The Qualitative Manifesto

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 Revolution

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

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.