Reforming Government

It does not surprise me that so much of the negative sentiments over health care reform stems from a general sense of distrust in “Government”. The corruption we see reported in almost every State where elected officials abuse the position of trust and power GIVEN to them by their constituents feeds into that distrust and, over time, it has eroded our confidence that anything labeled as “Government” can be of any value or do any good. As the title of a Tyler Perry movie goes, “I can do bad all by myself” – we certainly don’t need to elect or pay anyone to abuse us.

Things have been so bad in New York that a New York Times editorial (Oct 18. 2009) titled “Fed Up with Albany” recommended voting out every incumbent member of the state’s legislature if nothing is done within one year to clean up the mess (click here to view the NYT editorial). Readers from outside of New York chimed in with their comments and left stinging remarks about the disgraceful and shameful behavior by their own state’s elected officials, voicing their agreement with the idea of voting out every incumbent simply because they are an incumbent.

Unfortunately, we often have an innate tendency to generalize issues and things and, in doing so, we destroy the good that is overshadowed by the bad. Identifying the real issues and dealing with them may be more time consuming but clearly more civilized and less damaging. In the Biblical story of Sodom and Gomorrah, even an angry God was prepared to spare the lives of the Lot and his family before he rained fire and brimstone upon those cities. We have a duty to separate the good from the bad; the wheat from the chaff.

In fairness to the New York Times, their editorial included a promise to outline the ways that the existing inbred system allows for abuse and what Albany could do to change its ways. I will watch for their recommendations with great interest – New York is the only home I’ve known since coming to the United States.

The purpose of my posting here is to go one step further because “Government” is not simply made up of elected officials sitting in the halls of power inside the Capitol buildings. It includes Public Services that are run by the Government, funded by tax-payers’ dollars. The people employed by these Public Services are often the only faces most of us will see in our dealings with the Government.

Whenever I have had to avail myself of the services they provide, I make it a point to smile and be friendly, hopeful that in doing so, I will make their day a little brighter and in exchange, what I need done will be achieved with some dignity and expediency. Happily, my tactic works better than 50% of the time so it isn’t a wasted effort.

Unfortunately I can also say from experience that often times the faces I see are dour and the attitudes appalling – almost as if by my being there with a need which only they could service, I have become an unwelcomed intruder in their plans for the day. I’ve had employees of public services disappear on me while I was standing at the service counter because it was their lunch time or a personal call came in on their cell-phone and they didn’t want me to listen in on their private conversation. I’ve watched in amazement as they would stop working on my case because colleagues nearby had started a conversation about something outside of work and they felt a need to be part of that conversation. I’ve had to fill in a tri-fold, 4-color pre-printed form simply because it was standard procedure – despite the fact that all information I had to provide is already in their computer system and unchanged – only to see the form tossed into a trash bin moments later. I could go on…

Public Service is where we clearly need reform as well if we want to improve on the image of Government. Standards of efficiency and quality of service must be set and independently audited to ensure compliance and there must be accountability where the standards are not met. Pay increases must be matched by better performance and increased efficiencies so that they are self-funded and no new taxes are required. Public Service employees must be treated as private sector employees are treated – lifetime employment should not be guaranteed and they should be subject to the same possibility of termination for poor performance and for cause. Outside expertise should be brought in to improve work-flow, eliminate unnecessary processes and costs while enabling greater automation and efficiency. Performance of Public Services employees can and should be bench-marked against performance of employees in the private sector and made public so that there is transparency and necessary actions be taken to weed out the inefficiencies.

There is no reason why public services cannot be just as efficient as the private sector. If virtual monopoly exists, find ways to break up that stranglehold. Private schools co-exist and compete with public schools and private parcel delivery companies co-exist and compete with the US Postal Service. Similarly, private transportation services compete with public transportation services.

If politicians, elected officials and public service employees are keen to keep their jobs, they need to do a better one. The nation is suffering from the cumulative and simultaneous effects of the bursting of the housing bubble, the near meltdown of financial services, and technologies and policies that have enabled the relocation of many of the so-called ‘middle-class’ jobs to lower cost countries. Policies of the past no longer serve the needs of the present or the future and changes must be made from the very top to the very bottom of “Government”. Failing that, we should start looking at outsourcing or off-shoring Government jobs.

Go American

“Caveat Emptor” was one of the first Latin phrases I learned in law.  Quite simply, it means “let the buyer beware” – the purchaser has to take a certain degree of responsibility for ensuring that the property he/she is purchasing is fit for the purpose it was intended before closing on the deal.  As an example, home buyers will have their lawyers conduct a search on the property’s title, purchase title insurance, and hire an engineer to inspect the condition of the home before closing on the transaction. 

The “Caveat Emptor” doctrine works well with big ticket items (as in the example of the home purchase) but is more cumbersome and off-putting for the lower cost consumer items.  Hence most stores will have consumer friendly return policies that allow a hassle free return of items that are defective or do not meet the consumer’s requirement within a reasonable time after the date of purchase.

Because of the ease of buying and returning such consumer items, most of us do not think twice before acting on our urge to buy something.  We wanted it (because some clever advertisement or a ‘cool’ friend convinced us we “need'” it) and we went out and bought it because we could afford it.  Simple.  We rarely, if ever, think of the social and economic impact of our actions beforehand.

Yet everything we buy has an impact.  The stores make a profit; the sales person makes a commission; the truckers bringing the goods to the store were paid for their services; and so on.  In turn, we have to go to work daily so that we have an income to pay for the things and services that we consume. 

In short, our consumption creates jobs and, conversely, we can consume because we have jobs.  It is a dependency that has grave consequences should the link be broken. 

This recession is especially severe because job losses started in those industries that have a high degree American labor or content – housing, finance and auto-manufacturing.  Each job loss has a multiplier or cascading effect.  When those workers lost their jobs, their consumption pattern suddenly ceased and retail and sales of non-essential consumer products dropped precipitously, sending more workers to the unemployment lines.

The lessons learned from this downturn have to be put to good use if we want to recover from it and protect ourselves from yet another economic disaster of a similar magnitude.  Like the green-movement or awakening that brought ecological-consciousness to the forefront, we need a second green-movement that will bring economic-consciousness into every US Citizen’s thinking. 

Here are a few starter thoughts:

1.  Go American

Buy products that are high in American content.  Start with buying local produce:- fruits, vegetables, wines, cheeses, meats, processed foods that are locally produced.  Shop at your local farmers’ market.  Write to your local grocery store / chain and ask for more local products and dedicated American product aisles.  American produce is world-class and competitively priced - there is no reason to buy foreign. 

Vacation locally – there are many affordable American vacation products and places to visit.  They create jobs in America.

2.  Demand transparency and accountability

Write to the CEOs of the companies that benefit from your consumer dollars and ask for transparency into their practices – percentage of their jobs and production located in foreign countries; percentage of their product that have foreign content; etc. 

It is important to include the CEOS of foreign producers or importers of foreign products – they can create an impact by increasing the percentage of American content or labor used in their product.

3.  Lobby your representatives

Write to the congressmen representing your district or state and demand that economic-impact reporting become standard in every publicly listed companies annual report and filing. 

Ask about fair trade practices of the countries America deals with – what is the imbalance of trade with each country and how they plan to address that.  We want our creditor nations to be buying American products and services, not just US Treasuries.

I’m not recommending a boycott of any sorts over foreign products – I’m merely pushing for a greater awareness of the need for a higher percentage of American content in the products we buy, and what other countries buy from us in return. 

Yes, just like it has become hip to buy ‘organic’ products, it can become hip to buy ‘American’ products too.  And it will be more expensive to go ‘American’ as it was to go ‘organic’ but the end result will be worth it.

Some of us laughed at the ‘organic’ movement but it has taken root and become a settled part of our social consciousness.  We can make the ‘Go American’ movement work too.  It will take a conscious effort by every American concerned about his/her future or that of the next generation.  Sitting by idly or ignorantly and doing nothing is clearly not a solution.

YOU ARE AN AMERICAN; BE PROUD TO BE AN AMERICAN.

A Thing Called Freedom

Way back when I was in my early teens, I was taught that freedom can only exist within a framework of rules. Without rules, freedom would run amok and result in more harm than good. Clearly defined rules and good enforcement help build trust in a system and ensure that it is functioning properly for the benefit of all.

As an analogy, anyone with a valid driver’s license may drive a car provided that he or she is prepared to respect all traffic signs and rules posted. If the rules are not obeyed, there would be total chaos on the streets and innocent pedestrians and other drivers would be at risk of harm and injury. Traffic rules are built on logic (reaction times, road conditions, etc.) – they are not there to impede progress but to keep order so that everyone can get to their destination safely in due time.

The notion of absolute freedom cannot exist in any society because the good of the larger community must prevail. The driver’s right is not prejudiced by the traffic rules – he/she is free to drive so long as the rules that applies to everyone is followed.

Why am I writing about freedom and rules? Quite simply, in the light of the financial debacles we have recently witnessed, it is clear that the degree of freedom that was accorded to the financial industry led to abuses and ultimately a crash that hurt many innocents and retirement egg-nests’ values were destroyed or, in the worst of cases, completely wiped out. In the light of what has happened, it is clear that we need a fresh look at how to prevent similar crashes in the future and we need to write smarter rules.

For far too long, we have relied too heavily on the word of the law and not the spirit of what was intended by those laws. This trend stems from the fact that it is easier to apply a prescribed set of do’s and do not’s than to leave it to the interpretation of the authorities. The problem with that thinking is that as new processes and technology is adopted, hard coded rules must be revised to keep up and we end up with volumes and tomes of legal prescriptions that no lay man can hope to fully grasp or understand anymore. At the same time, the ‘pros’ exploit the gaps in the rule books to profit from the unwary and uninformed.

The recent meltdown of what were once giants in financial institutions and insurers, the investment fraud perpetrated by Madoff point clearly to the need for a more comprehensive and intelligent way of ensuring compliance and reliability of the system.

Post Enron, Tyco, and WorldCom, the Sarbanes-Oxley Act of 2002 imposed more stringent rules and yet failed to prevent the current crop of failures and disasters. Clearly, this point to a lack of enforcement and, even more alarming, the lack of understanding or knowledge necessary for a proper examination of the underlying risks in the newly minted derivative financial instruments, even in the reputable credit rating agencies. If they claim to have the necessary competence, then it raises questions on their independence and ability to voice their concerns, given the fact that they are paid by the very organizations and transactions that they are rating.

The question before us then is: Do we need more intelligent rules to govern financial reporting, trading in securities and derivative instruments OR, more importantly, do we need better enforcement of those rules?

Prior administrations have increasingly weakened the enforcement arm of the SEC by defunding and deregulating the financial industry on the basis that regulations impede business and profits as well as the ability of the US exchanges to compete internationally. That is hogwash and serves only to promote the false notion that the market will regulate itself. The problem with that self-regulation notion is that it fails to take into account the human factor we know as ‘greed’.

The consequence of the latest round of financial fiasco was a near total collapse in faith and trust in the system worldwide by all players, including the banks themselves – demonstrated by the sudden credit freeze when banks feared to lend to other banks. Had it not been for the massive intervention by the government here in the US and in the UK and elsewhere, things could have been worse. The problems seen in Iceland and Ireland could have been spread across the globe faster than the latest strain of the flu virus and caused more devastation in its wake.

I’m not advocating that businesses or profits are bad – far from it. Businesses exist for a profit motive and I strongly believe in industry and reward. However, businesses should not dictate its own rules and business lobbyists should not have such a strong hold on the government that it can. Capitalism should not mean freedom for the strong to prey on the weak nor for the present generation to pass the mess on to future generations. We have a responsibility as good citizens to ensure that the soul and strength of the nation is not destroyed by the greed of the few.

Invest Wisely

It may be a surprise to you if I were to tell you that we (you and I) make investment decisions daily – we don’t have to be a player in the stock market to make investment decisions.

Don’t believe me? Just think of what you had to do today.

Most likely, you woke up to the sound of your alarm clock – that reliable bedside gadget that greets you each morning with a loud jarring noise or, preferably, with some soothing sounds to ease you into your day. It was a tiny but necessary investment and, in addition to the cash you had to spend, you probably had to invest some time to test the ring tones on a number of alarm clocks before you found the one that you liked.

Having rubbed the last bit of sleep from your eyes, you headed for the showers and invested time in prepping your body for the day. You took care of your oral health, the way your hair looks, and, if you like to deepen the mystique, the ‘je ne sais quoi’ or the ‘something in the air’ about you, your daily routine ended with your dabbing on some cologne, after shave or eau de toilette.

Your decision on the clothes you wore was likely influenced by your knowledge of the type of meetings or occasions you have on your schedule for the day. If a meeting or an occasion was important enough, you would choose to put on an outfit with matching accessories – an ensemble that would make a statement - for which you had invested a handsome amount of money and set aside for just such events.

I think you get the drift. We are always investing – consciously or subconsciously – and if we think of our daily actions as such, we would most likely be smarter about our choices because we would be forced to think about the payback.

Investing in a healthy, balanced daily diet will yield us years of good health and fewer visits to the doctors for all kinds of preventable ills. Investing in our continuing education and awareness of the changes in the world around us will keep us one step ahead of our competitors and prepare us for the challenges ahead. Investing time with family, friends, colleagues and social networks (religious, professional, etc.) will enrich our lives together and our ability to interact and react, and to accept each other, warts and all. Investing in cleaning up and keeping our environment healthy will allow us and future generations to live and breathe on this earth for many, many more years. Investing in teaching love and respect for ourselves and for others who are less fortunate and in need of a helping hand will help counter the actions of those who chose to teach fear, hate and bigotry, perpetuating wars and needless killing.

If we learned anything in 2008, it is clear that we cannot afford to sit idly and quietly, and hope that the near collapse of the financial, insurance, auto and other industries due to weakened controls and accountability will not happen again. As investors in the many companies that the government has bailed out (whether or not we were for it), we have a duty to require of those in whom we have put our trust to give a clear accounting of their actions and results. Our economy, our country and our future depend on us being wise investors.

When I was in my early teens, I had a plain looking poster that had an image of an apple with a good chunk bitten off the top right corner. Beneath the picture were the words “Today is the First Day of the Rest of Your Life”. It conjures up the image of Adam and Eve taking a bite from the fruit of the tree of knowledge of good and evil and forever lost their innocence. I think that sums it up nicely – what we chose to do today will have a bearing on the rest of our lives and the lives of those around us.

As we head into the New Year, it is my hope that we can and we will think of our decisions and actions as investments in the future and that we will do so wisely. We all had a bite of that bitter fruit in 2008 and we are no longer innocent.