Economic Recovery - The Basis for Sustainability
Prepared for National Bureau of Certified Consultants - National Conference in San Diego California October 2003
If you have been watching the ebb and flow of economic activity for the last few years, you may be thinking that the old rules dont apply anymore. There does not seem to be much predictability or confidence in our economy. What can we do as individuals, as consultants, as business leaders, decision-makers, and consumers to support a healthy, balanced, viable and comprehensive economic recovery?
We need to start with our own thinking. In a capitalistic economy, each participant has an important part to play in the recovery. As in our democracy, so in our economy, each individual must participate in the achievement of economic viability. We are not helpless, nor are we the superfluous man that suffered from errant State planning in the socialized planned economies of the past Soviet Union or the old Red China. We vote for our own well being and the well being of our economy by spending our dollars efficiently and effectively, by making our individual and collective choices good, honest choices. Choices that support liberty, justice, and freedom, both economically and socially, will aid in the recovery.
First we need to understand the problem. A global economy is made of many components. These include ethnicity, language, religion, resources, both human and natural, political systems, cultures, development, and on and on. The complexity can be staggering, but I believe we can all agree on a few goals. Most individuals desire and seek the same basic things no matter where they live. These would be food, shelter, security, freedom, justice, and the pursuit of happiness. If we agree these are basic and similar goals through out the world, then we have a starting point. We can now begin to consider our actions in a global environment. Good choices on our part will ultimately lead us in the right direction.
Ethics There has been much talk about ethics since the Enron and WorldCom debacles. Like good manners, good ethics begin at home or in our own offices and places of business. If we all strive to be honest and straightforward in our business dealings and also support and work only with those who do likewise, this will help establish a foundation for a strong economic recovery. Trust comes as a direct result of ethical behavior. Without trust, based on sound ethics, there is nothing of substance for the recovery to build on. There will continue to be economic missteps and reversals until trust is restored through individual effort. When we agree to put ethics above profits and personal gain, and require that others do the same, then the recovery will be sustainable.
Education It is our ability to reason that will allow us to make wise choices. We must continue to educate ourselves on matters of the economy, trade, markets, new products, technology, and new methodologies. This education will make our choices better choices. Good individual choices resulting from an educated, well researched, well reasoned, thought process, will take our economy in the right direction for the right reasons. This will help build a sustainable economic recovery.
Due Diligence Think before you act! We need to be persistent and attentive when addressing any problem. In todays business environment there are many apparent solutions to the challenges we face. We must not only study the problem, but also the totality and specificity of the solutions. In all cases, we need to think long-term and not just about immediate circumstances. The fastest or easiest solution may not be the best long-term solution. Californias recent energy crisis is an example where this guidance would have been helpful.
Cooperation -- While our legal and political systems are based on an adversarial process, our economic system must be cooperative. In economics, we do not want a winner take all result. Win win should be our goal. We need to keep our eggs in many baskets so dropping one basket will not bring the system down. Everyone should be at the economic table and everyone should come away with sustainability. Labor and business need to work together. Environmentalists and developers need to dialog. Producers and importers need to communicate. No one should be, or can be, left out of a sustainable economic recovery. Just as high tide lifts all boats, economic growth should sustain all segments of the economy. This is only possible if we cooperate.
Productivity Currently productivity is going up. Output is increasing while hours worked in the US are decreasing. What does this mean for the US economy? Increasing productivity is good, right! Well yes, if it comes from a growing work force. Today our productivity increases seem to be a result of outsourcing US jobs to foreign countries like China and importing cheap goods. We need to figure out how to increase jobs and productivity while taking advantage of the world market. We cannot deny that we are in a global economy. We can, individually and collectively, use wisdom and common sense when making economic decisions about where and what to produce, what to buy and how much to pay. Opportunity cost needs to be a part of this decision. When considering the export of our economic productivity to the lowest possible labor rate, we need to factor in the cost of unemployment, welfare, housing, and other indirect expenses of this decision. Maybe we need a US import/export board to help manage our imports and exports so all citizens and not just a few companies benefit from foreign trade.
Social Responsibility As the only remaining superpower the US needs to be mindful of our responsibility for making the world a better place to live. Again a balanced and common sense approach is necessary. Political, economic, social, environmental, legal, and ethical standards should be a consideration before aid, trade and economic agreements are put in place. The US and its citizens have the opportunity to move standards in the right direction, making conditions better not worse for the world population. Those engaging in commerce in the US and abroad should always be thinking beyond short term profit and toward long term prosperity for all. Respecting individual dignity and freedom and providing the tools for their creation and acceptance through out the world builds a good foundation for comprehensive prosperity.
Tax Policy Fair taxation is better than low taxation. Most people prefer low taxes. There is, however, a level of taxation that would not be adequate to support national defense, social responsibility, general welfare, infrastructure development and maintenance, public safety, preservation and recreation, and the arts. Finding and agreeing to this level of expenditure is a tall order. Starving the government of its necessary revenue is not the best approach for reducing expenditures, though there are some that subscribe to this approach. Citizens, especially business leaders, need to think about and support fair tax policy. Be cognizant that a fair tax does not burden any segment of the economy unduly or unfairly. It should not punish nor discriminate. There should be a relationship between a tax source and the purpose of the tax, i.e., the gas tax should support highways. Taxes should be simple, broadly based, and those least able to pay should be exempt from the tax burden to the extent possible and practical.
Unfunded Mandates Government should not set social policy or establish laws and regulations and then expect others to foot the bill. Policy and law making should occur at the lowest possible level of government. There are exceptions to this rule like civil rights protection and environmental issues, but the exceptions need to be compelling. There will never be enough money to do everything that any politician can dream up. Most of us need to set budget priorities in our personal lives. The government should be expected to do the same thing. If the government is incompetent, sets bad policy, is frivolous, wasteful and abusive in its spending, then it needs to be set right. We the governed have the right to demand good government.
Opportunity Besides a good education, the most important thing government can do for its citizens is to provide opportunity: The opportunity to live freely, earn a living, raise a family, buy a house, live with dignity, and not be subjected to encroachments on our unalienable Rights. These are opportunities that a good nation should support. These are opportunities that we as citizens, business leaders and policy advocates must help to develop, maintain, and protect.
Finally, there is a dimension to our economy that gets too little attention. Understanding this dimension will help put our economy on strong footing. This dimension is spiritual. The founding fathers founded our nation by calling on the Almighty for help and support. Many of them were students of the Holy Bible. Washington at the Delaware River, Lincoln at Gettysburg, Reagan on the fall of the Berlin Wall, all invoked a power beyond their own, beyond anything on this earth, to see them and our nation through times of triumph and adversity. Our Nation was founded on, In God We Trust. We, as individuals, need to come to a fuller understanding of the implications of this maxim. This understanding above all else will lead us to economic recovery
By Terry E. Hornbacker, CPCM