The People's Economist

Qualitative Manifesto - Principle #2b: Give More of Your Talents

2012-02-18T14:02:00.001-06:00

The most highly educated, highly skilled generation in history is marching toward retirement at the rate of more than 10,000 a day. More than 3.6 million Baby Boomers will turn 65 this year and every year for the next 17 years until the last Baby Boomer reaches the conventional retirement age in 2029.

While many reaching the age of 65 today are simply unable to retire, millions are still opting for a life of leisure – even if that life of leisure comes at a much steeper price. However, a retiring Boomer at 65 is unlikely to be satisfied sitting around the pool or playing golf everyday. They’re an ambitious crowd and the creators of the 80-hour, two-parent workweek. From a resource standpoint, there is a mountain of talent that is marching toward free agency every day many of which are willing and able to play for a new team.

And while the headlines focus on the burden that this generation will place on a host of public and privately-funded services for the foreseeable future, what’s often missing in the discussion is the incredible opportunity to leverage both the volume and considerable talents of the largest generation in American history to help lessen the burden on other public and privately-funded services as well as local municipalities in their retirement years.

Certainly, the close to $60 trillion in unfunded liabilities at the Federal level in the form of Medicare, Social Security and the federal debt towers over the more than $6 trillion in future obligations for state and local municipalities across the country. But at risk are the current jobs and future retirement pensions of tens of millions of Americans whose state and local governments teeter on the brink of bankruptcy.

It’s difficult to imagine how the talents of a successful retired nurse, or electrician, or artist can help the federal government. But without question those talents can be put to good use in the thousands of local municipalities across the United States that have – just like the airlines and automakers – cut overly generous union deals that they cannot possibly fund in perpetuity. Already we’ve seen severe reductions in local services in schools, fire and police departments, and other public services. The economics simply no longer work.

But we have choices: (a) Reduce local services; (b) File bankruptcy and reduce pensions of existing retirees; (c) Raise taxes and continue on a dangerous spending trajectory; or (d) Find new ways to help reduce the burden our local governments. If we don't want to reduce local services, and we don't want to reduce the pensions of retired workers, and we don't want to raise taxes then we have to change our collective behaviors and creatively contribute in new ways.

We most often think about volunteering in manual terms – showing up to hand out water at a charity road race, at a hospital to help patients navigate in wheelchairs, at a church to help cook and serve up soup kitchen meals. While all of these actions are important and necessary, we now have an opportunity to leverage the talents of millions of retirees who can volunteer their considerable skills in wholly new ways – as professionals to help reduce the burden of outsourcing expensive professional and trade services in cities and towns across America.

Consider the many millions of premium volunteer hours and taxpayer dollars that could both fill the void and reduce financial stress on local governments as the largest generation in American history if we step up as we transition toward our senior years as:

· Nurses, physicians and dentists at the local free clinic

· Music, art, science, finance and communication teachers at the local grade and high school

· Legal consultants at the local municipality

· Accounting consultants at the local municipality

· Investment consultants at the local municipality

· Management consultants at the local municipality

· Contractors, plumbers, electricians, carpenters and masons

Each community has in it a vast hidden resource just waiting to be tapped. But until and unless we shift our entitlement mindsets and take responsibility, ownership and pride in our own communities, we will maintain our unrealistic expectations, and lament about the good times “back in the day.” It’s an economic fact that local and federal governments mostly expanded throughout the 20^th century to serve an ever-expanding population. But those days are over.

What we are experiencing now is the natural cycle of growth – from birth to expansion to peak to contraction. The problem is that many of us remember all too well the days of expansion when local governments poured forth services and benefits from free garbage collection to the rapid removal of snow from our sidewalks.

A century ago the local police or fire department was not at out doorstep in four minutes and we didn’t complain and blame local government when our house burned down because the fire department didn’t get there in time. We didn’t castigate the town or city because snow removal did not meet our considerable standards. We have to adjust our expectations because our world is no longer expanding. In fact, quite the opposite is true. Part of the process to adjusting to our contracting world is stepping up rather than just speaking up.

There is no shortage of people in our world who are extraordinarily proficient at pointing out a problem, but scarce few who are actually willing to get off the couch and do something about it. Which flavor are you?

Sorry I Disappeared

2012-01-18T22:41:00.001-06:00

So sorry that I dropped from view since November, but I have a good excuse and a story that will blow your mind and is directly relevant to my last blog titled GIVE MORE OF YOUR TIME. I promised in that blog that I would volunteer at least two hours of my time and actually Walk the Walk - to practice what I was preaching.

With my partner Angela, we volunteered to work at the Rehabilitation Institute of Chicago's (RIC) annual Sky Rise vertical run to the top of the Willis (nee Sears) Tower. On November 6, we volunteered to help an organization we knew nothing about.

A week later following a planned surgery, something went terribly wrong in post-op and I had a stroke. I then found myself trying to regain my speech, my motor skills and my organizational skills at Chicago's leading rehab center – yes, you guessed it - the RIC.

If you don't think these events are somehow cosmically, spiritually connected then you need to check your pulse.

I am now just reaching the point where I feel able to communicate effectively again - thanks to the good people at the Rehabilitation Institute of Chicago.

I gave and then I received. I can't explain it. It just happened. And for that I am profoundly grateful.

Qualitative Manifesto - Principle #2a: Give More of Your Time

2011-10-31T16:24:00.002-05:00

I don't know what your destiny will be, but one thing I do know: the only ones among you who will be really happy are those who have sought and found how to serve.

Albert Schweitzer

Most of us have more than we need. Certainly, we would all like to have more money, but look around you - isn’t it proven every day in this profoundly selfish world that there will never be enough. No matter how much we make we will always want more.

The good thing is that we are all blessed with THREE GIFTS – to one degree or another:

· OUR TIME

· OUR TALENTS

· OUR TREASURES

And since so much of our focus today is on the latter – our treasures or our money and possessions – this essay will focus on the incredible power of OUR TIME. We’ll talk about TALENTS next time and TREASURES after that.

If you look back over the last year:

· How many times did you take the initiative to volunteer your time to help an individual or institution in need?

Let’s be frank. Taking the time to give our time is inconvenient. I just don’t have the time – is a frequent retort. Well that argument is patently false. We all have the same amount of time – 24 hours every day. So it’s not a matter of having the time, it’s a matter of taking the time. And that’s where most of us fail.

When you think about how much time we have it’s actually quite a lot – 24 hours a day translates into 168 hours a week. So what do we do with all that time?

According to the U.S. Bureau of Labor Statistics, here’s how the average American spends those 24 hours each day (averaging out over a seven-day week):

· SLEEP: 8 hours 34 minutes

· LEISURE & SPORTS: 5 hours 7 minutes (this includes watching TV, socializing via cell, text, Facebook, Twitter, working out, etc.)

· WORK: 3 hours 28 minutes

· EATING & DRINKING: 1 hour 7 minutes

· SHOPPING: 47 minutes

· PERSONAL GROOMING: 40 minutes

· HOUSEWORK: 38 minutes

· CARING FOR HOUSEHOLD MEMBERS: 32 minutes

· FOOD PREP & CLEAN-UP: 31 minutes

· OTHER IN-HOME ACTIVITIES: 18 minutes

· OTHER OUT-OF-HOME ACTIVITIES: 18 minutes

SUB-TOTAL: 22 hours 0 minutes

AMOUNT OF DISPOSABLE TIME: 2 hours 0 minutes per day

While you might argue with the precise calculation and categorization of how you personally spend your time, the bottom line is this: It’s pretty safe to assume that we all have at least 2 hours of DISPOSABLE TIME each day after accounting for every other activity that we do from watching TV to texting our friend to flossing our teeth. And imagine just how much more time you could have if you cut down on watching TV, playing video games, or mindlessly Facebooking friends about your morning coffee choice.

So the real question is what are we doing with those 2 hours of DISPOSABLE TIME? Let me suggest that we treat those 2 hours just like we would treat a $20 bill we find in our coat pocket just before we turn it over to the dry cleaners – as FOUND TIME. And as FOUND TIME let’s do something with it that we ordinarily would not do – like give it away!

But let’s make it even easier. Let’s start by asking every able adult man and woman from the ages of 18 to 64 to GIVE 2 HOURS of the 14 DISPOSABLE HOURS they have each week - time that could be spent talking with a lonely senior in a local assisted-care facility, or tutoring an at-risk high school student, or in a soup kitchen cooking and serving up meals for those who need it most.

Now let’s try to quantify the potential impact of 175 million Americans volunteering just two hours each week over a year to worthy causes:

· If 175 million Americans gave just 2 hours a week that’s a total of 350 million donated hours per week or 18.2 billion hours per year

· That’s the equivalent of having each of the 285,000 employees at General Electric TIMES 30 all working full-time on worthy projects

Think about that – think about having 30 General Electrics all dedicated full-time not to make a profit but to make a difference! That is truly a powerful concept. And the beauty is that it takes just a fraction of the DISPOSABLE TIME that we all have – regardless of income.

This is the type of unconventional game-changing effort that it will take to tackle many of the insurmountable challenges that lay ahead of us. To put the depth of just one of our challenges in perspective and why a collaborative effort is the only feasible way to address them, let’s look at the national debt for example:

· Our current Federal debt is $14.9 trillion

· The U.S. has generated a budget surplus just 12 times since World War II – the largest of which was $236.4 billion in 2000

· In order to pay off just the debt principle, we would have to generate a surplus of $250 billion each year for 60 straight years!

When you look at this specific challenge from this perspective, it becomes clear that we will never be able to pay down the Federal debt using conventional tactics - especially when you consider that the interest alone on the Federal debt is currently in excess of $450 billion a year – or close to $1.25 billion a day before we fund any activity that the government must do. Think about that: when the Office of Management and Budget starts building the budget for the Federal government each year they start nearly one-half a trillion dollars in the hole before assigning $1 to anything!

Since it is highly unlikely that we will pay off or even pay down the Federal debt in any of our respective lifetimes, perhaps we can use unconventional thinking to begin to leverage the goodwill of Americans to begin to fix things that need fixing. Since we all have the time, where do we start?

We start by getting up and off the couch and funneling our collective time into organizations that are already in place to help lessen the burden. There are dozens of opportunities to volunteer just a short distance from your home.

While there is no shortage of charitable organizations out there, the web has made it easier than ever to find something that works for you, wherever you live and whenever you have time to give. Here’s an organization for volunteers across the country that serves as a sort of eHarmony for volunteers - VolunteerMatch.org. According to their website:

VolunteerMatch.org strengthens communities by making it easier for good people and good causes to connect. The organization offers a variety of online services to support a community of non-profit, volunteer, and business leaders committed to civic engagement. Our popular service welcomes millions of visitors a year and has become the preferred internet recruiting tool for more than 79,000 nonprofit organizations.

So here’s your challenge over the next month:

Simply visit www.volunteermatch.org or any similar site and find an organization that could use 2 hours of your skills and your time sometime over the next month. Do it just once. GIVE 2 HOURS just once over the next month to try it out – to help a child whose parent is in prison and needs some mentoring, or to help with fall clean-up in a community garden. Something, anything that works for you.

And I promise that I will do the same. And after I GIVE MY 2 HOURS, I will report back to you on what it was and how it helped and especially how it felt.

Next time, I will talk about blending our TIME and TALENTS to create a comprehensive, volunteer effort that would be dedicated to lessening the extraordinary burden on local municipalities – the cities and towns that have billions of dollars in unfunded future pension liabilities that are causing them to cut much needed services across the board today.

Qualitative Manifesto - Principle #1: Take Less

2011-10-18T12:50:00.003-05:00

Every man must decide whether he will walk in the light of creative altruism or in the darkness of destructive selfishness.

Martin Luther King, Jr.

I remember watching with horror one year an Easter egg hunt gone awry. There was this one little boy – bigger than most of the other kids – swooping in and quickly filling his basket with eggs. Even though he couldn’t fit any more in his basket, he knew there were still plenty of eggs still out there. The little boy first jammed as many eggs as he possibly could into his pockets before stuffing his face with the contents of the eggs already in his basket in order to make room for more. With a grim mixture of jelly bean goo and chocolate oozing out the side of his mouth, the little boy was back at it in no time – pushing little girls in pretty pink dresses to the ground in order to get one more egg from behind the flowering forsythia.

When Psychologist Abraham Maslow introduced his Hierarchy of Needs theory in 1943, he articulated the progressive stages of growth in humans especially the order in which human needs are met – from the most basic physiological needs to the more complex self-actualization needs. But closer examination of Maslow’s famed pyramid shows that these are the needs of the individual and even at the highest level the perspective is fully inward self-interest in order to avoid pain and to experience pleasure.

Maslow’s hierarchy then can be expressed as:

· My physiological needs (food, water, clothing, sleep)

· My safety needs (security of body, health, property, employment)

· My love and belonging needs (family, friendship, intimacy)

· My self-esteem needs (confidence, achievement, respected by others)

· My self-actualization needs (problem solving, creativity, morality)

So it’s not surprising that in all of human interaction each day, selfish-interest is often a driving motivator for many of us. It is an extraordinarily evolved and enlightened being that is able to move up and out of Maslow’s pyramid, out of the role of self-interest TAKER to that of compassionate GIVER.

And while scientists certainly do not agree as to whether or not humans are inherently selfish beings, it is often hard to see the altruism in our species. Some believe that we are entirely selfish which drives the natural selection process – survival of the fittest - looking out for number one first and foremost. Others look at chimpanzees and see a remarkable ability to empathize with their fellow chimpanzees in a community based on caring and sharing.

Regardless as to where you come out on this debate, it is pretty hard to argue that there is not at least a hint of TAKER in all of us to one degree or another. Most of us have been faced with the decision as to whether or not to take the last cookie from the cookie jar or to buy something that we really don’t need and can’t afford. It is the addictive lure of hyper-consumption driven by the TAKERS economy. But the TAKERS economy is on its last legs – and for that reason alone we need to completely rethink what kind of economy IS possible going forward.

Here’s the deal: For the last half-century we have pushed the pedal to the metal in creating a TAKERS economy based on hyper-consumption and we have exhausted our ability to push much further. While logic suggests that in order for us to create job growth we need to continue to grow the economy, there are very good reasons that a hyper-consumption strategy is no longer a good economic strategy for America for a number of reasons – and saving the whales is not the primary reason:

1. The TAKERS economy is unsustainable. It is simply not possible to continue to grow at levels that we have experienced in recent decades and have come to expect for future decades. GDP grew at an average rate of 1.69 percent per year in the first 10 years of the 21^st century – the slowest rate of growth since the 1930s - and the first two years of the second decade of the 21^st century is proving to be more of the same. So while environmental as well as physical and mental health issues are extraordinarily important reasons not to support hyper-consumption, the primary reason has to be that it just cannot, will not mathematically continue. Pundits and politicians who call for 4-5 percent GDP growth are completely delusional. It simply will not happen. Therefore, we must fashion a new type of economy that is based on actual needs and not unrealistic desires;

2. The TAKERS economy is bad for the environment. It forces us to strip the earth of limited natural resources and at the same time make it harder for all living things to exist;

3. The TAKERS economy is bad for us physically. We work excessive hours, travel excessive hours, and try to keep work and home moving forward in harmony – usually unsuccessfully. The whole sprint makes us physically ill. Our bodies are breaking down. We ache from head to toe;

4. The TAKERS economy is bad for us mentally. The constant up-tempo pace grinds at us – robs us of sleep, of time with family, of time by ourselves. Our minds are breaking down. We consume drugs just to cope – based on our doctors’ recommendations, our own self-medication efforts, or both.

We have arrived at a place in the history of our economy where we cannot stuff any more eggs into our baskets. We have taken and taken and taken and now something has to give.

We all have needs. And those needs can be filled – or as is the case with far too many of us - they can be overfilled. This is the result of the TAKER’S economy – hyper-consumption without regard to actual need. How much do we actually need? How many cars do we need? There are 50 million more registered cars and trucks in America than there are licensed drivers. How many televisions do we need? The average American home has 2.25 of them and 60 percent have three or more. How much food do we need? When will we finally stop over-buying produce that ends up rotting in the vegetable drawer of our refrigerators? When will we stop putting things in boxes that we will never, ever use again? We can fill the entire island of Manhattan with all the stuff currently in self-storage in America – and that does not include what’s in our closets, basements, attics or garages.

What we all need is a TAKER’S check up – an assessment of what we have and what we really need. So here’s a simple exercise for you the next time you find yourself home on a rainy Saturday:

1. Empty all the contents from your closet and dresser drawers onto your bed;

2. Separate the contents into two piles: the first pile consists of clothing/shoes that you have worn over the last 12 months. The second pile consists of clothes you have NOT worn over the last 12 months. Be brutally honest;

3. Neatly reload your closet and drawers with the contents from pile #1;

4. Bag up the contents from pile #2 and give it all away to Goodwill or the Salvation Army

If you are like me, you will be surprised – no disgusted - at the size of pile #2 and will be shamed into action. After you’ve given it away, you will feel remarkably good to have all at once lightened your load and at the same time provided for someone in real need.

Now you’re a GIVER. Welcome to the GIVERS economy.

The Qualitative Manifesto

2011-10-08T13:16:00.004-05:00

Revolution is not the uprising against preexisting order, but the setting up of a new order contradictory to the traditional one.

Jose Ortega y Gasset

If you are completely content in your life and work and play, then there is absolutely no reason for you to read this. But if are not content and are not even sure what contentment looks like for you, then read on. If you feel like you trudge through each day in order to be able to acquire a lot of stuff, then read on. If you feel like you are in a sprint that has no finish line, then read on. If you find yourself asking What the hell am I actually doing? then read on. You are certainly not alone.

There is a revolution building in America. This is not a revolution of geography or of race and was not born of injustices imposed on a suppressed minority. This revolution is about changing the definition of the American Dream – from one of Quantity of Life back to Quality of Life. There’s a reason that hundreds of angry Americans Occupy Wall Street. The Givers are mad as hell at the Takers. There is a bubbling malaise just under the surface in America that has festered for too long and is beginning to ooze out. It doesn’t matter that protests lack cohesion. What matters is that – like all revolutions – the promise of a better life in exchange for hard work becomes exposed as the lie it is for the working class and poor. And that’s where we are today.

We did this to ourselves. We bear much of the responsibility for the oppression we feel because we opted into a belief – consciously or unconsciously – that required us to work more, in order to earn more, in order to spend more, in order to have more. In exchange for this Faustian formula to create a bigger and therefore better life, we gave up a lot. We give up time mostly. Time with our partners. Time with our families. Time with our friends. Time by ourselves. Time off. Time doing things we love to do. Time reading. Time volunteering. Time creating. Time dreaming.

It has become very common to hear the phrase “Well I just don’t have the time for that.” The thing is this: we all have the same amount of time: 24 hours in a day, 168 hours in a week. We have simply chosen to prioritize that time in a way that fulfills us less and the Quantitative American Dream more.

But what about the Qualitative American Dream? What does it look like? How do we even define it? If you achieved it, what would it look like?

There is a very rare opportunity now for us to begin to heal America not from the TOP DOWN but the BOTTOM UP by embracing quality of life over quantity of life. Our closets are full. Our attics are full. Are basements are full. Our self-serve storage units are full. But our lives are empty.

We are waiting for our politicians to solve America’s economic problems and they are simply incapable of doing so from two perspectives: (1) they only believe the economy can be saved if it grows; and (2) they believe that the strategy that will drive recovery is a TOP DOWN strategy – one that will come from them. They are wrong on both counts.

No one from Washington ever said “Hey Dr. King. How about you organize some marches to protest social injustice in America.” He and his colleagues did not wait for anybody, anything. They simply took the initiative and did it. Dr. King did not WAIT. He took action – and America was changed forever – from the BOTTOM UP.

The strategies that drive revolutions always start at the BOTTOM, and, if successful, work their way up the pyramid – it may take 100 years but if enough people opt in, it will happen. The Qualitative Revolution starts with you. It costs nothing, it’s easy to start, and if enough people simply START, it can reset America’s expectations and goals in creating a New American Dream – a dream that is accessible to all and helps redefine what we mean by a better life today.

So how do you start a revolution? Most start with a manifesto. Here’s ours:

The Qualitative Manifesto

1. Take less

This applies to all things material and refocuses the individual on exactly what she needs. How much food is needed, how much transportation is needed, how much housing is needed, how much clothing is needed. Consume what you need and no more. Eat less. Drink less. Own less. Recycle. Waste not. Be selfless.

2. Give more

Whatever you don’t need and are not using, give it away to family, friends, and others who are in greater need and are suffering. No storage of any kind. Ever. Give your gifts. Your talents, your time and your treasures. There will always be someone with less who is suffering more.

3. Take ownership

If you are out of work, it is your responsibility to find or create new work. Not the government’s. Not your former employer’s. Yours. If a Wall Street bank puts itself in jeopardy, that’s too bad. It should not be bailed out. If a business fails twice, it should not be able to file for bankruptcy again. While you might be angry at the system, it is terribly stressed. Don’t make it worse by becoming a TAKER.

4. Take initiative

Make your own breaks. Get off the couch. Turn off the TV. Get moving. Ideas all by themselves are worthless. The rewards go to people who do something with an idea. Do something with yours. Go to the library. Go to a free concert. Look at the most successful entrepreneurs. Many of them started out in a garage with nothing and turned an idea into something that other people wanted. Remember: Steve Jobs started with nothing.

5. Judge less

We are all imperfect beings. We spend too much time assessing the actions of others and make judgments based on our own expectations. We spend too much time complaining, pointing out problems, yet offering little in the way of solutions. We don’t need a clearer articulation of the problem. We need a clearer articulation of the solution.

6. Compliment more

We need to spend more time connecting with people who are able to provide solutions. We need to engage them in the discussion and encourage them every step of the way. Compliments that are genuine radiate back to us. Build up. Do not tear down.

7. Talk less

We spend too much time listening to ourselves talk. We have way more to learn than we have to say – ALL of us. We have the capacity of solving all our problems if we spend more time formulating the solutions before we open our mouths. Pay attention. Be respectful. Don’t be quick to respond. Be patient.

8. Listen more

Lifelong learning is a beautiful thing. Open your mind. Let it all in. Formulate. Then decide. Try this exercise: Do not offer an opinion until and unless you are asked for it. Shakespeare said, “Listen to many, speak to a few.” Be humble.

9. Work less

This doesn’t have to mean earn less, though it might. Work is a good thing. It can serve as a resource that enables us to fund the things that truly fulfill us. But there’s a reason it’s called work. Leave it at the office and leave the office at a reasonable time. You can do quality work in exchange for a salary that can help fund what you really want to do outside of work. Or you can create your own work. That’s the best of all worlds.

10. Play more

Spend more time doing the things you love – things that inspire you, that make you feel good about yourself – that make you tap your foot or sing in the shower. Pursue your passion. There’s plenty of time for work. Insist on plenty of time for play. Dream your own American Dream.

It’s up to us as individuals to be creative, to be proactive and to take charge of our own lives. It starts with a trickle – the brave few that break free from the old, quantitative way of thinking, measuring, living – only to start on a new path that is designed by them. As the number of people who adopt this new way of thinking increases, the flow of this new energy, this new freedom increases – people employ themselves, they create new businesses that draw on their talents and passions. Those that are successful will employ others with similar courage, talents and passions.

Qualitative growth will be difficult to measure. We will not likely be able to use the same scorecard to measure the success of this new economy because this is about your own personal measure of contentment. The new qualitative economy will be driven by YOU. Not the President, not Congress, not the lobbyists, not big corporations. YOU. Hopefully as the this new way of thinking emerges, the economists and government will be able to create new measurements that accurately reflect how to measure what it takes to achieve and live the new Qualitative American Dream.

Stand up for the creation of your new life where you and only you are the architect. It doesn’t take much to opt-in. You can do it one step at a time. Your assignment for tomorrow is to consciously initiate just one of the steps above in order to activate your own Qualitative Revolution. When you do, pay attention to how it makes you feel. Write it down. Send me an email. Call your best friend. Then do it again.

The Qualitative Steve Jobs

2011-10-06T11:46:00.004-05:00

Innovation distinguishes between a leader and a follower.

Apple Co-Founder Steve Jobs

Steve Jobs was a discontinuous innovator. Like Edison with the light bulb and Benz with the automobile, he introduced products that not only changed human behavior, but also fully altered the course of human history. He was never happy tinkering with – or even improving upon - whatever already existed.

He was not a continuous innovator like John Sculley - the suit from Pepsi who followed him and fired him in 1985. Or like Jack Welch – the one-dimensional, six-sigma bore whose ego refuses to go away, or any of the tens of thousands of clever accountants whose only contribution to the mélange of distortion is in concocting new ways to add and subtract numbers to make the results look better.

Don’t get me wrong. Continuous innovators are important and they make up the vast majority of the labor force. But they are good at only one thing – tinkering with what already exists. They do not have the capacity to create things that do not yet exist. And they certainly do not alter the course of human events.

It was the questioning of what already existed that fueled the genius of Steve Jobs – and irony of ironies it was that revolutionary spirit that helped fuel Apple’s remarkable resurgence in revenue and stock price since his return to the company in 1996.

And if you think this is all pie-in-the-sky, earthy mumbo jumbo, let’s put it in terms that the continuous innovators and Wall Street carnivores can understand – financial results.

First, in terms of Apple’s revenue. In the years following Apple’s IPO in 1980, revenue increased at an average rate of over 50 percent per year under Jobs. Then he was fired in 1985. During the next 12 years without Jobs, Apple’s revenue grew at an average rate of 13.5 percent. Upon his return to the company, revenue has increased nearly 1000 percent – an average rate of more than 20 percent per year. Even more impressive is the rate of revenue growth since 2004 – more than 40 percent per year - unprecedented in American business history for a company more than 25 years old.

How did this happen? Two words: Steve Jobs. It was Jobs and his penchant for discontinuous innovation in the form of the iPod, iPhone and iPad. He didn’t just introduce new products like so many other schmoes. He changed the way we communicate. He changed the way we are informed, the way we are entertained.

Second, in terms of stock price. Let’s say you had an extra $20,000 lying around in May 2000 and wanted to place two $10,000 bets in the stock market. Your broker urges you to buy General Electric – the darling of Wall Street and a stock that just the day before split 3 for 1. You are also impressed with Jobs and Apple so you place your bets on May 8, 2000: $10,000 in GE stock yielding 191 shares and $10,000 in Apple stock yielding 91 shares.

Eleven years later, on the day that Steve Jobs dies, you check in on your bets and realize that while your investment in GE has shrunk by more than 70 percent, your investment in Steve Jobs has increased more than 12 fold!

STOCK	ORIGINAL INVESTMENT	VALUE ON 10/05/11
GE	$10,000	$2,916.57
APPL	$10,000	$137,683.00

Steve Jobs proved that someone without a Harvard MBA could use the qualitative side of his brain to create what convention has been unable to do - to all at once deliver historically unmatched organic growth while rocking the hell out of Wall Street.

Steve Jobs proved that growth could happen unconventionally – that the qualitative can drive the quantitative. This is the same spirit that must drive the Qualitative Revolution – where you listen to your heart, take control of your life, and shape it as only you would shape it.

Aldus Huxley once said that “a child-like man is not a man whose development has been arrested; on the contrary, he is a man who has given himself a chance of continuing to develop long after most adults have muffled themselves in the cocoon of middle-aged habit and convention.”

This was Steve Jobs. His “child-like” spirit is a lesson – and a gift – for all of us.

The Qualitative Revolution

2011-10-03T15:28:00.000-05:00

It has always seemed strange to me...the things we admire in men, kindness and generosity, openness, honesty, understanding and feeling, are the concomitants of failure in our system. And those traits we detest, sharpness, greed, acquisitiveness, meanness, egotism and self-interest, are the traits of success. And while men admire the quality of the first they love the produce of the second.

John Steinbeck

The Quantitative Revolution in the United States has just about run its course. The U.S. has posted remarkable growth over the last half century. But for all intents and purposes, it’s over. Will GDP grow? Sure, but at rates far below what we have historically seen and well below what most expect. The rate of Real GDP growth in the U.S. has been in decline since the 1960s – and there is no evidence to suggest a sudden spike in demand anytime soon.

You’ve heard about Peak Oil – the point when the maximum rate of extracting oil from the earth was reached in 2005. How about Peak Cars? The number of car and truck sales in the U.S. has been in decline since it peaked in 2000.

How about Peak Homes? The number of existing new home sales has been in decline since it peaked in 2005. (Housing Starts numbers look even worse)

The days of continuously posting more and more sales of these treasured must-haves are behind us. After consistently increasing unit sales every decade after World War II, the American Dream hit a wall after 2000 – and has been in trouble ever since.
To put these metrics in perspective, if we combine the sale of new cars and existing homes to create a QUANTITATIVE AMERICAN DREAM INDEX, we are currently delivering unit sales equal to those of the mid-1980s. Selling at levels from a quarter century ago is no dream - it’s a nightmare - especially for those who keep score using conventional means to argue that the American Dream is still within reach of most Americans. It is sadly not.

YEAR	NEW CAR SALES	EXISTING HOME SALES	TOTALS	+/-
1970	10.2 MIL	1.6 MIL	11.8 MIL	N/A
1980	11.4 MIL	2.9 MIL	14.3 MIL	+2.5
1990	14.1 MIL	2.9 MIL	17.0 MIL	+2.7
2000	17.8 MIL	4.6 MIL	22.4 MIL	+5.4
2010	11.8 MIL	4.3 MIL	16.1 MIL	-6.3

Combined sales of cars and homes dropped by 6.3 million units from 2000 to 2010 – nearly a 30 percent decline in two of the most important markers of U.S. economic health – and not just for the direct sales they represent, but also for the ancillary sales and market activity they generate as well.

The reason that these statistics matter is that cars and homes are two of the key components of the traditional notion of the American Dream - what I like to call the Quantitative American Dream. If these important metrics are in decline, then the Quantitative American Dream is in decline – signaling the need for serious reassessment - not only as to how we measure progress but how we actually define what the American Dream really is and what it takes to experience it. What is success? Is it more money, a more prestigious job, a bigger house, a second or third car? Or is it more time with your family, friends, your personal passions, or more time to recharge physically and emotionally?

I once had a boss who insisted on trumpeting quarterly results especially when they were record results. He started with blasting the news that record results had been delivered for four consecutive quarters, five consecutive quarters, six consecutive quarters, seven consecutive quarters. He had created an expectation that was impossible to maintain. At some point, the string would be broken and the results would not be record-breaking. This is what Washington, Wall Street, and the media has created – quantitative expectations that simply cannot be sustained. That better comes in only one flavor – more. It was a huge mistake opening that Pandora’s box – but once opened, there was no going back – and this will almost certainly not end well.

The Quantitative Revolution has had an amazing half-century run. Americans have bought and sold more cars and homes than any country on the planet. Since the mid-1960s, Americans have purchased a mind numbing 528 million new cars and trucks and over 150 million existing homes. But such robust growth does not – cannot – will not - last forever.

Like all consumer universes, it had its limits – and those limits have been reached. Sadly, though, the powers that be are only able to think in terms of a larger economy and are incapable of offering solutions in the event that the economy does not grow. That’s a real problem. Most politicians – whether they realize it or not – are offering conditional solutions to our economic problems. With growth, I have solutions. Without growth, I have no solutions. They have framed the discussion in such a way that they can wash their hands of responsibility unless and until the economy grows – and at a rate that they have determined to be appropriate.

The danger with such an approach is that it represents a WAIT strategy - requiring something that is out of our control to happen before our actions can be effective. If the economy grows, then we can create jobs. WAIT strategies are not PROACTIVE, often cause paralysis, and are not very effective – not in war, not in sports, and not in business.

This is why Washington cannot solve your problems. It cannot keep you employed or find you another job. Regardless of what politicians and pundits say, the government cannot create a job for you. That leaves each one of us to solve our own problems. It’s up to us as individuals to take charge of our own lives.

The ultimate solution WILL NOT come from trying to figure out how to get back to 4-5 percent GDP growth. The ultimate solution to our current economic and personal suffering WILL NOT come as the result of reviving the current Quantitative Revolution - but in starting a new one.

Welcome to the Qualitative Revolution.

Like all revolutions, this one starts with the individual and works from the BOTTOM UP – not the TOP DOWN. TOP DOWN is broken in America – waiting for an edict from the President or Congress or Warren Buffett to show us the way will not save us.

It’s time for us all to stop whining, stop WAITING, and take control of our own destinies. If you truly love liberty, then now more than ever is the time to use that liberty to create a new life for yourself – one whose quality and standard is defined by you, for you.

NEXT UP: The Qualitative Manifesto

The New American Dream

2011-09-23T13:07:00.003-05:00

10th and last in a series on the evolution of economic growth in the U.S.

Any intelligent fool can make things bigger and more complex. It takes a touch of genius - and a lot of courage - to move in the opposite direction.

Albert Einstein

Too often we lament an economy that grows too slowly and adds jobs at a rate that disappoints. An economy is a living, breathing organism - and like most living, breathing organisms, it was birthed, it experienced a period of remarkable growth, then that growth slowed, as it matured, and ultimately began to age and slowed even more. This is where we are today – sitting on top of the largest economy in the world – two-thirds of which has been created since 1970. That level of growth simply cannot – will not - be sustained.

In many ways we are victims of our own success. We wanted bigger and by almost any measure we got it. But what exactly is it that we got? A higher standard of living? Standard of living is a quantitative measure often expressed as GDP per capita. But such a metric fails to accurately reflect reality for tens of millions of poor and working class Americans and more recently a growing number of those in the middle-class. Conventional wisdom has always suggested that a rising standard of living naturally equated to a higher quality of life. That more equals better. But if quality of life is defined as spending more time doing the things that fulfill us, that make us happier, that make us healthier, that make us smarter, then we have failed miserably at increasing the quality of life in America.

The American Dream is dying a long, slow death – its core premise – a better life – has been badly misinterpreted by multiple generations of Americans as a bigger life. Now a bigger life is achievable by fewer and fewer Americans. And ironically, that may not be a bad thing in the end. Perhaps this is what it will take for us to finally realize that bigger does not necessarily mean better – and that the quantity of our lives is not always a relevant measure of the quality of our lives. The truly hopeful thing is this: If we interpret the American Dream to mean a better life – and no longer a bigger life – then we make it possible for every American to achieve the American Dream.

Our growth-at-all-costs strategy has cost us dearly, resulting in an embarrassingly dismal social report card – especially over the last 30 years. From record amounts of personal debt, to record numbers of personal bankruptcies, to record numbers of home foreclosures, to record low SAT scores, to record numbers of people living in poverty – our quantitative pursuits have yielded an undeniable qualitative failure. Right now, that’s our legacy, and to those who feel compelled to blame someone - it has little to do with any one administration.

Unfortunately, the Great American Dream has become the Great American Lie - the concoction of both political parties and multiple administrations. The Kennedy administration made unemployment figures look better by eliminating discouraged workers from the stats. The Nixon administration introduced the core-inflation concept that eliminated fuel and food from the basket used to determine inflation in the form of the Consumer Price Index (CPI). Clinton helped introduce even more accounting magic to the mask the true reflection of inflation by adopting substitution, weighting and hedonics, thereby suppressing the CPI even more. Bush 43 ushered in a new era of GDP imputations that shamelessly inflated the measure of what we produce by at least 15 percent today based on the Bureau of Economic Analysis’s own public data. Some economists estimate that GDP is artificially boosted by at least twice that figure.

We’ve also artificially inflated the size of the Dow Jones Industrial Average – for many of the gullible masses, the absolute measure of the health of the U.S. economy. The Dow appears to defy logic reflecting Wall Street’s requirement of the unattainable – growth in perpetuity. Poor stock performers are jettisoned in favor of stronger stocker performers. Sears out. Home Depot in. Woolworth’s out. Walmart in. For the 30 years from 1960-1989 a total of 9 companies were replaced as part of the Dow. For the 20 years from 1990-2009, 20 stronger performing companies replaced 20 poorer performing companies - the shell game only gaining momentum as the maturation of individual corporations accelerated.

Over the last 60 years, the U.S. economy experienced its greatest period of growth, and erroneously set expectations for growth levels that are simply not sustainable. Our relatively short history since World War II shows just how much we have grown, how much growth has slowed, and how much we have manipulated our measurement of growth in order to create the illusion that strong growth in perpetuity is possible. Let’s review:

· The U.S. economy experienced a once in a millennia growth anomaly in the decades following WWII. The confluence of four unique elements helped create the perfect storm for expansion in the post-war years:

o Pent-up demand from 16 years of war and sacrifice;

o The arrival of 76 million new babies in just 18 years;

o The introduction of hundreds of new consumer products;

o The introduction of network television enabled unprecedented and instantaneous marketing of those products to millions

· The economy nearly tripled in size from 1950 to 1980. That level of growth is both unprecedented and unsustainable

· But as the economy grew bigger and bigger, the pace at which it was growing started to fade - unable to sustain its post-war meteoric rise and instead slowly declined into the 2000s:

DECADE	AVERAGE RATE OF GROWTH
1950s	4.17%
1960s	4.44%
1970s	3.26%
1980s	3.05%
1990s	3.19%
2000s	1.69%
2010s	1.85%*

* 2010, plus first two quarters of 2011

· This slowdown in growth ushered in an era of radical micro and macro changes in terms of how businesses were managed and measured and how elements of the U.S. economy were managed and measured. The natural slowdown in growth spawned the advent of new economic inflators and deflators for the purpose of creating the illusion that growth in perpetuity was possible, including:

o REDUCING COSTS IN ORDER TO INFLATE EARNINGS

- Introduction of corporate re-engineering or cost-cutting

Revenues for many corporations started to grow at ever-decreasing rates in the 1980s negatively impacting earnings and causing corporations – for the first time in history – to begin to focus on cutting costs out of the enormous infrastructures that had been built during the decades following WWII

- Reduced tax liabilities for publicly-traded companies

Expanded our ability to grow by enabling companies – especially Dow Component companies – to negotiate tax relief in order to artificially inflate earnings

- Reduced the Quality and Quantity of Products and Services

Expanded our ability to grow by enabling companies to reduce the size and quality of products using deceptive strategies such as unit pricing to generate more revenue for selling less

o UNNATURAL INFLATION OF REVENUE

- Increased Retail expansion in the 1990s

By expanding distribution enabling greater access to products through unnecessarily aggressive retail expansion in the 1990s, consumers were treated to unprecedented access to everything from coffee to hammers to tax prep. The number of Walmart locations more than doubled in the 1990s, while the number of Home Depots grew by seven-fold and Starbucks by 24 fold

- Increased Mergers & Acquisitions in the 1990s

By forcing inorganic growth through hyper-aggressive Mergers & Acquisitions initiatives. In 1989, General Electric posted revenues of $29 billion and by 2000 had added nearly $100 billion to the top line – almost exclusively through Mergers & Acquisitions. While they rapidly grew revenues and earnings during this period, it was at the expense of many employees who were shown the door

- Increased Product Individuation in the 1990s

The 1990s also ushered in an era of product individuation. This narcissistic trend helped further expand growth by promoting the concept of a product per person instead of just one product per household. A phone in every household became a phone in every hand. Individuation was also aided by unnecessarily aggressive retail expansion in the 1990s

- Increased Easy Access to Credit

Expanded our ability to grow by enabling consumers to buy more through access to easy credit. The insidious side of credit – consumers - and even some businesses - used credit to ring up purchases only to flush all of those liabilities by filing for bankruptcy. In the end, were those sales purchased with credit that inflated results really sales?

- Reduced Prices

Increased the purchasing power of consumers by artificially keeping gas prices low and by encouraging the notion of everyday low prices at retail

We have squeezed the lemon dry. We have pulverized the lemon. We have nuked the lemon. And now we are trying to find ways to use creative accounting schemes to create the illusion that there is still juice left in the lemon. We have recalibrated our thermometers and blood pressure devices to make us feel better about our health. We have run the course of clever ideas from freshly minted accountants from the Harvard Business School on creative and mostly misleading ways to count things.

So where do we go from here? Do we keep kidding ourselves about the potential of our economy or do we finally look at the overwhelming evidence and admit that we have reached the end of an era. Pretending that we have not will only delay the paradigm shift necessary to reinvent the American Dream – a reinvention that could truly make the American Dream a reality for more and more Americans.

What we have to remember is that what we are experiencing now with our economy is part of the natural evolution of a living, breathing organism. There is no shame in it, and there is no blame in it. The U.S. economy is like a 235 year-old mountain ash tree. During its youth it grows rapidly – often seven to 10 feet per year. But by the time it’s 100 years old, its growth slows to about one foot per year. At about 150 years, it completely stops growing taller yet can still live for another 100 to 150 years. And even though the tree does not get any taller, it still yields new seeds every year – still provides shade from the heat every year – still supports a child’s swing every year. The tree still thrives, still provides value and quality even though it never gets any taller.

It’s time to change our perspective on how we view and define growth. We have posted a remarkable quantitative record since World War II – growing ever taller. But our qualitative record since 1980 has been dreadful by almost any measure. Quantitative growth has run its course and is largely a part of our past. Pretending that it is the key to solving our quite significant current and future problems is truly naïve and destructive and will only result in more suffering.

In his 1999 book Inner Revolution: Life, Liberty and the Pursuit of Real Happiness (Riverhead Trade, 1999), Author Robert Thurman suggests that our current quantitative culture almost requires someone else to lose in order for us to win:

How can we overcome our addiction to this pervasive competitiveness that allows us no rest, no ease, no contentment? We need to develop the ability to enjoy the happiness of others, empathize with them, and take delight in their good fortune. If we can sincerely wish one other person well (particularly someone close to us), we can create a wave of tolerance that can wash through an entire community.

Standing before us is the incredibly rare opportunity to reinvent ourselves as a respected world leader by creating momentum around a qualitative revolution – a movement that focuses on expansion of the quality not the quantity of our lives. Imagine for a minute a culture, a country that stands for qualitative growth. It happened before 235 years ago in 1776. Now we have an opportunity to do it again – not to birth a Republic but perhaps this time to save it.

Why Growth is so Difficult

2011-09-13T22:38:00.000-05:00

Ninth in a series on the evolution of economic growth in the United States

There is a notion in this country that more is the only outcome that is worthwhile – that bigger is almost certainly always better. That an entity can and should grow forever. People do not grow forever. Plants do not grow forever. Products and brands do not grow forever (Kodachrome, Pontiac, Max Factor). Businesses do not grow forever (AOL, Blockbuster, MySpace). Industries do not grow forever (auto, newspaper, postal).

If none of the individual components of an economy grow forever, why do we believe that an aggregate economy will forever grow? Is it because whenever an important measure of economic “progress” begins to fade we change the means of measurement, simply prolonging the illusion? The Dow Jones Industrial Average is losing steam? Just swap out mature, weak performing companies with younger, stronger performing companies to infuse some new energy. GDP is slowing? Then just identify and impute the value of services like that of a bank teller and simply add it to GDP.

I will never forget the assertion of an infamous cable-TV investment analyst one holiday season a few years back. A colleague asked him if holiday sales in the important fourth quarter might ever shrink one day as opposed to always growing from one year to the next. “No, it’s not possible for holiday sales to shrink,” was his immediate and rather indignant response.

This is our perspective today. This is what we have taught our business school students. This is the expectation that we have created. That there is no top. This is the disturbing pathology that is at the core of a bigger is better mentality – a belief that without growth we cannot possibly live full and satisfying lives.

But here’s the problem with growth:

1. The more you grow and the bigger you become, the harder it is to grow even more. It was far easier to grow a $29 billion General Electric in 1990 than a $182 billion General Electric in 2008.

2. The more you push for more growth, the faster you will reach saturation and the faster your growth will slow down. We are already seeing this with the number of Facebook users – well in advance of its planned IPO.

3. The more product variations you introduce, the more likely you are to cannibalize existing products. Crest has 41 different variations of toothpaste – yes you read that correctly – 41 variations. Adding a 42^nd variation will not increase the aggregate sale of toothpaste.

Austrian-American economist Joseph Schumpeter coined the term Creative Destruction in his 1942 book Capitalism, Socialism and Democracy which described a “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one while incessantly creating a new one.” In other words, one of the natural outcomes of innovation is the development of products, services, processes that are better, faster, and cheaper than those that already exist – all at once creating something new while effectively destroying or at least initiating the decline of something that already exists.

Many of us witnessed the creation of audio-tape which led to the destruction of vinyl records followed by the creation of CDs which led to the destruction of audio-tapes and followed by the creation of digitized music which led to the destruction of CDs.

So in a culture that is constantly introducing new innovations it becomes harder and harder to create net growth – or accretive growth because as the innovation of new products accelerate, so too does the destruction of existing ones.

This is not to say that growth is impossible – it is just to say that it is getting harder and harder to introduce products and services that are simply added to existing consumption resulting in 100 percent incremental addition and no subtraction whatsoever.

There are effectively 11 sectors that make up the U.S. economy. Most of the products and services that make up U.S. GDP fall somewhere inside of these existing sectors:

1. Healthcare (Johnson & Johnson, Pfizer, GlaxoSmithKline)

2. Financial (JP Morgan, Citigroup, BankofAmerica)

3. Energy (ExxonMobil, ChevronTexaco, BP Amoco)

4. Utilities (Southern, Duke Energy, Exelon)

5. Capital Goods (General Electric, United Technologies, Catepillar)

6. Basic Material (Dow Chemical, DuPont, Alcoa)

7. Transportation (UPS, FedEx, Delta Airlines)

8. Consumer Staples (Coca-Cola, Pepsico, P & G)

9. Telecom (AT&T, Verizon, Vodfone)

10. Technology (Apple, Microsoft, Google)

11. Consumer Staples (Walmart, McDonald’s, Home Depot)

While there are new companies constantly joining each sector, there are also mature or failed companies constantly exiting each sector. The youngest of the sectors is Technology, but even that sector is beginning to mature.

Some say it’s only a matter of time before a new sector is introduced. That may be so, but I am definitely not smart enough to even venture a guess at what the next new sector might be. And here’s the thing about a new sector: unless it introduces products and services that are simply added to what we currently produce and consume without cannibalizing existing products and services (like technology did with personal computers), it is unlikely to help economic growth.

Others say that green initiatives or new energy initiatives that can cut across and positively impact all sectors will provide new economic growth. But unless green initiatives translate into a new ways to raise revenues or to cut costs, don’t look for GE or IBM or any existing public entity to sign up for initiatives. While green initiatives might be the right thing to do for the environment, unless they provide a bottom line benefit for shareholders, don’t expect the slaves of Wall Street to sign up to pay a premium for ethical behavior. So it’s more likely that significant green and/or non-carbon-based initiatives will be driven by start-ups and for those with a bigger appetite to risk what little R & D funds they may have left.

Unless the introduction of new products and services results in a net gain to aggregate consumption (accretive growth) then the economy will not grow. Can it happen? Sure. But it is getting harder and harder to accomplish. Our economy is already huge. Our consumption has already reached record levels by almost any measure. Our lives and homes are full of products – in many cases duplicated several times over. And yes, the replacement of existing products happens all the time – but the trend of sales cycles for products such as cars, homes and even cell phones are lengthening every year. Instead of buying a car every three years we are now buying cars every six or seven years. Instead of replacing our cell phones every year and a half, we are now replacing them every two to two and half years. These types of behavioral trends result in fewer sales each year spreading sales out over a much longer period of time and negatively impacting consumption.

And here’s the thing: most conventional wisdom suggests businesses need to spend more time and resources trying to convince people to drink 48 servings of Coke a month instead of 24, buy cars every 24 months instead of every 72, good luck with those quests. And if you believe you have a real shot at influencing those macro-consumption trends, then maybe you believe that your home will appreciate this year too.

It was a whole lot easier to grow the economy in 1950 than it is today because most Americans did not own a home, most of us did not own a washing machine or dryer, an oven, or a television, a car, or a telephone. Now many of us own multiple homes, multiple televisions, multiple cars, multiple telephones.

The generations right behind the Boomers – Generations X and Y – are unwilling and in some cases will be unable to live life like their parents did – in a world where more and bigger was better. This dose of sanity is a good thing for us and for the planet on which we live. But not for the bigger-is-better economy.

We need to realize that - as much as we want to believe that ours is an economy without limits – we are wasting time and money trying to live up to that lie instead of trying to figure out what we really need to live satisfying lives. It is possible. But we need to first realize that our current more and bigger path is far more destructive than it is creative. From there, perhaps, we can finally begin to explore, and perhaps redefine a new and achievable American dream that is far less about quantity and much more about quality.

NEXT UP: WHERE WE ARE – THE SIMPLE TRUTH ABOUT THE U.S. ECONOMY