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Entrepreneurship

Why are We Still in Recession?

February 10th, 2011 // 4:39 pm @

Why was it that scientists were so excited to discover facts that farmers had known for generations and generations?” —Brandon Sanderson, The Way of Kings

The Wisdom of Crowds or Crowns?

There is a technical definition of economic “recession,” but many Americans don’t know exactly what it is. Nor do they accept the experts’ assurances that the Great Recession is really over.

Indeed, in the view of many, it was the experts who led us into recession while predicting something else.

The same experts promised that stimulus would fix things, and now they continue to confidently promise and predict as if their record should somehow bolter our trust.

In many ways, America’s elites consider regular Americans uninformed and ignorant. But there is another kind of wisdom, not based on expertise and therefore seldom understood by the elite class (most of whom were convinced some time before or during college that erudition is a matter of credentials, titles and peer consensus).

The “other” wisdom is based on an innate or experiential understanding of principles, of knowing things like these: Increased government size and spending is out of control; and like the housing bubble, the big-government bubble will have to burst at some point.

In the governmental model as erected by the American Founders, the wisdom of the masses is a critical and even central feature of republican government.

The American founders so trusted this type of wisdom above that of experts that they put the regular citizens in charge of elections and our direct representatives in charge of the nation’s purse strings.

They also gave the federal government only 20 specific powers and left the rest to the states and people.

Many, especially the upper classes of Europe, argued that such an arrangement could not succeed, that nations must be led by elites and their specialized agents.

History proved the Founders correct in this debate.

A Second Type of Recession

There is also another kind of “recession” not defined by economists but very real nonetheless — a recession where most people feel deep and overwhelming economic anxiety, where few families have as much money now as three years ago but more expenses, and where the majority feels deep down that things will get worse before they get better.

This kind of recession doesn’t move charts or graphs, but it does operate on a real logic: When the experts are wrong over and over, stop following them.

It should be noted that the people who use this type of reasoning generally have great respect for expertise and the experts, but not a blind faith.

Such wisdom holds that if individuals, households and businesses must tighten their belts, live within their means, and rise to a more self-reliant and entrepreneurial approach now that times are hard, the government needs to do the same.

If Washington refuses such common sense, it is deluding itself — and forcing us to pay the bill.

This “other” wisdom realizes that we have lived beyond our means for some time, and that we can only really build a new model if the old system is deeply changed.

The far Right and far Left argue that such progress can only come from the ashes or ruins of our broken system “after it falls,” while more moderate voices believe that a few fundamental shifts in worldview and policy can get us back on track.

We can move from nanny state to free enterprise, according to this view, from big government to smaller and more effective government, from a nation of dependents to a nation of innovators.

Such arguments sometimes sound untrained and unsophisticated to elite ears, partly because the privileged class wants America to look good to the European eye — but mainly because these type of arguments are often untrained and unsophisticated.

But we should not make the mistake of considering them naïve or ineffectual.

Sometimes the simple solution is best — especially when one of the most daunting problems is how complex our government and economy have become.

Expecting any single expert or government official to have a full grasp of it all is truly unrealistic, and depending on large teams of specialized experts doesn’t work without leadership from those who grasp the entire reality and envision something better.

Citizen Leadership

Grassroots wisdom from the people as a mass accomplishes this more effectively than any party, politician or intellectual class. This is the linchpin of freedom. The citizens must truly lead, or freedom does not last.

In times of crisis, wisdom is more important than expertise. Both are essential, but wisdom is most vital.

The American people, however uninformed they may appear to elite tastes, have wisdom in spades. They make mistakes, as Jefferson and later Tocqueville put it, but they always correct them.

In the governmental model as erected by the American Founders, the wisdom of the masses is a critical and even central feature of republican government.

One central reality stands out right now: People are struggling a lot more than the experts admit or the numbers show.

The economy may be in a slow recovery, but the American people are stuck in recession. And they know it.

Families and communities are experiencing more hurt than gets reported, and many people feel that things are getting worse. The middle-class standard of living is collapsing, and the worst of the housing bubble appears to still be ahead. Moreover, the government bubble is real and eventually it will burst.

Unemployment is worse than the numbers show. For example, many of the job losses are in middle- and high-paying jobs while most new jobs are low-paying. With the real unemployment rate (which includes those who have given up even trying to find a job) over 12 percent and the underemployed rate above 18 percent, we are more than halfway to a depression (traditionally defined by 25 percent unemployment).

Yet our leaders spend, borrow, and spend. The Chinese have continued to lend us more, as we figuratively hung ourselves and our posterity with an unyielding cord of debt.

Washington regulates more roadblocks to business growth, and tells us that 10 percent unemployment is the new normal. Then politicians pile on more regulations that hinder global investment in the U.S. and send it to friendlier markets.

American firms go abroad and find lower taxes, reduced regulatory environments, and more plentiful capital.

As unemployment lingers in the wake of these policies, we are assured that more government programs will care for those without jobs.

Most Americans find this more alarming than comforting. Consumers don’t spend. Businesses close. A drive down Main Street, Anywhere, USA is a museum tour of boarded-up windows.

We elect one party’s leaders with high hopes, then we try the other party—back and forth, without lasting success. Things worsen. Inflation may follow, as the Fed prints more money and further devalues our currency.

Many Americans feel the afterglow right after a major election, but the anxiety returns when the bills keep coming and they try to balance their checkbooks and plan for the years ahead. Call this recovery if you want, but the American people aren’t convinced.

Next Steps

The good news is that when pushed the American people take note and take a stand. The great American entrepreneurial spirit is rising, and it is our only real hope.

Elections come and go, but cultivating the values and skills of free enterprise in ourselves and others builds for the long term. It creates a solid foundation that works.

The election of 2010 is over, and the elections of 2012, 2014, 2016 and beyond will not have near as much impact on America’s future as the entrepreneurial spirit (or the lack of it) among the mass of regular citizens.

To the extent that elections help free the economy for growth, they can greatly benefit our prosperity and freedom.

But ultimately America’s success and affluence will depend upon the initiative, innovation, creativity, tenacity, resiliency, ingenuity, enterprise and entrepreneurial spirit of the regular people.

This is the true wisdom of crowds, and only the regular people can make this happen.

China may rise in prominence and even to superpower status in the decades ahead. If so, it will do so by applying these very entrepreneurial traits. The same is true of India, Brazil, Europe, other places, and the United States.

Our future depends on the rise of these entrepreneurial values and characteristics. The adoption of these will signal a true economic Recovery and put a real end to the Great Recession.

Whatever the politicians, parties and experts say, the world of 2020, 2030 and 2040 will be a world of our making, and the nations which rise in prosperity, freedom and power will be those where the entrepreneurial spirit flourishes.

With this in mind, I am convinced of at least two things: Our future is bright, and there is a lot of work ahead for all of us.

***********************************

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 : Business &Economics &Entrepreneurship &Featured &Government

The Declining American Dream

January 31st, 2011 // 9:55 am @

We still hear about the American Dream. But more and more it seems we’re in a Matrix-like dream state where our perceptions are being manipulated. It’s actually a pretty common plot in cinema: The Minority Report, The Sixth Day, Total Recall, Inception, The Adjustment Bureau and others riff on this theme. We’re living in a reality out-of-synch with some truth we’ve lost, and we don’t even realize it. Somehow our collective memory and our assumptions of “normal” are slowly morphing, and our definition of the American Dream at present is so far removed from the original concept as to be a pretty fair Doublespeak[i] idiom.

Back when the Cleavers[ii] and even the Bradys[iii] were the icons of American families, what was the definition of “The American Dream”? What did it mean to be “middle class”? There are some features of it that were fairly well accepted once upon a time:

1. Home Ownership I

Perhaps the most traditional measure of middle class and the American Dream is the ability for every man to be the king of his own castle. In this the U.S. was a beacon to the world, and other countries even began to adopt the value that every person might aspire to own his own dwelling. The historical and sociological significance of home ownership includes the moral and political empowerment of being “landed,” and affiliation with the natural aristocracy. Homeowners were believed to have a deeper sense of responsibility to invest in their property improvement, an elevated pride in and loyalty to their neighborhoods and communities, and a higher commitment to the good of society in general.

2. Home Ownership II

Now we have to dig a little deeper into our genetic memory. Home ownership a generation or three ago meant not only that you weren’t renting from somebody else, but after a maximum of thirty years in your home you weren’t renting it from the bank, either. A 30-year mortgage left the likes of Ward and June Cleaver without a house payment right about when the grandkids started showing up, and they were able to be a boon to their young married children as they were starting out. If the idea of Home Ownership I as a definition of “The American Dream” is still generally accepted (and I believe it is), the Home Ownership II definition has been deleted from our collective memory. Not only do we have a 30-year mortgage that gets refinanced ad infinitum, but we have seconds on our vanishing equity—and our seniors are living on the funds derived from reverse mortgages.

3. One Income

For the Cleavers and the Bradys, Home Ownership I and II were accomplished on one income. Dad had evenings and weekends for leisure; mom could volunteer with the PTA and community service organizations. Both could participate in book clubs, bowling leagues, gardening and other vocations. The Women’s Lib movement sent the modern woman into the workforce by choice; now Home Ownership II is entirely out of reach for the middle class, and Home Ownership I requires a minimum of two incomes—and often multiple jobs for an individual worker—in order to be a reality.

4. Two Cars

The family had a car—and later two. They were American made with pride, and they were built to last. Paid with cash from savings, or with a little help from the local bank, they were paid off long before they were sent to the salvage yard. Some families even scandalized the neighbors by giving each of their teens a car as soon as they were legal to drive.

5. College for Kids

Part of the understanding for middle class families was that they would be able to pay for their kids to get a college education. Now all that’s left of that understanding is the guilt for failing to live up to it. No one seriously expects one-income families to be able to pay off the house and cars and simultaneously send several kids to the University. Scholarships, loans, grants and lingering debt into the career years are now the means for those who want a college education.

6. Discretionary Income

With all of the above, it was still an expectation that a married couple could live within their means and have savings, investment, yearly vacations with the whole family at some destination spot, and still have a few dimes to rub together at the end of the month.

7. Retirement

Ah, and after all this came the golden years. The Cleavers could now spend their expanded leisure time, afforded by an empty nest and the retirement from the company (complete with gold watch honors), in community service and nurturing the rising generation. They had savings, investments and retirement income to fall back on, a house and car paid free and clear, and the greatest resource: Leisure Time. They were elders in their community, and relied upon for wisdom.

The percentage of families enjoying these luxuries shrinks every year. Where did our American Dream go? Somehow, point by point, it has slipped away from us, and taken with it our definition of “middle class.” Would that we could wake up and reclaim the best of that dream; instead, we’ve awakened to a reality where our elusive American Dream is just out of reach; and these seven points that were once considered the legacy of any hard-working family are being deleted from our list of aspirations. If they are middle class expectations, the majority of America is no longer middle class.

[For a follow-up article on the how and why the middle class is shrinking, and how to reverse the trend, read Oliver’s article, “The Rule of Leisure,” featured in the February 2011 monthly newsletter for The Center for Social Leadership.


[i] See Orwell, Nineteen Eighty-four.
[ii] From the 1950 – 60s classic sitcom about the traditional nuclear family of Ward and June Cleaver, “Leave it to Beaver”.
[iii] From the classic 1970s sitcom about the non-traditional nuclear family of Mike and Carol Brady, “The Brady Bunch”.

Category : Blog &Community &Culture &Economics &Entrepreneurship &Family &Generations &Politics &Postmodernism &Producers &Prosperity

Building With Kryptonite: Small Business “Bailout” and the Future of the American Economy

January 3rd, 2011 // 4:00 am @

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

Book Review: Rascal by Chris Brady

November 1st, 2010 // 2:00 am @

In his modern classic, Rascal: Making a Difference by Becoming an Original Character, bestselling author Chris Brady introduces two groups that are currently leading our nation and world.

Both groups can be found in Wall Street, Main Street, Las Vegas, Silicon Valley, Hollywood and in both of the major parties on Capitol Hill.

Both groups have great impact in the world, but the direction and focus of each group is significantly different. And unfortunately, members of one of these groups are far too rare.

The first group is what Brady calls:

“…the Council of They. They are the thought police, the guardians of political correctness, the masters of conformity, the keepers of the status quo. It is They who struggle to keep life always the way They say it should be, who fight change, who persecute creativity, and hurl criticism at anything that smacks of originality or authenticity.

“They try to say who is ‘in’ and who is ‘out.’ They seem to have so much power that good, creative people leave their lives on the shelf rather than face their wrath. They will try to influence how you live, what you do, whom you should marry, and how you should raise your children. They want control, obedience, and blind acquiescence…

“The only problem is, that herd of people following along in step aren’t going anywhere, and as long as anyone listens to them, he or she won’t go anywhere either.”

Like almost anything in our modern society, it is tempting for Republicans to point to this definition and say that the Council of They is Democrats, and for Democrats to say exactly the same about Republicans.

Many in the media, ironically, would think of the Tea Parties—who are clearly not following the path outlined by the experts.

Perhaps the reason this resonates on both sides of the political debate is that herd thinking has become too widespread across our society.

The second group doesn’t really act like a group, because it is made up of independent individuals who do their own thing.

Indeed, perhaps because of this choice to act according to their own views (not as followers of the herd mentality), Brady calls these people “Rascals.”

“What Rascals do is get out of line. In fact, many Rascals have heard most of their lives that they are out of line in one way or another! Rascals don’t fall for the lure of going along or becoming someone else just to please others. Rascals follow their convictions and confidently head in the direction of their destiny, mindful of their Creator and not of the crowd.

“Non-conformity is not what we are talking about, but rather, authenticity….The first rule of becoming a Rascal is to slay the dragon of They. Rascals, quite frankly, don’t care what They say. Rascals don’t take their cue from the peanut gallery. Rascals are driven by their own sense of purpose and direction.”

Brady rejects the definition of the term “Rascal” as unprincipled or dangerous to society, and instead focuses on people like John Wycliffe, the American founders, Mark Twain, Harriet Tubman and Mother Teresa who see what is needed in the world and go against the norm in order to make the world better.

One of his heroic “rascals” is the freedom-loving Chinese man who stood in front of the tank in the famous video clip from the Tiananmen Square protests of 1989.

Some of the very most important Rascals in history are regular people who ignore the path of the masses and take action to make a positive difference in society.

For those who want to be such leaders, Brady includes an excellent test to help you find out how much of an independent-minded leader you are.

I highly recommend this book to everyone.

What America Needs

Modern America needs a generation of great leader-citizens. Many great leaders like Gandhi, Andrew Carnegie, Margaret Thatcher, Mother Teresa, Nelson Mandela and others have done things in ways outside the mainstream—ways that are creative and genuine.

Such people have been called by many names, including Outliers, Pioneers, Explorers, Beagles, Founders, Mavericks, Trailblazers, Disruptive Innovators, and Leaders.

I have referred to them as Statesmen and also Social Leaders. I have written about them, and how to join them in making a real difference, extensively in my books and articles.

Most recently I described the coming impact of their independent thinking on the political future of America in my book FreedomShift.

Centuries ago the great classical economist J.B. Say invented a name for people who go against the norm, change things for good even in the face of societal opposition, and turn unproductive commodities into productive resources for society. He called them Entrepreneurs.

More recently, Jonathan Fields called them “Career Renegades,” people who overcome the widely-promoted fears that unless we follow the “normal” paths outlined by society we’ll end up failing.

In the new post-meltdown economy, success at all levels and walks of society is more and more dependent on being this innovative type of person. In our time, perhaps the best name for such people is “supermen” and “superwomen.”

Whatever we call them, today they lead most small businesses and more of them are found in small business than anywhere else. America needs more of them.

We live in a society in desperate want of leadership from such people. The future of our national prosperity depends on how well they overcome the current challenges to the economy—including government overreach—and apply innovation, initiative, ingenuity, creativity, tenacity, and social leadership in our nation and world.

Such leadership is needed in business, family, neighborhoods, the arts and sciences, society and government. Each of us should consider in what ways we can improve ourselves and provide such leadership.

Our national future may well depend on how effectively we make and implement this choice. And it is time for Washington to decrease regulation, taxes, and get out of the way of the small businesspeople who can rebuild our economy.

***********************************

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 : Aristocracy &Book Reviews &Entrepreneurship &Leadership &Mission

Is Government Broken?

October 26th, 2010 // 4:00 am @

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.

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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

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