A fascinating read providing some insight into causes, or possible effects, of division in the United States. http://online.wsj.com/article/SB10001424052970204301404577170733817181646.html?mod=WSJ_WSJ_US_News_10_1
I’m not sure whether this article identifies causes or effects, but it seems clear that people who profess a religion, delay children until after marriage, stay married, and finish high school, if not college fare better economically than people who profess no faith or religion, have children outside of marriage, get divorced, and do not, at least, finish high school. The article does not examine whether the more “traditional” lifestyle leads to more economic success or whether people who are more economically successful gravitate toward a more “traditional” lifestyle. The presented facts are food for thought.
The demographic differences seem to suggest that, as the middle class experienced division since 1960, during a time of broad cultural change in the United States and elsewhere, two seemingly distinct cultures emerged. These distinctions may help account for the increasing sense of division in U.S. society and among our elected officials, along with the increasing sense of polarization in general. Whether these are causes or effects, what is the vision of leaders for addressing the causes and the effects?
Two links, parts 1 and 2 of a lecture I gave to the University of Phoenix Leadership Colloquium. 500 doctoral learners and faculty from Phoenix’s School of Advanced Studies registered. I have another 10-20 minutes of responses to questions posed during the lecture and am constructing a document drawn from online discussions during the week before and the week after the lecture.
Leadership and Innovation, Part 1 (10:31)
Leadership and Innovation, Part 2 (10:22)
This Industry Week article provides examples of some of the innovations I had in mind when I speak on innovation and leadership as engines of economic recovery. http://www.industryweek.com/PrintArticle.aspx?ArticleID=26015&cid=NLIWIT
One of the sources of uncertainty about the global economy is the unsettled debate among leaders in Western Europe’s Eurozone about the use of monetary policy to solve economic problems. That debate rages in the United States despite rarely seeming to be framed in those terms.
The downturn in 2008 was led by a liquidity crisis, a shortage of cash, that resulted from mythical wealth and cash from over-valued real estate. The real estate bubble resembled a grand Ponzi scheme without a Madoff-like figurehead to blame. The feared second dip is not a result of a crisis of liquidity but of confidence and uncertainty. Bruder (2011), writing about Egypt following their Arab Spring episode, observed that investors do not and will not pour capital into economic environments when the direction of the country is uncertain. In that regard, the current climate in the United States is similar to that of Egypt.
Hough (2011) observed that publicly-traded U.S. companies, excluding financial companies, currently hold 12% of reported assets in cash, the highest reported level since 1954. Business executives are unwilling to release the estimated $1.2-2 trillion in cash on their balance sheets (Foroohar, 2011), and unknown amounts hidden offshore and elsewhere, until people in positions of leadership lead and re-establish certainty and a sense of confidence about fiscal policy, tax policy, spending policy, the deficit and whether to continue deficit-driven budgets, and what to do about companies and countries allegedly to big to fail. Compounding the uncertainty are conflicts and political turmoil seemingly around the globe and the limited recognition that the issue of debt extends beyond nations to states, businesses, and individuals.
For most of 2011, national lawmakers in Washington, DC have invested what seems to have been the vast majority of their time, and our attention, on the need to get the debt ceiling raised and the nation’s revenues and expenses aligned. Meanwhile, the economy flounders because business executives in the United States, and increasingly globally, have little or no confidence in the direction or stability of the legal and economic arena. Uncertainty like that makes strategic investing in jobs and in job-creating expansion risky and seemingly unwise. The debt ceiling crisis is a symptom of a much more difficult problem, the mismatch between overspending and too little revenue.
Political rhetoric out of Washington, DC is simply lip service meant to placate the itching ears of the electorate. Politicians have devolved into re-election machines focused on the next election cycle as soon as the last one is over. Most members of the U.S. House and Senate simply have no experience or education that would allow them to create effective policy for most of the topics they must address. So, with no basis for for developing, debating, and implementing effective solutions to the problems the nation needs them to address, elected and appointed decision makers in Washington seem inclined to simply parrot back the words the electorate and self-serving advisors and lobbyists beg them to say.
From my previous postings, it may be clear that I have an interest, even a fascination, with the ongoing discussions of job creation by people in positions of leadership about job creation. I posted a question on LinkedIn last week asking how many of our senators and representatives in Washington, DC have a background suggesting experience in creating jobs. I raised the question because evidence indicating such experience seems thin after more than two years of conversation about economic recovery and the need to reduce unemployment through job creation.
Since several people responded that I raised a good question and nobody seemed able to answer the question, I spent part of my 4th of July weekend reviewing the biographies of each member of the U.S. House of Representatives and Senate, as found at house.gov and senate.gov. The chart below shows the combined number from both chambers.
In these charts, I use the term “politician” to mean anybody whose indicated background includes only positions involved in negotiating and defining public policy or having no experience other than in those positions since 1980. I use the term “entrepreneur” to mean experience owning, building, or starting a small business.
The May 23, 2011 issue of Time magazine presented data on the national debt of 10 major economies. The presentation by Josh Sanburn includes an assessment of the risk of each country defaulting on its national debt, based on Moody’s credit ratings, which seem to be based first on the portion of debt held outside the country and second on the size of the debt compared to the country’s Gross Domestic Product (GDP). Japan and the United States are the only two of the ten countries not in Europe.
The level of debt combined with the significant foreign ownership, except in Japan, of that debt may indicate a tendency for these Westernized economies and cultures to live beyond our means. As individual nations, we have increasingly chosen to spend more than we earn or produce. At some point, this becomes unsustainable. When the United States may reach that point has been a subject of debate in recent weeks as the U.S. Congress considered, and has now chosen, to raise the debt ceiling.
Reports that the debate has simply been political grandstanding are disturbing. The issue is serious and significant. Resolution is feasible.
The United States and other nations can reduce current spending levels, a decision which is politically challenging in an era of near-perpetual campaigning for national and local elected office. The alternative most discussed is raising taxes to bring budgets more in balance, another politically dicey proposition. A third alternative, which receives little attention, is to raise GDP. The lack of attention may result from the difficulty in achieving this.
In the May 30, 2011 issue of Time, Fareed Zakaria presented a compelling analysis of the causes of and solutions to the sorry state of the United States economy. Mr. Zakaria referee to a global recession and, almost simultaneously, made a case for the economic downturn being less than global. Data from an on-going study of leadership with participants from more than fifty countries supports statements by Mr. Zakaria that some countries and economic sectors have suffered less, if at all, during the so-called global recession than others. Leaders hoping to change the current course of the United States economy can learn from these other leaders.
Mr. Zakaria identified five areas for leaders’ attention: manufacturing, retraining, growth industries, small businesses, and immediate needs. Each of these areas is more discussed than acted upon by leaders in the United States. Leaders wring their hands over lost manufacturing jobs and take few effective steps to stimulate the technical, skilled manufacturing jobs that the United States can sustain and that are difficult to send offshore. Leaders have talked about retraining as essential to economic recovery for several decades, but the talk receives inadequate translation into policy and funding to prepare people who lost jobs for new positions in potentially new industries.
