Why Washington Can’t Be Fixed, But America Can
January 7th, 2014 // 10:00 am @ Oliver DeMille
The problems in Washington D.C. aren’t going to be fixed, because Washington is the problem.
One fundamental way Washington operates is incompatible with freedom, prosperity, and common sense. Specifically, Washington today is caught in the rut of post bellum auxilium, and there is little chance of this changing any time soon.
This phrase was used in ancient times to describe politicians and generals who would hear warnings of danger and refuse to provide troops — then, upon hearing that their posts had been attacked and overrun by the enemy, would angrily and publicly gather troops and send them. The troops would arrive at empty battlefields, too late to do anything — which should have been obvious, since the politicians didn’t even send them until the battles were over.
Our government is profoundly dedicated to this method. Consider the many warnings of impending terrorism that came before 9/11, and the drastic Bush Administration response after. Or the fact that only a very few, isolated people saw the Great Recession of 2008 coming, but afterwards the Bush and Obama Administrations took draconian pains to ensure that nothing like this would ever happen again.
Then, when the Arab Spring started with a massive uprising in Egypt, President Obama blamed the intelligence community for failing to predict this event. There are dozens of similar examples, in just the last decade.
Here is the problem. Washington believes the experts. But, as Nassim Nicholas Taleb teaches in his excellent book, Antifragile, the experts are terrible at predicting surprises.
Obviously, that’s what makes such events surprising. And they keep coming, despite the experts’ best attempts to predict and forecast.
Taleb wrote that intelligence analysts and economists fail to forecast most major world changes because these events “are unpredictable, and their probabilities are not scientifically measurable.”
He points out a real weakness with most modern government leadership:
- governments focus on prediction, then when they are surprised they
- blame the experts for not forecasting effectively, and
- rally to create regulations and policies designed to anticipate and prevent events that have already happened.
What they don’t do is create what Taleb calls real resilience, or the ability to withstand surprises — whatever comes.
There are several consequences of this mistaken approach. First, the numbers of regulations skyrocket because politicians think it is their job to anticipate every possible surprise.
Second, the size of governments, debts, and deficits increase as officials try to be prepared for anything.
Third, after each failure, the government becomes more and more dependent on the “experts.”
Common sense dictates that we stop listening to those who consistently get most of their forecasts wrong, but the worry that government must foresee and block every surprise trumps common sense — and more money is spent on more experts whose predictions continue to fall short.
In our book, LeaderShift, Orrin Woodward and I called this widespread problem “Credentialism.”
Taleb wrote:
“Governments are wasting billions of dollars on attempting to predict events that are produced by interdependent systems and are therefore not statistically understandable at the individual level…This was not just money wasted but the construction of a false confidence based on an erroneous focus.”
Surprises will still come, including natural disasters and man-made crises. Nothing government does can stop this.
Some will no doubt ask, “So, what should we do? Just give up?”
The answer is interesting.
Instead of focusing on trying to forecast and prevent surprising events in the world, Taleb says that wise leaders will focus on creating a strong and resilient nation and society that isn’t hurt by surprise. In fact, he recommends that nations seek to become “antifragile,” meaning that they get even stronger during surprises and other crises.
This is how America responded to World War II, for example. Instead of weakening us, this crisis made us stronger. This happened because we were more antifragile than today. We had, on the whole, stronger families, stronger community bonds, and stronger dedication to morals. We also maintained a true free-enterprise system where anyone had the opportunity to take risks and create widespread prosperity — and many people did just that as a response to crisis.
In our current environment — where only 35n percent of all jobs are full time, and more than 48 percent of people are on welfare, food stamps, or other government benefits, and where the regulatory barriers to starting a business are much higher than fifty years ago — we are a lot more fragile.
In short, we are a nation deeply addicted to being ruled by experts. Our best future will come, Taleb suggests, by focusing on the things that make us stronger, more resilient, and even antifragile.
In my view, this means a return to genuine free enterprise, pure and simple.
The reason this works is because it incentivizes individuals, with enlightened self-interest, to take on the challenge of becoming entrepreneurs, i.e.: producers, independents and bastions of self-reliance, sharing their wealth and security with those who buy into their vision and help make it happen through intrepreneurial positions in their businesses.
Thousands of such entrepreneurs unleashed on our woes would have a leavening effect and the grassroots spread of forward-thinking innovation will put into operation the principles that govern freedom and prosperity.
We need to take a good look at our nation and government, identify areas where were we are fragile, and fix them. Government has a small but vital role to play in this, mainly in fixing our long-term government spending problem, but the majority of change must come from the American people.
The problem, as always, is that such change requires risk. This means that those who are willing to face risk and innovate must lead out — entrepreneurs, not politicians, bureaucrats, or experts.
The Washington/Ivy League/Wall Street crowd that depends on experts is extremely fragile, if for no other reason than it relies on experts whose forecasts are frequently weak.
If we are to put America on a path to a truly flourishing economy and society where every child can benefit from a rebirth of the American Dream, risk is necessary. Without great risk, there will be no great rewards.
The truth is, the most innovative entrepreneurs have already detected areas of fragility and are taking action in response — that’s what makes them innovators. But Washington seems committed to stopping all this initiative.
A national addiction to experts, and a simultaneous rejection of entrepreneurs, is a sure path to decline. This is where we now are as a nation.
The reality is that expertise thrives when there is no crisis, but crumbles in the face of surprises. Entrepreneurship flourishes in times of peace and crisis, even when it isn’t given much of a chance.
When a nation encourages entrepreneurship and the natural innovation and resilience of entrepreneurs, it becomes strong — strong when surprises come, and even if they don’t.
How do we become such a nation? Three things are needed:
- We have to be innovators and entrepreneurs regardless of what Washington does.
- We have to effectively stand behind those few in Washington who do take on the expert establishment and call for real change, even (especially) when it upsets the career politicians and media pundits.
- We have to show real respect for entrepreneurs, and teach all our kids to seriously consider and admire the higher calling of entrepreneurship.
As Taleb put it,
“We didn’t get to where we are today thanks to policy makers — but thanks to the appetite for risks and errors of a certain class of people [entrepreneurs] we need to encourage, protect, and respect.”
Our solutions are simple, not complex. But the “expert-dominated” elites are trying to keep things complex in order to “justify their profession,” as Taleb said.
Innovators can do better. They always have. Carpe diem!
Oliver DeMille is the New York Times, Wall Street Journal and USA Today bestselling co-author of LeaderShift: A Call for Americans to Finally Stand Up and Lead, the co-founder of the Center for Social Leadership, and a co-creator of TJEd.
Among many other works, he is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, The Coming Aristocracy, and FreedomShift: 3 Choices to Reclaim America’s Destiny.
Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.
Category : Blog &Economics &Entrepreneurship &Government &Mini-Factories &Producers
The Death of The Middle Class
July 19th, 2013 // 10:51 am @ Oliver DeMille
Columnist Joe Klein said on The Chris Matthews Show:
“This is the biggest problem that we’re facing going forward. We were a homogenous, middle class country, by and large, for the fifty years after World War II.
“Now we’re no longer homogenous, and there’s a good aspect to that in that we have become a true multiracial country. But there’s a bad aspect to that, in that the middle class, which was the heart of this country, is beginning to fracture, and to panic, in many ways.
“And unless we figure out a way to find jobs for the vast middle class in this country, it’s going to be really hard to sustain democracy. We now have a plutocracy in this country.”
This is exactly true, and many Americans feel Wall Street and Washington are working together against the middle class.
Worse, many people aren’t sure that any solution is ahead.
Many experts suggest that education can solve the class divide, but the people realize that most schools are actually increasing the gap between elites and the rest.
Modern schooling has become a huge part of the problem, not a solution.
The only real solution is a widespread shift from the employee mentality to entrepreneurship.
As David Ignatius points out, many immigrants to America see the United States as a great place to start businesses.
Sadly, most native-born Americans are afraid of entrepreneurship and feel that jobs should be plentiful—as if it were a birthright.
The future of American freedom hinges on this question: will the current generation of Americans embrace entrepreneurialism, or will we keep whining about Washington while waiting for more jobs to somehow appear?
Is the American spirit dead, or is free enterprise still one of our greatest American traditions?
Only the regular people can make this choice.
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Oliver DeMille is the chairman of the Center for Social Leadership and co-creator of Thomas Jefferson Education.
He is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.
Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.
Category : Aristocracy &Blog &Business &Citizenship &Culture &Current Events &Economics &Entrepreneurship &Featured &Leadership &Producers
Understanding the Battle
July 10th, 2013 // 6:34 pm @ Oliver DeMille
The following describes one side of the modern battle for our future:
“You believe you can change the world for good, one person at a time. You prioritize your children and your neighbors above your own consumption.Fulfillment for you comes through love and service, not accumulation of material goods.”
And the next one describes how the other side of the battle attacks the good:
“I’d thought these ideas placed people like you in an emotionally vulnerable position. You strive for an ideal, and since people are inherently imperfect, they will ultimately let you down….
“I obscured the idea of intrinsic self worth by encouraging comparisons with other people—people who were unnaturally perfect because I made them up. I appealed to peoples’ egos as well as their insecurities by promoting the idea that it was not enough to be unique or to do good.
“My intent was to convince them that the only meaningful accomplishment was to be better than someone else. That got them more concerned with promoting a perception of goodness than with actually doing good.”
These profound words, from The Curtain by Patrick Ord (which is a great and fun read), provide a nutshell summary of what is wrong with our modern world and why freedom is in decline.
Let’s be clear.
It is essential to teach our children than being your unique self and doing good really is enough.
In fact, it is what life is all about.
Doing good. Serving others. Improving the world.
Nobody needs to be better than others, we all just need to be the best we can personally be.
We don’t need to be perfect, but we do need to lose our lives in doing good things.
We must never be distracted into promoting a perception of goodness.
We should put all our energy into actually doing good.
Not forcing good through government, but just getting to work helping the world become a better place.
These principles are simple and true.
But the future of freedom depends on most of us really believing and living them.
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Oliver DeMille is the chairman of the Center for Social Leadership and co-creator of Thomas Jefferson Education.
He is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.
Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.
Category : Blog &Book Reviews &Citizenship &Featured &Government &Leadership &Producers &Service &Statesmanship
A Looming Crisis — & a Call for Solutions
May 6th, 2013 // 3:51 pm @ Oliver DeMille
Most Americans have no ideas it is coming. But it is just around the corner.
It’s one of those technical changes that only wonks pay attention to, so few people realize how big this will be.
In fact, it’s a serious crisis in the making. And unlike the Y2K scare in 1999, this crisis is a sure thing.
What is it?
Well, put simply, this coming January, many companies will be required to extend Obamacare health care to their employees.
The costs of this are significant, and will force many small and larger businesses to make some very tough choices.
The result will be a lot of layoffs, downsizing, reduced pay, and outsourcing.
Service will suffer, and response times will plummet.
Most families and individuals plan on a yearly basis, running January 1 to December 31, so they may not know how that a lot of businesses run on a fiscal year—from April 1 to April 1, July 1 to July 1, or October 1 to October 1.
This is very important, because we just witnessed the first big round of businesses (whose fiscal year is April to April) factoring in the costs of the January 2014 Obamacare requirements.
The number of layoffs and cuts is a serious concern.
But those who run April to April have only had to factor in three months of Obamacare costs so far, so the damage has been minimal.
It’s going to get increasingly worse on July 1, and then by October 1 it will start having a major impact.
By the first of January, when everyone will have to pay the higher costs, the effect will be huge.
Again, because this is a numerical concern, most people aren’t paying attention. Here’s the crux of the problem:
- Our economy is already struggling with a weak recovery.
- The increasing tax and regulatory burden on business has dampened innovation.
- The schools seldom teach innovation or initiative—indeed they usually promote the opposite.
- International innovation is rising.
- Business is reticent to invest or spend, because the current environment in Washington is highly uncertain.
- Big business, which has a high surplus right now, is finding better political environments in other nations—so the money will naturally flow to where business is treated better.
- The Obamacare requirements are making business a lot more costly, and they mostly kick in this coming January.
A lot of businesses are scrambling.
For example, in the past few months I’ve received email from a number of friends who are business owners or who consult with small businesses—saying that their only choice is to either lay off a lot of employees or shut down their business.
One company, for example, is trying to prepare for next year, but has realized that the additional cost of Obamacare for their firm will be at least $18,000 a month.
This is a fairly small company, with close ties to its people.
The last thing it wants to do is lay off employees. But what to do? The costs are simply prohibitive.
Laying off is the obvious option; and after digging deeper, it may be the only option.
How would you counsel companies in this predicament? (Note that most companies are dealing with this right now.) What ideas do you have? I’m sincerely asking for input.
What can they do?
Thousands of companies are asking the same thing right now, and many others will do so before the end of 2013.
This is going to be a real shock to the economy.
A crisis is coming.
But back to the question. How can small companies that are already financially tight comply with the new regulations—without laying off or cutting salaries?
I’m hoping you see some real solutions.
The obvious one is to innovate—to expand sales into new markets and make a lot of extra cash.
The regulatory challenges of such a strategy are, alas, a serious problem. At least in the United States.
So, thinking like an owner, what would you do?
I know you don’t have financials or details in front of you for any one company facing this challenge, but take a stab at this problem anyway—because almost all businesses are doing the same thing right now. It’s the only realistic way to look at Obamacare, because it’s the way pretty much every business owner is looking at it.
Specifically: Costs are going up significantly, with no offsetting increases in income.
In fact, higher taxes and increased regulations make growth even more difficult.
In this environment, how can you absorb the Obamacare costs without laying off a bunch of employees?
Or letting them go and hiring all new people who are desperate for jobs and will work for much lower pay?
Or simply taking your business to Brazil or India or some other country where growth is actually rewarded?
Please send me your responses. What can be done?
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Oliver DeMille is the chairman of the Center for Social Leadership and co-creator of Thomas Jefferson Education.
He is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.
Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.
Category : Blog &Economics &Entrepreneurship &Featured &Government &Leadership &Producers &Prosperity
Why We Need a Third Party
November 17th, 2012 // 10:36 am @ Oliver DeMille
by Oliver DeMille
In the aftermath of the 2012 election, there have been numerous emails, posts, articles and blogs by business owners who say they are planning to sell or close their businesses, or just lay off enough workers that they can afford Obamacare for the employees who remain.
One summary listed the following announced layoffs—all attempts to deal with the new costs of Obamacare:
- Welch Allyn, 275 layoffs
- Stryker, 1170 layoffs
- Boston Scientific, between 1200 and 1400 layoffs
- Medtronic, 1000 layoffs
- Smith and Nephew, 770 layoffs
- Hill Rom, 200 layoffs
- Kinetic Concepts, 427 layoffs
- Coviden, 595 layoffs
- Abbot Labs, 427 layoffs
- St. June Medical, 300 layoffs
There are many, many others.
One email dated November 7, the day after the election, read:
“Time to sell our business. We can no longer afford to provide a living for 14 employees as soon we’re forced to pay for their healthcare. So sad, too bad. On to new ventures.”
After responses about how sad this is and others pointedly blaming the Obama Administration, the same person continued:
“We are all Americans and need to find common ground and make this country great together. I’m not mad at anyone for voting different than me. They love their president, don’t lose friends over calling him a dictator. I’m excited to sell our business. We are adventurous!”
That’s the entrepreneurial spirit that made America great.
Not: “Oh no, we’re losing our job. Will the government help us?”
But rather: “Hey, change happens. We’re excited. This is going to be an adventure!”
That’s the American spirit.
And while rumors abound about how much Obamacare will cost each small business and which won’t have to make any changes at all, there are a lot of employers right now who are very concerned.
Those with under 50 employees aren’t supposed to be hurt, but smaller employers are still worried about exactly how the new laws will be enforced.
Sadly, we will likely see a lot of change in small business in the months and years just ahead.
More regulation, higher taxes and drastically increased costs of employing people will make things more difficult.
An exception may be in network marketing companies or compensated communities.
I’ve long considered them among the top entrepreneurial opportunities in free nations, and with the current changes and policies this is even more true.
“My son is a doctor,” Marge said proudly.
“Wow,” Betty said with a concerned voice. “How is your son dealing with the new regulations coming into effect under Obamacare?” she asked.
Marge nodded and her face grew serious. “He’s very concerned, to tell the truth.”
“Fortunately, my son is building a huge network marketing company, and the regulations aren’t hurting him much,” Betty said. “Maybe your son would like to meet with mine about an opportunity?”
This kind of conversation is taking place a lot right now, and all indications are that it will increase.
Some parents are recommending that their college children put school on hold and start a network business, and I know two medical doctors who have gotten out of the profession in order to build networking businesses.
One of them talked two of his sons into quitting college and doing the same, though the three of them all ended up building networking organizations with entirely different companies.
II. The Party of Small Business
All of this got me thinking today, and as I pondered I realized something. Something big.
Something we really need right now in America.
We need a third party.
Actually, we need a new party that becomes more popular than the Republican Party and the Democratic Party.
There are more independents than members of either big party, so this shouldn’t be too much of a stretch.
Here’s the problem: The Democratic Party is now the unabashed party of big government, the welfare state, rule from Washington D.C., and everything that goes with these values.
The Republican Party touts itself as the party of freedom, limited government, free markets and business, but in fact it is the party of big business and a big-spending government at the same or just slightly lower levels than Democrats.
We have a party of Big Government (with big business as its co-pilot), and another party that emphasizes Big Business (with big government as its co-pilot).
The first is the Democratic Party, the second the GOP.
Neither is now effectively serving the needs of our nation.
As a result, we get bigger government regardless of who gets elected, and big business grows (to the frequent detriment of small businesses) regardless of who is in power in Washington.
In all of this, small businesses, families, communities and the middle class are the losers.
The solution? We need a party of small business.
We need a party whose top priority is the needs of families and small businesses.
This new party needs to reject the big-government and anti-free enterprise values of the Democrats and simultaneously the big-business and anti-immigrant attitudes of Republicans.
It needs to embrace toleration, diversity, reduced government regulations, lower taxes, decreased government spending, incentives for entrepreneurship, a charitable safety net, and incentives for more immigrants to bring their capital, businesses, labor and families to America.
It needs to get rid of the barriers to hiring (such as the increasing required health care costs) and drastically reduce government red tape for small businesses.
It needs to allow more innovation, shrink requirements on licenses and permits and other unnecessary costs that decrease entrepreneurship and growth, and create an environment of seamless partnerships between schools and businesses.
It needs to promote, encourage and incentive a lot more initiative, innovation and entrepreneurialism.
It also needs to push for more creative and independent thinking in the schools and less that is rote, conveyor-belt, and pre-scripted.
It should change the way schools are run, replacing an environment where administrators and bureaucrats feel comfortable to one led by proven innovators and others who have been successful in the real economy, the FOR-profit economy.
Forget teacher certification and unions—if we want to compete in the global economy we need innovators leading our classrooms.
As an example, principals and teachers should be hired who have excelled at implementing successful business plans rather than writing resumes.
And funding should flow to schools that excel in a true free market.
To ensure to that no child is left behind (for example in less-advantaged neighborhoods), even larger premiums should go to innovators who successfully turn dumpy schools into flourishing institutions whose graduates thrive.
The new party should apply similar principles to other kinds of organizations, from health care and community governments to every other sector of the economy.
Small businesses bring the large majority of growth in the economy, and the new party needs to begin with the specific needs of small businesses in mind.
It needs to identify things that hurt small business and repeal them, and find out what helps small businesses succeed and introduce more policies that encourage these things.
It needs to rewrite the commercial and legal code to create an environment where innovation is the norm, along with the values of growth, calculated risk, leadership, creativity, and entrepreneurialism.
It needs to be not the party of jobs, but the party of successful business ownership—and the jobs they naturally create.
III. A Bright Future?
We need a third party. The party of Big Government (with big business as co-pilot) and the party of Big Business (with big government as co-pilot) simply aren’t doing what our nation needs anymore.
It’s time for new thinking and new leadership.
There is an old saying that you can’t pour new wine into old bottles, because the residue of past wine always taints the new.
This is where we are in America.
The current parties, as much good as both have done at times, have peaked and are in decline.
New leadership is needed, along new values untainted by the baggage of two parties whose time has come and gone.
It is perhaps possible to reform one of the parties to get better results, but it is likely that only a new party with an entirely new focus and fresh thinking is going to take America where it needs to go.
Democratic nations are notorious for refusing to change until crisis forces their hand, and I suspect this is what we’ll witness in the 21st Century.
At some point, probably after major crisis and a superhuman American response, we’re going to need a new party.
Those who love freedom should start thinking about what it should look like.
One thing is clear: When it does come, it needs to be a party of small business.
Free enterprise and the entrepreneurial spirit made America great, and it will do so again if we let it.
Whatever comes in the economy, we want to be led by those whose attitude is, “It might sound bad, but this is an exciting adventure! Let’s get started…”
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Oliver DeMille is the chairman of the Center for Social Leadership and co-creator of Thomas Jefferson Education.
He is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.
Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.
Category : Blog &Business &Citizenship &Community &Constitution &Culture &Current Events &Economics &Entrepreneurship &Family &Featured &Government &Independents &Leadership &Liberty &Mission &Politics &Producers &Prosperity &Statesmanship
