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.
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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 @ Oliver DeMille
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.
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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 @ 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.
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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
Why We Need a Renaissance
October 22nd, 2010 // 4:00 am @ Oliver DeMille
The problem with revolutions is that they throw out the good with the bad.
Promoters of revolution gather support by peddling hate of the current system and those who lead and benefit from it, so when they get around to making changes they have actually discredited much of what is good in society.
Indeed, this is why some scholars have argued that the American Founding was not truly a revolution like those in France and later Russia.
Reforms, many thinkers rightly suggest, are gentler than revolution and can still result in positive improvements.
Unfortunately, reform thrives by re-empowering entrenched institutions, systems and even groups that are often more than just a little invested in doing things without change.
Reform tinkers with the edges while leaving the majority of the failing system intact.
Making reforms can certainly bring needed improvements to an organization or society, and sometimes little changes are enough.
The rule of thumb is to avoid revolution unless those things you hold most dear are under attack and clearly threatened, and to rely on reform when the issues and consequences aren’t quite so drastic.
Revolution throws out the good and bad of the past and replaces it with an all new system, while reform leaves the system mostly unchanged but alters certain procedures, institutions or personnel.
There is another option which approaches things very differently, and which can bring major change without the pain of revolution.
This option is Renaissance.
Renaissance is unlike revolution and reform in many ways, but can often deliver the positive results of both.
Renaissance operates from a very different premise than the other two, because it focuses on drastically changing people instead of things.
It changes people from the inside, and then leaves it to them to alter their lives, choices and actions in ways that reform the past and revolutionize and redirect the future.
When societies emphasize progress through revolution or reform, they focus on institutions, laws, policies, funding, credentials, resources, and other manifestations of the physical world.
In contrast, renaissance emphasizes the soul.
When people change their ideas, feelings, goals, dreams, loves, beliefs, passions, ideals, objectives, wishes, relationships and other intangibles, the future is forever impacted.
While these may seem ethereal to some, their impact on history is certainly concrete and momentous.
Two Models
In times of consistent economic growth, plentiful jobs and easy capital, the characteristics of success are often consistency, schooling, training, expertise, steadiness, reliability, obedience, compliance and longevity.
Schools in such environments teach memorization, fitting in, impressing superiors, and excelling within the guidelines, and jobs tend to reward these things.
But when the economy is struggling, jobs are difficult to get and keep, employers are laying off and reducing costs, and/or capital is scarce and minimizing risk, a different set of values dominate.
Traits like capability, skill, ability, initiative, resiliency, optimism, inventiveness, ingenuity, ability to inspire others, frugality, resourcefulness, tenacity and especially enterprise are most valued by the economy.
Schools and parents in such times need to help students increase creativity, imagination, originality, individuality, mental agility, emotional resolve, innovation, risk and entrepreneurialism.
We have been in a general growth period for nearly fifty years, and we are now in a struggling economic era, so the values are in transition from the first list to the second.
Parents and grandparents are still likely to dispense advice from the old economy, emphasizing things like test-taking, credentials and impressing superiors over the new economic realities such as initiative, individuality, originality and entrepreneurialism.
The government is stuck in the same rut, trying and failing to fix major societal challenges with trivial, albeit expensive, reforms.
Where they do attempt to make huge changes, such as in health care and financial reform, their symbolic and revolutionary-style agendas are creating more anger, frustration and deficits than actual solutions.
Tea Party responses further fuel the revolutionary rhetoric in the media and on Capitol Hill–but things remain mostly unchanged.
This lingering “business as usual” in Washington is alarming in a society with significant problems and major challenges in many fields of life.
From the obvious economic problems to unending international quagmires in Afghanistan (now the longest war in American history), Iraq and a number of other places, to a decaying infrastructure of roads and bridges, rising health care costs (unsolved and further complicated by the new health care law), decreasingly effective schools, high unemployment, unsolved levels of crime, and so on, we need real leadership and solutions that actually remedy our national problems.
Revolution is not the answer.
There is much that is good in America, and we want to surgically solve our problems without undoing the many positive things we have built into our society.
But the reform mentality isn’t working either, and the problems have been piling up for over a decade.
We need to drastically improve society, deliver solutions to overcome our most pressing problems, and simultaneously maintain the things which are already working.
Despite the attachment of both political parties and nearly all of our major public and private institutions to reform thinking, we need something much more effective.
We need change from within, a drastic alteration of attitudes and goals and thinking across our nation.
We need people to imagine a better future, to really believe in the reality of what we can do, and to take action.
We don’t need more stirring speeches from the President or any other leader so much as we need millions of individual Americans to get work–alone and in small groups–on solving our problems.
In short, we need a renaissance. And we need it soon.
The Power to Change
Fortunately, the greatest power in all of this may simply be individuals taking action and parents discussing the new values (initiative, ingenuity, tenacity, entrepreneurialism, and so forth) with their children and youth.
In fact, the American spirit of resourcefulness, optimism and enterprise is alive and well. More of us just need to take the leap.
The difficulty, of course, is that the old values were against risk.
In the old economy, the one that dominated from 1945 to 2008, risk was scary and often unrewarding.
A lot of people made small to large fortunes in entrepreneurial ventures, small businesses, network and multilevel marketing, and other non-traditional enterprises, but a lot more lost money in such attempts and ended up dependent on jobs like nearly everyone else.
The lesson for many people was just to get a decent education, a regular job, and a secure benefits package.
Like in Defoe’s classic Robinson Crusoe, many parents shared the advice not to aim too high or too low, but just to be content with “the middle station” in life.
A decent house, two cars, cable television, a good grill and a family membership at the local rec center — these were the dreams of two generations of Americans.
Robert Kiyosaki develops this theme in various interesting dialogues in the best-selling Rich Dad, Poor Dad (affiliate link).
But in the new economy, such a course is likely to create permanent economic struggles in your life. In this economic environment, without risk few people get ahead.
Entrepreneurial thinking, originality and initiative are the new credentials.
Tenacity, ingenuity and enterprise are the new job security.
This is true even among much of the traditionally employed population. The stakes are higher now and success is more difficult across the board, and thinkers, leaders and innovators are needed.
Early Adapters
But how to get the population on board with the new values? Most of us were raised, educated and lived our careers in the old economy, and shifting to the new realities is proving troublesome.
If the Great Recession is just a blip in history and the days of easy credit and consistent growth return for a decade or more, people will justify this refusal to transition their thinking.
But if, as all indications and evidence seem to suggest, the times of high unemployment, a difficult growth environment and a sputtering economy are here to stay for a while, we are kidding ourselves and hurting our futures by refusing to adapt.
No policy, institutional plan or governmental debate is likely to shift the national mentality from employee thinking to entrepreneurial values.
A renaissance is needed. Our vision must change, and our dreams must imagine the great opportunities available in the new realities of the future economy.
We must, as a people, engage a massive migration toward the new economy.
We can lead the economies of the world, but we have to embrace the new reality and get to work. Until a mental renaissance occurs, we are stuck in a rut of old thinking.
Of course, even if the majority refuses to move forward in this new world, each of us can make these changes and get started on our own journey.
In fact, those who get started first are more likely to benefit and profit than the latecomers. This is true in any nearly any industry and endeavor. The early bird gets the worm.
And, as the early adapters get to work, it is empowering to those who are waiting for validation or credibility to justify the risk so they can get on board as well.
There are already a few who are pioneering and building in the new economy. For example, the “downshifter” trend took successful people from the coasts to small towns to build an entrepreneurial new economy starting in the late nineties.
Likewise, homeschooling and the organic foods movements addressed problems in education and health care using new economy thinking long before the 2008 economic meltdown.
Both continue to grow as the rest of the economy unsuccessfully grasps for solutions. Indeed, few whole foodists were (or are) too concerned about health care reforms–because they are, simply, healthy.
Participatory religion continues to grow, as the old-line religions dependent on Priests and Professionals watch their numbers dwindle.
Public schools and teacher unions are increasingly concerned with the growth of charter and other non-traditional educational offerings, and the rise of for-profit career colleges has the old educational bureaucracy hiring lobbyists and badmouthing these “upstart” competitors.
With just one of these schools, The University of Phoenix, quickly becoming the largest university in the world, the old system sees its monopoly fading.
There is a shortage of new economy thinking because the whole nation needs to make the shift, but there are numerous examples of leaders and groups making the transition.
Indeed, literally thousands of online “tribes” are slowly moving (and many are going more quickly) in the right direction.
A few guidelines for transition to the new economy and values include:
- Start young, or if you are older, help the young get started
- Don’t seek to impress the old elite, but rather go after real results
- Get past the old value of not taking risks
- Be experimental, not limited by old systems, methods or models
- Don’t be limited by old obstacles like office space or business cards
- Don’t get stuck on hierarchies, titles and power struggles
- Think virtual, tribal and international
- Be inclusive, open and interconnected
- Be mindful of the way information grows
Conclusion
In the Information Age, revolution would cause as many problems as it might possibly fix, and reform has proven too feeble to really bring necessary change.
We need a massive internal renaissance of the great explorer, frontier, pioneering, and entrepreneuring values which took Pilgrims to the Mayflower, 49’rs to the plains, and led generations of Americans to build the businesses, families, schools, churches, and communities that made our nation great.
We need to accept that we live in a new economy and embrace the new values which bring success in our new environment.
Chief among these are initiative, cheerfulness, persistence, and an enterprising mentality. We need to engage the powerful flow of information in this age, and help it spread and lift the plight of peoples worldwide.
Each of us has a vital role helping the future emerge, and it is time to take the leap and get to work on those things we have always felt we should do.
Or, if we are already hard at work doing our part, it would be well to smile, laugh more often, and give our full attention to watching a sunset or contemplating a tide as it comes in.
It is time for a renaissance, and if the whole nation doesn’t lead out, each of us can embrace it anyway.
Above all, it’s time to take a deep breath, exhale any doubts, and sit down with our youth and share our vision of the new world and the renaissance ahead.
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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 : Economics &Entrepreneurship &Featured &Government &History &Information Age &Leadership
Robin Hood, or Prince John: Overcoming a Problem Worse than Socialism
October 20th, 2010 // 4:00 am @ Oliver DeMille
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When the government takes middle-class tax money and bails out big bankers, automobile manufacturers and other big businesses paying out huge multi-million dollar bonuses, that’s not socialism.
Socialism, like Robin Hood, proposes to take money from the middle and upper classes and redistribute it to the poor.
But during the Great Recession, the lower and lower-middle classes found it much harder to make ends meet. Many lost their jobs, and even their homes.
Where is Robin Hood when they need him? Where is their socialist bailout?
Whether or not you subscribe to the socialist ideal (and I decidedly do not), a careful consideration of the social and economic climate of the U.S. is warranted.
What is really happening? Talk radio and conservative television hosts have railed about the “rise of socialism,” but in reality something else is going on here.
When socialistic programs are introduced, the lower classes benefit and the upper-middle and upper classes pay the bill.
But in our time, precisely the opposite has happened.
In addition to increasing woes for the lower and lower-middle classes, the upper classes actually benefited from the economic downturn.
The number of millionaires grew 16 percent during the Great Recession; and those with a net worth over $5 million grew 17 percent.
So why are conservatives and Tea Partyists bantying about the s-word so much?
And after all is said and done, what difference does it make what we call it?
While the “socialism” furor may be linked to the Health Care debate and other left-of-center proposals of the Obama Administration, a deeper look shows that socialism is not the real culprit.
It is critical to understand that this distinction is not just a talking point for politicians and pundits to discuss on Sunday morning talk shows, or for academics and intellectuals to publish in scholarly journals.
By misdiagnosing the problem, we are also applying the wrong remedies and can never hope for improvement.
We are all the day vigilant against the small-time con of Robin Hood, and Prince John plunders us while we sleep.
What is Socialism?
The technical definition of socialism is government ownership of the major means of production in a society.
American Liberalism, in contrast, believes that there should be both a private and a government sector, and that the government should highly tax and regulate the private sector.
While both of these are anti-conservative, they are not one and the same, and the difference is critical.
American Liberalism does believe in limits, checks and balances; it believes in a separate private sector.
Socialism believes in none of these; it believes that the government should run the entire economy.
Obama Administration involvement in bailing out banks and auto companies certainly had liberal and even socialist overtones, but the top banks quickly paid back government loans and went back to private ownership.
In this sense, to label this as socialistic is not accurate.
Again: this is not question of semantics, but speaks to the very heart of the issue and how we should respond. (More on this later.)
In the wake of the economic meltdown, the government drastically increased regulations on large and small businesses. This regulatory activity is a basic value and tool of liberalism.
While liberalism seeks to ever increase regulation on private businesses, socialism seeks to own most and eventually all the companies in a nation.
Polls showed the Obama Administration to be left of the American populace in regard to fiscal and other types of regulations, but all within liberal rather than socialistic definitions.
It may be well argued that this distinction is simply a question of degrees.
But even in that paradigm the differences demand a greater understanding of and tailored responses to the liberal and socialist encroachments on freedom and prosperity.
If It Quacks Like A Duck…
Another reason many called Great Recession policies “socialist” is that government actions caused private businesses to shed employees at the same time that the government was hiring.
When the media shared the numbers showing that average private salaries are less than the average government employees make, the “socialism” name-calling was a natural angry response.
The Economist predicted growing political battles between taxpayers and government employees in nearly all nations.
We need to get serious about incentivizing small and mid-size businesses.
For example, a recent version of the health care bill would have required businesses with twenty employees and a $1 million/year budget would have to add $300,000 to its annual costs or pay $40,000 in fines.
Result: at least two employees would be let go and twenty people would still not have health insurance.
To say nothing of the fact that these individual employees will still have to buy their own insurance or pay additional fines.
It’s anybody’s guess how it will all shake out as the health care law undergoes endless tinkering over the next who-knows-how-long, but it’s worth asking the question: How, exactly, does this help unemployment?
In fact, it dis-incentivizes entrepreneurship and hiring, and encourages people to go on government programs. This certainly feels like socialism.
And big business is facing similar challenges. For example, Intel’s chief executive Paul Otellini said that the U.S. is driving away businesses and employers:
The things that are not conducive to investments here are taxes and capital investment credits. A new semiconductor factory at world scale built from scratch is about $4.5 billion–in the United States. If I build that factory in almost any other country in the world, where they have significant incentive programs, I could save $1 billion.”
How many jobs are we sending to other countries because of our high taxes?
This was clearly not a hypothetical situation; Intel built its latest factory in China. Said Otellini:
And it wasn’t because of the labor costs either. Yeah, the construction costs were a little bit lower, but the cost of operating when you look at it after tax was substantially lower…”
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 did 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.
It’s almost as if the U.S. government doesn’t want business to succeed or grow, and only thinks that government spending and government jobs are the solutions to economic challenges.
This is easy prey for conspiracy hunters, but I don’t think Washington is capable either of such ubiquitous cleverness or cooperation.
I think it is much more likely when it comes to preserving freedom, they are simply not minding the store.
Other pressing needs have our leaders distracted, and the expedient responses they recur to also happen to militate against our future freedom and prosperity–and specifically, against free enterprise.
No wonder so many people are angry at recent presidential administrations. No wonder so many are crying “socialism.”
How can we defend against the allegation that our government purposely wants private businesses to fail or flee the U.S.?
Instead of promoting incentives that bring more business and jobs, the government is promoting higher taxes and regulations like health care that make business success more difficult.
More government regulation, increased government hiring and increased government social programs demanding ever higher taxes: these are features not only of liberal policies, but of a growing aristocracy.
Socialism Versus Aristocracy
Predictably, most Americans today who actually have an opinion on the matter readily conjure the twentieth-century enemy of free enterprise, socialism, rather than the older, forgotten eighteenth- and nineteenth-century evil of aristocratic rule.
But the fact that lower classes are struggling more than ever while the upper classes are increasing their wealth during economic downturns is a clear sign that aristocracy is the issue.
Consider this: in socialist cultures celebrity and fame are denigrated; in aristocratic societies they are esteemed and celebrated.
We clearly love celebrity at levels far beyond socialistic, conservative or even liberal societies.
Aristocracies and monarchies are the domain of such infatuation with fame, get-rich-quick schemes and the lottery mentality.
Like Shakespeare’s Antonio, we just know our ship is about to come in.
Conservatives traditionally invest in building businesses and like-minded community, liberals in educational degrees, professional excellence and credibility, and socialists in government positions.
Like characters in an Austen novel, in aristocracies like our modern America those in the lower classes fantasize about some punctuated leap in their “prospects”–from marrying rich to the modern equivalent of winning on Survivor, American Idol, The Amazing Race, The Bachelor or some other concocted scenario where the fate of the aspirants largely lies with those in power.
Note that in pyramid schemes there are a few winners at the top but thousands of hopeful and willing enablers the rest of the way down.
Why the Difference Matters
The debate between socialism and aristocracy is more than just semantical.
The technically inaccurate label of socialism allows the educated media and the elite establishment to patronize and condescend to the “uneducated” who push for change.
It allows government officials to dismiss the “uncouth dissenters” while maintaining their conviction that “they” (the “educated,” the most “talented,” most “intelligent” ones) know what the nation needs and those whose opinion really matters (the “educated,” the most “talented,” most “intelligent” ones) are completely in favor of their proposals.
Unfortunately, those citizens who put aside apathy and stand up to make a difference find themselves always frustrated because they fight the wrong battle.
If socialism is our problem, the perpetrator is the political leaders promoting socialist policies, and the philosophical left is to blame.
But if aristocracy is the challenge, then the two parties are both culprits in the promotion of a privileged class.
If aristocracy is the challenge, the citizen is his own worst enemy as he does not pay the price to rise above the mediocre education of our schools or to see beyond a complicit, dumbed-down media designed more for entertainment than positive impact on freedom and prosperity.
If we think socialism is the enemy, we will put our effort into electing different leaders, only to discover that Washington’s problems continue and increase no matter whom we elect.
By misdiagnosing the problem, we are using the wrong treatments and failing to get better.
No matter how active and engaged voters are, from the left or the right or the middle, if we continue to think that socialism or capitalism is our problem then all our efforts will continue to be impotent.
Very little will change in Washington and our problems will continue to grow.
Virile & Viral
If we realize, in contrast, that aristocracy is the real problem and that electing an upper class from either party will only worsen the problem, we can shift focus and consider what is really needed.
And the answer, the real solution, will become clear: As long as we live in a society of upper and lower classes, our freedoms and prosperity will continue to decline.
The solution is not to just elect a different leader, but for all American citizens to once again obtain the kind of education that allowed regular farmers and shopkeepers to study the federalist papers and listen to and consider eight-hour debates during the Lincoln-Douglass era.
If we think the problem is socialism, we will consider great education benign and ineffectual.
But if we know the real problem–that people in both parties and in all social strata are enabling a growing aristocratic power over our society–then we will realize that simply electing a better senator or president is not nearly enough of a solution.
True: Socialism and aristocracy share many symptoms, so electing the best leaders is still vitally important to stem big government.
But the real, unseen, issue is aristocracy. And until the American people realize this and more of us get the same quality of education as the CEOs, judges and presidents, the problems will continue to grow.
Above all, it is education that determines class levels.
Entrepreneurship is another path to leadership. This doesn’t mean that we need all enroll in the Ivy League.
In truth, the greatest classics of history are still the true library of freedom, wealth and leadership.
Virtually every town library has the great texts of liberty and success available.
The question is, do Americans value our freedom enough to end the rise of aristocratic rule by becoming greatly educated ourselves?
Will we step up to our responsibilities as citizens and qualify ourselves for our role as the overseers of government by learning about freedom, leadership, economics, human nature and the other great ideas of mankind?
As our society is on track for disaster from numerous threats (to our food supply, availability of fuel, decaying infrastructure, dependency on programs that have poor prospects for future funding, terrorism, failing economy) we all know that somebody needs to “Do something!”
We have been caught in the binary trap of either expecting someone else to “fix it” or expecting that we can make a difference just by making our voices heard.
But our moral authority and our ability to impact our society’s direction will come not from complaining about the ideas or performance of those who have stepped up to lead, but from actually having the answers to society’s ills.
We can’t just protest that the world simply must turn back the clock two hundred years.
New leadership is needed by today’s American citizens.
If we truly revere the American founders and idealize their accomplishments, we must move beyond hero worship and actually do as the founders did: We must apply a profound understanding of sound principles to the establishment of policies and forms that directly apply to our complex and critical situation today.
This we can do, just as the American founders did in their day.
As I have said elsewhere: Getting a world-class education and running successful businesses is “doing something.”
That is precisely the “something” that is called for today, and that any other solution which does not include a better educated populace has a different outcome than liberty and justice for all.
It is time for an entrepreneurial approach to getting an individualized, superb, great, innovative leadership education in the classics.
Each of us can do it, and the future of our freedoms depends upon it.
If the current growth of American aristocracy is allowed to continue, our future is destined to be less free and more harshly lacking in opportunity than any socialistic society.
The criticism of “socialism” is certainly negative; but unless we change course, the aristocracy that our grandchildren and their children inherit will be something far worse.
Click Here to Download a Printable Version of This Article
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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 &Economics &Education &Entrepreneurship &Featured &Government &Liberty
