Blog > Category: Politics
Kudos to Secretary of Defense Robert Gates and Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, for advocating repeal of the 1993 “Don’t Ask, Don’t Tell” law. This hypocritical act forces honorable military men and women to be inauthentic by hiding their sexual identity or be forced out of the U.S. armed forces.
Admiral Mullen was especially forthright when he stated, “Allowing gays and lesbians to serve openly would be the right thing to do.” He went on to say eloquently, “I cannot escape being troubled by the fact that we have in place a policy which forces young men and women to lie about who they are in order to defend their fellow citizens. . . For me personally, it comes down to integrity – theirs as individuals and ours as an institution.”
Mullen said what every military person knows, “I have served with homosexuals since 1968. Putting individuals in a position that every single day they wonder whether today’s going to be the day, and devaluing them in this regard, just is inconsistent with us as an institution.”
Since the passage of the 1993 law, the U.S. has officially accepted gays in the military as long as they hide their identity. In other words, your sexual identity is acceptable if you don’t tell anyone about it – or more baldly, just don’t be authentic about who you are. It’s hard to see what harm could be done to the armed forces if troops were allowed to be open, since every soldier already knows there are gays in the military. Are U.S. officials really that threatened by people who are gay or lesbian?
Last week I had the privilege of delivering the keynote address on “Authentic Leadership” at the U.S. Naval Academy’s annual leadership conference in Annapolis. This event included leaders from more than fifty universities and academies in addition to hundreds of cadets. As I got to know many future officers, it never occurred to me to wonder which of them might be gay. But it troubled me greatly to think that U.S. law forces those who are to be inauthentic – precisely the opposite message of my talk.
In my “Authentic Leadership Development” classes at Harvard Business School, I have had several retired military officers share with me their deep fears that every day their sexual identity might be exposed by a former partner or someone who didn’t like them. It is not surprising, but very sad, that these graduates of our military academies gave up their careers because they could no longer tolerate living a lie and living in fear.
It is worth noting that it isn’t just gays who are forced to compromise their honor. Many straight officers have confided their worries about having some of their best troops exposed and not wanting to begin the process of their expulsion from the military.
Most disappointing of all was Senator John McCain, who reversed his 2006 position when he declared, “When the military wants to change the policy, we should consider seriously changing it.” Now, he is accusing Secretary Gates of being “clearly biased.” Before making such accusations, McCain should look in the mirror and ask himself, “Who’s biased here?”
Sixty years ago – long before the passage of the 1965 Civil Rights Bill – the armed forces led the nation in integrating its ranks from top to bottom. What a loss it would have been to this nation had General Colin Powell not been permitted to serve his country as chairman of the Joint Chiefs. It’s about time that the military catches up to the rest of the country in openly accepting gays throughout its ranks. Might there be a gay person who could rise to the top as General Powell did?
One of the cases in my HBS course is on Lisa Sherman, a talented executive who felt forced to resign from Verizon in 1994 because she couldn’t safely reveal her sexual identity. Her departure caused former CEO Ray Smith not only to change the Verizon culture but to campaign for passage of the Employment Non-Discrimination Act.
I open the class by talking about our “hidden differences” and asking students to write down one thing about themselves they don’t want anyone else to know. This simple exercise enables them to “walk in Lisa Sherman’s shoes,” rather than objectifying her as a lesbian that many cannot relate to. All of us have hidden differences. Shouldn’t we work toward a society where we can share them openly without fear of rejection?
Thanks to Admiral Mullen and Secretary Gates for bringing us one step closer to the time when all Americans can reveal their hidden differences without fear of retribution and become truly authentic leaders.
Even more coming out of the #WBF09.
Former President Bill Clinton began his Wednesday night speech with the acknowledgement that much had changed since he assumed the WBF stage in 2007: “I was reviewing my notes [from last year] and things are a little different now than they were at that point.”
And though we remain in the midst of a worldwide economic downturn, President Clinton believes there is something that each of us can do to make a dent in global problems. As we continue moving into the 21st century, we need to think very hard about good global citizenship.
Some highlights from his remarks:
- It is worth remembering that worldwide inequality is a threat to our future. We can afford to make great strides if we just focus on making immediate actionable impact now. For instance, investing in malaria medication, aids medication, and clean water programs will reap incredible health and economic benefits immediately – and carrying into the future – at a minimal cost.
- Regarding the global economic collapse, China really did not have money problems as it enjoyed over $2T in cash reserves. Meanwhile Ireland, England, Iceland, and the US were all leveraged to the hilt. However, despite the on-hand cash, China was also hit by the financial crisis as it had no one to buy their products. The lesson is that no country is completely stable or independent.
- There are many people who question whether climate change is as important as 95% of all scientists claim it to be. “But when I think about the future of my children and grandchildren, I don’t want to bet that only 5% of people are right.”
- Since 2001 the US ranking in the percentage of people between 25 -34 with 4-year degrees fell from first to tenth. It’s not rocket science – we’re pushing ourselves out of the market.
- There needs to be a new source of jobs every 8 years to remain productive. (The President used the example of tech growth during his term.)
- On the current healthcare debate, “I want to laugh, cry, and gag.” If we don’t solve this healthcare issue, we will drive America into an uncompetitive economic situation.
- When we get out of this recession we have to go back to a balanced budget.
- 90% of the decisions the President gets blamed for are really made by advisors. You hire the President for the other 10%.
- The best thing you can do as a leader is to communicate with your people that you are doing the best you can do.
Columbia Professor Jeffrey Sachs, Director of the Earth Institute, spoke on the economics of a crowded planet.
The remarks—sober in tone—narrates a series of global crises related to a “bursting” planet filled with more people and more resource consumption per person than ever before.
What is happening to the American political system? It’s not only the global resources challenges, but we have clear failures of American politics that are contributing to the shocks we’re facing. If you take a non-partisan, dispassionate view of it, our problems of governance extend for 20-25 years. They are crippling thoughtful decision-making
Here are some highlights, as reported by those in the audience at the blogger hub:
- @AndreaMeyer Sachs: when financial crisis hit, Chinese leadership immediately understood the decline of exports to US would be deep & swift #wbf09
- @SethKahan: Sachs:This country is so awash in politics that it cannot make the decisions it needs to make
- @rjmac: Sachs: Now, multipolar innovation in world. That means new ways to solve problems. #wbf09
- @DonPeppers #wbf09 Jeffrey Sachs: Malthus redux. Get a grip Sachs. Technology is growing MUCH faster than even your worst resource projections
- @rjmac The bursting planet compounds our economic problems, says Sachs, and will destroy climate in 30-40 yrs. #wbf09
- @triplepundit Jeffrey Sachs - Even water is now a binding constraint in much of the world- #wbf09
And perhaps the best Tweet of the afternoon:
- @ssmirnov: Rubenstein says we're poor + Sachs says planet imploding, hoping George Lucas shares plans 4 Endor colonization at 5 pm #WBF09
7:56pm EST - @Bill_George: “#health – waiting for pres. obama’s speech: anticipate he’ll take middle ground on insurance & propose ins exchange instead of public option”
Last night I was confident of several things. First, my Twitter addiction had officially taken hold, and I would fuel it by tweeting my way through the President’s Address to Congress (“Hey, that would make great material for a blog post”…). Second, this speech would define the remainder of the health care reform debate. The President would either steer Congress further into the quagmire or redirect them towards drier, middle ground.
7:59pm - “#soccer – miserable first half for u.s. – donovan had great chance at the end – must do much better in 2nd half”
Lastly the President, and certainly the cast of characters on the House floor, would likely be far more entertaining than the first half of the US v. Trinidad & Tobago soccer game. But I digress.
I switched channels just as the President’s cabinet weaved across the floor. And as the President himself assumed the podium, I wondered: would this speech be a high-flying rhetorical display, or a practical treatise? Would the President go on the attack or play defense? How deep in the weeds would he get on policy? Would he be the Democratic politician, or the bipartisan leader?
Most importantly, how would Congress and America respond? One way to answer at least that last question would be to do just that: respond. So, I did. The following is an array of my Twitter conversations across the duration of the Address, intermingled with a few respective clarifications. What were the in-the-moment reactions to the President’s speech? As they say in the Tweetdom, “follow me”:
8:04pm – “#hcr Pres. Obama must retake control of hcr debate tonite. not about dems and repubs but what’s in it for us and how will he pay for plan?”
And the President was off: “When I spoke here last winter, this nation was facing the worst economic crisis since the Great Depression. We were losing an average of 700,000 jobs per month. Credit was frozen. And our financial system was on the verge of collapse.”
8:10pm – “#health – interesting that Pres started with jobs crisis – at least he is facing that reality but no solutions offered – on to health care”
At the time I was intrigued, but it made perfect sense for the President to set the proper scene: America’s struggling but slowly-recovering economy. This placed the issue in proper context. Cost-effective, long-term health care reform is one necessary component of regaining a strong financial footing and putting Americans back to work.
8:19pm –“#hcr – Pres doing job of making the case for insurance reform – We shouldn’t lose coverage with pre-existing conditions or loss of jobs.”
8:26pm – “#health – insurance exchange makes sense -self-funded? run by government? In lieu of public option? Mandatory coverage good but a tough sell”
I was very impressed with President’s cohesiveness and efficiency in these opening lines. And he was very shrewd to highlight issues of universal agreement alongside issues of universal debate. Compelling recognition of shared interest, this was an important and recurring strategy in the speech, as well as an important step in making the debate respectful as Congress moving forward.
8:33pm – “#health – good move to take on bogus claims by Palin, et al and insurance companies denying coverage”
I had hoped the President would take “death-panels” head-on, and he did so with a confidence and above-the-fray dignity that every President should project in such circumstances.
8:40pm – “· #health – looks like public option is back. He is doing a good job (finally) of making the case. promising savings, but where’s the beef?”
I concede that it’s difficult to interweave important policy nuances into an hour long speech, but the details are what matter right now. At this point, I was still waiting. And so were the Republicans, as they waved copies of a GOP health care bill.
8:48pm – “#health – are medicare savings he’s promising real, or just more reimbursement cuts? Good move to take on malpractice costs and tort reform.
Time, and the Congressional Budget Office, will tell if the savings are legitimate. However, I was pleased with the President’s stance on malpractice and torts. He scored points with independents and conservative Democrats with that one.
9:07pm – “#soccer – US beats T&T 1-0. Great win on the road. Much better play in 2nd half. Good for Ricky Clark. On to World Cup – Let’s get top seed.”
I just had to check the score. And to my pleasant surprise, the US came a winner tonight. Switching back to the speech as the applause boomed and the President stepped down, I pondered: was Obama’s speech a winner too?
9:09pm – “#health – an excellent speech by Obama. Finally, he is back to being a leader and taking control of debate – now the hard work begins.”
Just eight months into his term, Barack Obama is facing a severe crisis that will define his leadership as president. The immediate challenge is health care reform, but the deeper issue is whether Obama the Leader or Obama the Politician will dominate.
Like the Roman god Janus, with two heads facing in opposite directions, Obama the Politician pulls against Obama the Leader. This identity crisis is eroding the President’s political capital, hampering his chances for legislative success on health care, and alienating recession-stricken Americans.
We have always known there were two Obamas: one, the idealistic and compassionate community organizer whose service changed lives; the other, the skilled operative who emerged from the political wars of Chicago’s south side. During the long, brutal presidential campaign, Obama did a brilliant job of integrating these two facets of his persona. Many who supported him hoped and trusted that once elected to the nation’s highest office, Obama the Leader would retain his passionate commitment to certain ideals over and above political considerations. Since January, however, politics has seemed to dominate many of his decisions, with health care being the most recent example.
Rather than provide the leadership he promised on this crisis by presenting a comprehensive, integrated health care policy to the American people, Obama is instead playing politics by ceding leadership to Congress. In leaving the details of the reform bill to Congress, he has effectively abdicated, removing himself from substantive Capitol Hill discussions. Congress, in turn, has focused on only one aspect of this complex problem: health insurance reform that will provide guaranteed access. The other essential aspects of health care — cost, quality, and consumer focus on wellness and prevention — are being virtually ignored. All three must be addressed in an integrated fashion before the health care crisis can truly be resolved.
This will require real sacrifices and concessions from everyone, and a politicized executive cannot make that happen. What’s needed here is realistic and, above all, forthright leadership. How can the President shed political pretense and become the same galvanizing leader on health care that he was during the 2008 campaign? How can Obama the Leader predominate over Obama the Politician and take full ownership of this process?
As leader of this all-important reform effort, he must immediately face the reality that the debate is going in the wrong direction, acknowledge the mistakes he made in abdicating and ceding leadership to Congress, and put the legislation on hold until early 2010. In my recent book, 7 Lessons for Leading in Crisis, this is Lesson #1: Face reality, starting with yourself.
Then he needs to go on offense. Obama should introduce an integrated plan that focuses first on wellness and prevention, develops detailed programs to incentivize quality outcomes and reduce costs, and offers affordable access. Most important, he must take his case to the American people and convince us that this plan is the only way to resolve the health care crisis for the long term.
During the campaign President Obama delivered a remarkable, uplifting speech on race in Philadelphia that elevated our level of national discourse. As president, he has demonstrated strong leadership in the Middle East peace process, and he has guided us away from financial collapse. Here is a man who is capable of authentic leadership.
Now, on health care, the United States needs Obama the Leader to step up again.
On August 7th Alaska Governor Sarah Palin warned that Congress and the White House will create bureaucratic health rationing panels – aka “death panels” – to decide whether America’s sick, aged, or disabled are “worthy of healthcare.” In other words, Palin predicts the government will decide if you live or die, should pending legislation become law.
In the same breath that she mentions death panels, Palin asserts that “[h]uman rights and human dignity must be at the center of any health care discussion.” I wholeheartedly agree. “Rights” and “dignity” are central to the health care discussions we have with our doctors, particularly end-of-life consultations about our future care.
A wide range of media have delivered over forty reports refuting this warped and unfounded claim but shockingly, it is still believed by many, much like last year’s charges that President Obama is a Muslim. Conservative pundits and fringe elements are using it as a call to arms to oppose reform.
Spare us the pain, and examine the facts.
Proposed legislation provides Medicare funding for voluntary end-of-life counseling, also known as advanced care planning consultation. This permits American citizens to visit their doctor once every 5 years to discuss issues like hospice care, health proxies, living wills, and appropriate future pain medications. There are no provisions for bureaucratic health boards, no mentions of care rationing, and no allusions to anything resembling a “death panel.”
Despite all this evidence, arguments to the contrary pervade the blogosphere. The misinformation just won’t stop. Those who hype the “death panel” argument continue to distract attention away from an already confusing debate on healthcare. We need to focus on the framework and details of an integrative, preventative healthcare reform approach, and not get lost in the mire of deficient, inflammatory rhetoric.
Regardless of how irrational their basis, “death panelists” are having a very real impact on healthcare reform. The New York Times reported on August 14th that the Senate will likely drop end-of-life care provisions because they “could be misinterpreted and implemented incorrectly.” Furthermore, USA Today reported on August 18th that while end-of-life counseling “started out as a rare example of congressional bipartisanship,” the measure has effectively zero chance of passing. Not only has Congress been forced to ignore one potential building block for consensus, but many American citizens may be forced to enter a very trying period of life with little to no guidance from their personal physicians.
Framing end-of-life counseling as some form of forced euthanasia robs America’s seniors of the dignity that comes with making these difficult decisions in their waning years. It is a disservice to humane hospice and in-home care, and it insults the intelligence of responsible Americans seeking candid medical advice on extremely sensitive treatment options. This debate is more “sound and fury,” another sidetracked discussion where political rhetoric displaced policy debate.
To get the health care dialogue with the American people back on track, President Obama needs to step up and address these issues directly, along with making the case for comprehensive health care reform – not just health insurance reform – starting with a national focus on wellness and prevention.
Ted Kennedy was a true leader in the United States Senate. While other senators played politics, he rose above them to pursue the causes he was passionate about and reached across the aisle to team up with Republican Senators like Orin Hatch (R – UT). After the death of his brother Bobby, he assumed the leadership of the Kennedy clan and did so with dignity for more than forty years. He overcame the disappointments of his younger years, including the tragic deaths of his brothers and the sad events at Chappaquiddick Island, to become the finest Senator in the United States.
I vividly recall our meeting exactly ten years ago when Medtronic was working to gain his support. A FDA reform bill that enabled patients to receive life-saving medical technology was up for consideration, and Senator Kennedy’s office was the last stop before the legislation was signed into law. Prior to the meeting I waited in a room just off his office that was filled with Kennedy memorabilia. I was there just long enough to soak in the connections with historical events of the world over the past forty years. Ever the negotiator, Kennedy started off by saying, “Well, Mr. George, it looks like we have resolved five of our seven points [which we had previously conceded in his favor]. If you can see these last two points our way, we have a deal.” I patiently explained that these were the two most important points of the bill and that eliminating them would emasculate the legislation. After some thoughtful exchanges, he graciously agreed to accept our position. Two days later President Clinton signed the bill into law.
The United States Senate has lost a great leader who cannot easily be replaced. His life’s story validates the premise that out of tragedy can come greatness. Ted Kennedy learned from earlier events in his life and devoted the last forty years to serving his country with dignity and honor.
The American healthcare debate has taken a turn for the fanatical. An overzealous constituency, bolstered by a media more interested in the next big controversy than the next big policy breakthrough, has snatched the microphone from the nation’s political leaders and temporary drowned out any semblance of a coherent, meaningful debate.
I cherish the First Amendment. I believe that elected officials need town hall forums to effectively represent their constituents. And I am happy to see the public taking an active role in the discussion.
However, as much as it is someone’s right to speak, it is another’s to be heard. And as much as members of Congress need to listen to their constituents, their constituents need to do some listening of their own.
Reforming healthcare to achieve a cost-reducing and long-lasting system is far more complex than many rally-criers would suggest. Crafting a viable reform bill is an intricate process which brings many potentially competing interests – lawmakers, insurers, lawyers, doctors, pharmaceuticals, interest groups, employers – to the table. Boiling viewpoints down to polar opposites and then boiling over in public rage simply distracts from the true goal: affecting a cost-reducing and integrative reform.
The media, particularly partisan talking heads, shoulder every bit as much of the burden for the confusion, mistrust, and misplaced rage streaking the landscape. The nation needs news anchors to play a role in moderating a complicated discussion. Instead, they are juicing ratings with a turbo charged focus on controversy. News coverage has stoked partisan flames, distracting from the issue.
All things considered, I’m left to ask myself: what are the policy implications of all this? What does it mean for democracy when our politicians cannot have a discussion without being shouted down?
As far as the future health of American democracy and civil discourse, this recent rash of extreme activism has the possibility of discouraging politicians from engaging face-to-face with their constituents on hot-button issues. What rational person runs for office hoping for wrathful constituents to berate her?
At heart, I believe the media pundits and town-hall attendees mean well. Though lacking tact, they have reflect viewpoints that are (in theory) based on what they believe to truly be in America’s interest. But they are going about it all wrong. Debate is only possible when other side will pause and listen. An argument without a counter-argument is just a lot of yelling.
Obama has surrendered policy to politics. Here’s a workable proposal to get health-care reform back on track.
Courtesy of BusinessWeek.com
Health-care reform—version 2009—is heading for a train wreck. The debate in Congress is generating more heat than light. While senators and congressmen are on August recess, they are getting an earful from worried constituents, who sense the flaws in proposed plans. The Obama Administration would be well advised to take its own recess to develop a sound, workable policy proposal that can be reintroduced in the fall.
By focusing on politics instead of policy, the Obama Administration has erred in letting Congress create an unworkable reform. The final health-care legislation is being severely compromised by myriad lobbyists and special interests who advocate to protect their turf but rarely contribute to sound long-term policy. Already numerous side deals have been cut with industry groups that make a noncompetitive market even less competitive. The bills under consideration will only make a broken system worse, resulting in unintended consequences.
Health care already accounts for one-sixth of U.S. gross domestic product, and this legislation pushes it toward one-fifth. The system is extremely complex with many interlinked parts. Of the four major elements of health-care— access, cost, quality, and consumer focus on wellness and prevention—current reform efforts address only access to insurance. By tinkering with just one aspect without looking at the whole picture, the President and Congress risk destabilizing the system further.
Granting access to health insurance to all Americans is a worthwhile goal. However, we cannot do so without addressing problems of ongoing cost escalation, major quality issues, and unhealthy lifestyles. The risk in ignoring these other three areas is runaway costs that could bankrupt Medicare while producing convoluted legislation that satisfies no one.
AN AFFORDABLE HEALTH-CARE PROPOSAL
What’s needed is an approach that enables all Americans to gain access to health insurance while incentivizing them to adopt healthy lifestyle practices and rewards their providers for reductions in spending. Here is an integrated proposal for achieving all these goals on a fiscally sound basis:
1. The greatest risk to individuals is facing catastrophic events without insurance. Instead of providing full insurance coverage, the government should sponsor self-funded low-premium, high-deductible catastrophic coverage plans. Catastrophic coverage would kick in after the individual absorbed the deductible. To reduce deductibles, consumers could pay higher monthly premiums.
2. To administer these plans, the government should set up insurance cooperatives that require mandatory portability for workers changing jobs and no limitations for pre-existing conditions, so that no one would fear loss of health-care coverage. These cooperatives would be self-funded and run independently under rules set by the government. All billing would be handled electronically to eliminate paperwork.
3. To address lifestyle issues contributing to the high cost of chronic disease, the federal government should launch a national wellness and prevention campaign—much like the smoking cessation campaign—focusing on sound nutrition, physical fitness, stress management, and reduction of obesity.
4. The federal government should partner with state and local governments to expand community clinics that provide basic services for modest fees and teach people how to improve their health. These clinics would also help consumers access the massive amount of health-care information available on the Internet. This approach puts responsibility for healthy lifestyles where it belongs—on individuals, with support from their caregivers.
5. To promote quality outcomes for chronic disease, the government would shift from reimbursing procedures to paying for keeping people healthy. Physicians and hospitals would be paid for keeping people well, not doing more procedures and tests. Physicians and caregivers would develop integrated approaches to patient care, rather than automatically opting for high-tech, high-cost approaches.
Comparative effectiveness studies would help patients and physicians choose the most cost-effective, proven procedures for treating chronic illness, including accelerated approval of generic drugs after patents expire.
6. Changes in tort laws should be enacted to protect physicians and hospitals that follow these procedures from punitive damage claims, thereby reducing the malpractice claims and class action suits that dramatically drive up costs.
7. To address high end-of-life costs, patients would shift to hospice facilities or their homes where they would receive palliative care.
By focusing on wellness and prevention, consumer empowerment for healthy lifestyles, improved quality in chronic disease management, and reducing overuse of health care, excessive paperwork, and end-of-life costs, this integrated plan ensures affordable access to all Americans while addressing the major elements of health-care costs.
The only costs of this program would be for a national health and wellness campaign and funding community clinics. These costs, a fraction of the $1 trillion price tag being considered by Congress, would more than pay for themselves as citizens choose healthier lifestyles.
This is the only way that we can ultimately ensure health coverage for all American citizens and high-quality, cost-effective care that strengthens our economy and builds a healthy population.
Courtesy of BusinessWeek.com
Wall Street may have stabilized, but the crisis on Main Street is deepening. The jobs crisis is going to get worse before it gets better.
The stock market is booming again after months of sharp decline. Leading economic indicators are turning positive. Prominent economists, the Federal Reserve Bank, and the White House are proclaiming the U.S. is on its way to recovery.
If you’re one of 7.5 million Americans who lost your job in the recession, don’t buy into this optimism for a minute. Wall Street may have stabilized, but the crisis on Main Street is deepening. Get ready for the long haul: The jobs crisis is going to get worse before it gets better.
This recession is the deepest and longest of the past 60 years. By the end of 2009, 9 million to 10 million people will have lost their jobs, triple the number of any period since the Depression. Those jobs aren’t coming back soon. The true unemployment rate, counting former full-time employees doing low-paying, part-time jobs and those who have given up looking, is running 16% and looks like it is heading to 20%.
STIMULUS WON’T SOLVE THE PROBLEM
The situation is dramatically worse among racial minorities and the young. The only sectors gaining employment are government, education, and health care, all of which are largely funded by taxpayers, not private investment. The U.S. cannot look indefinitely to deficit financing to offset private-sector losses.
Last winter’s $787 billion stimulus package isn’t going to solve these problems. These funds are going for tax cuts, extended unemployment compensation, fiscal relief for states, and federal spending. The stimulus package is providing temporary relief that it helping to stabilize the economy but it won’t get the economy growing steadily again, nor will it provide steady new jobs for the unemployed.
The government’s claim that the stimulus will “create or retain 3.5 million jobs” by the end of 2010 is misleading. Saved jobs are generally not sustainable. For example, look at General Motors, which emerged quickly from bankruptcy, thanks to prompt action by the Obama Administration. Its employment trend is clear: non-competitive U.S. factories will be shuttered and thousands of people laid off as GM shifts to more competitive plants overseas. Other traditional manufacturing industries are experiencing similar shifts.
HEADING FOR A JOBLESS RECOVERY
We have structural problems in the economy that can only be resolved with a new growth strategy. The post-recession economy of 2010-2012 won’t resemble the boom economy of 2007-08. The latter was driven by overheated consumer spending and depleted savings, which created nonsustainable jobs that were quickly shed when the financial crisis hit. Consumers who are out of work—or fear that they might be—aren’t going deeper in debt to buy new cars or houses, no matter how attractive the incentives.
It is highly unlikely that traditional companies will be the ones to add employees. No CEOs I know are hiring these days, other than replacement workers, nor do they have plans to ramp up hiring. At many companies, workers who leave aren’t being replaced at all. Companies continue to look to technology for efficiency instead of their employees. When large numbers of employees are needed, jobs are often moved outside the U.S., usually to Asia.
Unless immediate action is taken, we’re headed for a jobless recovery, which will be a drag on the economy for years to come. There is only one way out of the jobs crisis that will create sustainable new jobs: Revive the entrepreneurial economy based on innovation and creativity.
SEVEN WAYS TO CREATE JOBS
From 1982-2000, the U.S. went 18 years without a recession, but not because old-line companies were adding employees. Rather, new companies like Intel (INTC), Microsoft (MSFT), Apple (AAPL), Wal-Mart (WMT), Starbucks (SBUX), Target (TGT), and Google (GOOG) emerged as dynamic growth engines, driven by creativity. Thousands of new companies were jump-started by ingenuity and entrepreneurship. They stimulated U.S. demand and became leading global competitors.
What can the U.S. government do to stimulate another boom in innovation and entrepreneurship? It shouldn’t be by subsidizing preferred industries or funding startups. Instead, the government needs to facilitate innovation and new company formation. Here are seven things that would release the U.S. from a jobless recovery and create sustainable jobs:
1. Base capital gains taxes on the time an asset is held, with assets held for seven years or more taxed at only 10%. Investment tax credits should be dramatically increased and made permanent. These moves will stimulate company formation and capital spending.
2. Incentivize investment in research by increasing R&D tax credits and making them permanent.
3. Actively negotiate free trade agreements to open up export markets for U.S. companies to compete aggressively.
4. Accelerate federal investments in science and technology. To stimulate basic research in renewable energy sources, create a National Institute of Energy, like the National Institutes of Health.
5. Enforce patent and intellectual property rights around the world to enable American companies to realize global benefits from their research investments.
6. Expand educational grants for math and science, to encourage more young people to enter these fields.
7. Liberalize H1B visas to keep talented and entrepreneurial foreign nationals with U.S. graduate degrees in the U.S.
These actions will take time, but now is not the time to look for quick fixes. These steps will provide for sustainable gains in employment and healthy growth for the U.S economy.It’s time to get started.
