We All Want To Live The American Dream

Just when I thought I had read up enough to understand what caused of the financial crisis that led to the actual or near collapse of some the major financial institutions, the Foreclosure Flap reared its ugly head, telling me that the underlying problems could be deeper than we’d realized.  We may have put out the fire caused by all the mortgage backed securities (a.k.a. toxic assets) but hot ambers are still smoldering and could break out anytime and burn us again.

What has been most shocking is that the problems are occurring in the United States of America which pride itself as being a nation of laws.  A look at the train wreck of the mortgage mess reveals a chain of dishonesty and a disregard of the laws that send shivers up and down the spine. The image of reliability, trustworthiness and enforceability of deals and investments in the US has been severely damaged as a result. 

Having laws but not the desire or the means to enforce them renders the laws simply useless.  As the former Chairman of the Fed has discovered, expecting the financial industry to self-regulate was a mistake.  It is akin to asking a drug addict to take charge of a warehouse filled with drugs.  Sadly, the people elected to positions of power AND responsibility took the first and forgot the latter.  They eliminated regulations that were designed to protect the average man on the street and they denied funding to those agencies that were set up to ensure adherence to the laws and regulations.  By demonizing “government” they chipped away at the rules that had been been carefully crafted to protect the innocent.  Corporate profits became their sole obsession and expanding that their only mantra.  In essence, they sold out the very people that had elected them into positions of power and opted for corporate welfare instead of helping the average American get closer to achieving their American dream. 

For most Americans, the “Pursuit of Happiness” entrenched in the Declaration of Independence translates to ‘living the American Dream’.  In the majority of instances, it simply means a decent job, a house, a spouse, two kids (and maybe a dog) and a car.  That simple dream is now more remote than ever before.  The so called ‘middle class’ is fast shrinking as decent paying jobs and industries have migrated overseas.  Graduates with higher degrees (and big student loans to go with them) often find themselves fighting for jobs that barely pay their living costs.  Their employers have higher productivity expectations and the longer hours at work often translates into less quality time with family and friends.  The wealth gap in America is rapidly increasing and the pendulum must start swinging the other way or something will break very soon. 

To turn the tide, our elected and appointed officials cannot continue doling out cash (remember the bailouts?), concessions and tax breaks to the big corporations and banks unconditionally.  Yes, we want them here and we want to help them succeed but we want them to be good citizens as well, providing decent jobs and paying their fair share of taxes.  Their focus cannot be on the short term profits alone – the longer term well being of the US consumers must be part of their priority too.  The US consumers cannot consume unless they have the ability to do so and fundamentally that means a steady job with a decent pay.  Flipping burgers and temporary jobs don’t make the cut.

We need to figure out what the appropriate criteria of a good Corporate Citizen should be and start enacting rules to bring that about.  Corporations that do not meet those expectations should be taxed at a higher rate or not be allowed access to the same incentives that Corporations that do. 

As a start, Companies that do not pass an American Content test (US employment and product component percentages) should be made to pay a penalty in the form of a surtax.  All companies closely monitor their employment numbers and their product content makeup so introducing a requirement that they disclose those numbers in their quarterly and annual reports should not result in any additional cost to the corporations.  Such a rule should not impact the small and medium sized businesses that have all or the bulk of their production and employment in the US.

Those who are in bed with the big corporations would decry this proposal as being protectionist.  We must peel away the rhetoric about protectionism and see that not all such rules are necessarily bad – lawyers, doctors and accountants from other countries can’t legally practice their profession in the US unless they have the necessary US training and certification.  Take away those protections and their jobs would quickly be outsourced to lower cost countries as well.

We’ve tried the carrot without the stick approach and we know that it does not work.  Corporations took full advantage of the system and did all they could to make their profits private and their losses public. 

However the winners or the losers of the mid-term elections choose to frame it, the exit polls point out that the real anger at Washington is about bailing out the big corporations at the expense of the American people.  We’ve saved the mega banks, the insurance companies, and the auto-manufacturers and we’ve pumped cheap cash at them but where are the jobs?  US Corporations are reporting higher sales and bigger profits but where are US based jobs?  Retirees who depend on income from their savings have seen interest rates plummet to near zero and they have had to rethink their retirement but where are the jobs for their grandchildren who are entering the workforce?

The late Ted Sorensen, who helped compose JFK’s inaugural address and the exhortation “Ask not what your country can do for you”, once wrote: “Government must give priority to the needs of ordinary citizens, workers, consumers, students, children, the elderly, and the ill, the vulnerable and the underdog, and not to the needs of those already sufficiently powerful and affluent to afford their own lobbyists.”

We all want to live the American Dream.  It should not be an impossible dream or one that is reserved for only the elite and the rich.  Take away the American Dream and you take away the hope of a nation. 

The S.S. USA

While searching for a new topic for my blog, one thought that struck me over the Independence Day weekend is that this historic event that we celebrate each year is all about Choices.  The founding fathers of this great nation chose to be free from the oppression of the colonial masters and to be able to set off on the pursuit of equality, life, liberty and happiness.  Generations later, those pursuits continue and the ideals have not faded. 

As we try to find our way through the present period of economic uncertainty, high unemployment, soaring budget deficits, two drawn out wars, and a whole financial mess brought about by the housing bubble and unbridled greed, we are faced with choices that we must make.  Some of the choices will be hotly debated by people on both sides of the political and economic spectrum.  A healthy debate is always good but we must not let it turn into a mud-slinging match or allow ugly words and unfounded accusations tear us apart.  None of the choices will be easy and some will, with certainty, be painful but inevitable.  What is key to the success in our march forward is for everyone to grasp that we’re all in it together – we can either sink or swim.  As in generations past, we will need calm hearts and cool minds to make the balanced set of choices that will bring us safely back into harbor. 

To understand the dilemma we’re in, we need only to imagine that all of us are passengers aboard an ocean liner, the "S.S. USA".  There is a big gash on the side of the ocean liner and the ship's crew is fighting to keep the ship afloat.  We can opt to vent and scream at what the crew members are doing about the situation but that would clearly be not helpful.  Neither would throwing all of them overboard. Running a ship, let alone saving one, is not a simple task.  Blocking others from acting or doing nothing or simply hoping for a passing ship to come to the rescue are not the smartest moves either.  What we need are calm heads, constructive ideas (not rhetoric), and healthy debates that lead to smart choices.

Justifiable anger has been and continues to be vented against those who had helped create the financial mess and at the corporate executives at those ‘too-big-to-fail’ entities that had to be bailed out with taxpayers’ money.  To be clear, I don’t like government bailouts of private enterprises any more than the person next to me and I can’t agree more that none of the bail out moneys should have been used to pay bonuses to the same people whose callous actions helped bring about the crash.  That being said, the financial crisis called for quick thinking and difficult ‘on-the-spot’ choices had to be made.  Failure to act fast as the events were unfolding would have resulted in dire consequences and collateral damages too frightful to even ponder.  Imperfect as they were, TARP and the bailouts helped steady the S.S. USA so that it can be navigated back to shore.

I recently finished reading the book “Too Big To Fail” and it was an eye-opener on the behind the scenes dealings and decisions once the sequence of events that led to the collapse of Bear Stearns and subsequently Lehman Brothers started.  The heavy and momentous choices that the (then as well as the present) Treasury Secretary, the Chairman of the Federal Reserve, Congress, and the CEOs of the many financial institutions had to make at short notice, were mind numbing.  With hindsight, some might criticize those decisions but the reality was that time was a luxury they did not have. Events with potentially disastrous outcomes were happening at a rapid clip on a twenty-four hour clock cycle.  If nothing was done immediately, the destructive forces could have accelerated and spread across the globe in a more catastrophic manner.

What brought about the near financial crisis was a series of poor choices.  Homebuyers chose to borrow more than what they could reasonably repay even when they had jobs.  Mortgage brokers chose to falsify records or ignore sound financial requirements in order to close the deal and get their commission.  Investment banks chose to buy up those mortgages, repackage them as mortgage based securities - masking the high risk of default behind those mortgages - and sold them off to investors, earning a hefty fee in the process.  We could go on but I think the point has been made – poor choices can only lead to ruinous ends.

The frightening thing is that most of us will continue to make poor choices for selfish reasons and short term rewards.  Recent examples: We chose to punish those who are unemployed in this current economic downturn by cutting off their unemployment benefits.  We chose to rail against regulations and controls that are meant to better ensure we won’t have a repeat performance of the recent financial meltdown.  We chose to demonize healthcare realities and the inevitable end-of-life decisions we must all make.  We continue to choose to close a blind eye to the cost of unfunded programs and wars.

We can change the direction of the ship and steer it into a safe harbor by making choices that will shift the balance back towards a greater focus on the American people.  Our elected officials must make choices that will ensure that small and medium sized enterprises that form the backbone of the US economy have every incentive necessary to hire, train and retain staff.  Our appointed official must negotiate more balance trade agreements with other nations and ensure adherence.  As consumers, we must leverage our consumption power and choices to help keep good paying jobs in the US. 

Choice, after all, is what “Government BY the people and FOR the people” is all about. 

Remember, we are all aboard the S.S. USA. 

Putting People First

One of the most inspirational moments in my career happened when I was just a young accountant, starting off on a professional journey that lasted many years and eventually landed me in the United States. 

I was thrilled to have been invited to the company’s global seminar, held that year in Vittel, France, and I was totally wowed by the events and speeches but the special moment happened rather unexpectedly one afternoon when the founder and chairman and I were passing each other in a busy hallway.  He stopped to smile at me, reached out to put an arm on my shoulder and spoke with me for a few short minutes, asking me with an utmost sincerity how I was doing and assuring me that he appreciated my work and how important it was to the success of the group.

Imagine, the chairman of a global corporation stopping to give a moment’s attention to a little known employee from somewhere across the world !!  I did not get a pay raise but I was absolutely motivated to do more as a result of that encounter.  Maybe I didn’t or couldn’t work any harder after that but I have no doubt that the experience taught me how to be a more caring, approachable and effective leader. 

As we enter a new era of challenges as the economy slowly recovers from its dramatic downturn, corporations, executives and political leaders will have to learn new motivational skills.  If, as some economists have predicted, the rate of unemployment will remain stubbornly high for some years to come, wages will fall and that will in turn demoralized the workforce.  As their pocketbooks shrink, it will feed into the negative spiral downwards - corporations will attempt to boost profit margins by cutting costs, one of which may be through a greater exodus of jobs to countries with cheaper labor.  To break that vicious cycle, political and corporate leaders (the people with the means and the ability to influence the outcomes) will have to value the workforce in ways that they have not done in a long time.  Budgets will be tight (if they aren’t already so) and higher paychecks or benefits are harder to justify.  Absent those financial incentives, they will have to win their constituents’ trust, loyalty and hard work by demonstrating more of their humanity and show greater empathy and appreciation of their contribution to the company profits and to the country’s economy.  In short, they must learn to put their people first. 

I recently stumbled across an ancient Chinese philosopher as I was doing some personal research work.  Mozi (墨子) lived sometime between 470 and 391 B.C. and his teachings were quite startling and refreshing.  I was never much of a student of Chinese history when I was growing up so the discovery of other Chinese philosophers besides Confucius was a revelation of sorts.  If, like me, you’ve not heard of Mozi or his teachings before, it is quite fascinating to read.  The Stanford Encyclopedia of Philosophy has a write up about Mozi’s teachings.  [For a Cliffs Notes style summary of his teachings look up Mohism on Wikipedia.]

While imperfect, Mozi put forward certain thoughts that are worthy of further examination.  Among other things, Mozi taught that a leader’s role is to live up to a set of high moral standards that are inclusive and indiscriminate – and his followers would then emulate his example.  Failure to follow that principle would result in chaos and the loss of the leader’s mandate. 

In a section titled “Critical Assessment”, the author of the Stanford Encyclopedia’s entry wrote: “Model emulation is indeed a powerful educational process, as any parent knows, and many of our values and judgments are in fact learned by following the example of admired role models. Social coherence, peer pressure, and the approval of superiors are important motivational factors even for critical, reflective adults.”

If business leaders want to overcome the general perception that they are solely focused on profits and personal enrichment; and political leaders want to inspire their constituents to do greater good; they would do well to get down from their ivory towers and walk among the people and occasionally put an arm on a shoulder and offer that someone words of appreciation and encouragement.  As they see more of what the everyday man or woman has to go through to put a meal on their family’s dinner table, to put clothes on their kids and to send them off to school, they might regain their humanity and find it harder to justify the increasingly huge gap between their own paychecks, bonuses, stock options, etc., and the wages of the average workers. They will find it difficult to explain, to the people they have touched and connected with, why their jobs have been or will be sent overseas and they might even reverse the tide by bringing those jobs back to the US.  They will recognize that with a concerted effort by all, unemployment will ebb and consumer confidence and spending recovers, sales and profits will quickly grow again.

Half a century after Mozi’s teaching on inclusive care, Jesus taught his followers that there is no credit for loving only those who love them (Luke 6:32) and he gave us the “do as you would be done by” rule.  Our job on earth is to leave it a better place and we can only do that by putting people first.  Nothing is as important as how our actions (or a lack thereof) impact and affect other peoples lives.

Bringing Jobs Back

Despite a drop in the number of newly unemployed, the dismal real unemployment numbers in the US point to a need for drastic measures that will help stimulate job creation.  The Obama Administration recently held a Jobs and Economic Growth Forum to garner ideas that would help kick start a new phase of economic growth.  That effort is to be applauded and given full support by every concerned citizen.  However, grand schemes and efforts to reverse job losses stemming from the years of relentless exporting of manufacturing and all kinds of back office work to lower cost offshore centers will take time.  Congress will need to put aside partisan politics and dig deep for the courage and good sense necessary to pass laws and investment incentives that will smooth the passage for recovery without jeopardizing the future. 

In the meantime, we cannot just sit by and hope that things will change.  We cannot wait another year to replace ineffective members of Congress and put new ones in there that will do the will of the People who elected them rather than the will of the lobbyists and the people that employ them for their own selfish gains.  We cannot wait another year and see continuing job losses, even if it is at a reduced pace.  Clearly, those who have lost jobs since 2007 and are still unemployed or underemployed cannot wait another year, hoping that their unemployment checks (if they are collecting one – most self employed people do not even have that luxury) will continue and fearing the worst should any unexpected illness befall them as they lose their health insurance coverage.

As good as tax credits and new hiring incentives sound, they won’t immediately create or bring back jobs.  Corporations and businesses will not hire unless there is a demand for their products and services.  Tax credits are only good if they make a profit – if there is no profit, they won’t be paying taxes in the first place.

As concerned citizens, what can we do that will help turnaround the economy and will do so with an immediacy that the lawmakers can’t?  You might not think that as individuals, you’ll have much influence but you’d be wrong not to take into account the effect of critical mass – if there are enough of us who are prepared and willing to do something about it, WE can help turn the tide.

Starting with this holiday season, think “American” in all the things you buy and in the gifts you are planning for your friends and family.  Here’s a list of gift ideas that have a high American content and will help keep or create more American jobs:

• Tickets to Broadway and Off-Broadway or any local theatrical and orchestral productions.  Attend a “Messiah” concert to get into the holiday spirit and bring a friend with you.  The Arts are hurting as corporate donors slash costs that do not help with their bottom line and as individual donors are faced with real or possible unemployment.  
• Tickets on domestic airlines to domestic destinations for that winter break.  Airlines are very labor intensive (despite their automated reservation system) and they have the ability to quickly bring back capacity and jobs as demand increases.  Hotels, resorts and theme parks at your destination are also highly labor intensive and your patronage is a key driver.
• Gift baskets filled with domestic products (wines, cheeses, fruits, jellies, crackers, etc.).  It may be chic to have imported gift items but they don’t create American jobs to the same extent.  American products are world class and, in most cases, less expensive than imported ones.
• Gym / Sports Club Memberships.  Register yourself and your friends for a trial membership at a local gym or at a Yoga or Tai-Chi class.  If you like the experience enough (going with a friend always help), you might sign up for a more permanent membership.  These are again service oriented industries and quickly creates employment opportunities as class sizes are normally limited and each new class will require new instructors and support staff.  You’ll do yourself and your friend a world of good and you can work off the extra pounds from the many holiday parties and keep you fit for the challenges in the days and years ahead.  Think of your positive contribution towards reducing healthcare costs as well.
• Sign yourself and a friend up for a class to learn new culinary skills, a new language or pick up defensive driving credits.  You’ll be a better cook and you and your family will eat healthier OR you’ll be better qualified for jobs that look to exporting American goods and services to overseas markets with your new linguistic skills OR you’ll save a few bucks on your car insurance.
• Invite your friends from other countries to come visit America.  It is a beautiful country and there is so much to see and do and they can take advantage of the weaker dollar.  Sales taxes in America are very low compared to the VAT or GST levied in many countries.  Tourism is a big employer of labor and every direct job created has a multiplier effect, creating further (indirect) sales and jobs.

I’ve planted a few easy ideas on what you might do to help turn around the economy.  I’m sure that as you put your mind to it, there will be plenty more you can think of to add to the list.  The important thing is to ACT NOW and THINK AMERICAN.  Focus on the American Content factor (read my previous post) in what you consume and you will be instrumental in bringing jobs back the way your politicians can’t.

As I began to write this blog, I was reminded of a very short rhyme that I learned in grade school:

Little drops of water, little grains of sand

Makes the mighty ocean, and the pleasant land.

YES WE CAN MAKE A DIFFERENCE !!!  

Spread the word – share this blog with your friends.