by Adam Hartung | Dec 3, 2013 | Current Affairs, Leadership, Web/Tech
“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.
by Adam Hartung | Sep 30, 2013 | Current Affairs, Defend & Extend, Leadership, Lock-in
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.
by Adam Hartung | May 16, 2013 | Current Affairs, General, Leadership
With the stock market hitting new highs, some people have
already forgotten about the Great Recession. If you recall 2009, things looked pretty bleak
economically. But the outlook has changed dramatically in just 4 years. And it has been a boon for investors, as even the safest indices have yielded a 250% return (>25% annualized compound return:)
Source: Bulls, Bears and the Ballot Box at Facebook.com
Meanwhile, trends have reversed direction with unemployment falling, and consumer confidence rising:
Source: Bulls, Bears and the Ballot Box at Facebook.com
Since this coincides with President Obama’s first term, I asked the authors of “Bulls, Bears and the Ballot Box,” (available on Amazon.com) which I reviewed in my October 11, 2012 column, to capture their opinions on how much Americans should attribute the equity
upturn, and improved economic prospects, to the President as we enter his second term.
Interview with Bob
Deitrick, co-Author "Bulls, Bears and the Ballot Box" (BBBB):
Q– Bob, how much credit should Americans give President
Obama for today’s improved equity values?
BBBB – Our research reviewed American economic performance
since President Roosevelt installed the first Federal Reserve Board
Chairman – Republican Marriner Eccles. We observed that even
though there are multiple impacts on the economy, it was clear that policy
decisions within each administration, from FDR forward, made a clear difference on performance. And
relatively quickly.
Presidents universally take credit when the economy does
well (such as Reagan,) and choose to blame other factors when the economy does
poorly (such as Carter.) But there
was a clear pattern, and link, between policy and financial market performance.
Although we hear almost no one in the Obama administration
taking credit for record index highs, they should. Because the President deserves
significant credit for how well this economy has done during his leadership.
The auto rescue plan has worked. American car manufacturers are still dominant and employing millions directly and in supplier companies. Wall Street reform
has been painful but it has re-instated faith amongst investors.
The markets are far more predictable than they were four years ago, as VIX numbers demonstrate greater faith and less risk.
Even for small investors, such as thoughs limited to their 401(k) or IRA investments, the average annual compound
return on stocks under President Obama has been more than
24% since the lows of March, 2009.
This is a better result than either Clinton, Reagan or FDR who were the
prior winners in our book.
Q– Bob, what policies do you think were most important
toward achieving today’s new highs?
BBBB – Firstly, let’s review just how bad things were in
2009. In 2000 America was completing the longest
bull market in history. But by
the end of President Bush's tenure the country had witnessed 2 stock market crashes, and the DJIA had fallen 58%. This was the second worst market decline in history (exceeded
only by the Great Depression,) and hence the term “Great Recession” was born.
In 2000, at the end of Clinton’s administration, the
Consumer Confidence Index was at a record high 140.
By January, 2009 this index had fallen to an historic low of 25.3. Comparatively, when Reagan took office
at the end of the economically weak Carter years the Confidence Index
was still at 74.4! Today this
measure of how people feel about the country is still nowhere near 2000 levels,
but it is almost 3 times better than 4 years ago.
Significantly, in 2000 America had a budget surplus. By 2009 surpluses were long gone and the
country was racking up historic deficits as taxes were cut while simultaneously
outlays for defense skyrocketed to cover costs of wars in Iraq and
Afghanistan. Additionally, banks
were on the edge of failing due to unregulated real estate speculation and massive derivative losses.
Today the Congressional Budget Office is reporting a $200B decrease in the deficit almost entirely due to increased revenue from a growing economy and higher taxes on the wealthiest Americans. The deficit is now only 4% of the GDP, down from over 10% at the end of Bush's administration – and projections are for it to be only 2% by 2015 (before Obama leaves office.) America's "debt problem" seems largely solved, and almost all due to growth rather than austerity.
We can largely thank a fairer tax code, improved regulation and consistent SEC enforcement. Also, major strides in health care reform – something no other President has accomplished – has given American's more faith in their future, and an increased willingness to invest.
Q– To which President would you compare Obama’s economic
performance?
BBBB– By all measures, President Obama has outperformed
every modern President.
The easiest comparison would be to President Reagan, who’s
economic performance was superb. Even though Obama's performance is better.
Reagan had the enormous benefit of two major factors:
- a significantly better economy than Obama inherited, even if afflicted by inflation
- and his two terms coincided with the highest performing
demographic years of the Baby Boomer generation.
Today's demographics have shifted dramatically. The country is much older, with fewer
young people supporting a much larger near-retirement age group. This inherent demographic fact makes
creating economic growth monumentally harder than it was 30 years ago.
Few people think of Reagan as a stimulus addict. Yet, his administration’s military
build-up added $1trillion of stimulus to the national debt ($2.3trillion adjusted for
inflation) – the opposite of what is happening during the Obama years. Many like to think
that it was tax cutting which grew the economy, but undoubtedly we now know
that this dramatic defense and infrastructure (highways, etc.) stimulus had more to do with igniting economic growth. Reagan's spending looked far more like FDR than Herbert Hoover!
Ronald Reagan tripled the national debt during his tenure, creating what today's Congressional austerity advocates might have called "a legacy of unpayable debt for our grandchildren.” But, as we saw, later growth (during Clinton) resolved that debt and created a budget surplus by 2000.
Q– Bob, President’s Obama detractors liken the Affordable
Care Act (i.e. Obamacare) to an Armageddon on business, sure to kill economic
growth and plunge the country back into recession. Do you agree?
BBBB– To the contrary, ACA levels the playing field and will
be good for economic growth. Where
previously only large corporations could afford employee health care plans, in
the future far more employees will have far more equitable coverage. Further, today employees frequently are unable to leave a
company to start a new business because they would lose health care, which in
the future will not be true.
One leading indicator of the benefits of ACA might be the performance of healthcare and biotech stocks, which are up 20-30% and leaders in the current market rally.
Q– What policies would you recommend the Obama
administration follow in order to promote economic growth, more jobs and
greater returns for investors during the second term?
BBBB- Obama needs to make the cornerstone of his second term creating new job growth. That was the primary platform of his candidacy, and it is a platform long successful for the Democratic party. If President Obama can do this and govern effectively, this could be his real legacy.
by Adam Hartung | Oct 10, 2012 | Books, Current Affairs, Leadership, Lock-in
There was a time, before primaries, when each party's platform was really important. Voters didn't pick a candidate, the party did. Then voters read what policies the party planned to implement should it control the executive branch, and possibly a legislative majority. It was the policies that drew the most attention – not the candidates.
Digging deeper than shortened debate-level headlines, there is a considerable difference in the recommended economic policies of the two dominant parties. The common viewpoint is that Republicans are good for business, which is good for the economy. Republican policies – and the more Adam Smith, invisible hand, limited regulation, lassaiz faire the better – are expected to create a robust, healthy, growing economy. Meanwhile, the common view of Democrat policies is that they too heavily favor regulation and higher taxes which are economy killers.
Right?
Well, for those who feel this way it may be time to review the last 80 years of economic history, as Bob Deitrick and Lew Godlfarb have done in a great, easy to read book titled "Bulls, Bears and the Ballot Box" (available at Amazon.com) Their heavily researched, and footnoted, text brings forth some serious inconsistency between the common viewpoint of America's dominant parties, and the reality of how America has performed since the start of the Great Depression.
Gary Hart recently wrote in The Huffington Post,
"Reason and facts are sacrificed to opinion and myth. Demonstrable
falsehoods are circulated and recycled as fact. Narrow minded opinion
refuses to be subjected to thought and analysis. Too many now subject
events to a prefabricated set of interpretations, usually provided by a
biased media source. The myth is more comfortable than the often
difficult search for truth."
Senator Daniel Patrick Moynihan is attributed with saying "everyone is
entitled to his own opinion, but not his own facts." So even though we
may hold very strong opinions about parties and politics, it is
worthwhile to look at facts. This book's authors are to be commended for spending several years, and many thousands of student research assistant man-days, sorting out economic performance from the common viewpoint – and the broad theories upon which much policy has been based. Their compendium of economic facts is the most illuminating document on economic performance during different administrations, and policies, than anything previously published.
Startling Results
Chart reproduced by permission of authors
The authors looked at a range of economic metrics including inflation, unemployment, growth in corporate profits, performance of the stock market, change in household income, growth in the economy, months in recession and others. To their surprise (I had the opportunity to interview Mr. Goldfarb) they discovered that laissez faire policies had far less benefits than expected, and in fact produced almost universal negative economic outcomes for the nation!
From this book loaded with statistical fact tidbits and comparative charts, here are just a few that caused me to realize that my long-term love affair with Milton Friedman's theories and recommended policies in "Free to Choose" were grounded in a theory I long admired, but that simply have proven to be myths when applied!
- Personal disposable income has grown nearly 6 times more under Democratic presidents
- Gross Domestic Product (GDP) has grown 7 times more under Democratic presidents
- Corporate profits have grown over 16% more per year under Democratic presidents (they actually declined under Republicans by an average of 4.53%/year)
- Average annual compound return on the stock market has been 18 times greater under Democratic presidents (If you invested $100k for 40 years of Republican administrations you had $126k at the end, if you invested $100k for 40 years of Democrat administrations you had $3.9M at the end)
- Republican presidents added 2.5 times more to the national debt than Democratic presidents
- The two times the economy steered into the ditch (Great Depression and Great Recession) were during Republican, laissez faire administrations
The "how and why" of these results is explained in the book. Not the least of which revolves around the velocity of money and how that changes as wealth moves between different economic classes.
The book is great at looking at today's economic myths, and using long forgotten facts to set the record straight. For example, in explaining President Reagan's great economic recovery of the 1980s it is often attributed to the stimulative impact of major tax cuts. But in reality the 1981 tax cuts backfired, leading to massive deficits and a weaker economy with a double dip recession as unemployment soared. So in 1982 Reagan signed (TEFRA) the largest peacetime tax increase in our nation's history. In his tenure Reagan signed 9 tax bills – 7 of which raised taxes!
The authors do not come down on the side of any specific economic policies. Rather, they make a strong case that a prosperous economy occurs when a president is adaptable to the needs of the country at that time. Adjusting to the results, rather than staunchly sticking to economic theory. And that economic policy does not stand alone, but must be integrated into the needs of society. As Dwight Eisenhower said in a New Yorker interview
"I despise people who go to the gutter on either the right or the left and hurl rocks at those in the center."
The book covers only Presidents Hoover through W. Bush. But as we near this election I asked Mr. Goldfarb his view on the incumbent Democrat's first 4 years. His response:
- "Obama at this time would rank on par with Reagan
- Corporate profits have risen under Obama more than any other president
- The stock market has soared 14.72%/year under Obama, second only to Clinton — which should be a big deal since 2/3 of people (not just the upper class) have a 401K or similar investment vehicle dependent upon corporate profits and stock market performance"
As to the challenging Republican party's platform, Mr. Goldfarb commented:
- "The platform is the inverse of what has actually worked to stimulate economic growth
- The recommended platform tax policy is bad for velocity, and will stagnate the economy
- Repealing the Affordable Care Act (Obamacare) will have a negative economic impact because it will force non-wealthy individuals to spend a higher percentage of income on health care rather than expansionary products and services
- Economic disaster happens in America when wealth is concentrated at the top, and we are at an all time high for wealth concentration. There is nothing in the platform which addresses this issue."
There are a lot of reasons to select the party for which you wish to vote. There is more to America than the economy. But, if you think like the Democrats did in 1992 and "it's about the economy" then you owe it to yourself to read this book. It may challenge your conventional wisdom as it presents – like Joe Friday said – "just the facts."
by Adam Hartung | Mar 25, 2011 | Current Affairs, Defend & Extend, In the Swamp, Innovation, Leadership, Lock-in
It is unlikely anyone in business or government thinks productivity is a bad thing. Productive students get their homework done faster, and learn more in the available time. Productive musicians make more recordings, and tend to learn more over their careers. And productive companies produce more goods and services with less inputs – like labor – thus offering more to customers at lower cost while making more money for investors. At a national level, the more productive we are at everything from growing wheat to making cabinets to writing smartphone apps improves the quantity of goods available to our population – growing the gross domestic product (GDP.) Improving productivity is one of the most critical activities to creating and maintaining a healthy economy, improving incomes and generating wealth.
Then why is American policy so anti-productivity?
American manufacturers today are about the most productive in the world. In the Wall Street Journal's "The Truth About U.S. Manufacturing" we learn that American factory workers are producing triple the output of 1972. The use of ever more sophisticated equipment, often with digital controls, and a higher trained workforce has made it possible to make more and more stuff with less and less labor. While considerable manufacturing has gone offshore, it is not because our workers are competitively unproductive. To the contrary, productivity is amongst the highest in the world!
Unfortunately, most of America's business/economic policy at the government level has been trying to preserve jobs that are, well, not that productive. Take for example agriculture subsidies. They pay farmers to produce less and otherwise make less productive use of land, feedstocks, grains, etc. By giving farmers (most of which are now huge corporations, not the "family farm" circa 1970 and before) subsidies it actually lowers agricultural productivity.
Similarly, bank and auto bailouts (and all subsidies to any manufacturer) in effect lowers productivity. It gives money to a bank, which makes nothing. Or to an unproductive manufacturer to keep its plant operating when the value of the output is insufficient to cover costs. These spending programs serve only to defend and extend the least productive jobs in society – jobs that are economically unviable. By spending money in these areas the government attempts to preserve the old (companies such as GM and Chrysler) at the expense of productivity.
America can create highly productive jobs
"Amazon.com On Hiring Spree" is the Seattle Times headline. Amazon has revolutionized book retailing, publishing and is changing a number of other markets as well. The result is a far more productive workforce in these industries than previous competitors. Borders, to cite a recent example, could not be nearly as efficient selling or publishing books with its out of date model, so it recently followed 90% of other book sellers into bankruptcy. The more productive company, Amazon, is hiring people as fast as it can to grow its business. Its productivity allows Amazon to sell more and create jobs.
Had the government chosen to bail out Borders there would have been a public outcry. Why should we protect the jobs of those store shelf stockers? Likewise, as the number of printed books drops, replaced by digital books, should it be government policy to subsidize book (or magazine, or newspaper) publishers/printers? Whenever a business is no longer competitively productive – whether it be agricultural, manufacturing or anything else – bailouts serve only to keep the unproductive competitor alive. Which actually harms the more competitive company that subsequently must fight the subsidized competitor.
The right policy would be to subsidize Amazon. Amazon is growing. Theoretically, the more money Amazon has the faster it could grow and the more jobs it could create. But, of course, nobody feels good about subsidizing a growing, profitable concern. And Amazon isn't asking for subsidies, anyway.
Our public investments are shifting in the wrong direction.
The right public policy is to invest in creating new Amazons. New businesses that create products and services which are desirable to customers, productively using resources and creating jobs. By helping these new businesses get going the government spending creates new markets. Government money "primes the pump" for investors. Early stage funding allows the business to get started, create a product or service, generate initial revenues, demonstrate a P&L and entice others to invest. The payback to society is a growing enterprise that creates jobs, both of which creates future tax revenues which repay the early investment funding.
The current administration touts investing in the tools for creating growth. In early February the MercuryNews.com reported on a Presidential speech in Michigan, "Obama Promotes Plan for Near Universal High-Speed Wireless." But, like previous Presidential administrations, this is just a lot of talk. While Mr. Obama may think national wireless technology to promote economic growth is good, there is no money for it. In the same article it is noted that Michigan congressional representatives, who resoundingly backed putting billions into the auto bailouts, question the efficacy of investing in emerging infrastructure tools. Protecting the past, while questioning (or opposing) investments in the future.
Unfortunately, for the last 50 years American policy has been headed in the wrong direction! Innovation investment projects peaked around the Kennedy administration (early 1960s) with several American efforts to dominate new technologies through programs such as the famous "space race." Since then, less and less has gone into America's future, and more and more has been spent preserving the past – through entitlements, military spending and tax cuts which provide less and less incentive to invest in unproven projects.
Source: Silicon Alley Insider Chart of the Day from BusinessInsider.com
Since 1953 government "pump priming" by spending on R&D for innovations has declined by 50%!!! No longer is even 1% of Gross Domestic Product spent on R&D. Businesses, which require an immediate return on investment and are generally loath to spend money on things which are uncertain, have been left to fill the vacuum. As a result, total spending has been stagnant. Worse, most spending by business is on sustaining innovations – improvements which defend and extend an existing business – rather than on breakthroughs which create new markets, and a lot more jobs (for more on sustaining innovation investments by business read Clayton Christenson's books including "The Innovator's Dilemma.") Investment in innovation has been woefully underfunded, allowing America's economic leadership position to shrink.
America is driving innovation offshore
The Wall Street Journal has reported "More Companies Plan to Put R&D Offshore." When things are equal, business will invest where the costs are lowest. With little incentive to undertake innovation in America, increasingly U.S. companies are moving their R&D — along with manufacturing, customer service, telesales, etc. — to emerging markets. And their plans are to increase this movement offshore by 50-100% by 2015!
![[EMERGING]](http://si.wsj.net/public/resources/images/MK-BK032A_EMERG_NS_20110221173344.jpg)
What will happen if innovation investments move from America into emerging markets? Will intellectual property remain an American advantage? Will new product development be done in America, or elsewhere? If the manufacturing is already in these markets, is it hard to predict that new products will increasingly be made offshore as well? Asked another way, if we outsource the innovation jobs – what jobs will America have left?
A dramatic change in American policy is needed
Last week America started bombing Libya. Part of protecting the national interest. But, this is not free – reportedly costing Americans $100M/day. Two weeks is $1.4B (probably a lot more, to be honest.). Let's not debate whether this is necessary, but rather recognize (as Roseanne Rosannadanna used to say on Saturday Night Live) "it's always something." There are programs, policies, military bases, agricultural lands, national parks and jobs to protect in every district of America – and its interests around the globe. And that's increasingly where America's money goes. Not into innovation.
So why are Americans surprised that job growth struggles? When the head of GE, a company that has moved manufacturing, information technology, engineering and R&D to offshore centers across the last decade, is made head of the U.S. jobs initiative is there much doubt? When the spending and incentives, as well as the selected leaders, have as their #1 interest preserving the past – largely in areas where American productivity lags – why would anyone expect new job creation?
America's protectionist mentality is causing its lead in innovation to slip away. The President, administration officials, Senators and Congresspeople needs to quit thinking that talking about innovation is going to make any difference in investments, or job creation. If America wants to remain globally economically vibrant it requires a change in investments – starting with more money for R&D via grants, subsidies and tax breaks.
If America wants jobs, and healthy economic growth, it needs innovation. Innovation that will create new, highly productive jobs And that requires investing in the future, rather than spending all the money protecting the past.
