President Trump: The 5 Reasons You Are Not A Disruptive Leader And Instead Create Chaos

President Trump: The 5 Reasons You Are Not A Disruptive Leader And Instead Create Chaos

The news was filled this week with stories about President Trump’s “unorthodox” management style. From tweeting his thoughts on replacing Attorney General Jeff Sessions, to tweeting his multiple positions on healthcare law changes, to hiring a new communications director who lets loose with expletive-laden rants, people have been left questioning what sort of leadership style President Trump is trying to display.

Donald Trump promised to be a “disruptive leader”

Donald Trump ran for office as an outsider who pledged to disrupt Washington politics.  This was a message well received by many people.  They felt that “business as usual” in national politics was not serving them well, so they wanted change.  To them a disruptor could find a way to steer national politics back onto a course that was more aligned with the conservative middle Americans.  These voters felt that a businessman entrepreneur just might be the kind of leader who could disrupt the status quo in order to get something done for them.

Trump wins, Steve Sack, orange explosion

Unfortunately, things have not worked out that way.  And largely this can be traced to the leadership style of President Trump.  Rather than a dedicated disruptor, ready to implement change, President Trump has proven to be a chaos generator that has stymied progress on pretty nearly all issues.  Disruptions can lead to positive change.  Chaos leads to stagnation and degradation as the system searches for homeostasis and a path forward.

From early age, we are taught not to be disruptive.  Disrupting someone during school, religious ceremonies, entertainment events leads to distractions and an inability to remain focused on the goal.  Thus, we are mostly taught to listen, learn and do what we’re told.  However, we also recognize there is a time to be disruptive, because the act of intervening in the process at times can lead to far more positive outcomes than maintaining the course.

But it takes good judgement, and reasoned action, to be a positive disruptive influence.  If you are in a crowded theater and you recognize a blaze it is time to disrupt the stage presentation.  But you have a choice.  If you jump up and yell “fire” you will create chaos.  Everyone suddenly realizes a problem, but with no idea how to deal with it a thousand different solutions emerge simultaneously.  Everyone starts looking out for their own interest, and they trample those around them in an effort to implement their own plans.  Many people get hurt, and frequently the goal of saving everyone by disrupting the presentation is lost in carnage created by the bad disruption leading to chaos.

What is successful disruptive leadership?

So, if you sense a pending fire you are far smarter to develop a plan, such as activating the evacuation notices and opening the exits, prior to making an alert.  And then, instead of yelling “fire” you say to folks “an issue has developed, please make your way down the evacuation routes to the open exits while we deal with the situation.  Please remain calm so everyone can exit safely.”  Your disruption can lead to successful outcome, rather than chaos.

I’ve spent over 20 years focusing on how disruptions can lead to positive change.  And it is clear that with disruptive innovations, and disruptive business models, their success relies on leaders that understand how to implement disruptions effectively.  Leadership matters.

Disruptive leaders think very hard about their desired outcomes, and they go to great lengths to describe what those future, better outcomes will look like.  They then create a plan of action before they do anything.  While the innovation might well be known, they are very, very careful to think through how that innovation will be adopted, then nurtured to gain acceptance and hopefully become mainstream.  These leaders are very careful about their language choices, and where they communicate, in order to encourage people to accept their vision and join with their plan.  They seek adoption rather than confrontation, and they discuss the desired outcomes rather than the disruption itself.  They gain trust and build a consensus for change, and then they systematically roll out their plan, which they adjust as necessary to meet unexpected market conditions.  They gradually move people along the implementation route by relentlessly focusing on the better outcome and reducing the fear inherent in accepting the disruption.

Five ways Donald Trump fails as a successful disruptive leader:

  1. The President has not portrayed a superior outcome which he can use to rally people to his viewpoint.  Despite talking about “making America great again” there is no picture of what that looks like.  What is this future “great” America he envisions and wants us to buy into?  What are the poor outcomes of today that he will greatly improve, leading to vastly superior future outcomes?  Without a clear description of the future, it is hard to gain supporters.  For example, will changes in health care improve care?  Lower the cost? What are the benefits, the better outcomes, of change?  What is the benefit of replacing the sitting attorney general?
  2. The President has not laid out his plan for bringing people on board to his future. Look at the recent effort to implement new health care legislation. At times the President has said there is a need to repeal current legislation and replace it, but he has offered no description of what the replacement should look like.  At other times he has said to repeal current legislation, but he has offered no insight into how that would lead to better outcomes than the current legislation provides.  At yet other times he has said to do nothing, and he expressed his hope that current legislation would fail even though he admitted this would lead to an outcome far worse than the status quo.  By not creating a plan, and bringing people on board to his plan, he has created chaos in the legislative process.
  3. President’s Trumps messages are built on negative language, not positive language about the future. His messages are long on how some person or current situation is weak, rather than explaining what a strong future would look like. He frequently attacks his predecessor, or his former electoral opponent, but does little to say what is good about his Presidency or recommendations or what he is specifically going to do that will create better outcomes.  He frequently talks about firing people in his administration, but talks little about the specifics of what good work people in his administration are doing.  These language choices are exclusive, not inclusive, and they create chaos among those who work in his administration, and members of Congress.  Instead of understanding the President’s goals and objectives people are wondering “what will he say next?”  And by appointing a communications director who uses outrageous, unacceptable and incendiary language he further exacerbates the problem of everyone losing any insight to his message because we are stunned and amazed at the choice of language.
  4. President Trump has the ability to communicate from the most Presidential locations. He can provide TV, radio and internet addresses from the oval office, or the White House platform. He can invite media in for press conferences or interviews to discuss his goals and ambitions, plans and pending decisions.  Or he can make himself, or his staff, available for press interviews.  And while he does some of this, we all spend every day wondering what Tweet he will send over the Twitter social network next.  Several million people use Twitter. It is for social exchange.  For the President to announce policy positions (such as banning transgenders from military service) or evaluations of key subordinates (such as referring to the attorney general as weak) or military policy (such as opining on the potential retribution toward North Korea) via Twitter belies the nature of the office and his role.  His selection of communication venues only serves to make his comments less valuable, rather than more important.
  5. President Trump neither remains consistent in his communications, nor does he exert loyalty. Changes on health care and denouncing his own staff does not create trust. How are people in the legislature, regulatory agencies or military going to become advocates for his goals when they don’t know if he can be trusted to support their actions, or support them as employees?  If you want people to take a different course of action, to let go of the status quo, they have to trust you.  Disruptive leaders time and again must state their positions with clarity and demonstrate support for those who do their best to promote the disruptive agenda.  They battle fear of the future with clarity around their support for future outcomes those who help describe how the future will be better.

There are times for disruptive leadership.  Status quo models become outdated, and outcomes decline as a result.  Change offers the opportunity for better outcomes, and helping people migrate to new innovations helps them toward a better future.  But implementing innovation and change requires skill at being a disruptive leader.  If the process is bungled, you can look like the guy who started a deadly rampage by yelling “fire” when a more reasoned approach would have prevailed.  If you don’t follow the best practices of disruptive leadership, you will create chaos.

Obama’s Trifecta – Democrats Continue Economically Trouncing Republicans

Obama’s Trifecta – Democrats Continue Economically Trouncing Republicans

This week marks the 6th anniversary of the stock market’s bull run, with the S&P up 206%.  Only 3 other times since WWII have equities had such a prolonged, sustained growth series.  Simultaneously, last week saw yet another month with over 200,000 non-farm jobs created, making the current rate of jobs growth the best in 15 years.  And, in a move that has taken some by surprise, the U.S. dollar is hitting highs against foreign currencies that have not been seen in over 12 years.

It is a rare economic trifecta, and demonstrates America is doing better than all other developed countries.

It seemed an appropriate time to re-interview Bob Deitrick, Managing Director of Polaris Financial Partners, and author of “Bulls, Bears and the Ballot Box” to obtain his take on the economy.  Mr. Deitrick’s book reviewed America’s economic performance under each President since the creation of the Federal Reserve, and in direct opposition to conventional wisdom concluded presidents from the Democratic party were better economic stewards than Republican presidents.  When published in 2012 Mr. Deitrick predicted that the economy would continue to do well under President Obama, and so far he’s been proven correct.

SP500 - March to March

AH: Since we discussed “Obama’s Miracle Market” in January, 2014 stocks have continued to rise.  Has this bull run surprised you, and do you think it will continue?

Bob Deitrick: No it has not surprised us.  Looking across  history since Hoover, Democrats in the White House have generally presided over good stock market gains.  Since Clinton was elected, Democratic administrations have done remarkably well, with both Clinton and Obama outperforming the best Republican presidents which were Eisenhower and Reagan.

Looking at the S&P 500, Clinton and Obama have performed about the same with about a 17% annual rate of return through the first 62 months of office.  Which is 70% better than the approximate 10% return of Republicans.

Avg Annual Compound Return on Equities

It is worth noting that when we take a broader gauge of equities (which we used in the book,) including the more volatile NASDAQ index and the highly selective Dow Jones Industrial Average, then the market’s performance during the Obama administration is unchallenged.  The last 6 years generated compound annual returns of 22.5% (including dividend reinvestment) which is the best improvement in equities of all time.

It is also worth noting that the collapse of equities has happened 3 times since 1900, and all under Republican administrations – Hoover, Nixon/Ford, Bush 43.  Even Carter had a rising equities market, and the Clinton + Obama years were unparalleled.

We agree with many other analysts that this bull market is not complete.  We think the stock markets are only at the half way point in a secular bull cycle which will last, in total, 8 to 12 years.

AH: It was 6 months ago when you pointed out that President Obama outperformed President Reagan on jobs growth.  At that time there were many, many naysayers.  Yet, August’s numbers were later revised upward to over 200,000 and every month since has continued with strong jobs growth – some nearly 300,000.  Are you surprised by the strength in jobs creation, and do you think it will stall?

Bob Deitrick: Both Reagan and Obama inherited a bad jobs marketplace.  Both of them saw unemployment spike into double digits early in their presidencies.  And both created jobs programs that brought down the percentage of people unemployed.  Obama had a lesser spike than Reagan, and during the last 5 years unemployment rate fell faster than it did under Reagan.

Unemployment RateBoth Democrats, Obama and Clinton, had big decreases in unemployment due to their policies.  From peak to trough in this current administration unemployment has fallen by 5.5 percentage points, a decline of 81%.  Clinton oversaw unemployment decline of 3.1 percentage points, or 73%.  Both Democrats followed Bush Republican presidencies which had seen unemployment increase!  During Bush 41 unemployment rose by 2 percentage points (5.4% to 7.3%,) and during Bush 43 unemployment nearly doubled from 4.2% to 8.3%.  Not even the Carter presidency had unemployment increases anywhere close to the 12 years of Bush presidency.

It is also worth noting that when comparing Obama and Reagan, Reagan undertook the largest increase in non-wartime deficit spending ever.  He essentially used a form of “New Deal” debt spending on infrastructure and defense to stimulate jobs production.  President Obama has been able to reduce the size of the annual deficit every year since taking office, in reality shrinking the amount of money spent by the government while simultaneously creating these new jobs.  The only other president to accomplish this feat was Clinton, who actually balanced the budget during his presidency.

We believe the economy is very strong, and along with other analysts think the jobs recovery will remain intact.  With less war spending, lower oil prices, more people covered by insurance, and higher minimum wages consumers will continue to spend and the economy will grow.  New technology products will bring more people into the workforce, and manufacturing will continue its renaissance.  We expect that unemployment will continue falling toward 4.4% by summer of 2016, returning the economy to non-wartime full employment.

AH: For years many talk show hosts and guests have been declaring that the Fed was flooding the markets with cash and setting the stage for rampant inflation which would ruin the dollar and the U.S. economy.  But in the last few months the dollar has rallied to rates we haven’t seen since the 1990s.  Did this surprise you, and do you think the dollar will remain strong?

Bob Deitrick: We were not surprised.  Ben Bernanke ranks right up there with the first ever Federal Reserve Chairman Marriner Eccles at knowing what to do to keep the American economy from collapsing in the wake of the country’s second depression.  Only by re-inflating the economy with more cash, and keeping interest rates low, did America avoid a horrible repeat of the 1930s.

Dollar

As a result of Democratic policies America re-invested in growth, which allowed companies to invest in plant and equipment and create new jobs, while lowering the deficit.  This happened simultaneously with opposite policies being implemented in Europe and Japan (so called “austerity”) which has caused their economies to weaken.  And slowed demand from Europe has reduced growth rates in China and India, all leading global investors to return to the U.S. dollar as a safe haven.  It is because of our economic strength that the dollar is returning to rates we have not seen since the Clinton presidency.

US Dollar Value

Many people recall the huge increase in the dollar’s value toward the middle of the Reagan presidency.  However, as the U.S. deficits, and total debt, skyrocketed the dollar plummeted.  By the time Reagan left office the dollar was worth almost the same as when he entered office.

And the combination of lower taxes plus costs for waging war in the middle east sent the U.S. debt exploding again under Bush 43.  What had been a balanced budget under Clinton, which had pushed the dollar almost back to post-war highs, was destroyed causing the dollar to plummet 25%.

The dollar is now up 21% against a basket of world currencies.  Given ongoing European weakness and the never-ending fight over austerity we see no reason to think the Euro will make a comeback any time soon. Rather, we predict the strong U.S. economy, especially with oil prices likely to remain low (and priced in dollars,) the U.S. dollar will continue to rally.  It could well go back to Clinton-era highs and possibly approach the values during Reagan’s presidency.  Should this happen it would be a record improvement in the dollar by any modern administration.

AH: Any concluding comments?

Bob Deitrick: I have voted for both Republicans and Democrats, and think of myself as a centrist.  Most people, by definition, are centrists.  I long believed that the GOP was the party which was best for the economy.  But I could tell something wasn’t adding up during the Bush 43 presidency, so I chose to research the performance of both parties.

The GOP has created an illusion that it is a better economic steward by promoting itself as the party with the better business acumen, frequently touting elected officials from business schools and with MBAs rather than law degrees.  The GOP, and the media leaders who identify with the GOP, tell Americans every chance they can that Republicans are the party of financial acuity and have the policies to create economic prowess.  Yet we found through our research that these claims were little more than myth.  In the modern era, post Great Depression and with a strong Federal Reserve in place, Democratic administrations have been far better stewards of the economy and caretakers of the government’s wallet.

We have coached investors to be in this equity market, and remain long, since early in the Obama administration.  We have continued to remain long, and coach investors that in our opinion this remains the best course.  We see the economy growing due to a balanced approach to jobs creation, spending and taxation. Were there less partisanship, such as occurred during the Reagan era when the Democrat party controlled the Congress while Republicans controlled the administration, it might be possible for the economy to grow even more quickly.

Will Obama’s Presidential Legacy Be Ruined by a Website?

Will Obama’s Presidential Legacy Be Ruined by a Website?

“A horse, a horse, my Kingdom for a Horse” King Richard cried out just before he was murdered (Richard III by Billy Shakespeare ~ 1592.)

King Richard of England was really, really unpopular.  He was accused of ascending to the throne via various Michiavellian behaviors.  Eventually he was trapped on the battlefield by his enemies, his horse was slain, and he uttered the above line – metaphorically begging for a way out of the trapped world that was his kingdom.  He didn’t get the horse – and he died.

After over 20 years of fighting about health care the U.S. Congress passed the Affordable Care Act and the President signed it into law in 2010. About the only agreement in the country was that the ACA appealed to almost no one due to the compromises required to get it passed.  It was fought by wide ranging constituencies, until in 2012 the Supreme Court upheld the law.

But not even that was the end of the fight, because in October, 2013 Congress shut down the government as groups fought about whether the act would receive any funding to implement its own provisions.  Eventually an agreement was reached, the government re-opened, and it looked like the ACA was going into practice.

Oh, but wait…

In today’s world everyone uses the internet.  Face-to-face meetings are largely gone, and forests by the score are being saved as we refuse to use paper when a digital screen will accomplish our tasks.  So it only made sense that when the U.S. population was to sign up for the benefits of this new law they would do so on the World Wide Web.

Folks would buy health insurance just like they buy books and clothes, and download movies, from a web site.  Billions of transactions have happened over the web the last decade.  Why, Google alone does over 5 billion searches each and every day.  So it seemed easily practical, and doable, for implementation to be as easy as opening a new web site.  We all expected that come November we’d simply hit the search button, go to the web site, price out the options and make our health insurance decisions.

Of course we all know how that worked out.  Or didn’t.  The site didn’t work for spit.  Apple may be able to track about a million apps on its site, and it seems able to deliver about 4 million per day at an average price of about a buck.  But the U.S. government web site – after spending over $400million (maybe even $1B) – couldn’t seem to process but a few thousand applications a day.  So Congressional hearings started – cries for firing Secretary Sebelius rang out – and President Obama’s favorability plummeted faster than the failed effort messages came up in browsers at Healthcare.gov.

You could almost hear the President on the steps of the White House “A web site, a working web site, my Presidency for a working web site.”

There was a Chicago mayor who lost an election because he couldn’t clear the streets of snow.  Something as simple as removing snow in a 1979 blizzard overtook everything Mayor Bilandic’s administration did, and wanted to do, for his great city.  When Chicagoans couldn’t access their streets for 3 days they “threw the bastard out” by electing a new candidate (Jane Byrne) in the next primary – and she went on to be the next mayor.

And the only thing anyone remembers about Mayor Bilandic was he didn’t get the snow off the streets.

This lesson is not lost on any local mayor.  You can have grand plans, and vision, but if you can’t keep the streets clean you get thrown out.

We’ve entered a new era of political expectations.  Citizens now expect their politicians to build and operate functional web sites.  They expect their government to do as least as good a job as private industry at everything digital.  And if politicians, or administrators, flub a web implementation it can have signficant, damaging implications.

Failure to build a functional web site, meeting the average person’s expectations, is a terrible, terrible falure these days.  Perhaps enough to lose the voters’ trust.  Perhaps enough to breath new life into those who want to overturn your “landmark legislation.”  And perhaps enough to kill your place in history.

 

What Global Warming and the U.S. Government Shutdown Have in Common

Last week we learned that there is no doubt, the world is warming.  A U.N. report affirmed by some 1,000 scientists asserted 95% confidence as to the likely outcomes, as well as the cause.  We must expect more volatility in weather, and that the oceans will continue rising. 

Yet, most people really could have cared less.  And a vocal minority still clings to the notion that because the prior decade saw a slower heating, perhaps this will all just go away.

Incredibly, for those of us who don't live and work in Florida, there was CNN news footage of daily flooding in Miami's streets due to current sea levels which have risen over last 50 years.  Given that we can now predict the oceans will rise between 1 and 6 feet in the next 50 years, it is possible to map the large areas of Miami streets which are certain to be flooded

There is just no escaping the fact that the long-term trend of global warming will have a remarkable impact on everyone.  It will affect transportation, living locations, working locations, electricity generation and distribution, agriculture production, textile production – everything will be affected.  And because it is happening so slowly, we actually can do lots of modeling about what will happen.

Yet, I never hear any business leaders talk about how they are planning for global warning.  No comments about how they are making changes to keep their business successful.  Nor comments about the new opportunities this will create.  Even though the long-term impacts will be substantial, the weather and how it affects us is treated like the status quo.

What does this have in common with the government shutdown

America has known for decades that its healthcare system was dysfunctional; to be polite.  It was incredibly expensive (by all standards) and yet had no better outcomes for citizens than other modern countries.  For over 20 years efforts were attempted to restructure health care.  Yet as the morass of regulations ballooned, there was no effective overhaul that addressed basic problems built into the system.  Costs continued to soar, and more people joined the ranks of those without health care, while other families were bankrupted by illness.

Finally, amidst enormous debate, the Affordable Care Act was passed.  Despite wide ranging opinions from medical doctors, nurses, hospital and clinic administrators, patient advocacy groups, pharmaceutical companies, medical device companies and insurance companies (to name just some of those with a vested interest and loud, competing, viewpoints) Congress passed the Affordable Care Act which the President signed. 

Like most such things in America, almost nobody was happy.  No one got what they wanted.  It was one of those enormous, uniquely American, compromises.  So, like unhappy people do in America, we sued!  And it took a few years before finally the Supreme Court ruled that the legislation was constitutional.   The Affordable Care Act would be law.

But, people remain who simply do not want to accept the need for health care change.  So, in a last ditch effort to preserve the status quo, they are basically trying to kidnap the government budget process and hold it hostage until they get their way.  They have no alternative plan to replace the Affordable Care Act.  They simply want to stop it from moving forward.

What global warming and the government shut down have in common are:

  • Very long-term problems
  • No quick solution for the problem
  • No easy solution for the problem
  • If you do nothing about the problem today, you have no immediate calamity
  • Doing anything about the problem affects almost everyone
  • Doing anything causes serious change

So, in both cases, people have emerged as the Status Quo Police.  They take on the role of stopping change.  They will do pretty much anything to defend & extend the status quo:

  • Ignore data that is contradictory to the best analytical views
  • Claim that small probability outcomes (that change may not be necessary) justifies doing nothing
  • Delay, delay, delay taking any action until a disaster requires action
  • Constantly claim that the cost of change is not justified
  • Claim that the short-term impact of change is more deleterious than the long-term benefits
  • Assume that the status quo will somehow resolve itself favorably – with no supporting evidence or analysis
  • Undertake any action that preserves the status quo
  • Threaten a "scorched earth policy" (that they will create big, immediate problems if forced to change the status quo)

The earth is going to become warmer.  The oceans will rise, and other changes will happen.  If you don't incorporate this in your plans, and take action, you can expect this trend will harm you. 

U.S. health care is going to be reformed.  How it will happen is just starting.  How it will evolve is still unclear.  Those who create various scenarios in their plans to prepare for this change will benefit.  Those who do nothing, hoping it goes away, will find themselves struggling.

The Status Quo Police, trying their best to encourage people to ignore the need for change – the major, important trends – are helping nobody.  By trying to preserve the status quo they inhibit effective planning, and action, to prepare for a different (better) future.

Does your organization have Status Quo Police?  Are their functions, groups or individuals who are driven to defend and extend the status quo – even in the face of trends that demonstrate change is necessary? Can they stop conversations around substantial change?   Are they allowed to stop future planning for scenarios that are very different from the past?  Can they enforce cultural norms that stop considering new alternatives?  Can they control resources resulting in less innovation and change? 

Let's learn from these 2 big issues.  Change is inevitable.  It is even necessary.  Trying to preserve the status quo is costly, and inhibits taking long-term effective action.  Status Quo Police are obstructionists who keep us from facing, and solving, difficult problems.  They don't help our organizations create a new, more successful future.  Only by overcoming them can we reach our full potential, and create opportunities out of change.

 

It’s About the Economy, Stupid – Lessons from the election


Summary:

  • Voters whipsawed from throwing out the Republicans 2 year ago to throwing out Democrats this election
  • Americans are frustrated by a no-growth economy
  • Recent government programs have been ineffective at stimulating growth, despite horrific expense
  • Lost manufacturing/industrial jobs will never return
  • America needs new government programs designed to create information-era jobs
  • Education, R&D, Product Development and Innovation investment programs are desperately needed

“It’s the Economy, Stupid” was the driving theme used during Bill Clinton’s winning 1992 Presidential campaign.  Following the dramatic changes produced in Tuesday’s American elections, this refrain seems as applicable as ever.  Two years ago Americans changed leadership in the Presidency, Congress and the Senate out of disgust with the financial crisis and lousy economy.  Now, Congress has shifted back the other direction – and the Senate came close – for ostensibly the same, ongoing reason. What seems pretty clear is that Americans are upset about their economy – and in particular they are worried about jobs and incomes.

So why can’t the politicians seem to get it right?  After all, economic improvement allowed Bill Clinton to retain the Presidency in 1996.  If smart politicians know that Americans are “voting with their pocketbooks” these days, you’d think they would be doing things to improve the economy and jobs.  Wasn’t that what the big big bailouts and government spending programs of the last 4 years were supposed to do? 

What we can now see, however, is that programs which worked for FDR, or Ronald Reagan and other politicians in the late 1900s aren’t working these days.  Everything from Great Depression Keynesians to Depression retreading Chicago School monatarists to Laffer Curve idealists have offered up and applied programs the last 8 years intended to stimulate growth.  But so far, the needle simply hasn’t moved.  Recognizing that the economy is sick, looking at the symptoms of weak jobs and high unemployment, could it be that the country’s leaders are trying to apply old medicine when the illness has substantially changed? 

What’s missed by so many Americans today – populace and politicians – is that the 2010 economy is nothing like that of the 1940s; and bares little resemblance to the economy as recently as the 1990s.  Scan these interesting facts reported by BusinessInsider.com:

These lost jobs are NEVER coming back.  The American economy has fundamentally shifted, and it will never go back to the way it was.  Clocks don’t run backward. 

In 1910 90% of Americans were working in agriculture.  By 1970 that proportion had dropped to 10%.  Had American policy in the last century remained fixated on protecting farming jobs the country would have failed.  Only by shifting to industrialization (manufacturing) was America able to continue its growth – and create all those new industrial jobs.  Now American policy has to shift again if it wants to start creating new jobs.  We have to create information-era jobs.

But government programs applied the last 12 years were all retreaded industrial era ideas (implemented by Boomer-era leaders educated in those programs.)  They were intended to grow industrial jobs by spurring supply and demand for “things.”  Lower interest rates were intended to increase manufacturing investment and generate more supply at lower cost.  These jobs were expected to create more service jobs (retailers, schools, plumbers, etc.) supporting the manufacturing worker.  But today, supply isn’t coming from America.  Nobody is going to build a manufacturing plant in America when gobs of capacity is shuttered and available, and costs are dramatically lower elsewhere with plentiful skill supply.  We can keep GM and Chrysler on life support, but there is no way these companies will grow jobs in face of a global competitive onslaught with very good products, new innovations and lower cost.  Cheap interest rates make little difference – no matter what the cost to taxpayers.   

Other old-school programs focused on increasing demand. TARP, cheap consumer lending, tax cuts, rebates and subsidies were intended to encourage people to buy more stuff.  Consumers were expected to take advantage of the increased supply and spend the cash, thus reviving the economy.  But today, many people are busy paying down debt or saving for retirement.  Further, even when they do spend money the goods simply aren’t made in America.  If consumers (including businesses) buy 10 Dell computers or 20 uniform shirts it creates no new American jobs. Spurring demand doesn’t matter when “things” are made elsewhere.  In fact, it benefits the offshore economies of China and other manufacturing centers more than the USA!

If this new crop of politicians, and the President, want to keep their jobs in the next election they had better face facts.  The American economy has shifted – and it will take very different policies to revive it.  New American jobs will not be created by thinking we’ll will make jeans, baby food or baseballs, so applying old approaches and focusing on increasing supply and demand will not work.  America is no longer an industrial economy.

The jobs at Dell are engineering, design and managerial.  Hiring organizations like Google, Apple, Cisco and Tesla are adding workers to generate, analyze, interpret and gain insight from information.  Jobs today are based upon brain work, not brawn.  An old American folk song told the story about John Henry’s inability to keep up with the automated stake driving machine – and showed all Americans that the industrial era made conventional, uneducated hand-labor of little value.  Now, computers, networks and analytics are making the value of manufacturing work low value.  Because we are in an information economy, rather than an industrial one, pursuing growth of industrial jobs today is as misguided as trying to preserve manual labor and farm jobs was in the 1960s and 1970s.

Directionally, American politicians need to implement programs that will create the kind of jobs that are valuable, and likely, in America.  Incenting education, to improve the skills necessary to be productive in this economy, is fairly obvious.  Instead of cutting education benefits, raise them to remain a world leader in secondary education and produce a highly qualified workforce of knowledge workers. Support universities struggling in the face of dwindling state tax funds.  Subsidize masters and PhD candidates who can create new products and lead companies into new directions, and do things to encourage their hiring by American companies.

Investments in R&D and product development are likewise obvious.  America’s growth companies are driving innovation; bringing forward world-demanded products like digital music, on-line publications, global networks, real-time feedback on ad links, ways to purify water – and in the future trains, planes and automobiles that need no fossil fuels or drivers (just to throw out a not-unlikely scenario.)  For every dollar thrown at GM trying to keep lower-skilled manufacturing jobs alive there would be a 10x gain if those dollars were spent on information era jobs in innovation.  America doesn’t need to preserve jobs for high school graduates, it must create jobs for the millions of college grads (and post-graduate degree holders) working today as waiters and grocery cashiers.  Providing incentives for angel investing, venture capital and other innovation investment will have a rapid, immediate impact on job creation in everything from IT to biotech, nanotech, remote education and electric cars.

A stalled economy is a horrible thing.  Economies, like companies, thrive on growth!  Everyone hurts when tax receipts stall, government spending rises and homes go down in value while inflationary fears grow.  And Americans keep saying they want politicians to “fix it.”  But the “fix” requires thinking about the American economy differently, and realizing that programs designed to preserve/promote the old industrial economy – by saving banks that invest in property, plant and equipment, or manufacturers that have no money for new product development – will NOT get the job done.  It’s going to take a different approach to drive economic growth and job creation in America, now that the shift has occurred.  And the sooner politicians understand this, the better!