Do Something. Now.

I’ve touched before on the issue of what I think, ultimately, will propel us out of The Great Recession. But I’d like to expand upon it a little more now. On the one hand I agree with those economists who have acknowledged that such measures as bank bailouts and the stimulus package have been essential to preventing a crisis from becoming a calamity, as well as those who have asserted that there is already evidence that these measures have succeeded in slowing the downturn and bringing us close to a bottom -- if, in fact, we aren’t there already.

But, on the other hand, I also believe that, in the final analysis, it isn’t really going to matter all that much what government does. Government interventions may jump-start the beginning of the next up cycle, but they won’t be the primary factor or “first cause.”

All this is based on the assumption that we will remain, fundamentally, a free country with an economic system based on reasonably free enterprise. I think the likelihood is extremely high that this assumption will hold true, in spite of the efforts of some conservative commentators to incite McCarthy-esque, anti-socialist paranoia. Notwithstanding what Rush Limbaugh might say, we’re not about to turn into the next Cuba. The checks and balances built into our system are working -- we can see the congress and the administration compromising when they find the may have strayed too far beyond the public consensus.

Taxes may increase, as may regulations. And this may indeed alter the “topography,” if you will, of the business playing field. But it won’t block access to the field. As long as we remain a free people, and as long as our spirits of ambition, self-reliance, enterprise, ingenuity, and inventiveness do not for some reason become broken or stifled, we will adjust to the new topography. We’re homo sapiens, after all, and Americans. So we have the ability to adapt to a changing environment.

Business Will Adapt to the Topography of the New Playing Field

In the same way that human beings likely emerged as a species in a hot tropical environment but successfully adapted to be able to succeed in diverse settings ranging from the Sahara Desert to Iceland, we Americans should be able to adapt to and prosper in whatever environment of reasonable taxation and regulation we end up with -- through the same inventiveness, ambition, and work ethic that have served us well thus far.

This won’t be the first time our economy has experienced basic structural changes that have altered the topography of the playing field. Changes occur all the time, and businesses and the individuals who lead and work in them will adjust to the new environment, as they have in the past.

Example One: The Two-Income Household

Examples? Well, in the years following World War II until, perhaps, the late 1970s, it was very possible for an average Joe to get an average job with a compensation level that would support a family reasonably well without the need for his wife to work. But as women increasingly entered the labor force the dynamics of the labor market changed.

In the early phases of the two-income, middle-class household phenomenon, the wife’s return to work was a way to substantially increase a family’s standard of living. But as the number of two-income families increased, the labor pool grew faster than the rate of available jobs, and the market moved gradually toward an equilibrium at which the average Joe or Jane could only earn about half of what it takes to sustain a middle-class lifestyle.

I would argue that, today, perhaps with a few exceptions in certain industries and occupations, a middle-class worker needs to rise to at least middle-management level to earn compensation sufficient to support a family as the sole wage earner. So for households in which neither spouse has yet achieved that rank, the second income is not an enhancement to the standard of living but a virtual necessity to enter the middle class.

This might not be the most positive example, but it shows how business adapt when the playing field changes. The labor supply expanded, so the true cost of labor went down -- simple supply and demand.

Example Two: The Impact of Taxes

I think taxation has a similar effect. The fact that we pay income taxes is factored into the hidden “formula” that sets wage levels. Do you really think that, if the federal income tax were eliminated tomorrow, your employer would continue paying you, indefinitely, as if you were still paying taxes?

I don’t think so. While you might experience a short-term windfall, eliminating taxes would simply create a basic structural change in the cost of labor, and market forces would adjust your real compensation gradually to return you to about the same level of net purchasing power, through such means as reduced annual increases and reduced ability to negotiate higher salaries for in-house promotions or moves to other employers.

For businesses to keep nominal compensation the same if employees were no longer paying taxes would be patently irrational. This is why I believe that, in much of our political debate, taxes are little more than a rhetorical bogeyman.

The same would hold for increased taxes on businesses or on wealthy business owners, who, again, would eventually pass on their increased tax costs in the form of higher prices or, yes, even job cuts. In reaction to both of these responses to tax increases, the market would return to a new equilibrium. Increased prices, for example, would place more upward pressure on wages, while job cuts would provide other businesses with the opportunity to benefit from the talents of displaced workers.

Indeed, if market forces are as strong as those on the unconditional laissez-faire side of the equation insist that they are, one might wonder what the fuss over taxation is really all about. If the invisible hand always prevails, the system should be able to adjust to a new equilibrium no matter what government does, short of extremely draconian, fascistic restrictions on business activity or extremely high, confiscatory tax levels -- neither of which is likely in this country, at least under current conditions.

The Response to Crisis Generates Energy -- And Value

The illustrations I’ve offered here are rather lengthy, but the underlying principle of the ability of business to adapt brings me back to my basic premise. The current crisis has already changed the economic playing field in this country. And the playing field would have changed with our without the significant government intervention we have seen. Pain has been inflicted upon many in the process, both in terms of businesses and individuals.

But this pain, these challenges, can also be looked at as an infusion of energy, like an injection of strong medicine that initially causes pain to a patient from the needle prick, and perhaps some queasiness as the drug enters the bloodstream. Nevertheless, the medicine will ultimately do its good work. And those who have suffered setbacks may find themselves more motivated than ever to take actions that will improve their situation and improve their ability to withstand a future crisis.

It’s a cliché, but I’ll say it anyway: a time of crisis is a time of opportunity for those willing to say “No!” to the temptation to sit around and stew, for those willing to, instead, get off their butts and do something. Maybe it’s a career change. Maybe it’s starting a new business. Maybe it’s making painful decisions about whether to unload the McMansion at a substantially-reduced, post-bubble price and downsize to a more modest -- and perhaps more realistic and sustainable -- lifestyle.

But what all of these responses to crisis have in common is that they are all actions. And we know from physics that every action creates an equal and opposite reaction. These acts of “doing something” will create ripples of energy in the economy, and this energy will eventually show up somewhere as added value. One person’s “fire-sale” on their McMansion becomes someone else’s bargain investment that will eventually produce a return in terms of an enhanced standard of living, rental income, or a capital gain after the market turns around. One company’s layoff of a mid-level manager may mark the birth of a new entrepreneurial venture, successful freelance career, or unexpected and positively life-altering occupational change.

In the aggregate, these ripples of energy, created in the course of one “decision to do something” at a time, will have a tremendous impact. It is ultimately this energy, rather than stimulus packages or centrally planned systemic overhauls, that will drive the next up cycle.

So do something. Now. Don’t sit around and mope about multi-trillion dollar deficits or whether healthcare reform will lead to higher taxes and unfunded liabilities. Don’t focus so much on what the dueling pundits are saying. Instead, do some creative thinking about what next move might work best for you, and give it your best effort.

It won’t be easy, and there are no guarantees of immediate success. There are, after all, and however sadly, no guarantees for any of us in this journey of life. But at a minimum the effort will generate “psychic income,” as a learning experience that will leave you stronger and better prepared for whatever it is that life has in store for you next. And although it might take a while, with sustained effort you have a good chance of ending up in a place you’ll like better than where you were before. Sphere: Related Content

Insisting on a Better Way

It is surely no coincidence that, during the past several weeks, when the healthcare reform effort has been reaching a critical point, the voices of opposition against the Obama administration's economic policies have grown increasingly shrill.

On the other hand, it is a pleasant coincidence that, as we near Father's Day, some of my primary illustrations of the theme of this post come from a couple of stories my father told me long ago.

The first story was about how my grandfather reacted when the first motion pictures with sound ever came out. People called them "Talkies," at least in the small New Hampshire town where Dad was born and raised, to distinguish them from the silent movies of the day. My grandfather, according to Dad, characterized Talkies as a fad that would never last.

Far be it from me to poke fun at my late grandfather for this. He was a man of his times. And a man of his environment.

That environment is illustrated vividly by the second of my father's stories that came to mind as I formulated this post. The town that was home to my father and grandfather was the same place where, at a town hall meeting, when the topic of improving the literacy of local students was being discussed, an elderly citizen stood up and said "I don't believe in readin'. Readin' rots the mind." This is of course a very narrow view by a more contemporary and cosmopolitan standard, but it was a view that represented a pattern of thinking that has not been uncommon in certain places and times.

Let's be grateful that there have always been people who, even if they're usually in the minority, have been more open and imaginative in their thinking -- people, in other words, who insisted that there must be a better way. What would cinema be today if everyone had shared my grandfather's opinion of Talkies? And what would our entire society, let alone our educational system, look like if everyone shared the opinion of the elderly gentleman at the town hall meeting?

How does this relate to the healthcare reform debate? Well, it hit home for me during the first hour of All Things Considered on NPR today. I heard a teaser on a story that, as I write, may not yet have even aired. It featured interviews with physicians from Howard County, Maryland, on the subject of healthcare costs.

In a brief sound bite, one of the docs was talking in plaintive tones about the countless hours that are wasted on such bureaucratic processes as filling out forms, verifying insurance coverage, and so on, implying that costs could be reduced drastically if only we could make better use of all the modern technologies and resources at our disposal to make the process of managing healthcare more efficient.

So far, our wonderful, privately managed, competitive healthcare system hasn't accomplished that efficiency.

The real question, when you cut through all the partisan rhetoric, and through the squeals of interest groups who feel that the government is about to take away the fat slice chocolate cake they've grown used to having after every meal, is "how can we find away to do this better?"

If we engage in "readin' rots the mind" or "Talkies are a fad" thinking, we get to the kind of rhetoric we're hearing now -- "ObamaCare will bankrupt the country and destroy the best healthcare system in the world"; or "the system is so hopelessly broken that there's no fixing it"; or "government is incapable of making anything better and more efficient"; or "we'll end up with the nightmare scenarios of endless waiting lists for surgeries, rationing, and denials of treatment that you see in Canada and the UK."

Behind all that rhetoric, basically, is the kind of "it can't be done" thinking that hinders progress. It's like saying, before television, that "it's impossible to send pictures through the air." And it also reminds me of something that was said by an old-school mainframe programmer who worked for an organization where I used to work. His opinion in the early stages of an effort to migrate our content management system from mainframes to PCs was that "it can't be done."

The destructiveness of this kind of thinking is self-evident. And perhaps, unfortunately, there may even be a trace of it in the approach of compromise that Congress and the administration feel they have had to adopt in conceding that single-payer is off the table. The administration, in other words, should perhaps be doing a better job at articulating the message of "there must be a better way" to deliver healthcare to U.S. citizens, and the message that, even though our current, flawed system may indeed be the best in the world, at least in terms of creating innovative treatments, it doesn't mean that it can't be made better.

There must be a better way. That's the message that President Kennedy so successfully conveyed to the people in rallying support for the effort to land a man on the moon. And perhaps that's the message that President Obama should be articulating on healthcare reform. What if there's a way to still allow doctors, health insurers, and other healthcare professionals to be reasonably compensated, and to insure all Americans and give them fair and equal access to the best available treatments, without the need to put the private healthcare industry out of business?

The simplistic rhetoric we're hearing is all of the "either, or" variety -- public OR private; capitalist OR socialist; free market OR government-run. But those who are squealing loudest are likely to be those who have the most to lose. It's the same pattern that occurs in the "not in my backyard" reaction to certain public service projects, or the "don't cut my pork-barrel project" reaction to government budget cuts.

But the real issues aren't about any of that. It's all about finding a better way, about insisting that there is a better way. We need "we're going to put a man on the moon in 10 years" thinking here, not "reading rots the mind" or "Talkies are a fad" thinking.

Are Congress and the administration compromising too much, or not thinking boldly enough? Perhaps at this stage the best we can hope for in the near term is a baby step of progress. But if that's the case, let's not take our eyes off the long-term aspiration for a better way.

I'm glad that my father, in spite of a tendency in his home town to look at things from a rather narrow perspective, was someone who realized that there must be a better way to live, and got himself an education and allowed his life to take on broader horizons, both geographically and intellectually, enabling me to have a life much richer in possibilities.

Let's take a lesson from that model and from everyone else who understands the value of insisting on a better way, and apply it to our thinking and decision making on healthcare reform, and to the feedback and criticism we provide to the elected officials who are currently engaging in the debate.

And Happy Father's Day, Dad. Sphere: Related Content

Doyle Does it Again with Disingenuous Disinformation

Another Saturday night, another rebroadcast of The Jerry Doyle Show. I have to admit: as much as I might disagree with much of his politics, Jerry Doyle might just be the smartest person in talk radio today.

He’s highly articulate and urbane, and refrains from the simpleminded name calling and other cheap tactics of some of his conservative peers like Rush Limbaugh and Sean Hannity. He seems to draw callers who are more sophisticated and well spoken. And he doesn’t shout.

Doyle often cites persuasive facts and figures to back up his claims, even though he often uses them in ways that seem subtly misleading and out-of-context. He puts impressive, expert talking heads on the air to serve as seemingly credible supporters of his viewpoints. It may be lost on much of the audience that these guests may not represent a preponderance of opinion in their fields or may be affiliated with institutions that represent only a one-sided view of complex issues.

During the broadcast I caught yesterday, Doyle was commenting on a recent commencement speech from President Obama. Doyle focused on sound bites from the speech about “a poverty of ambition” that the President said has characterized the most recent chapter of U.S. history, which closed with the beginning of the current economic crisis. These ambitions, according to the President, were fueled by excessive self-interest, self-enrichment for its own sake and by any means, and superficial, status-oriented aspirations such as having the fanciest corner office.

Predictably, Doyle interpreted these statements as socialistic, anti-capitalist, and representative of a direction American attitudes that, to Doyle, is frightening. In Doyle’s interpretation, the President was attacking the self-interest that is the very fuel of capitalism, the driver of great inventions and industries. He went on to assert that the speech was just another example of the President acting as a puppet for the far left, advocating the surrender of all personal ambition in favor of ever-expanding government, all in the name of “public service.”

I find Doyle’s interpretation disingenuous. There is nothing, per se, anti-business, anti-capitalist, or even particularly “anti-ambition” about the President’s comments. In fact, I would even argue that Doyle’s interpretation depends on a fundamental error in “parsing” the phrase “a poverty of ambition.”

For Doyle, the interpretation seems to be that the President’s phrase “a poverty of ambition” is equivalent to “ambition equals poverty,” or that Obama was suggesting that ambition, as a human motivation, is impoverished in some absolute sense.

I submit, however, that the more accurate interpretation, based not only on the context in which Obama used the phrase but also on the content of the phrase itself, is that the President was referring to an impoverished form of ambition: one that pursues personal gain purely for its own sake, and by any means; that condones self-interest at the expense of others; and that seeks the reward of a superficial status defined solely in material terms, rather than striving for achievements that have the virtue of also benefiting others.

By speaking of a poverty of ambition, the President was asking the students to aspire to a higher standard, one that allows for individual gain while also benefiting society as a whole. This, in my view, is in no way incompatible with capitalism.

While monetary gain is a key incentive to innovate in business and industry, it is not the only one. The true innovators of the world are passionate about what they do and, while money is an important motivator, so, too, is the intrinsic reward of work that produces something of quality, to the benefit of society as well as the innovator.

A higher form of ambition is one that drove, for example, a Henry Ford to invent an industry that revolutionized personal transportation and created a new level of mobility for the common man. Or a Steve Jobs, who has criticized Microsoft for building “so little culture” into their products, to infuse elegance and ease of use into desktop operating systems.

An impoverished form of ambition, on the other hand, is one that drives an investment bank to recklessly trade risky, overly leveraged securities that have the potential to bring down an entire economy, or a CEO of a failing company to move forward with a seven-figure renovation to his corner office.

The case for my interpretation can be supported on a purely linguistic basis. To be correct, Doyle’s interpretation would require the phrase to have been “the poverty of ambition. But the President said “a poverty of ambition,” which can mean one of two things: (1) an impoverished form of ambition, as I have argued here, or (2) a poverty consisting of a lack of true ambition. Either one of these interpretations is in opposition to Doyle’s.

Should we give Doyle the benefit of the doubt and assume he simply erred in his grammatical perception? But if that’s the case, maybe he’s not the smartest person in talk radio after all. Sphere: Related Content