we should expect during the next decade:
1. Major Economic Problems
The Great Recession does not qualify as a major economic collapse, though nearly all the experts are convinced that it came very close to becoming one. An economic depression of considerably greater magnitude may be ahead.
2. Health Pandemic
Modern nations are extremely concerned about this terrifying possibility. It is a telling foreshadow that insurance companies are taking this threat very seriously and preparing accordingly. Historically, the Black Plague was as devastating as any war–more than most; indeed, it reportedly killed a third of the population in many parts of Europe.
3. An Unexpected Major Crisis
Examples might include a major volcanic event, earthquakes, meteors, drastic environmental shifts or other so-called “acts of God.”
Of course, the unexpected can come at any point in the historical cycles, but in times like ours these randomly occurring disasters are especially devastating because coinciding with one or more of the other three challenges is so likely. In the age of WMDs, such catastrophes could be manmade–in all of history, there is no credible example of weapons being created and remaining unused.
4. Major War that Threatens the Homeland
The experts seem to think that few enemies in the world have the potential to challenge America in this way, but even if this is true the reality is that any of the other major crises would most likely be quickly followed by major warfare.
Things can change very quickly, as history has proven. We are at the point in history (following a major boom in the 90s and then 9/11, the longest war in U.S. history and the Great Recession crash) that we are weary of crisis.
We want the challenges to be over, and we are thus particularly vulnerable. It is at such points that the really big problems come–like Pearl Harbor after a roaring twenties boom ended by the stock market crash in 1929 and then twelve long years of crushing depression.
Turning Crisis to Opportunity
We’ve gotten a little soft after several generations of prosperity and entitlement. It’s time for us to cheer up, man up and turn our coming challenges into opportunities.
America’s biggest successes came in times of challenge: the Constitution came out of a time of war and economic downturn, slavery was ended in another era of war and economic depression, and the Greatest Generation stopped Hitler in a period of world war following the Great Depression.
The patterns of history suggest, and the intelligentsia from across the globe concur, that we are headed for another such time period; in fact, we may well be into it already.
The challenges won’t be identical, of course, but they will likely be similar. Realism says our generation will have as many challenges as any other, and optimism says we can turn the coming challenges into remaking America and the world in the best and most important ways.
Whether we succumb to the challenges ahead or turn them into America’s best years depends on the American people.
If we stand back and wait for our leaders to solve our problems, the crises ahead will almost certainly go very badly for America.
If we just pretend everything is fine (or that our leaders will fix everything without our help) until the crisis is fully upon us, we miss valuable preparation time.
If, on the other hand, we resurrect our identity as a nation of grassroots leaders, entrepreneurial thinkers and citizen-statesmen, we will use the coming difficulties to significantly improve the world we pass on to posterity.
Well, Chicken Little–it turns out that the sky is falling. Will we be prepared?
Category : Current Events &Economics &Featured &Foreign Affairs &Government &Leadership
The Reality Behind the 2010 Election: It’s the Economy
October 29th, 2010 // 4:00 am @ Oliver DeMille
The economy is struggling, and it is driving the election. As so many have said since the Clinton campaign made it popular in the 1990s, “It’s the Economy, Stupid!”
And many Americans believe the economy will continue to decline. If it does, the Obama Administration has very few tools to respond.
The White House has based its entire economic policy on an ideological belief in government spending and intervention, but further economic downturn will require it to take serious action.
What can it do that it hasn’t already tried? How much more can it spend? And at what point will it accept that such spending isn’t delivering fixes to unemployment and the economy as promised?
If the government increases spending, promotes more stimulus, raises taxes or increases regulations (or all of the above — which is what it has done so far), it will run into major difficulty.
So far none of these have fixed the economy. The nation now ranks Democratic leaders at their lowest rating ever compared to Republicans (42 percent to 52 percent).
And the major issues fueling dislike of the Obama agenda are unemployment (now 9.6 percent), the healthcare law and other increased government regulation, and massive government spending.
Some economists, like Paul Krugman, say the problem is that the stimulus should have been much bigger in the first place — since now there is very little support for more government spending.
The White House seems to agree, and it is preparing to raise taxes on big business. The problem with this strategy is that very few small businesses have a lot of extra cash right now. Big business, in contrast, has a lot more extra cash than the whole of government stimulus.
Unfortunately, with the Obama Administration promising to end tax cuts to big business, these companies are unlikely to hire or spend their cash on hand. And if President Obama does raise taxes on big business, they are likely to simply hold their cash or spend it in other countries.
A lot of corporations are seriously considering moving more of their operations abroad to find more favorable environments for profit. Many have already made this move, taking jobs and money with them.
Some countries are aggressively advertising their low tax rates to lure international investors. For example, a full-page ad in The Economist reads:
“Fact: the Gulf’s lowest taxes are in Bahrain. As are the region’s lowest living and operation costs. Which leaves more of the cake for you and your business.”
A lot of nations are using similar campaigns to lure investment, while the U.S. is actively adopting policies which drive capital away.
Why would businesses that can afford to move stay in the U.S. to face more White House attacks and increasing taxes and regulations?
This not only won’t help our economy. It will increase unemployment, make credit harder to obtain for small businesses, and convince consumers to buy less. In short, it will significantly hurt the economy.
The Obama plan claims to help small business, but in fact its proposed policies will do the opposite. One Harvard economist points out that our debt load is now even worse than that of Greece, which has just experienced major economic collapse and is being bailed out by international banks.
Open For Business?
The impact on the elections is obvious. If a lot of Republicans win, they will have more influence to argue for more business-friendly policies. But there is no guarantee they will do so.
After all, the Bush Administration significantly out-spent the Clinton Administration before it. No matter what happens in the election, the Obama team needs to take a different route if they want to reboot the economy.
Two years into Ronald Reagan’s presidency, the economy was struggling and unemployment was above 10 percent. Reagan pushed to cut taxes, reduce government spending, and, perhaps most importantly, sent out the message — over and over — that government needed to be reduced and that private business was the hope of the economy.
In retrospect, spending actually increased under Reagan, but his consistent message of promoting business, support for business growth and free enterprise, and the need to cut government and spending made business feel safe.
He spoke optimistically of business on all levels, and lauded the opportunities provided by free enterprise and free markets.
The result? Businesses hired and entrepreneurs went to work. Commerce soared. Growth quickly soared to 8 percent (the Obama “recovery” was around 1 percent) and unemployment rates came down. The 1980s became an era of economic boom, which grew into the roaring 1990s.
Too often the opposite message is coming from Washington. The White House repeats its “unfriendly to business” message over and over, calling businessmen “fat cats” and telling young people to work for non-profits and not go into business.
It constantly promotes increased government spending and ever-expanded regulations which drastically increase the cost to start and build businesses. It has publicly attacked the Chamber of Commerce, the ultimate small-business advocate, and in general it has sounded angry and dangerous to business.
Now, in the name of “helping small business,” it is increasing taxes on big business and people who succeed in small business — many of those above the $200,000-$250,000 threshold are small entrepreneurs.
And, as I said above, many big businesses which hold a lot of cash are making plans to take it abroad. These realities are a serious problem.
Americans now believe Republicans (49 percent) “would do a better job of dealing with the economy than Democrats (38 percent).” But what exactly is the Republican plan? It is unclear.
Americans seem to believe that at least Republicans will stop increasing taxes and regulations on business, and perhaps be a lot more friendly and welcoming to business.
Whom Do Voters Support?
Perhaps the most significant reality is that Democrats and the Obama Administration now have a 60 percent disapproval rating among independents.
Of course a lot of Republicans support Republican politicians and a lot of Democrats support Democrats. But President Obama was swept into office by independents, and now most of them no longer support his policies.
Independents are mostly for fiscal responsibility, lower taxes and lower levels than the current government intervention in the economy. Indeed, many of them supported Candidate Obama because they disliked the Bush Administration’s high-spending, over-regulating policies.
It seemed to independents that Candidate Obama promised new leadership and a new direction for Washington. Many independents have been shocked and dismayed by the Obama Administration’s move to the left. But they could have supported this surprise if there wasn’t such a lack of new-era leadership.
For example, as an independent, I expected President Obama to be liberal. I closely read The Audacity of Hope (affiliate link) before the election and I was clear that he would govern from the left.
But I also thought he would bring a new brand of leadership — a fresh, charismatic, Generation-X-style emphasis on American growth and vibrancy rather than old-line Washington politics.
Unfortunately for all Americans (left, right and independent), that did not occur.
Many independents feel abandoned by President Obama less for his liberalism than for his return to “Washington politics as usual.” This shift occurred within days of inauguration, and his popularity among independents has consistently fallen ever since.
We live in an era where the key to winning elections is to combine support from your base (liberal or conservative) with the support of independents.
This is true nationally and in most locales as well. For Democrats, who will get the bulk of Democratic votes no matter what, the goal right now should be to bring in independents by pushing through many tax breaks and finding ways to deregulate business requirements.
When asked who they will vote for in the 2010 Congressional election, 62 percent of registered independents said they support Republicans; 30 percent plan to vote Democrats.
This is a huge split in American politics, where voting differences are usually 1-3 percentage points and a 6 percent split is a landslide.
As a result, many current Democratic candidates are frequently using the phrase “I’m independent.” As the election season kicked off right after Labor Day, the Obama Administration changed its message —apparently to attract independent voters.
President Obama said in his speech on September 8th that it is American business which drives the economy, and Timothy Geitner said the same day that American businesses are very innovative and able.
This change is a good move for the administration, but President Obama still managed to include disparaging remarks about privatization and Wall Street.
Despite the fact that there may be truth to what he says, it is the tone of anti-business that reverberates. He may get past this bias in the weeks and months ahead, but will it last after the election?
From an independent perspective, it doesn’t seem like it.
Business really does drive the economy, and we need to genuinely embrace and support this.
Independents are tired of the constant attacking between parties. Instead of Republicans attacking President Obama and the White House attacking Republicans, why can’t either just get serious about enacting policies that actually help small business?
It’s the Economy!
Our leaders must find ways to significantly help business.
Proposed tax cuts for small business, payroll tax holidays, and not taxing research and development are good starts with bipartisan support. The Obama Administration deserves praise for these proposals. But a lot more is needed.
If the government is going to spend money regardless of what the voters want, the current push to spend it on infrastructure is probably the best plan.
Still, spending $50 billion of taxpayer money is quite an expense. And nearly all infrastructure contracts will go to big firms, further excluding and in places even hurting many small businesses.
Unless private business is convinced to rebuild the economy, one business at a time, government spending will just make the problem worse.
Harvard economist Niall Ferguson responded to President Obama’s new plan by pointing out that the $50 billion of infrastructure expenditures will do little or nothing to boost the economy since the plan is built on faulty economic reasoning that is good for politics but bad for the economy.
In contrast, Ferguson argues, we should be studying how Reagan and Thatcher successfully battled and overcame major recession in both the U.S. and Britain in the 1980s. Even experts from left agree that the proposed Obama plan won’t do much to help the economy.
President Obama’s speech included numerous jabs against Republicans, which many independents agree with. But it didn’t include much that could really help the economy.
This has many independents frustrated. It feels too much like more politics, not better leadership.
For example, the proposal to put freezes on non-security spending is a good idea, but it rang hollow, sounding more like a political debating point than something the president really cares about.
If he gave it the same support as health care, and kept pushing it with tenacity and refusals to give up on the idea, many independents would be impressed.
Instead, it seemed to come across like the right thing to say in this election season, but prone to be ignored in favor of big government spending after the election.
If that isn’t true, if the Obama Administration really does follow through on this proposed freeze on the non-essentials, many independents will swing back to supporting President Obama.
But I think that most independents will wait until after the election to see if this happens.
The president’s speech was excellent in many ways, and independents should be glad that he is now saying some of the right things. It felt like the return of Candidate Obama.
But therein is the problem. Is it just campaign rhetoric? The contrast between Obama’s campaign persona and his Head Democrat persona is so dazzling that it’s more challenging than usual to hope that Mr. President will lead out.
And why did he say a lot of the right things about fiscal responsibility but only get passionate when he was criticizing Republicans or talking about increased government spending?
It’s the Economy, Really!
The Democratic narrative seems to be that without the stimulus the recession would have been much worse.
But many independents don’t buy it. They didn’t like many of President Bush’s policies, but they are just as frustrated with the current administration’s strategies.
They believe the stimulus was a flop and healthcare and other massive regulations have seriously hurt the economy. They blame both Obama and Bush for the current economic mess.
But since Bush is out of the discussion, their frustration is pointed at President Obama.
American independents aren’t the only ones who feel that the Obama Administration’s stimulus and massive spending/regulating strategy has worsened the economy.
Some international analysts, for example, say: “[The stimulus] has not worked. The whole thing has failed. And that is why America, of the big economies, is the one that is now teetering on the brink.”
Some say, “I think in Europe it’s very clear the direction the Europeans are going down, which is to basically start bringing public debts and deficits under control. Obama is still worried about the polls….Personally, I think the best thing they could do is probably just sit on their hands in the U.S. …”
If the plan is to spend more, tax more and increase regulations, then I agree — let the politicians sit on their hands and do nothing!
But what if, instead, they cut taxes, deregulated small business, changed the healthcare law to incentivize business investment, and extended an olive branch of friendship and thanks (yes, genuine gratitude) to entrepreneurs and business for their vital contributions to our prosperity?
Doing nothing, as good as it may sound to Tea Partiers and some independents, is not enough. Washington needs to reverse the bad-for-business policies accumulated since 1987 — or at least during the Bush/Obama growth of anti-business policy since 2001.
If this sounds impossible, we may be in for a very long period of economic struggles.
In Conclusion: It’s the Economy!
The future of the economy depends on the willingness of small business to take risks and the willingness of big business to hire, spend and invest.
Until our national leaders are willing to cut government spending, lower taxes, reduce government interventions in almost every sector of business, and show more genuine friendliness to business, our economic problems will continue.
Whatever the results of the 2010 election, Washington has got to make friends with business. We simply must make those who spend their lives in business feel safe and excited about building, hiring, investing, growing and spending. Otherwise, deepening economic troubles are ahead.
We desperately need real leadership in Washington, leadership which will actually incentivize, promote and reboot the economy.
The best-case scenario would be for the Obama Administration to lead out in this direction. After all, they’ll be in the White House for at least the next two years.
This pro-business outline (cut taxes, significantly reduce regulation on business, get government spending under control, and make friends with business) should be the guiding principle to every voter in every election across the nation this year.
We need to pay little or no attention to political party and instead elect leaders who will help kick-start, encourage, and stimulate the economy.
This is a true mandate, and our national future depends on it.
***********************************
Oliver DeMille is the founder of the Center for Social Leadership, and a co-creator of TJEd.
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 : Business &Current Events &Economics &Government &Prosperity
O Canada: Lessons From Our Northern Neighbor
October 28th, 2010 // 4:00 am @ Oliver DeMille
Two words that haven’t shown up together very much since the 2008 economic meltdown are “austerity” and “Canada.”
That’s quite an accomplishment for our neighbor to the North. Austerity has been paired with Greece, Portugal, Spain, Great Britain and France in just the past 18 months.
Austerity means having your economy controlled and run by international regulators, and right now the idea of austerity for the United States is growing.
Not only is the federal government in financial trouble, but so are many of the individual states. In addition to struggles in 2008, 2009 and 2010, 31 states project major budgetary shortfalls in 2011.
Prospects are getting worse in many states, rather than improving.
Unemployment numbers are knocking on double digits (which is to say that in some places they already exceed 10 percent), and the U.S. deficit and debt promise to be major issues in the 2010 election — to say nothing of their impact on America’s future for years and perhaps decades to come.
Canada’s Example
But Canada faces a much smaller challenge.
Ironically, for decades U.S. conservatives have pointed to Canada’s health care system as the example of what not to do — often referring to it as a failed icon of “socialized medicine.”
Many liberals have idealized the nations of Western Europe, looking past Canada and preferring Britain, France and Germany as examples.
The Great Recession has changed all this — mainly because Canada avoided the worst of the global financial meltdown.
As Ken Kurson put it:
“When the worldwide system collapsed…Canada didn’t have a single bank poisoned by toxic assets and not a penny of public money was used to bail out its financial institutions.”
Of course, many businesses and individuals suffered, but it would have been much worse if Canadian banks followed more European-U.S. policies.
Israel, India and China all fared pretty well in the meltdown — as did Canada — while the U.S. and Britain were hit very hard. Canada’s traditional liberalism and conservatism helped shield it from the worse financial collapse other nations faced.
Modern liberalism and conservatism are mostly focused on winning office and promoting partisan agendas, whereas the traditional strains of both conservatism and liberalism are more interested in ideas, values and ideals.
Traditional liberals in Canada used government to put caps and controls on the nation’s financial institutions, keeping them from simultaneously posing as both lending institutions and speculators in the Japanese style that most European and U.S. banks have adopted.
And traditional conservatism kept banks and business from leveraging their resources at the high levels which brought down so many institutions in other nations.
One can argue with either the underlying Canadian liberalism or conservatism, but the results were a traditional kind of system that is too often seen in many advanced (and broke) nations as outmoded, quaint and passé.
For example, most U.S. mortgages were intended for sale while nearly all mortgages in Canada are still held by the banks where they originated.
In other words, Canadian bankers only made loans to people they intended to have as long-term customers; the happy result is that when the housing bubble burst such banks remained solvent.
Of course, all nations were hurt by the global economic downturn. Certainly, Canada, Israel, and other nations have their share of problems, but simple financial frugality and common sense are never old-fashioned.
What We Can Learn
There are at least two important lessons America should learn from this.
First, the traditional models of either liberalism or conservatism seem better for America than the modern, partisan styles of liberals and conservatives.
The commonsensical use of government combined with a free and flourishing private sector is vital to the future of freedom and prosperity. And the ideal is found in earlier American history rather than modern Canada, India or China.
Still, when China incentives free enterprise more effectively than the United States, the results are predictable. Freedom works, and when America ignores its own legacy it loses its strength and economic resiliency.
Second, technology doesn’t trump wisdom.
We live in a world where checks can be deposited through cell phone cameras, current events are taught better on QRANK than the nightly news, and mobile phone applications like Avoidr “allow Foursquare users to select the ‘friends’ they want to avoid” (and their phones keep them abreast of where their friends are at any given moment).
Amazon sells more books on Kindle than in hardback, and online media is causing many newspapers and now book publishers to disappear.
On a macro level, nanotechnology makes surveillance, theoretically, ubiquitous — it is becoming ever-present, everywhere, always.
As Graeme Wood wrote in The Atlantic:
“If the past several years in the shadow of a war against terrorism have taught us anything, it is that, once available, surveillance technologies rarely go unused, or un-abused.”
And governments are pursuing increasingly deeper rings of secrecy even though technology makes transparency possible.
All of these are ultimately the tools of human values and decisions. Indeed, the more powerful the technology, the greater the need for wisdom, limits, checks and balances.
It matters whether we learn these lessons or not. When the global economy broke down in 2008-2009, many businesses, industries and even states were bailed out by the federal government.
But the next round of major decline could easily force Washington to follow the majority of non-industrialized nations and even European countries like Greece, Spain, Portugal, and France in turning to international lenders for bailouts.
If this comes before 2012 or even 2020, as it certainly could, we will have to borrow from those who have money to lend — meaning banks in nations such as China, Israel or Canada.
Of all the possible candidates, we will most likely go hat in hand to Canada.
Revisionist History
The other option is simply to adopt fiscal responsibility on our own. A little common sense — both the conservative and liberal kinds — can go a long way.
Unfortunately, the opposite seems to be gaining momentum. After the end of the Cold War in 1989, the common wisdom seemed to be that capitalistic nations had overcome their communistic rivals.
But for many, the Great Recession has revised this conclusion. Now the theme seems to be that Soviet-style communism and Americanized capitalism are just the age-old battle between power and greed.
The emerging winner appears to be government-run industry, what The Economist called “Leviathan Inc.: The State Goes Back Into Business.” Indeed, these are the models followed by nations like China, Israel, Brazil, India and Canada that fared better than most in the recession.
Some leaders in Washington are taking note:
“[F]rom Berlin to Brussels, demand for industrial policy is back. Japan’s new government is responding to what it sees as the increasingly aggressive policies of foreign competitors by deepening the links between business and the state.
In America Barack Obama, the effective owner of General Motors and a chunk of Wall Street, has turned his back on the laissez-faire approach of the past: a strategic-industries initiative is under way.”
Unfortunately, the politicians are ignoring the rest of this report:
“Yet the overwhelming reason for China’s miracle is that the state released its stifling grip and opened the country to private enterprise and to the world…
India’s wildly successful software and business-process-outsourcing industries blossomed not because of help from the government, but precisely because its [government] did not understand these nascent fields well enough to choke them off…
In the rich world, meanwhile, the record shows, again and again, that industrial policy doesn’t work.”
The Real Need
I’ll take traditional liberalism or conservatism – either one – over the current modern Democratic or Republican models.
Commonsensical uses of government spurring a free economy, or a truly free-enterprise system with a limited government effectively taking care of the basics—either would be much better than the current reality.
Canada, Greece, Israel, China, Britain, France, Portugal, Spain, Germany, many other nations, and the United States — all could use a free-enterprise upgrade.
A constitutional, free enterprising, federal democratic republic which believes in freedom and applies its principles sounds like a utopian dream.
Or, it could just be a nation run by a truly educated, wise and active citizenry.
Without citizens who are effective overseers of the government, freedom doesn’t last anywhere. Because of this, even those nations which were less hurt by the Great Recession face difficult futures.
It remains to be seen what nation (or will it be a tribe, or something else?) in the world will become the new standard of freedom.
Such leadership will naturally flow to the society whose common citizens become a new generation of great citizens—like the American founding generations.
***********************************
Oliver DeMille is the founder of the Center for Social Leadership, and a co-creator of TJEd..
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 : Current Events &Economics &Foreign Affairs &Government &Leadership &Politics &Technology
Is Government Broken?
October 26th, 2010 // 4:00 am @ Oliver DeMille
Is our government broken?
More and more people think so. The current presidential administration makes periodic claims that we are in an economic recovery, but at the same time growth is still slowing and unemployment figures stay around ten percent.
With more American deaths in Afghanistan during the last week of July than any week to date, things seem to be deteriorating at home and abroad.
To make matters worse, few people believe that the opposing Republican Party has much more to offer than the Democrats.
With neither side poised to really fix things, few Americans have a lot of hope for the future of government leadership. Here a few of the issues vexing citizens.
A Missing Recovery
First, even though many politicians have been claiming that we are experiencing an economic recovery, it doesn’t feel like it to most Americans.
The Obama White House doesn’t seem very friendly to small business.
Most of the entrepreneurs and businesses who do hold cash aren’t about to hire or expand in an environment where their taxes and regulatory burden could be increased at any point by an unfriendly Administration.
Ironically, Washington is responding by promising to increase taxes and regulations. Understandably, those who hire are skittish.
Treasury Secretary Timothy Giethner said in July that we’ve reached a point where private hiring—rather than government spending—is the answer to economic growth.
But until the government starts supporting small business, and as long as it refuses to incentivize free enterprise, the economy will struggle.
Author Arthur Brooks argues that the nation is 70% in favor of free enterprise and about 30% opposed, but that the 30% are in charge.
The 30% has gained much influence over citizens by convincing them that it was private business that caused the recession in the first place.
Somehow, this view has successfully convinced much of the public that the Bush Administration, big banks, Wall Street and all small businesses are the same group.
Those who read the fine print, however, are clear that policies from the Clinton and Bush Administrations led to the mortgage crisis.
Moreover, big government and big business together caused the recession. In the meantime, both ignored small business and continue to do so.
As a result, the 70% is confused and unable to keep the 30% in check. So more government policies hurt the economy and make it unwise or unfeasible for small businesses to hire and grow.
In the meantime, much of the Right is busy labeling Democrats as “socialists” rather than helping incentivize growth and prosperity.
Both sides seem to mean well, but one has unbounded faith in government and the other is preoccupied attacking that faith.
While the two sides posture, the plight of small business is sometimes discussed but remains unaided.
What the Citizens Want
Second, this problem is deeper than most people realize.
Since World War II, the United States has promoted a mixture of free enterprise and big government. In history, societies typically emphasized one or the other.
When big government ruled, enterprise was highly regulated and taxed; where free enterprise was the focus, taxes were small, regulations were minimal, and governments were limited in size, scope and budget.
But in modern America, no politician from any party can claim success unless he/she has “done something in office.”
And to nearly all Americans, “doing something” means increasing government action to benefit the pet cause or regional constituency.
If President Obama doesn’t pass much of his agenda, his political friends and competitors alike will label him ineffective.
Americans in general want their politicians to do a lot and are disappointed when officials fail in this.
The irony of the American voter is that “doing a lot” immediately earns most politicians a place on the voters’ list of officials to vote out.
Americans today want the impossible: low taxes and lots of government programs.
The Economist summarized it this way:
In the end, the question of whether a country is governable turns on how much government you think it needs. America’s founders injected suspicion of government not only into the constitution but also into the political DNA of its people. And even in the teeth of today’s economic woes, at least as many Americans seem to think that what ails them is too much government, not too little.
“But there is a catch. However much Americans say they want a small government, they seem wedded to the expensive benefits of the big one they actually have…With deficits running at $1 trillion a year, and in order to stay solvent, they will have at some point to cut spending, pay more taxes, or both….To balance the books, politicians have sometimes to do things the people themselves oppose—even in America. That will be the true test of whether the country is governable.”
Americans must either choose big government and be willing to pay for and submit to it, or they must move toward smaller, less intrusive government and be willing to enjoy fewer government programs.
When voters want the prosperity of freedom along with the bread and circuses of massive government, every election is a referendum on incumbents.
Eventually, though (and the day of reckoning appears to be close on the horizon), something will have to give.
Unfortunately, few societies make such hard choices until they are forced upon them by war, depression, pandemic or other major crises.
Sadly, few nations have the leadership or the fortitude to adopt the simple solution of spurring major growth and prosperity by de-regulating, de-taxing and freeing up the economy.
Freedom works, but few in history have been willing to adopt it.
Lost Leaders
We are unable to overcome these and many of our deepest challenges because of the way we distribute leadership in our society.
The American founders envisioned a truly great educational system, built around schools in every locale, to train their youth in the great ideas of mankind’s history, as well as the latest practical arts and sciences.
They built the early American schools to train empowered citizens who would protect freedom, foster prosperity, leadership, and character in all walks of American life.
They wanted an educational system that prepared their youth to become effective in their families, communities, and careers.
This vision helped create a nation that by 1946 produced over half of the world’s goods and services with only 6% of the globe’s population.
Freedom works, and the success of the American constitutional-free-enterprise model was spectacular. In the process, this system over time addressed, and — in some cases, even began to resolve its biggest negatives, including slavery and other inequities.
Unfortunately, by the late 1930s, the citizens and leaders who built this great model of success, freedom, and prosperity sent their children and grandchildren to schools which rejected this system, and instead adopted a new style of education focused mostly on career training.
Sadly, these American schools established by the our founders were replaced after World War II by the German model which was based on socio-economic class divisions.
In the “new” system, the elites still received leadership education (like all citizens had before 1939) while the middle and lower classes were educated only for jobs.
As this system grew, a Germanic-style grading system reinforced class-society advancements among the youth.
The maladies of credentialism, class divisions, and reliance on experts made their way into mainstream American culture. From 1939 to 1979, these contagions grew and infected the Founders’ classless and “free American” vision.
In such a system, the motto was: “A students work for B students.” The concept of “The Company Man” spread and Americans became addicted to big institutions.
Freedom and entrepreneurial values gave way to competing for executive positions and benefits packages. The goal of employeeship replaced the American dream.
Career became the purpose of schooling in almost everyone’s mind, and ownership and leadership values begin to literally disappear.
Eventually big institutions became truly massive, and anything except employeeship was considered inferior and backward.
In this environment, young people with a sense of leadership, idealism and ambitions to make a great impact on society split between the Left and the Right.
Those coming from traditionally conservative families tended toward majors and careers in business, while youth from more liberal backgrounds leaned towards the media and legal professions.
Most of today’s national leaders were part of this split.
The Reagan era ushered in a revolution of support for and promotion of free enterprise ideas and values.
Numerous non-traditional business models (like multi-level and network marketing) put individuals at the center of building a personal business rather than working as an employee, and eventually non-traditional educational options (from private and charter to home and online opportunities) grew in popularity.
Employeeship was still the dominant view, but a rising minority embraced the freedoms and prosperity of entrepreneurship. The dot.com boom and Roaring 90’s soon followed, and the entrepreneurial sector slowly grew.
Today a new culture of education and business is evolving out of the Great Recession and all that led up to it. A new maxim seems to be much more complex than in past generations:
- B students work for C students
- A students teach or work in government
- Those who cared little for grades and a lot about learning are building small businesses
Note that “those who cared little for grades and a lot about learning” often come from non-traditional private, charter, home and online learners, as well as from immigrants who are leading in entrepreneurial successes. And more than a few come from the traditional schools.
Since small business accounts for 80% of America’s economic growth, this is a significant development. Unfortunately, the number of people in the entrepreneurial sector is still very small.
Whether purposely or as a side effect, we are still training the overwhelming majority of our youth to believe that being A students means getting a good job and that employeeship is the greatest goal for education and even lifestyle.
Satirist P.J. O’Rourke addressed the problem this way:
America has made the mistake of letting the A student run things. It was A students who briefly took over the business world during the period of derivatives, credit swaps, and collateralized debt obligations. We’re still reeling from the effects…
“It was a bunch of A students at the Defense Department who planned the syllabus for the Iraq War….The U.S. tax code was written by A students….Now there’s health care reform—just the kind of thing that would earn an A on a term paper from that twerp of a grad student who teaches Econ 101…
“A students must do what teachers and textbooks want and do it the way the teachers and texts want it done….Such brisk apple-polishing happens to be an all-too-good preparation for politics. This is because a student’s success at education and a politician’s success at politics are measured mostly by input rather than outcome.”
Perhaps even more disturbing is that most of our Idealistic youth with ambitions to improve the world are still going after jobs in big business or big government.
The thing is, working for a big corporation or in a government job are unlikely places to really make a positive difference in the world.
We are distributing leadership in the way aristocratic and socialistic societies always have, and the future will unfold accordingly unless something changes.
We desperately need a rebirth of the entrepreneurial ideal.
The New Religion: Employeeship
Unfortunately, it’s not just the schools and universities that are continuing this outdated focus on jobs as the end-all of education and life.
Movies and television often demonize entrepreneurs while dedicating most of their time to stories about employees.
Full-time sports channels seem to dedicate as much time to the business side of athletes as to the entertainment, making sports role models as valued for their lucrative contracts as for their abilities on the playing field.
Even elected officials more typically refer to their role as a job than as public service.
Recent administrations and the media have referred to the constitutionally-titled commander in chief as the nation’s CEO. There are many other examples.
Because the “job-is-life” view is so prevalent, it has even become normal for successful entrepreneurs to see their work as done as soon as they can live comfortably.
In earlier generations (those that built and maintained American freedom), such successful entrepreneurs considered it their duty to spend the second half of their life helping society greatly improve.
Perhaps only parents and community leaders can effectively counter this trend and help more youth who want to help improve the world seek a true leadership education and seriously consider engaging in entrepreneurial careers.
Repairing the Break
So, to answer our question, yes, government is broken. The break is repairable, but it will take some major work and effort on the part of this generation.
When freedom is decreasing through constantly increasing regulations, government is broken. When the free enterprise system is under attack from our own government, government is broken.
When a tenth of our working society can’t get a job, and when the government responds by increasing taxes and regulations on those who could provide the jobs if they were free to do so, government is broken.
When two parties hold a monopoly on government, and where both increase spending and regulation no matter who is in office, government is broken.
But all of this misses the real point.
When most of society seeks employeeship above all else and every facet of life revolves around employeeship, much more than government is going to be broken.
Employeeship certainly has a place in effective nations, but it should be prioritized behind things like family leadership, citizenship, and private ownership.
Another name for these is life, liberty and the pursuit of happiness (or alternatively, as Jefferson originally wrote, “life, liberty and property”).
A successful society is made up of at least the following things:
- Effective parents, grandparents and other family leaders who help raise good, wise and industrious adults to take their place
- Citizens who are well-educated in freedom and leadership and who keep government, business and other officials in check so the society can remain free and prosperous
- Owners who improve the prosperity of society, in a free enterprise system where all can be owners
- A constitutionally guaranteed freedom where all are treated equally before the law and all are protected in their inalienable rights
How the President Can Repair the Economy
In the 2008 election President Obama was supported by the Left (who loved his promises of economic liberalism), but he was elected by independents who saw in him a possible end to the corruption of the Bush years and a potentially great leader for the United States.
The “Leadership Thing” swept him into office. Now, the Obama Administration could greatly boost the economy by deeply promoting entrepreneurship—both symbolically and in reduced taxes and regulations.
Such incentives would spur more hiring, investment and expansion, and a recovery would follow that Americans could really believe in.
In fact, the President could probably accomplish this without changing any policy at all, simply by warming to small business and genuinely becoming friendly to entrepreneurs.
As a friend, a member of a minority, told me about President Carter:
“I didn’t agree with his politics or policies, but I just feel that he loved me and my people and cared about us. I never felt that from Reagan or Bush, and so I voted Democratic even though I was more aligned with the politics of the Republicans.”
An old advertising proverb says that people make choices emotionally and then use logic to defend it.
No matter what Washington says, and no matter what the economic numbers show, most entrepreneurs are unlikely to increase jobs and boost the economy through investments as long as they think the man in the White House basically dislikes and mistrusts them.
Even liberal-leaning businessmen are worried that the President isn’t supportive.
The White House could drastically help the recovery simply by changing its bias against small business. If this is just a perceived dislike of business, not a real one, they can simply change their message.
If, on the other hand, the Administration really does mistrust or dislike small business, it should reconsider. After all, unlike Wall Street, big banks and big corporations, small business simply cannot be blamed for America’s economic challenges.
It has been the victim of the mistakes made by both big business and past government. Yet it keeps plugging along, keeping the recession from being much worse.
And small business certainly is the group most likely to overcome high unemployment.
Indeed, when the economy does make a serious comeback, entrepreneurs will be leading the way. Hopefully, the Obama Administration will extend its “Yes, We Can” philosophy to those who have the most potential to drastically grow our economy.
Conclusion
It is time for all Americans—from the White House to our individual living rooms—to pour out a deep, genuine and heartfelt admiration and “thank you” to those who run small businesses.
Whatever the politicians of any party do, the greatest need is for parents, grandparents and all of us to rekindle an excitement for entrepreneurship in the youth.
The future of America’s freedom and prosperity may well depend on it. As long as free enterprise isn’t flourishing, our government will be broken.
***********************************
Oliver DeMille is the founderof the Center for Social Leadership, and a co-creator of TJEd.
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 : Business &Constitution &Culture &Current Events &Economics &Education &Entrepreneurship &Generations &Government &History &Leadership &Liberty &Politics
