Why Big Corporations Are Failing - 1

Over the past two postings, we have talked about the critical role played by small businesses and entrepreneurs in building our economy, and the need to “buy locally” to sustain our employed population.  While we are supporting all of that at the smaller end of our economy, what is the current picture at the large, (multi-)national corporate end of the spectrum? 

In a single word, it is “disconnected.”  With certainly some notable and admirable exceptions, many big corporations and their leaders have become isolated, disconnected, and not really plugged into the customer base they attempt to serve.  Many corporate headquarters have become not leaders of the economic empires they have created, but fortresses built to preserve the leadership itself.  Size for its own sake has become the objective, and the results are unmanageable entities in which management anarchy and disconnection often reigns.  This shows up in two distinctive characteristics:

#1. Loss of the “product guys.”  A few years back, colleges and universities created an educational cash cow program called the Masters in Business Administration (the MBA), and to sell it they convinced corporate America that these were the people needed to run business operations.  They were trained in manipulating financial statements, “crunching the numbers,” interpreting market surveys and demographic statistics, and steeped in supply-chain concepts.  With “MBA” stamped on their foreheads, they were hired directly into (upper-)middle management good-income positions to lead the company’s future.  Unfortunately, what they were not steeped in was the actual core product of their industry which is the real heart of the corporation’s existence.  They did not spend time out in the plant, the warehouse, making the sales calls, seeing firsthand how their customers actually use their products day-to-day.  Coming into the corporation at the management level, thinking that business success is simply a matter of managing the income statement and generating market share, these kinds of corporate leaders never really understood the product that justifies the corporate being, or the people throughout the corporation who make it all happen (or not).  They did not understand all of the different pieces that must come together to get that product into the hands of customers.  The many dangers of missing that understanding is why the smart business owners of yesterday always started their rising stars at the bottom of the organizational rung and let them work themselves up – so that they would truly know how that business worked top to bottom.

Bob Lutz is a lifetime car guy.  He was hired by GM in 2000 to try to turn that corporation around on the inside after years of GM’s downward slide in sales, market share, and profitability against its competition.  His very excellent book, Car Guys Vs. Bean Counters, The Battle for the Soul of American Business, is highly recommended to those interested in understanding the decline of American business.  It details his experiences encountering GM in 2000 versus the company he had left 30 years earlier towards becoming a successful auto manufacturing executive.  This giant corporation that once exemplified American can-do success had become choked with focus groups, decision-making-by-committee, oppressive generations of statistical numbers and irrelevant marketing projections.  All while the “car guys” (of whatever gender) – the people who lived, breathed, designed and built cars simply because they loved cars and truly understood Americans’ longstanding love affair with their cars – were marginalized to the sidelines.  The finance/MBA folks focusing on the numbers had taken control of the company at the expense of the engineer / product designers who intuitively understood the product and the people who wanted to buy it.  This gap resulted in a massive disconnect between company and consumer, fully exploited by the Japanese auto industry, ultimately leading GM into structured bankruptcy.

We can only hope that real automotive people are moving back into running the American auto manufacturers; early indications show such a potential revival.  What is clear is that GM’s experience is but an example of a wider-spread problem – that when the creative entrepreneur who started the business based on his/her love of the product move out and are replaced by “the suits” (the finance people who should be supporting the business leaders not trying to run things), that is when the disconnect happens between corporation and consumer.  (E.g. – think Steve Jobs’ tenures at Apple.)  It explains why the consumer takes a product home and, after numerous bad experiences trying to assemble / use / consume it, is fully convinced that because it is so unusable / unfriendly the corporation’s leaders must surely have never actually used their own product themselves.

This disconnect between corporation and consumers also creates an internal disconnect between corporate leaders and workers.  Corporations that get too big, well beyond the point where size creates true benefits of scale, progressively get further removed from what is actually happening inside their companies.  Leaders are so busy holding the seams of the organization together, focusing on their own survival and personal monetary success and promoting the image of the company instead of strengthening its product, they become virtually clueless about the substance of what is actually happening at the factory / retail / classroom / branch office level.  So employees and operational middle-managers are either ignored or left to their own decision making without adequate guidance, supervision or ethical example.  Or they become so bottled up in ill-thought, overly-broad generic corporate-written rules, regulations and policies that they cannot respond to the real-world needs, problems and creative ideas that arise each working day.  In management theory it is important to delegate and allow for initiative in the ranks; such has been a hallmark of American business and military success.  But in the last few years we have heard far too many excuses from business and educational leaders that “I never knew that was happening,” not understanding that such ignorance does not take them off the hook; it puts them squarely on it.

Truth is, large corporate size can be a good ingredient for business success.  It can bring an aggregate power to production and marketing leading to cheaper cost and wider distribution.  But when size creates insulation, and corporate leaders are no longer connected to nor understanding of their customers or employees, when corporate success is no longer shared top-to-bottom in recognition of the interdependency and contributions of all levels and functions of employees, and mere personal survival is more important than product, then failure sits at the CEO’s door.  In big corporate America, we have too many instances of the wrong people running the show.  We need the product people back in charge, and the finance people back at their computers doing the important advisory job keeping financial score.  Good business success is about good product from good employees clearly focused on customer needs.  When that is in place, the balance sheet will be automatically taken care of.

[Next upcoming posting: #2 – Corporate Customer Service]

Don't Bank On It

In my last two blog postings, I wrote about the importance of small businesses to our American economy, and the need to “buy local” and support our neighbors economically.  Business and economics are not my normal areas of continuing discussion.  But poll after pundit keeps saying that jobs and the economy are the #1 priority on the minds of Americans and the dominant 2012 election issues.  So these continue to seem appropriate areas of reflection for this and some subsequent postings as we begin to head into 2012.

Which brings us to the subject of the American banking industry.  Banking, and more specifically lending, is really a ridiculous business proposition, in my opinion.  A great aura is built up to make us believe that getting credit or a loan is a “reward,” an anointment a banker makes certifying our good financial character.  The whole banking persona is geared to make us believe that “they” are the dominant player in our relationship, and we are the subservient ones begging for their endorsement.  But this is all crap.  They hold the purse (temporarily); but the borrowing public holds the purse strings.

As a young adult, I thankfully came to an early conclusion that bankers needed me at least as much, if not more, than I needed them – assuming I was willing to reasonably live within my means.  The worst liability a banker has is cash sitting in the vault unused.  The deposit side of a banker’s ledger yields no income to the banker; it is simply their debt to their depositors.  Bankers only make money by lending or investing that money – to non-bankers like you and me.  And there are plenty of bankers/credit companies looking to loan their money.  So when I take out a loan, on which I am willing to pay the bank interest (income to them), who is doing whom the real favor?

The problem is, during the last three years of economic crisis brought on by the biggest banks, that “mutual interest” has been forgotten.  Those big banks who irresponsibly went headlong into risky investments and paper profits from worthless mortgages have tried to recover not through newly-found good business practices and management, but by taking one-way handouts, creating new nickel-‘n-dime side income (fees), and trampling on good customers.

Americans have always had a hate affair with the banking industry, often with good cause, going back to our earliest founding.  Our forefathers resisted establishing any national bank, or concentrating the banking industry into too few hands.  In the early 1900s, the American economy was dominated, if not ruled, by the mega-rich of Wall Street, not unlike today.  President Theodore Roosevelt tried to break up this monopoly somewhat, but it took the extreme depression of the 1930s to finally break this banking stranglehold on the economy and on Congress, resulting in some of the best regulatory legislation from that decade to keep these financial titans in check from risky speculation.  Unfortunately, the 1990s eliminated many of those and other newly-needed restraints, resulting in the free-wheeling rush to unsubstantiated paper profits that created the 2008 banking crash.  Three years later we still have not cleaned up that mess; apparently this substantial recession has not provided Congress with the sufficient gumption to reinstate the regulatory controls truly needed.  Wall Street bankers and their lobbyists are still playing fast and loose, all in the name of “free enterprise” (which is not free), while paid-for friends in Washington inexplicably go along with them.

If ever a meeting of diverse minds between Tea Partiers and Occupy Wall Streeters could ever find common ground, irresponsible banking would seem to be the issue to do it.  In the meantime, Bank of America – probably now the worst run company in America’s worst run industry – continues to be the leader in arrogantly shooting itself in the foot.  Seemingly every week new stories emerge about mortgages improperly foreclosed, new fees imposed to make up for “lost” (i.e. “blown”) income, and an arrogance to its customer base that no amount of p.r. can ever disguise.  Other big guys are just as bad, but a bit less obvious.

The truth is, banks are just not the same as other normal manufacturing / retail / service businesses.  Why?  Because first and foremost their “inventory” is other people’s money held in trust, not their own.  If a private investor wants to wildly speculate with his/her own money, go for it – hopefully do well, or eat the consequences, your choice.  But my bank is holding my money to facilitate my bookkeeping and bill paying.  And for a small interest income on my deposit, I am also OK with the bank making some profit on their own through their larger reasonable interest fees.  But they need to stop thinking that this is their money to use as they please.  I am a depositor, not an investor in their bank.  Their first job is to ensure that their fiduciary responsibility to me is secure.

Since responsible government regulation does not seem to be able to manage these banking CEOs, what is left?  Well, some people have shown that the consumer marketplace still has some power to work.  Recently, a very public online petition organized by one young fed-up lady in Washington, D.C. garnered over 350,000 signatures; the ensuing publicity halted an industry-wide move towards a planned $5/month debit card usage fee.  More people are pulling their money out of these big banks and moving it to smaller, local community banks and credit unions, where people rather than just balance sheets still seem to matter.  And people are borrowing less and saving more; in the short term this hurts our overall consumer economy but may force bankers to get back to honest basic business.

The problem with the bank bailout attempt was that it was done through the banks and led by banking industry veterans.  It was a wrong mindset.  If we had gone directly to the public holding problematic mortgages and worked with them directly instead of the bankers, we would probably already be out of this economic mess.  The idiocy of banking is that when a loan is paid off (or even foreclosed), banks have to immediately go find new borrowers for that same money, else no profits are to be had.  (Just look at all the mailers asking me to take out new credit cards and refinance my mortgage in the midst of this supposed no-credit recession.)  Conceptually, loan money is never paid back, but is in a constant state of lending.  If the bankers had just skipped foreclosures, left people in their houses, and made any kind of refinancing deal possible with troubled buyers (who cares whether they pay it back anytime soon as long as some monthly payments are coming in), then deposits would still be lending, profits would still be coming in, the housing industry would still be reasonably intact, and the economy would be injured but doing reasonably well.  Our paper-based economy would still be going strong.

Mass foreclosures due to non-creative bankers mentally stuck in an old and bad business model of their own creation engenders neither sympathy nor a sense of responsibility on my part.  So take your business elsewhere and get out of their game.  Buy locally from small banks whenever you can.  There are still options.  The consumer marketplace still works.

The Economics of Local

I am not an economist.  The truth is, most everyday conversations about general business topics tend to leave me disinterested.  But economics as a profession must be important, because universities give advanced doctorate degrees in this stuff, and Nobel prizes are given for new economic concepts – even though economic predictions are usually less accurate than my local weather forecaster.  (It is noted that there is no Nobel for accountants or advertising gurus!).

All that said, I do find the human interactions upon which economics is based to be quite fascinating.  And that is the flaw in “economic science.”  It attempts to rationalize the irrationality of human beings, a nonsensical quest if ever there was one.

In the first English colonies that begat America (Jamestown and Plymouth), both were settled and, by necessity, operated on a “collective good.”  Everyone participated in constructing homes for each other, serving in a defense role, and gathering food.  All shared in the common result.  There was virtually no supply chain of goods from England, so the Massachusetts Pilgrims and the Virginia adventurers had to be self-sufficient to survive.  They all worked together as a collective team.  (Our forefathers/mothers were communists – Gasp!)

But survive they did. They prospered and expanded over wider territory.  Trade and supplies from England stabilized and regularized.  So these early Americans then began to specialize – as craftsmen, tradesmen, farmers and merchants, thereby beginning a culture of exchanging services to meet their several needs.  The “collective economy” gave way to the “exchange economy.”

Thus was created Economic Theory 101, all we really need to know about building an economy.  I have a need for something.  Since I cannot make it myself (due to lack of time, resources or skills), I come to you for it, since that is what you make for people.  As a result of my buying my something from you, you can now buy the somethings you need.  And you can also pay all of the people who helped you make my something, or provided you with the raw materials or services you needed to work with.  Thereby, all those folks can go out and get the somethings they need.  And so on and so on.  This beautiful chain reaction keeps geometrically expanding, ultimately coming full circle back to me when someone wants the something that I make.  Thus allowing me to start the chain reaction all over again.

This is really all I need to know about Economics 101.  My needs for somethings support other people, and if the chain reaction flows unbroken, it will all come back to me for my own benefit.  But if the chain gets broken, the economy breaks.  The dollars do not keep moving; someone does not spend their piece of the chain, or takes the dollars out of the circle.  So the dollars do not complete the circle and do not come back to me.  This is what is happening in America today.

Big corporations, making record levels of income and profits, are sitting on those profits and not reinvesting them in hiring and innovation investments.  Banks, whose reason for existence is to multiply their depositor’s funds through prudent lending, are not lending, sitting on the money and therefore stifling other people’s potential growth.  Governments are being forced to lay off employees and decrease wages due to perverse political pressures that inconceivably believe that laying off workers will grow the economy and reduce unemployment.  (Huh?)  Links in the economic chain have been taken out as some of the suppliers have been moved to Asia or other places, but their needs for somethings do not come back to me and complete the circle.  Our interdependencies have been broken, our mutual support has been pulled.

2/3rds of our economy is built on consumer spending for somethings.  But consumers are not spending because they are not convinced that their dollars spent will come back to them as income.  The greed and immorality of 2008 has undermined our economic trust.  Rebuilding that trust is today’s true economic challenge.  It continues to be clear that the big corporations are not rising to meet that challenge; they are concentrating on preserving their status quo, not leading to our collective future.  So we need to collectively go back to the beginning and rebuild our American economy through smaller local economic circles.  Circles where we can see and make a more immediate impact.

ABC News/Diane Sawyer has been running a wonderful “Made in America” series of reports.  They have shown many examples of small businesses competing on price and besting on quality versus the imports we currently buy.  One home builder in Montana built a new home entirely of American-made products for no net added cost.  He estimates that if all builders and suppliers increased American-made purchases just 5% it would create 200,000 new jobs.

I encourage everyone to access the www.abcnews.com/worldnews website for more information and lists of websites on buying American.  We need to buy more food from local farm stands – it is healthier for us anyway.  We need to buy jewelry, housewares, clothes and furniture from American craftspeople and small industries, not foreign products imported and sold by American-based corporations.  (Wal-Mart, Lowes, Sears/K-Mart – where are you in this effort?)

This is not about isolating ourselves from the world, being uncaring about others across this globe.  It is about “acting local” where we can make the most immediate and effective impact.  It is about helping our next door neighbor.  We cannot help the world if we are not healthy ourselves.  We must first heal ourselves before we can help others in the world.  That is true global leadership.  So let us first rebuild our simple economic circle.  Look at those product labels, ask the store managers where the American-made products are, and pick those items with your neighbor’s name on it.  It is simple Economics 101.

American Small Business Entrepreneur

I love the American small business entrepreneur.  Always have.  By which I mean those millions of self-starting, self-reliant people who jump out of the (supposed) safety net of the weekly paycheck and opt to take a less certain economic path for myriad different reasons.  They get where they are going through very hard work, long hours and much worry, often combined with bursts of creative thoughts and methods.  My adoration may come as a surprise to some of my regular readers, given my frequent criticism of corporate America.  But I am differentiating between big mega-corporate America versus our dedicated band of small business owners and legions of self-employed workers.

We often hear of the “1000 new jobs” and the “10,000 new layoffs” from the big guys.  But the truth is that it is estimated that over 50% of Americans work in small businesses or are self-employed.  This includes the mom & pop retail stores, the franchisees, the individual tradespersons, and the artists and crafts people who toil independently in their studios.  Given that around 50% of new small business startups fail within 5 years, the continual never-ending march of idealistic and optimistic people into these independent business ranks is all the more amazing if not inspiring.

We repeatedly hear that American economic prowess has been, and likely will be, built on innovation.  In our earliest centuries, innovation came from colonizing, pioneering and settling North America, which gave almost everyone (African-Americans and some other minorities regrettably excluded) potential entry into a new “middle class.”  In the late 1800s/early 1900s, it was manufacturing innovation – steel, automobiles, textiles, oil, transportation.  In the post-WWII 1900s, it was computer technology, science and communications innovation.  And in the run-up to this century, it was financial innovation – which unfortunately has suffered from periodic bouts of collapse due to excessive greed with no “hard” products or services to fall back on (e.g. the collapse of the S&Ls in 1980s; the dot.com’s of 2000; and the subprime mortgages in 2008→2009).

While there are some exceptions (e.g. 3M, the old Bell Labs), most innovation does not come from big corporate America.  The big guys are great at volume low-cost production and broad-based marketing.  But they are too cumbersome and over-organized to support – much less encourage and nurture – the lean, fleet-footed, non-standard right-brain thinking that true innovation requires.  America’s innovation has been very much a bottom-up cascade of “the next big thing.”

The American folklore of the self-made man, the tinkerer building the better mousetrap, is all very real.  Thomas Edison, Alexander Graham Bell, and the Wright Brothers worked virtually alone in their labs producing what others could only dream of.  They spawned the spirit of Steve Jobs (Apple), Mark Zuckerman (Facebook), Larry Page & Sergey Brin (Google), and Bill Gates (Microsoft).  Yankee Candle, Chick-Filet, and Kentucky Fried Chicken all started as a 1-person shop that grew to be a major national corporation.  Advances in medicine and drugs are far more likely to come from scientists toiling in their individual university research lab than big corporate facilities – even if those university labs are funded by corporate or federal government (NASA, NIH, NIS) dollars.  The Sedgway; the many TV descendents of the classic 1950s Veg-A-Matic; Oreck’s twisting and turning rollerball vacuum cleaner; endless new gadgets in kitchen and hardware stores to solve needs we never even knew we had.

But it was not just innovation that is the province of the small entrepreneur.  It is the countless local people who provide the daily repetitive services that keep us all going, with or without occasional bursts of creativity.  Our day care centers; our local restaurants; our dry cleaners; our florists.  It is the army of carpenters, plumbers and electricians that opt to operate independently to maintain our homes.  As the 2009 debate about the Detroit auto bailout reminded us, it was not just about the GM/Ford/Chrysler corporations.  It was also about the innumerable local car dealers, auto parts stores, small parts manufacturers, service mechanics and car washes that keep hometown economies functioning – a network of millions of people supporting the thousands of “Big 3” automobile manufacturing workers.

Small business and individual entrepreneurs are still the backbone of our American economy, even though they struggle against difficult odds, artificial barriers to their success, and unfair (if not illegal) trade practices from the big corporations who seek to drive them out while they simultaneously proclaim the virtues of free enterprise.  Yet somehow the small farmer continues to grow things that we can buy at farmers markets and produce stands instead of chain grocery stores.  And the small manufacturer continues to make things even while big government, businesses and individuals frustratingly buy comparable (or less) products from China and other low-wage countries.

As ABC News has commendably pointed out in its “Made In America” series of reports, if Americans bought comparable (quality and price) products that were simply made here rather than overseas, we could literally reduce U.S. unemployment by millions of workers.  Help begins with self-help.  We need to support local businesses and entrepreneurs, whether down the street, across town, or (thanks to the internet) across the country.

I am lucky to have many friends and acquaintances who have taken the entrepreneurial route.  They all have my profound respect and admiration for their courage and efforts.  It is to acknowledge them that this blog posting is dedicated.

Debt Limit Limited

In my last posting to this blog (“Ideology Versus Governing”), just before the scheduled vote to raise the U.S. debt ceiling, I wrote about what I felt was the larger issue emerging from this debate.  Namely, the emergence of what I called “legislative terrorists,” willing to take one of our greatest possessions – “the full faith and credit of the United States” –  and hold it hostage to a purely political agenda.  It is a “My way or else, at any price” mentality that has no place in this heterogeneous multi-cultural environment that is America.  So I wrote that the need to say “No” to that extremism was the greater crisis to be dealt with.

Unsurprisingly, Congress and the President chose to ignore my earnest plea.  And so what we had on August 2^nd was one of the ugliest displays of bad government in America not seen in a very long time.  And it resulted in no real substantive solution to debt and economic growth.  But it did establish some very bad precedences we will have to live with for awhile.  So did anyone come out of this mess a winner?

Certainly not Speaker John Boehner, a generally decent fellow who was shown to be an emperor with no clothes.  His openness to negotiate a responsible, big-picture substantive solution to our needs was shut down by a controlling portion of his own party.  He could not lead his group, only run faster in the front to avoid being run over by his party.  And he stands without a loyal support team, notably Majority Leader Eric Cantor who stands at his back – with a knife marked “Future Speaker” poised just inches from Boehner’s back.  Sam Rayburn or Tip O’Neil he ain’t.

Certainly not President Barack Obama.  He probably got the biggest individual win – the debt ceiling was raised as he wanted, and there will be no more discussion / maneuvering about the debt limit until (thankfully) after the 2012 election.  We are spared at least one more grandstanding episode for awhile.  But after weeks of saying “Don’t call my bluff, Eric,” that is exactly what Eric et al did; the perception deepens that when pressed, the President will cave in on his principles.  When Obama first came into office, much ado was made about his reading of Doris Goodwin’s book “Team of Rivals,” the tale of Lincoln’s creative maneuvering  of his political rivals to pursue his leadership through the Civil War.  I would suggest that on his current vacation Obama switch his reading to biographies of Theodore Roosevelt and Andrew Jackson – two presidents who were not afraid of presidential power and used it to move their agenda through hostile Congresses.  Strong leadership (versus headstrong leadership) is needed.

Certainly not Congress.  Its approval rating is 15% (a nicer way of saying “85% negative”).  And for the first time I can remember, over 2/3rds of Americans in a recent poll said that their own Congresspersons should not be reelected.  That is pretty astounding, considering that most of the time Americans feel that “my Representative / Senator is OK, it is yours that is the problem!”  The capstone proof of this Congress’s inability to govern was its decision to create a 12-member “Super Congress,” found nowhere in our Constitution.  The message is, “We cannot agree on how to govern, so let’s absolve ourselves of the responsibility and create another polarized committee who will mimic our disagreements, and we can blame them for Paralysis – Round 2.”  Just before Thanksgiving, we will be able to watch the whole dysfunction replay again.

Certainly not Majority Leader Harry Reid and Minority Leader Mitch McConnell.  These two Senate leaders were essentially pushed to the sidelines, while all attention was on the House Republicans and President Obama.  In the end, it was their silly “solution” to create the Super Congress which broke the stalemate but guaranteed us the upcoming “Government Fiasco – The Sequel.”  (Invisible) House Minority Leader (and a former Speaker) Nancy Pelosi can probably share a seat with them in the back of the movie house to watch this movie sequel play out.

Certainly not the Tea Party, although some commentators would have us believe that they were the big winners.  But they were not.  A number of them have set themselves up for defeat in the 2012 election by Republican rivals who will accuse them of underachieving and not delivering.  Or by a Democrat who will replay these Tea Party speeches against a backdrop of people without jobs, without teachers for their children, or adequate police and firefighters to protect them.  (Then again, Democrats have never shown much skill in capitalizing on campaign opportunities handed to them.)  But their biggest failure is how they snatched defeat from the jaws of victory – the potential offered for a $4 trillion cut in expenditures in exchange for some selective tax increases on the 2% wealthy class.  It is a failure to accept that more revenues, and the closing of discriminatory tax laws favoring “friends of Congress,” are absolutely necessary along with tax cuts to bring fiscal sanity to this country.  They gave up a very big prize because it was not pure enough.  But Americans never like purists for long.  Barry Goldwater, a highly principled man, said that he would “rather be Right than President.”  Well, he never became a President.  The Tea Party is likely to get its similar wish.

Certainly not We the American People.  There are no jobs in this debt ceiling bill.  There is no badly needed investment in places where we know it is needed.  There was no democratic process shown in the passing of this debt ceiling bill.  The people who claimed to be all about saving our economy, and that defaulting on the debt limit didn’t matter, sent the stock market down 1500 points within two weeks of passing their plan of salvation.  We were taken to the precipice.  And then we jumped.

Thanks, but no thanks to all involved.  This cast of characters is now on August recess.  We can only hope that they extend that recess as long as possible, and stay the hell away from Washington.  Because if your mantra is that “government is the problem,” and this is your idea of “helping us,” then it shows that you are the government and you are clearly the problem.  So stay away and quit making our lives worse.

We still have a new budget to pass for 2011-2012; we still have a Super Congress to bicker and non-legislate.  It is all going to look very similar to this August, making it a tough fall season for all news watchers.  My last posting on my Our Spiritual Way blog was about the virtue of Patience.  It is a virtue that is being severely tested right now in all of us.

Ideology Versus Governing

Dear President Obama:

For the last two months, We the People have watched – in some horror – the full and true picture of how our elected government is operating today.  Past legislative battles have been but a pale preview of the political warfare now occurring over raising the debt limit.  And We the People are not at all happy with what we see.

There is no question that We the People have widely different views about the proper role of government – federal, state and local – in our economic, religious and personal lives.  Nor is there a question that many of us hold those views with strong passion.  But there is no question that the greatness of America has always been its ability to transcend those differences, moderate our extremes, and ultimately do the right thing for the greatest good.  It is only when we have failed to see and strive for that bigger view that We the People have collectively come up short in the great promise that is America.

We now have bills to pay for monies already spent based on previous commitments of Congress-persons and Presidents.  In hindsight, some of those bills may have been good or bad decisions, but they are decisions long sense made.  Now we have to live with them responsibly.  Like any corporate chief or small business owner, when expected revenues do not work out, one needs to borrow to get through today while concurrently making smart plans about tomorrow.  In such times, it is vital to keep one’s credit worthiness whole, and to demonstrate an unflinching commitment to paying one’s obligations.  Yet our current debt is not just about the credit worthiness of the federal government; it is more importantly about affirming the “full faith, credit and backing” of We the People.  It is all pretty simple and basic stuff.

Yet instead of dealing honestly and efficiently with this credit management need, our government has instead decided to hold this backbone of our economic stability hostage to a wide-ranging ideological war of every conceivable pet philosophy.  The supposed debt “debate” in fact has little to do with the debt limit.  All of the current arguments instead reflect classic disagreements over the size and role of government, how it should be paid for, and by whom.  These are heated arguments on both sides that have been with us unsettled since our Constitution was first written.

But where in the past these arguments ebbed and flowed and ultimately found resolution in the middle (like the writing of our Constitution itself), this time we are watching acts of legislative terrorism taking place.  (I realize that this risks sounding as its own inflammatory rhetoric, but if it looks, quacks, and waddles like a duck, there is a high probability it is a duck!)  Legislative terrorists have sized a valuable hostage (the debt limit requirement), issued their list of “non-negotiable demands” (strictly cutting spending of their own unilateral determination without new revenues), and threatened to kill the hostage if these demands are not met without compromise (a never-before, constitutionally prohibited default on our debts).  It is a classic fighting tactic of the political revolutionary – hostage-taking, ransom and killing – a tactic that all governmental leaders everywhere have always been quick to condemn.

Mere days before our deadline for paying the ransom, we are still unclear about the potential outcome.  Yet the damage to our credit standing and economic well-being is already occurring simply by the threat of a default.  Politicians who have been talking big about being committed to job creation and economic growth are in fact taking steps towards destroying any chance for an economic turnaround.  Playing “chicken” with our country’s reputation and greatness for the pure sake of ideological combat is not responsible governing, it is simply power exercised for the aggrandizement of one’s personal ego, not for our national well-being.  We the People clearly see the difference.

So what to do?  There are times when headstrong children, employees, and friends are hell-bent to follow a course without regard for the larger consequences.  Consequences upon them as well as others.  As parents, supervisors and concerned friends, we must choose between trying to forcibly stop them, or letting them go forward so that they can learn needed lessons from the disaster of their own experience.  This is one of those times.

As President, I know that your sense of overriding obligation is to protect us from our worst enemies, whether enemies within or without.  Therefore I know your instinct will be to protect our credit rating from our self-inflicted wound and accept whatever ransom demand is made.  But if you do, you will only validate the legislative terror tactics now being employed.  You will confirm that they in fact work.  And so we will see these tactics constantly replayed on every issue over the next two years – the politics of brinksmanship.  It will repeat again when we try to create a budget for FY 2012 that starts TWO MONTHS from now; have yet another debt limit battle in six months (and again six months after that?); and when we start working on the 2013 budget that takes effect in October 1, 2012 – just before the next election.

Standard policy for all law enforcement agencies is to never accede to the demands of terrorists.  I ask you to follow that same policy now.  We the (most of the ) People ask you to veto the many nonsensical proposals about the debt limit now being offered up from all quarters.  We will survive a temporary default – and it will be temporary after the consequences are upon us – though our word and our dollar bill will never mean the same to citizens the world over.  But the far greater lesson that apparently needs to be learned, and point to be made, is that this current way of “playing politics” is no way to run a government.  It is not how democracy works.  It is not how We the People desire to spend the next 1½ years, embarrassed, frustrated and ill-served by government leaders basking in all of their self-generated noise.

It is time to stop this ugly, pathetic stage show that has been occurring in Washington for the last decade or more.  We the People need big thinkers right now with effective solutions that bring the center core of Americans forward together.  We have not seen such leaders in a long, long time.  In 2010 liberal left zealots were chastised and replaced.  In 2012 the same will happen to conservative right zealots.  History affirms that a time-honored correction to the middle when needed is what We the People do.

Entitlement

We hear a lot of discussion these days about “entitlements,” argued on moral, legal and economic terms.  It has become another one of those loaded words that often generates argument instead of discussion because we each react to our different meanings attached to the term.  And these often unrealized differences are critical when they are part of the ongoing dialog about government budget – and budget cutting – decisions.

I believe that there are two forms of entitlements: inherent entitlements and earned entitlements.  Both forms have examples in all three areas of the moral, legal and economic arenas.

There are certain expectations and rights that I believe that I am entitled to simply because I exist as a human being.  Simply because I exist as a human being, morally I am entitled to be treated with respect and dignity; with politeness and considerateness; to be listened to for my thinking and opinions; to be undiminished vis-à-vis any other person; to be mentally and physically free to live my life – without conflicting with others – in the full expression of my creativity.  Simply because I am a citizen of this country, legally I am entitled to protection from unprovoked harm; to the same right of “ownership” of my government as my neighbor regardless of wealth, position or heritage; to be treated equally under the law as any other regardless of my perceived standing in the community.  Simply because I am a creative person of beneficial outputs who must maintain my physical well-being (and perhaps the well-being of others), economically I am entitled to be treated honestly, without falsehoods; to be given the opportunity to meet my supportive needs; and to be appropriately compensated for the gifts of my talents to society.  Importantly, we are inherently entitled to “the right to be left alone – the most comprehensive of rights and the right most valued by civilized man.”  (Supreme Court Judge Louis Brandeis, Olmstead vs. United States, 1928).

These, and others that could be similarly enumerated, are inherent entitlements enabled for me simply because I am, I exist.  There is nothing I need do to obtain them; there is nothing another can rightfully do to deny them.  These rights and expectations therefore come with the fact of my humanness.  They are manifestations of the “unalienable right to life, liberty and the pursuit of happiness” espoused in our American Declaration of Independence.  For the spiritually minded, these are rights inherent in the beauty of our divine creation.

There are also the earned entitlements we have as a result of what we do, what we give, in response to our living responsibly within a greater society.  This form of entitlement is not due me simply because I am, but are in exchange for my positive contributions and efforts.  If my labors, skills, responsibilities and outputs are similar to another’s, economically I am entitled to comparable compensation regardless of age, gender or heritage.  If I live a different lifestyle that causes no true (versus perceived) injury to others, morally I am entitled to the full and equal benefits, protection and opportunities that society offers.  If I choose to worship God (by any name seen in any form) in a manner that causes no substantive harm or hindrance to another’s worship, and does not seek to convert them away from their beliefs, then morally and legally I am entitled to be left alone and undenied in my practice.  If I give a fair day’s labor, economically I am entitled to a fair day’s wage.  If I create or invent or transform an intangible concept into a tangible reality that is useful to society, economically I am entitled to be compensated for my work – a job not of labor but of creation.

Conflict arises when one tries to take away inherent entitlements – they cannot be taken away except by force.  Conflict arises when the magnitude or scope of earned entitlements become outsized, or the entitlement is no longer seen as “earned” (no quid pro quo has been exchanged).  However, such assessments are usually subjective, as seen in the eye of the assessor.

I would submit that unique talents and contributions deserve unique entitlements.  But does a $100M baseball contract reflect a truly unique talent, or that great a benefit to our society and culture?  Is the talent of many financial and corporate executives really worth 150,000 times greater compensation than the worker who actually produces their product?  If an entitlement to basic medical care is a measure of the genuine humaneness of America, should someone who ignores a healthy eating and lifestyle be so entitled?  Is every American looking for a job entitled to get one if s/he has not maintained or expanded the skills needed in a changing job market?   If a bank is entitled to a bailout for making many bad loans, should not a homeowner who signed on to that bad loan (or even a good one) be similarly entitled to loan forgiveness?  Do excess restrictions on the use of protected, copyrighted/patented materials wind up perversely preventing their utilization and enjoyment by society?  Is the recipient of our charitable gifts and social welfare entitled to take no steps, sit idly, and make no effort to move him-/herself out of their need for help?

As always, it is in the specifics, and the individual, that the idea of entitlement gets difficult.  It is in the gray areas, and the nuances, that the conversations become difficult, but they must always come back to match concept and realities with the heart.  We are not entitled to be absolutely protected from the realities of life, the realities of nature, the realities of our human community.  When we make bad choices ignoring those realities from the outset (e.g. building a beachfront home in Florida or on the banks of the Mississippi), we are not entitled to be rescued from our recklessness – though we can accept graciously and humbly the gifts of those who have determined to help us.

We are entitled to be allowed to fulfill our potential for happiness by receiving fair and equal treatment from others.  Yet even our inherent entitlements come only as long as we act from our inherent good, not in ignorance or discrimination of others.  When we fail on our side of our entitlements – whether inherent or earned – by not appreciating our inherent humanity or by not earning life’s rewards, then we become entitled to no entitlements at all.