We need Dave

One of my favorite movies is called “Dave” starring Kevin Kline and Sigourney Weaver. Kline plays the title character who is asked to be a puppet President propped up by the Chief of Staff (played by Frank Langella) after the President has a stroke. Dave is tapped due to his close resemblance to the President which he has parlayed into an act for parties.

Yet, Dave turns out to be a surprisingly good President who gets further enabled when the First Lady (Weaver) realizes he is a fraud and her husband (who she loathes  due to his affair) is in a coma on life support. She encourages Dave to be a true people’s President and he flourishes. Unlike the President he replaces, he focuses on jobs and helping people when needed. The best segment is when he asks his accountant, Murray, played by Charles Grodin, to find money in the budget to help disadvantaged kids and then plays his ideas out in front of his cabinet to the fury of the Chief of Staff.

Thinking of the line from Simon and Garfunkel song, “Where have you gone Joe DiMaggio, our nation turns its lonely eyes to you,” I would insert Dave’s name for the needed hero. Rather than the man who is President in name only, we need Dave to come to the rescue and take the reins. It cannot be the Vice President who has become chief sycophant to the President agreeing with every inane thing he does. We need a hero who truly cares about people and relationships, values those who serve and inspires others. The “valuing those who serve” is important as our current President shows disrespect to hard working civil servants as well as his staff and due process.

Two key undercurrents of the movie are the relationship Dave has with his Secret Service lead (played by Ving Rhames) and his respect he gains for his Vice President (played by Ben Kingsley). He values them and they show him respect in return.

So, if we could trade out Dave for Donald, we would be in a much better place. And, if he cannot do it, maybe Michael Douglas’   “The American President” could be tapped.

 

A few workable and impactful jobs initiatives

With the domestic economy doing well with one of the longest growth periods, we have a lot to herald in the US. However, we still have some room to improve on job growth as many are working, but not everyone are in jobs that can provide sustainable living. Many are working multiple part-time jobs as there has been a trend for some time to cut hours in retail, restaurant and service jobs. There is a lot of lip service provided for job creation legislation, but one party believes jobs are created through trickle down economics, so tangible efforts to promote jobs either need to be masked or do not get passed. Yet, there are few things that could be done which will solve other problems and create job growth.

First, I have written many times before about our increasingly obsolete and in need of repair infrastructure. Bridges, roads, ports, airports, internet connectivity, distribution facilities, etc. are all in need of update, improvement or replacement. There is a huge bi-partisan message that this needs to be done and yet it still cannot get funded beyond Band-Aid fundings. These needs are long overdue, so say the US Chamber of Commerce and Department of Transportation, and with interest rates so low, now is the time to borrow. I repeat a theme from earlier, borrowing to build or maintain an asset is different than borrowing to pay for operations. From these investments, jobs will come. Jobs that will impact highly educated folks and blue collar folks. We need to fund the Department of Transportation Trust Fund once again by months end. Congress needs to make a move and do something productive.

Second, I have harped on this issue a great deal, but numerous studies by foundations and universities have reinforced this. Those states who have not expanded Medicaid are missing the boat economically. The impact on the states’ economies who have done this is measurable. The impact on the rural hospitals in those states who expanded Medicaid is measurable. This is includes more healthcare jobs remaining and keeping major employers in an area alive and well. Plus, those who need healthcare and cannot afford it, are being left out in the cold. With healthcare paid for, they will be able to spend more on gas and groceries. The data shows this to be true, but leaders in some states have such a negative perception of the Affordable Care Act, they refuse to consider this option which is economically additive to their states.

Third, in keeping with the infrastructure comments, some states have done a better jobs than others with reinvesting in their communities. Many states have Historic Redevelopment Tax Credits, which have an eye toward taking abandoned factory or housing assets and repurposing them to be community assets. The numbers from redevelopment are staggering over time. To take a liability and turn it into an asset that will draw business, retail, tourists, and jobs, can be an amazing thing to behold. These are examples of blending public and private funding to do targeted things. In North Carolina, our General Assembly wants to let the tax credit expire. That would be a disservice to our state, as we can point to so many developments that make a place more inviting. Of course, not all development is well-conceived, but there are so many things that can be invested in that will pay dividends, if parties do their homework.

Fourth, the renewable energy future is showing up more and more, but there is so much more that could be done. This is also where jobs are, especially as dirty fuel sources wane or are phased out over time. Solar jobs tally 174,000 at year-end and have been growing at a double digit rate for several years. If we invest in wind energy more, we could have over 500,000 jobs by 2030.  Yet, the federal tax credit to incent renewable investments will be cut back in a couple of years and the North Carolina credit will expire at year-end. These are wise investments, through tax breaks, that will spur even more growth. So, we should not take the wind out of our sails.

Each of the above changes would add significant numbers of jobs. They are not outlandish, as America’s greatness has been fueled by public/ private investment. The rest of the world is copying us, so we should not throw our baby out with the bathwater. Let’s invest in America. Let’s invest in us.

Invisibles: People who don’t pat themselves on the back

On CBS Good Morning last week, David Zweig was interviewed about his recent book called “Invisibles – The Power of Anonymous Work in an Age of Relentless Self-promotion.” The book sounds like a fascinating read which explores the success of those who show up to work each day, do their job well and collaborate with others toward common goals. These folks do not seek the limelight and are definitely not about merchandising themselves. And, each has a very rewarding career doing a job well and sharing the success with others.

In my over thirty-three years of working as a consultant, teammate, employee and, at times, manager of people, one observation seems to ring true – “work will find good people.” These are the folks who don’t talk about getting it done, they work with others to get it done. In any business, we find people who are over-committing and routinely missing deadlines or producing less than quality deliverables. We will also find people who talk about good ideas, but fewer people who get up out of their chair and go do something.

The invisible people need not be the “stars” of the team. Sometimes their strength is project or process management competence. They are the machine that gets work product done. In other words, they do the basic blocking and tackling that does not make the headlines. A successful football team is more due to those guards and tackles who make way for the stars. A business is no different. And, many do not do their job exceedingly well, but do it well-enough, and show up each day to do it again. These are those solid C+ and B- performers that every organization needs to be successful. They have an intrinsic knowledge of how to do things within that organization. If leaders do not heed their value and input, they will not be as successful or may fail.

I had an old management professor who advised his son on how to be successful, advice which I share with others. If you do these three simple things, you will have some success. “Show up, show up on time and show up dressed to play.”  It matters not the underlying business or work group. If you are not there, others have to pick up the slack. If you are constantly late, others have to pick up the slack. If you are not there wearing clothes to present yourself as expected to your colleagues and clients or dressed with the right attitude, others will have to pick up the slack. Then, an invisible person becomes visible and management will realize they can do their job without you.

The lesson of the book is a good one. You do not have to merchandise yourself to be successful. Competence is a terrific aphrodisiac to an employer. I often help people network as it is my way of paying it forward. I was helping someone I know well get a job and she is all about competence, efficiency, teaming and effectiveness. She is not as good at merchandising and your first impression would be not to hire her. I used to tell prospective employers, she may not be the one you propose to, but she is the one you want to be married to. She understands strategy, tactics and execution and that is a powerful combination.

Let me close with some observations on what to avoid. If you hear someone say he/ she is a “big picture” person, don’t hire them. If you hear someone use far too many “I’s and me’s” and not many “we’s and us’s” don’t hire them. If someone “throws people under the bus” more than accepting responsibility, don’t hire them. I recognize fully the need to have people who can sell services and merchandise themselves. But, the merchandisers I would prefer to work with know that it is a team of others who back up their commitments. Many of them are in this group called “invisibles.”

Obama’s Economy in 17 charts

In attempt to move beyond the rhetoric, attached is a series of charts with a brief commentary on each that I found on CNN Money, which does a good job of showing economic results under President Obama’s tutelage. These charts are updated through December, 2013. They do a nice job of taking some complex topics and boiling them down into 17 charts. It will not take too long to wade through them. I will let you draw you own conclusions.

http://money.cnn.com/gallery/news/economy/2014/01/28/obama-economy/index.html

I would love to hear your thoughts after you have perused these charts. What surprised you? What gives you concern? How do we address some key issues which may cause other measures to get worse before they get better?

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Some of my takeaways (comments added February 3, 2014)

On the positive side, while a president gets too much credit and blame for the economy, the steady job growth numbers over three and a half years is telling. The President and Congress passing the first stimulus bill (which did not fail per six econometric firms) as well as the bailout of the US automakers aided the recovery. The echo effect of not bailing out the automakers would have been significant. Also, the President has not gotten the credit he deserves on some community college retraining investment. What we needed was (and still do) an additional stimulus, but since the GOP opposition was using “failed stimulus” as campaign rhetoric, it precluded that as the legitimate course of action. Note a tax cut for the wealthy is not a jobs bill, as Trickle Down economics has been proven several times over not to work. We already have companies sitting on cash, so giving them more, won’t trickle down. If it would, the plan would have a better name.

The economy has also turned the corner. What is of interest is every governor running for office is touting a turned around economy in their state. The economic growth, corporate profits and stock performance (in part) charts show evidence of the improving economy. The stock performance is largely due to the Federal Reserve stimulus under Ben Bernanke. This money supply stimulus aided the economy. What Congress needs to realize is Bernanke felt a need to do something, since they were failing to do their job. Thank goodness he did.

On the concern front, I point to several measures which indicate the poverty problem in our country. The growth in food stamps, the stagnant wage and the unemployment number charts which mask the true rate of unemployment with so many not looking anymore, are indicative that our recovery is not being experienced by every one. Here is where I would add, while some fraud exists,  the data shows there is not significant misuse of the food stamp program. So, the increase is a good indicator of poverty rising in this country.

This is where we need combined efforts to address the problem. We need to push job retraining, minimum wage increases, and infrastructure investment. We should likely push out the extended unemployment benefits for a little longer, as we have a number of long term unemployed who will drop deeper into poverty. The infrastructure investment costs money which gets into the next topic, but is much-needed and is the  best jobs program out there.

The major concern is the increasing debt. This is one area where the Tea Party has it right, although they are myopic on the remedies. The deficit is coming down, but we need to get the annual budget back into a surplus position which is what President George W. Bush inherited. We need to look hard at the Simpson-Bowles Deficit Reduction Plan, which I fault the President and Congress for putting on a shelf, more so the President. We need both tax revenue increases as well as cuts.

While the Tea Party and GOP are touting tax cuts, that strategy is ill-founded, as we need more revenue as well to solve our problem. This is why Bush/ Dick Cheney fired Secretary of Treasury Paul O’Neill, as he openly disagreed with the Bush tax cuts. Here is where I like to add, any idiot can get elected talking about tax cuts, but we need to pay for some things, like infrastructure investment. And, truth be told, we have enough idiots in office.

Our country is falling apart and we must get deeper harbors on the east coast or the bigger ships passing through the bigger/ deeper Panama Canal will sail to Canadian ports. For example, LaGuardia airport, one of our nation’s busiest is the second worst airport structure in the country. Plus, per the Simpson-Bowles plan, we can cut more on defense rather than building vehicles and planes that fight older wars that are sitting unused on tarmacs. This is similar to China building huge cities that no one lives in.

So, if we really want to deal with the deficit and debt, we need to listen to folks like Simpson and Bowles. Cut defense even more along with some other cuts, reshape taxes to gain more revenue and invest in our infrastructure. As I mentioned in a post of a few weeks ago, borrowing to build or improve an asset is different from borrowing to pay for operational cost. Plus, the direct and indirect jobs around our infrastructure improvement projects will be felt in many places where needs exist.

That is my two cents. Some good comments are made below by readers. I would welcome others.

Trickle-Down Economics Remains an Unsuccessful Approach

Trickle-down economics continues to get a lot of airplay in conservatively led states such as NC, which is unfortunate, as it has been proven to be an unsuccessful approach to economic growth. In a recent speech at the Center for American Progress, Maryland Gov. Martin O’Malley took aim at trickle-down economics — the conservative theory that fiscal policies benefiting upper earners will improve the whole economy and therefore also benefit the middle and lower classes. “Trickle-down economics has been an abject failure for 99% of Americans,” O’Malley said, according to prepared remarks. “If we want to deliver better results — if we want to strengthen our middle class and expand middle class opportunity — then we have to be willing to make better choices.”

As governor, O’Malley has a strong base of success to speak from. Yet, he does not stand alone in this opinion. The Congressional Research Service, the nonpartisan think tank for Congress, prepared a report on their analysis of the veracity of trickle-down economics and was to release it last fall. The report agrees with the assertion made by O’Malley above. The reason it did not get much airplay is Senator Mitch McConnell had the report buried before the election according to the New York Times.

Yet, a better source may be David Stockman who was budget director to President Reagan. Stockman claimed that trickle-down economics was a favored economic tradition, believing it would benefit the entire country over time. Of course, he did not say that everyone would benefit equally or adequately. Over time, many felt they had been left out of the promised glory. Today, Stockman has a different view from the one he had then. He is on record saying trickle down economics did not work and I have seen him say it.

Even going in Stockman should have read more history.The idea that trickle-down economics is good for the country was ridiculed by economist John Kenneth Galbraith and even FDR. They said that it had been tried in the past and failed. According to Galbraith, it was known as the “horse and sparrow theory.” He said that “If you feed the horse enough oats, some will pass through to the road for the sparrows” and  believed that this idea lead to an economic crisis referred to as the “Panic of 1896.”

Let’s not take Stockman and Galbraith’s retrospective insight by themselves. This belief is also echoed by Nobel Award winning economist Paul Krugman. And, you may want to check out Mehrun Etebari’s article published on June 17, 2003 entitled: “Trickle Down Economics: Four Reasons Why It Just Doesn’t Work.” His thesis is by any of four major measures – GDP growth, Income growth, Wage growth or Improvement in un-employment, trickle-down economics fails to deliver. Here is a link to the article: http://www.faireconomy.org/research/TrickleDown.html.

Two closing thoughts. First, the best comment about trickle-down economics actually comes from one George H.W. Bush (which he borrowed from journalist Paul Harvey) when he was running against Ronald Reagan and before he became his Vice President. Bush referred to it as “Voodoo Economics.” Harvey and Bush were correct.

Second, if people are looking for an economic theory that does promote growth, look to Keynesian economics. People refer to stimulating the economy through government investment as strictly Keynesian economics. The Obama Stimulus was Keynesian economics and unlike what has been drummed into an electorate by the GOP last year, the “Failed Stimulus” actually worked. Who says so? Six economic organizations do – Macroeconomics Advisors, Moody’s Economy.com, IHS Global Insight, JP Morgan Chase, Goldman Sachs and the Congressional Budget Office. They said it improved the economy and would have been even more successful if it was larger.

So, let’s sum up. The GOP is touting an economic approach – trickle-down economics that has been proven not to work.The only people who will benefit from reducing taxes on the rich are the rich. Keynesian economics has been proven to work including the Obama Stimulus plan, which the GOP was able to convince others it did not, even with evidence to the contrary. I think the Democrats need a better press agent.

Job Creation is Still Key

I must confess I am not surprised, but am disappointed in the failure of Congress to address the issue of job creation after spending so much time talking about it. To the President’s credit he has posed ideas to move things forward, but has not said this is mission one and we must do this. Our Congress can find ways to discuss every thing else under the sun, with the exception of what they need to discuss. The right seems so infatuated with not increasing the deficit, that they fail to consider needed investments in areas which could fuel growth. What does fuel growth?

According to Thomas Friedman and Michael Mandelbaum’s “That Used to Be Us: How American Fell Behind in the World it Invented and How It can Come Back” we have strayed from our model of public/ private partnership of investing in our infrastructure, innovative ideas and education. For some reason, the involvement of government investing in moving big ideas forward seems to have gotten lost. Our government has always invested in big infrastructure items like highways under Eisenhower, dams and highways under FDR and water resources under Teddy Roosevelt. But, it also has invested in tandem with venture capital and other investors on ideas that could be game changers. For a copy of the book, please link to: http://www.thomaslfriedman.com/bookshelf/that-used-to-be-us.

This thesis of investing in innovation is also echoed in David Smick’s book “The World is Curved” which plays off Friedman’s earlier best seller “The World is Flat.” What is interesting about Smick’s perspective is he was an economic advisor to two Presidents – Ronald Reagan and Bill Clinton, as well as Jack Kemp who ran unsuccessfully for President. He notes that America must invest in innovation to remain successful, as he notes innovation is portable. If the idea is created, protected and funded elsewhere, that is where the initial jobs will be created. For a copy of the book, please use the following link: http://theworldiscurved.com/. This is a key reason the Immigration Bill included keeping talent here in America as we need to keep our innovators.

One of the interesting observations that Smick makes in his book is how similar Reagan and Clinton were in a key area. They both opened up markets for US trade. When you look at the jobs created during various White Houses (note this gives too much credit to the President, but is an interesting exercise nonetheless), Bill Clinton’s tenure had the most non-farm jobs created than any other president – over 22.7 million, an average of 11.4 million jobs per four-year term (per the Bureau of Labor Statistics). The fourth best president result, per added non-farm jobs is Reagan at 16.1 million or 8.1 million jobs per term. What I found surprising is the second most jobs created per term was under JImmy Carter at 10.3 million. Lyndon Johnson came in third with 9.8 million jobs in his second term, building off a good combined result with JFK in his short first term ending JFK’s term after his assassination.

Our Republican friends will not appreciate this next statement, but if you look at the Bureau of Labor statistics and earlier data, the comparison of non-farm jobs created under Democratic White House tenures dwarfs the same result under GOP White House tenures. Again this gives too much credit (or blame) to the President, but since 1921, the twelve GOP terms have created 35.3 million which pales in comparison to the eleven Democratic terms which had 74.5 million jobs added. The average per term shows 6.8 million/ term for the Dems versus 2.9 million/ term for Reps. It means that the Democrats needed a better press agent. But, I do believe it goes deeper than that.

I believe Keynesian economics seems to have been embraced more by Democrats than the GOP, who are much more interested in trickle down economics. The Keynesian view follows some of what Smick and Friedman/ Mandelbaum are saying. Intentional spending creates jobs. If we Invest in infrastructure, jobs will be created that will fuel more spending. So, as we look at the deficits, they are important, but we need to be mindful of three things. First, we need judicious cutting of some expenditures. Second, we need increased spending in infrastructure, innovation and education investments. It is OK to borrow to build an asset, less so to pay for operations. You may have debt, but you do have an asset. Let’s build things – this latest bridge collapse was not a total surprise. Third, we do need more revenue. The Bush tax cuts which we continue today (except at the upper end which has helped bring down the deficit) took us from a surplus position to a deficit position and caused Bush to fire his Secretary of the Treasury Paul O’Neill when he openly was critical of this move.

It should be noted these three ideas are part of Simpson-Bowles plan and are behind some of the President’s budget recommendations. And, I do want to say to those folks that called his stimulus a failure did not read the conclusions of five reputable economic firms who said the stimulus actually worked, it was just not enough.

Our economy continues on its journey upward. The capital market are at a new peak doubling what they were when Obama started (a lot of GOPers should thank Obama and Bernanke), the housing market is recovering and jobs have been added for over three years. Yet, we need to build things. And, we have stuff like these bridges that need to be built. Congress please stop focusing on nonsense and focus on this issue. You said you would.