Friends have asked why a businessman like me supported the Affordable Care Act. Like many people I worried that the legislation was replete with problems and had little confidence for what the final version adopted by bureaucracy might look like. Despite all of those problems I felt compelled to support the Bill and efforts to extend healthcare to the working poor. This is despite what I see as the flagrant unwillingness of the US Government to fulfill its financial and fiduciary obligations to its people i.e. produce a balanced budget, a just system for commerce and reduction of the Nation’s debt and trade imbalance. But I believe foremost in the basic dignity of every citizen.
The United States has systemic fault lines that are both complicated and commonly misunderstood and misrepresented by much of academe and the general populace. Common sense tells us that our country is on the decline. The proof is in the numbers. We had no net job creation in the first decade of the Twentieth Century. In January 2001 the United States had 132.5 million nonfarm jobs (NBC News Oct 2004); by April of 2010 that number had dropped to 129.8 Million (BROOKINGS, 2010). But the United States, during the same period, had a net population gain of 9.7% (uscensus.gov).
Most of those job losses are from manufacturing, which incidentally is the same condition which pragmatists believe to have been a key trigger to the Great Depression. (Mechanization in Industry, Jerome 1934) It is estimated that we had lost between 5.5 jobs between 2000 and 2010 mostly from manufacturing.
The multiplier for manufacturing is said to be a dollar forty of value for every dollar while the multiplier for retail is only sixty cents for every buck. If this trend continues into the future we are in deep trouble.
Clearly the answer is not to impose huge tariffs on all imports, that had been tried in the 1930's and it resulted in retaliation by our trading partners and resulting in a rejection of a considerable volume of our exports. Although a modest increase might be a part of the solution. American manufacturing is endangered, electronics, apparel, even advanced technology products have a growing trade deficit for the USA. Airbus is beating Boeing building a delivering more units of more efficient great capacity commercial aircraft to the market. (Airbus-A380-Facts-and-Figures-Sep2015).
Despite massive reductions in American workers in 13 out of 19 segments of manufacturing the country still has an aggregate increase in output For example between 200 and 2010 there was a 20% increase of advanced technology product exports. The problem is concurrently there was a 60% increase in imported ATP's. (www.census.gov/foreign-trade/balance).
The growth of the economy in GDP is masking the true size of the iceberg below the surface. The predominate Pollyanna worldview that the information age is creating sufficient service opportunities and that somehow manufacturing no longer matters is wrongheaded. The truth is reflected in the numbers and we are loosing ground on all fronts.
Having traveled the States myself I have seen with my own eyes the immediate effects of loss of industry on a grand scale. Having lived in one of those blue collar towns where metalworking, car parts fabrication, chemical synthesis, textile, furniture, appliances and all of things we use in our daily lives were once being made in great volumes but are increasingly finding their inputs and assembly elsewhere. The immediate devastation in its wake is troubling enough. But there is a much bigger issue looming just around the corner. It is the elephant in the room.
As companies increasingly get whatever inputs need made from other countries there is an accumulating net loss of skill, leverage and opportunity being surrendered to foreign concerns. It might have been worthwhile had the standard of living, and education of our citizens continued to increase for most people, but that has not been the case. We were once number one in education, but we are now number twelve. (According to Arne Duncan the Secretary of Education). Clearly we are failing to invest in our own people the way that we once had.
Innovation in any operation happens incrementally and the best improvements in procedure occur from hands on experience. The old axiom rings true that an engineer who isn’t getting his hands dirty during the course of his projects is not worth his salt.
So much of our country’s manufacturing infrastructure has been sold offshore, that you would be hard pressed to find a single item anywhere in your home from the last two decades that was made in the USA. This is a dangerous , while we are blinded by the latest cloud application and with virtual electronic bliss the globalization pirates unload their plunder and sail off into the sunset. We find ourselves increasingly hemorrhaging equity and at the mercy of unpredictable forces because we’ve accepted the absurd rationalization that it is desirable to allow nearly all of the tangible things that we need to sustain life to be created offshore in other countries.
As early as the mid 1980’s I had seen the writing on the wall, it seemed obvious that the American landscape was becoming increasingly unethical and unstable. Especially for those who would depend on a large company to build their career and future upon. And while I have faith in the competitiveness of our nation’s workers, it is a relatively a small number of truly great companies having budgets larger than some foreign nations (Microsoft, Apple, General Motors) which are now responsible for most of the innovation advances that we count on. Yet nearly all of them are slipping. and those who are on top (think Apple) don't make a single item here in the USA, but it employs tens of thousands of workers in China.
Call me a protectionist. Actually it is like this: I was one who was fooled by the idea that NAFTA would raise the standard of living in our world. It has to a large degree created jobs for other countries, but perhaps as it is, at much greater expense than we can possibly afford. Too much investment went to where the only kind of value that matters to many, the biggest short term return. So anyone who thinks that we should not protect our nation's interests, and the interests of the vast majority of our people should take a hard look at their children and grandchildren.
I think that it is every individual's duty to learn to understand what is at stake here. That doesn’t mean that we should become isolationists or alarmists either. Someone at GM once said that "what is good for our nation is good for General Motors". Sadly that doesn't ring as true anymore.
Globalization is inevitable and we will not abandon trade around the world anytime soon, nor should we do so. However abandoning domestic manufacturing is not the way to achieve sustainability, nor long term security here in the USA.
Perhaps we must instead change our ways and learn to consume a bit less, to stop throwing everything away and focus rather on making quality things that will last. We could be a bit more discerning about the junk that we all buy. Rather there should be a collective focus on educating our citizens (and reminding ourselves what the true accumulative cost is having to frequently replace the low quality wares that are being imported. (The Walmart/China nation) Perhaps a probable lifespan quotient for products might be required to help balance the scale in a way that is fair to consumers. (Truth of Quality)? A pair of shoes from mass merchandiser is replaced many times over the cost of a quality pair. The soles for instance are so soft these days that thorns impale the foot when we stumble upon them.
The Truth in Quality Statement might read: This shoe is not designed to protect the soles of your feet while walking in your yard.
Finally what is more the nonrenewable resources on earth are a finite quantity. and it is estimated that we simply will not have enough essential raw material to meet the demand, given at our present trajectory of consumption and population growth. It has been calculated according to the second law of thermodynamicswe cannot maintain our pace of consumption indefinitely. Some estimates indicate that humanity has already passed the halfway point for many nonrenewable resources.
America can negotiate terms of trade better, Donald Trump has that one thing correct at least. Perhaps America should charge a fee (to our own exporters) equivalent to the loss of wages incurred from outsourcing by American companies over a specific volume. A incremental increase in the bar to a reasonable point, allowing companies ample time to adjust their planning. If such a plan is possible at all, it must be a gradual and a well balanced plan. There should be a whole lot more transparency, planning for the future, including investing in making a reasonable portion of everything that we need from birth to the last day of life right here right in the States.
But performance plays a major role too. Feedback from the majority of consumers was ignored by our auto industry. Detroit kept producing heavy fuel guzzlers that had too many defects, for far too long. The consumer protection watchdogs failed us. It isn't that the autoworkers were paid too much, that seems audacious making workers a scapegoat, (though the agreed upon retirement and benefits packages were clearly unsustainable) . It is leadership who is responsible to provide the vision to create a competitive product . Once which stood a fighting chance against the Volkswagen's and Toyota's.
Japan's leadership is what rebuilt our Auto industry and put thousands of American's back on the job. We should be exercising more leadership where it is lacking rather than protecting ineffective leadership. Was it pride that kept the American Automakers from listening to the polls which indicated that most people preferred the fuel efficient and more reliable imports? Why has our steel industry retreated from building more efficient steel plants? Where is that American can do attitude that made us the manufacturing leader of the world into the 1970's?
The rules of the game must be leveled to players on all sides. If they are not, then the deal makers (politicians and business leaders) must ultimately be held accountable. No American citizen should lose his or her job to someone in another nation simply because people there are willing to work for sub par wages and at the detriment of their own safety. And yes, that much of it, really is that simple.
What gives us a nosebleed is the labyrinth of poorly constructed data sets and outdated indicators put forth by industry associations and used by policymakers which yield inaccurate value added estimations of product streams. Inputs are arbitrarily assigned to categories hodgepodge and values to primary countries missing subtotal of the value by components captured in secondary and tertiary countries. Manufacturing should be factored by the true sum of the parts, by way of its actual total inputs and outputs. Undervaluation cheats the American taxpayer left to foot the bill. The true flow of trade is utterly impossible to calculate and track as things stand. However in my mind the trade deficit certainly does indicate who is gaining the leverage in the relationship.
By accepting unreliable metrics it appears patently impossible for policy makers to formulate effective policy. After only a short study of the particulars one finds something analogous to putting a Frenchman, Italian and a German in a room, none of whom speak a second language (okay, but you get my point) and commissioning without a common currency to categorize the chart of accounts for the country's manufactures. One puts computer manufacture in the retail sector another pulls the silicone from manufacturing inputs and places it in a separate category of mining. So no real reconciliation can ever occur. The ethics woven in economic policymaking has fallen well below ineptitude to a new level which might aptly be called lunacy. The rule must be to simplify, so that we are no longer baffled by the brilliance of obfuscation.
America needs strong business leadership, one that has the backbone to put teeth in the need to invest in our mutual future, with such we will have nothing to fear from socialists. This type of leader is not a politician, yet he knows how to take care of his own people. The People of the USA.
Now from my own experiences:
Many years ago during my first startup requiring regular full time employees I found that no matter how I crunched the numbers there was no way to provide health insurance for my employees. The small margins captured working in the small rural city of Ludington Michigan simply weren't adequate to do that. So I decided that if the workers must live with uncertainty then I could do the same.
A couple of things happened over the years that persuaded me that every American should have access to healthcare.
The first was meeting a man named Fred Simmons. Fred was a fifty eight year old cancer victim. I didn’t know this when he first came into my James Street office seeking employment. Fred wore a generous smile, his bright green eyes were warm and reflected his kindness. While articulate he had that aura of being a salt of the earth kind of guy whose company is easy. He waited patiently for me to finish with my morning regimen of phone calls to Jon Franquist at West Shore Bank, Dave Johnson the manager of the Mason County Airport, and confirmation of several appointments for projects in the days ahead.
When I finally had a moment to see him Fred he reminded me gently that he had dropped off a resume and followed up with on few (unanswered messages) a job posting I had made at Michigan Works.
Fred had a solid work history having been a janitor at a school in an adjacent county for nineteen years until the district had decided to outsource cleaning to a private concern. Fred suddenly lost his pension. Shortly thereafter he had fallen ill and could not work for a spell while he was undergoing treatment. Frankly, I was concerned about Fred's ability to meet the strenuous physical requirements of the job but his winning attitude took hold of me and told me that I should at least give him a chance. So I hired him.
A week later his supervisor approached me to let me know that Fred was not keeping up with the rest of the crew and that some of the other workers resented that they had to pick up the slack. I asked Shirley to give Fred a bit more time.
A month later Fred’s performance still had not improved enough to keep him on. When I called him into my office, Fred saw the writing on the wall, he graciously thanked me for having given him the opportunity and told me that he understood my position and that he didn’t have any hard feelings. It was sincere and decent of him. That was enough to bring me to tears once he had left the office. I felt like I did as a child finishing The Diary of Ann Frank. Her last recorded words were something like :"I still believe that people are basically good at heart". Are we? How I wished I had the resources to give Fred a less demanding job. But I just didn't and further I had no idea at the time who to reach out to or what might be available for someone in Fred’s position. My company was leading but still very young and vulnerable. It isn’t that I didn’t care; I was just so busy working to keep everyone else working.
Later Shirley who was the crew supervisor told me that Fred had been in remission but that his cancer was an invasive type and the doctors didn’t give him very long to live. Several months later someone called my attention to Fred’s obituary: It read something like: “Fred Simmons was a longtime janitor for such and such school district survived by one daughter who lives in Daytona Florida and two grandchildren. At Mr. Simmons request there will not be any service”.
I sensed that Mr. Simmons was the kind of fellow who wouldn’t have wanted to have burdened anyone with his problems. That is a fine conservative value. I also discovered that Fred had been visiting the local pawn shop selling off his things to pay for his treatments and living expenses while he was sick. He had died penniless, and I just don’t see the dignity in a good life ending in such a desperate undignified manner.
Some years later I sold my cleaning enterprise to a former employee and became a pawnbroker myself. Oftentimes I found myself buying things that were essentially of little value to help people like Fred get medication and so forth. Don't get me wrong I was only able to do this from the proceeds I made from people who mostly buy things they can't afford on impulse. I found that a great many people when hardship falls upon them will sell their things before they ever seek charity. These folks know full well the value of dignity and self reliance. It taught me that although people lack resources it doesn't always follow that they are lacking in character.
The second experience that helped to shape opinion on healthcare came later on when I myself suddenly fell ill with appendicitis. I needed an emergency operation and knew the surgeon who performed the procedure fairly well. He had been one of my regular customers for a couple of years. He was a naturalized citizen from an Islamic country and one afternoon in the presence of his wife he confided in me that life had not been easy for his wife and himself, that they hadn’t been accepted by some in the community. Despite what rang true, it was clear that the surgeon’s efforts had paid off handsomely. Evident by the fact that he had purchased three separate beachfront properties on Lake Michigan and torn all of those perfectly fine structures down so as to build a ginormous castle of a home. I have many pictures of my company working on that property.
The doctor called me one day to ask me to adjust (lower) my fees by a few hundred dollars that year for his scheduled routine maintenance. I agreed to what amounted to cutting my profit to nothing because it would allow workers at least to keep busy and get a full paycheck. But later on when I received my bill for his services to the tune of fifteen thousand dollars, a large portion of which was his fee for thirty minutes on his operating table, I of course asked for the same consideration from him. This occurred at my “post op” appointment. To my assertion the doctor was visibly aghast. He brushed me off and didn't return my calls thereafter.
This was a lesson for me that prestige and privilege often does callous a man’s heart and if unchecked will stain his actions with an ugly reflection of indifference. So I scrimped and paid him every last penny over time.
Another instance much earlier illustrates the nature of leverage on the least of workers. I was in the southwest having finished a large profitable project and wanting to stay in the area a bit longer. So I blanketed the commercial ward with fliers and received a call from a local motel for a bid. The motel owner refused my proposal of just $2.00 per window citing that he could have an undocumented person from Mexico do the work for just twenty five cents per window. Indignantly he then proclaimed: (as if he cared about my plight) "this situation was the doing of our government, and that You should take it up with your senator!"
I retorted that "It's a free man’s prerogative whether to furnish people with a decent minimum wage, and as such you should man up and at least own your own actions". This was the first of many times I would hear this same argument. It is a greater struggle to truly do our best than it is to blame someone else for our worst behavior. I didn't particularly need the work, but others certainly do and that experience told me just how uncaring someone infected with earning money can become.
In fairness most establishments in other industries and professional spaces were paying $4.00 to $5.00 dollars per window, plus a fee for the setup and removal of staging where required. I easily earned sixty dollars per hour or more just cleaning windows. So there is still plenty of opportunity for those who have the gift to market well, in spaces where others just don't care to do the work. I believed in charging a fair fee for my work and had no problem achieving that goal at least while I was self-employed before there were numerous employees to look after. (Not everyone had the attention for detail required for window cleaning).
The ceiling for profit in the general custodial work in a small pond (with travel costs factored in leaves little wiggle room in what one can afford to their help. And I had no loans, franchise fees or investors to pay. Though I had built a company by that time with ten full time employees. (Up to twenty in the summer months) having a loyal following, easily half of the existing market, number one by sales in Mason County of just thirty thousand people. Honestly I can't imagine what hardships life must have delt employees of number two or number five in the same market!
But those words of that innkeeper continued to resonate with me. Perhaps he was right about one thing, what we cannot do in private alone we might accomplish in public collectively. In a world where getting a fair shake is by no means guaranteed, our Constitutional Bill of Rights ought to be interpreted to reflect our natural inheritance as creatures of this planet to the arbitrary construct we call our nation to include the minimum basics all need to exist.
I think that we would mitigate many of the problems of our society including: fatherlessness, incarceration and domestic violence plaguing our great cities, if we were to simply absorb and take action on that single ideal. But first the change must occur in our own hearts.
Together if is possible to make certain that every citizen of our nation has at minimum the access to the basics to sustain his or her life. (Shelter food and medical care). The only ethical solution to the present paradigm being a shift in worldview to remove the ugly stigmatization of entitlement from our vocabulary. Rather than entitled we might say that every life has fundamental value which ought to be protected.
Imagine a nation where people are truly free to pursue their dreams without fear of starvation, homelessness and medical emergencies. There is precedent, the Scandinavians have been doing this successfully for many years. Are we so proud that we refuse to learn from the success of other models? My experiences have impressed upon me that any discussion of business ethics ought to ensure a bit more dignity for the least appreciated among the working class.
I count myself fortunate to be able to own companies and having lived a good life and truly have no complaints about the lack of opportunities afforded me, there have been plenty. I wasn't timid I didn't take no for an answer. Too often I think we get stuck managing problems when what we ought to doing is rejecting the status quo and leading not only our companies but also our employees and our communities to growth.
I also acknowledge that I too have enjoyed the privilege of wealth at the particular expense of others much less fortunate, (As a pawnbroker). In a competitive system there must be winners and losers. I never gave much worry to the loss of material things. It is afterall just stuff. And so I play the game of business without too much worry about that. "We rationalize to ourselves that if I don't take this opportunity, no one else will give it to me, no one else will look out for my family." This mindset though natural and encouraged by the competitive spirit, if unchecked by compassion leads to increasingly calloused behavior in the best of us.
The difference between what pawnbrokers and retail buyers jobbing textiles in Southeast Asia is that the pawnbroker actually faces his suppliers (people who are in a pinch needing cash) directly. I haggled to get valuables at a cost that allowed sufficient revenue and profit. I built a reputation on paying a thirty to thirty five percent more than my competitors for the things of value I sold. Though it never seemed to be enough. The pawnbroker deals with untold hopelessness and desperation with people who fall between the cracks, primarily from the loss of steady work and insufficient wages. There is no better classroom to learn sociology hands on and to practice business ethics than your neighborhood pawn shop.
This is really how I came to be writing books and PULSE articles about the basic building blocks of ownership and bootstrapping business. That and having sold ( my one regret in business) one of my pawnshops to a young man who as it turned out lacked the skill to run the operation profitably. I vowed to never put anyone in that position to fail again. So my first business book (Backroom Pawnshop Deals) was about how to run such an operation.
I believe that there is much room for improvement in our institutions and in our own hearts to enable everyone to learn to become more self-sufficient while still saving grace for those poor souls who find themselves seemingly hopeless and heavy burdened.
Citizens of these United States share a heritage of overcoming adversity and together we can find ethical and practical solutions for everything that we face one Nation under God with Liberty and Justice, hopefully in the direction of Dignity for all.
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