Why Washington Can’t Be Fixed, But America Can
January 7th, 2014 // 10:00 am @ Oliver DeMille
The problems in Washington D.C. aren’t going to be fixed, because Washington is the problem.
One fundamental way Washington operates is incompatible with freedom, prosperity, and common sense. Specifically, Washington today is caught in the rut of post bellum auxilium, and there is little chance of this changing any time soon.
This phrase was used in ancient times to describe politicians and generals who would hear warnings of danger and refuse to provide troops — then, upon hearing that their posts had been attacked and overrun by the enemy, would angrily and publicly gather troops and send them. The troops would arrive at empty battlefields, too late to do anything — which should have been obvious, since the politicians didn’t even send them until the battles were over.
Our government is profoundly dedicated to this method. Consider the many warnings of impending terrorism that came before 9/11, and the drastic Bush Administration response after. Or the fact that only a very few, isolated people saw the Great Recession of 2008 coming, but afterwards the Bush and Obama Administrations took draconian pains to ensure that nothing like this would ever happen again.
Then, when the Arab Spring started with a massive uprising in Egypt, President Obama blamed the intelligence community for failing to predict this event. There are dozens of similar examples, in just the last decade.
Here is the problem. Washington believes the experts. But, as Nassim Nicholas Taleb teaches in his excellent book, Antifragile, the experts are terrible at predicting surprises.
Obviously, that’s what makes such events surprising. And they keep coming, despite the experts’ best attempts to predict and forecast.
Taleb wrote that intelligence analysts and economists fail to forecast most major world changes because these events “are unpredictable, and their probabilities are not scientifically measurable.”
He points out a real weakness with most modern government leadership:
- governments focus on prediction, then when they are surprised they
- blame the experts for not forecasting effectively, and
- rally to create regulations and policies designed to anticipate and prevent events that have already happened.
What they don’t do is create what Taleb calls real resilience, or the ability to withstand surprises — whatever comes.
There are several consequences of this mistaken approach. First, the numbers of regulations skyrocket because politicians think it is their job to anticipate every possible surprise.
Second, the size of governments, debts, and deficits increase as officials try to be prepared for anything.
Third, after each failure, the government becomes more and more dependent on the “experts.”
Common sense dictates that we stop listening to those who consistently get most of their forecasts wrong, but the worry that government must foresee and block every surprise trumps common sense — and more money is spent on more experts whose predictions continue to fall short.
In our book, LeaderShift, Orrin Woodward and I called this widespread problem “Credentialism.”
Taleb wrote:
“Governments are wasting billions of dollars on attempting to predict events that are produced by interdependent systems and are therefore not statistically understandable at the individual level…This was not just money wasted but the construction of a false confidence based on an erroneous focus.”
Surprises will still come, including natural disasters and man-made crises. Nothing government does can stop this.
Some will no doubt ask, “So, what should we do? Just give up?”
The answer is interesting.
Instead of focusing on trying to forecast and prevent surprising events in the world, Taleb says that wise leaders will focus on creating a strong and resilient nation and society that isn’t hurt by surprise. In fact, he recommends that nations seek to become “antifragile,” meaning that they get even stronger during surprises and other crises.
This is how America responded to World War II, for example. Instead of weakening us, this crisis made us stronger. This happened because we were more antifragile than today. We had, on the whole, stronger families, stronger community bonds, and stronger dedication to morals. We also maintained a true free-enterprise system where anyone had the opportunity to take risks and create widespread prosperity — and many people did just that as a response to crisis.
In our current environment — where only 35n percent of all jobs are full time, and more than 48 percent of people are on welfare, food stamps, or other government benefits, and where the regulatory barriers to starting a business are much higher than fifty years ago — we are a lot more fragile.
In short, we are a nation deeply addicted to being ruled by experts. Our best future will come, Taleb suggests, by focusing on the things that make us stronger, more resilient, and even antifragile.
In my view, this means a return to genuine free enterprise, pure and simple.
The reason this works is because it incentivizes individuals, with enlightened self-interest, to take on the challenge of becoming entrepreneurs, i.e.: producers, independents and bastions of self-reliance, sharing their wealth and security with those who buy into their vision and help make it happen through intrepreneurial positions in their businesses.
Thousands of such entrepreneurs unleashed on our woes would have a leavening effect and the grassroots spread of forward-thinking innovation will put into operation the principles that govern freedom and prosperity.
We need to take a good look at our nation and government, identify areas where were we are fragile, and fix them. Government has a small but vital role to play in this, mainly in fixing our long-term government spending problem, but the majority of change must come from the American people.
The problem, as always, is that such change requires risk. This means that those who are willing to face risk and innovate must lead out — entrepreneurs, not politicians, bureaucrats, or experts.
The Washington/Ivy League/Wall Street crowd that depends on experts is extremely fragile, if for no other reason than it relies on experts whose forecasts are frequently weak.
If we are to put America on a path to a truly flourishing economy and society where every child can benefit from a rebirth of the American Dream, risk is necessary. Without great risk, there will be no great rewards.
The truth is, the most innovative entrepreneurs have already detected areas of fragility and are taking action in response — that’s what makes them innovators. But Washington seems committed to stopping all this initiative.
A national addiction to experts, and a simultaneous rejection of entrepreneurs, is a sure path to decline. This is where we now are as a nation.
The reality is that expertise thrives when there is no crisis, but crumbles in the face of surprises. Entrepreneurship flourishes in times of peace and crisis, even when it isn’t given much of a chance.
When a nation encourages entrepreneurship and the natural innovation and resilience of entrepreneurs, it becomes strong — strong when surprises come, and even if they don’t.
How do we become such a nation? Three things are needed:
- We have to be innovators and entrepreneurs regardless of what Washington does.
- We have to effectively stand behind those few in Washington who do take on the expert establishment and call for real change, even (especially) when it upsets the career politicians and media pundits.
- We have to show real respect for entrepreneurs, and teach all our kids to seriously consider and admire the higher calling of entrepreneurship.
As Taleb put it,
“We didn’t get to where we are today thanks to policy makers — but thanks to the appetite for risks and errors of a certain class of people [entrepreneurs] we need to encourage, protect, and respect.”
Our solutions are simple, not complex. But the “expert-dominated” elites are trying to keep things complex in order to “justify their profession,” as Taleb said.
Innovators can do better. They always have. Carpe diem!
Oliver DeMille is the New York Times, Wall Street Journal and USA Today bestselling co-author of LeaderShift: A Call for Americans to Finally Stand Up and Lead, the co-founder of the Center for Social Leadership, and a co-creator of TJEd.
Among many other works, he is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, The Coming Aristocracy, and FreedomShift: 3 Choices to Reclaim America’s Destiny.
Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.
Category : Blog &Economics &Entrepreneurship &Government &Mini-Factories &Producers
The Death of The Middle Class
July 19th, 2013 // 10:51 am @ Oliver DeMille
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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Oliver 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 Looming Crisis — & a Call for Solutions
May 6th, 2013 // 3:51 pm @ Oliver DeMille
Most Americans have no ideas it is coming. But it is just around the corner.
It’s one of those technical changes that only wonks pay attention to, so few people realize how big this will be.
In fact, it’s a serious crisis in the making. And unlike the Y2K scare in 1999, this crisis is a sure thing.
What is it?
Well, put simply, this coming January, many companies will be required to extend Obamacare health care to their employees.
The costs of this are significant, and will force many small and larger businesses to make some very tough choices.
The result will be a lot of layoffs, downsizing, reduced pay, and outsourcing.
Service will suffer, and response times will plummet.
Most families and individuals plan on a yearly basis, running January 1 to December 31, so they may not know how that a lot of businesses run on a fiscal year—from April 1 to April 1, July 1 to July 1, or October 1 to October 1.
This is very important, because we just witnessed the first big round of businesses (whose fiscal year is April to April) factoring in the costs of the January 2014 Obamacare requirements.
The number of layoffs and cuts is a serious concern.
But those who run April to April have only had to factor in three months of Obamacare costs so far, so the damage has been minimal.
It’s going to get increasingly worse on July 1, and then by October 1 it will start having a major impact.
By the first of January, when everyone will have to pay the higher costs, the effect will be huge.
Again, because this is a numerical concern, most people aren’t paying attention. Here’s the crux of the problem:
- Our economy is already struggling with a weak recovery.
- The increasing tax and regulatory burden on business has dampened innovation.
- The schools seldom teach innovation or initiative—indeed they usually promote the opposite.
- International innovation is rising.
- Business is reticent to invest or spend, because the current environment in Washington is highly uncertain.
- Big business, which has a high surplus right now, is finding better political environments in other nations—so the money will naturally flow to where business is treated better.
- The Obamacare requirements are making business a lot more costly, and they mostly kick in this coming January.
A lot of businesses are scrambling.
For example, in the past few months I’ve received email from a number of friends who are business owners or who consult with small businesses—saying that their only choice is to either lay off a lot of employees or shut down their business.
One company, for example, is trying to prepare for next year, but has realized that the additional cost of Obamacare for their firm will be at least $18,000 a month.
This is a fairly small company, with close ties to its people.
The last thing it wants to do is lay off employees. But what to do? The costs are simply prohibitive.
Laying off is the obvious option; and after digging deeper, it may be the only option.
How would you counsel companies in this predicament? (Note that most companies are dealing with this right now.) What ideas do you have? I’m sincerely asking for input.
What can they do?
Thousands of companies are asking the same thing right now, and many others will do so before the end of 2013.
This is going to be a real shock to the economy.
A crisis is coming.
But back to the question. How can small companies that are already financially tight comply with the new regulations—without laying off or cutting salaries?
I’m hoping you see some real solutions.
The obvious one is to innovate—to expand sales into new markets and make a lot of extra cash.
The regulatory challenges of such a strategy are, alas, a serious problem. At least in the United States.
So, thinking like an owner, what would you do?
I know you don’t have financials or details in front of you for any one company facing this challenge, but take a stab at this problem anyway—because almost all businesses are doing the same thing right now. It’s the only realistic way to look at Obamacare, because it’s the way pretty much every business owner is looking at it.
Specifically: Costs are going up significantly, with no offsetting increases in income.
In fact, higher taxes and increased regulations make growth even more difficult.
In this environment, how can you absorb the Obamacare costs without laying off a bunch of employees?
Or letting them go and hiring all new people who are desperate for jobs and will work for much lower pay?
Or simply taking your business to Brazil or India or some other country where growth is actually rewarded?
Please send me your responses. What can be done?
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Oliver 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 : Blog &Economics &Entrepreneurship &Featured &Government &Leadership &Producers &Prosperity
A LeaderShift is coming. Are you ready?
February 8th, 2013 // 2:09 pm @ ekdemille
Now available for presale!
P
lease join us in celebrating Oliver DeMille’s latest work, co-authored with best-selling author and business guru Orrin Woodward — the soon-to-be released book, LeaderShift: A Call for Americans to Finally Stand Up and Lead, with an on-sale date of April 16, 2013.
This action-packed business fable is the culmination of Orrin and Oliver’s combined expertise and will offer every North American a deeper understanding of the Five Laws of Decline and how the respective effects are becoming increasingly evident in the United States.
LeaderShift will explain this devastating phenomenon in detail, motivate readers to take immediate and precise action and, most importantly, offer guidance on how each individual can contribute to not only stopping, but reversing this crippling trend.
Orrin and Oliver are proud to have LeaderShift published by the prestigious Hachette Book Group (second largest book publishing company in the world) and will hit the mainstream under the Business Plus imprint of one of the country’s most elite book publishing groups. In 2011, Hachette Book Group had a record 182 print books and 62 eBooks on the New York Times bestseller list, 45 of which reached #1.
At the time of this posting, LeaderShift is already rated #38 on Amazon’s sales ranking for Business Leadership titles, and #25 on Barnes and Noble.
Pre-order your copy today! >>
Category : Blog &Book Reviews &Business &Current Events &Entrepreneurship &event &Independents &Leadership
The 50 Steps of Crisis Eras
January 10th, 2013 // 9:23 am @ Oliver DeMille
Note to the Reader: I offered this list three years ago in early 2010, and since then the steps of crisis have advanced. I felt it was time to review and see where we are right now. Today I added a few words of commentary that update things since 2010—these are at the very end of this list. If you want, feel free to skip to the end and read the last paragraph before reading the list. It is amazing how closely we are following this! —Oliver
Part I: The 50 Steps of Crisis Eras
The steps below come in the following general order during the 20-25 years of Crisis Eras in history. This pattern repeats itself every 80 years or so, with the last crisis era occurring between 1922-1945. Within the phases, steps can come in any order. Our current crisis era began on September 11, 2001.
PHASE I
The Pre-Crisis Era (Usually 7-12 Years before the Crisis)
1. Foreign war (e.g. French and Indian, Mexican-American, WWI, Gulf War)
2. Major economic boom (e.g. the roaring twenties, the dot.com nineties boom)
3. Declining morals (both sexual and charitable)
4. Escapist entertainment (novels, the Charleston, the sitcom, etc.)
5. Salesman values are the norm: tolerance, niceness, wealth, etc.
6. Two-party conflict
7. Big institutions lose popular support (e.g. British Parliament 1780s, Congress 1860s, Presidency 1920s, courts 1990s).
PHASE II
The Catalyst and Its Aftermath
8. Major catalyst event changes everything (e.g. Boston tea party, Election of Lincoln, 1929 stock market crash, 9/11).
9. Society gears up for crisis, but nothing happens yet.
10. Return to seeming normalcy, but growing fear and mistrust.
11. Gold (and in modern times steel and oil) prices soar.
12. Realist entertainment
13. Growing racial and religious intolerance
14. Business failures and buy outs
15. Increased regulation of business
16. Many foreign conflicts
17. Many government scandals
18. Widely increased stress and health problems across the nation
19. Economic downturn — looks bad but bounces back for a while
20. Entrepreneurial values begin spreading: ingenuity, self-reliance, confidence
PHASE III
The Escalating Crisis (Steps 21-28 can occur in any order and at any point before step 35, but they do occur at some point during crisis eras.)
21. Big crisis event! (war, pandemic, natural disaster, depression, etc.)
22. All society’s problems suddenly combined into 1 big problem!
23. It feels like our civilization itself is at stake (it is!)
24. Statesmen either choose pessimism, fear, worry about the future, or they choose optimism and planning for after the crisis.
25. Major economic downturn, often at depression levels.
26. Major war begins.
27. One political party takes charge (for next decade or more).
28. Leaders either hunker down and try to survive the crisis, or they study hard, research deep, start or build businesses to fund freedom, and figure out answers for when the crisis is over.
29. Emphasis off rights and on duties (draft, tax hikes, censorship of media, etc.)
30. Customized becomes Mass (fewer brands at store, one or two office pay-scales and benefits package, etc.)
31. Leaders either focus on self survival or they write, teach, publish and spread ideas of freedom for after the crisis.
32. Warrior values dominate society: courage, strength, resiliency.
33. Every family sacrifices greatly.
34. Religious observance soars.
PHASE IV
The Turnaround (This is where things take a shift toward positive!)
35. Health increases, stress and anxiety decrease.
36. Greatness returns, because there is no other choice: greatness in homes, communities, nations, business, politics.
37. Leaders either trust that the government will just handle things after the crisis or they continue studying, teaching, writing and spreading the ideas that need to be adopted when the crisis ends.
38. The splintering, complexity and cynicism of the past 40 years turns to cooperation, spirituality and optimism. Happiness increases. (e.g. the number of people who considered themselves very happy decreased 60% from 1957 to 2007. 60%!).
39. Crisis ends! Everyone celebrates.
40. Masses go home, ignore societal progress and get back to life.
PHASE V
The Post-Crisis Era—Major Changes (Typically 0-12 Years After Crisis)
41. Leaders establish a new set of economic rules (with a mixture of regulation and free enterprise and a bias toward one of these).
42. Leaders establish a new culture (with government, corporations or family as the central institution).
43. Leaders establish a new social contract (with a mixture of government and private institutions such as schools, health care, insurance, technology, arts, etc.).
44. Leaders establish a new society (with decisions on the accepted mixtures of morals, pleasures and duties).
45. Leaders establish a new ideal view of rights (with mixtures of inalienable, civil and human rights).
46. Leaders establish a new definition of family.
47. Leaders define a new class (or classless) system.
48. Leaders establish new boundaries, allies and treaties.
49. Leaders establish new constitutional models and legal codes to embody steps 41-48 above.
[These choices can go very good for freedom, prosperity and happiness, or very poorly for these. It is up to the citizens and statesmen who influence and impact these decisions. While the decisions are made during the early post-crisis era, the leaders are prepared and the ideas promoted during the 20-25 year period of crisis.]
What’s next? Well, it could go either of two ways:
50a. If leaders are effective in their studying, learning and spreading freedom and free enterprise ideas during the crisis era, the society adopts free enterprise, family-centered culture. moral-based society, inalienable and equal civil and human rights, strong family values, no class or caste system, and a freedom-based form of constitution.
50b. If leaders aren’t effective in their studying, learning and spreading the principles of freedom during the crisis era and early post-crisis era, society adopts lots of regulation, governmental and corporate controls over the people, pleasure-based society, a loss of rights, aristocratic class systems and laws, and a force-based government.
Part II: Comments by Oliver DeMille
March, 2010
Almost a decade ago, 9/11 created event 8, and we watched events 9-13 occur during the Bush Administration. Then, since the major economic crisis and the election of President Obama we have watched events 14-18 occur.
This is happening very quickly. With the Health Care law, we will likely see 14-18 accelerate in the next couple of years before we have a chance to reverse things in a presidential election. The election will probably determine whether or not we progress quickly or slowly toward major crises.
January, 2013
We have witnessed a significant increase of events 14-18 since March 2010, and after the midterm elections of 2010 and huge gains by Republicans in the House of Representatives, we saw event 19 occur. In fact, it was strong enough that the nation re-elected President Obama in 2012.
After the election, we began witnessing event 20, partly as numerous businesses shut down to use resources in other ways or restructured in the face of increasing regulations, and also as a number of entrepreneurs saw the decline of free enterprise and got even more serious about growing their businesses—regardless of what government does.
We will see event 20 increase in 2013, and events 21-25 sometime very soon—likely before the 2016 election. Whether 21 or 25 will come first remains to be seen.
Are you ready for a current events master class?
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Category : Blog &Culture &Current Events &Economics &Entrepreneurship &Family &Featured &Generations &History &Leadership &Liberty &Politics &Prosperity &Statesmanship
