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Bill George

Harvard Business School Professor, former Medtronic CEO

Category: Partisanship

What the President Should Say on Jobs and the Economy

Tonight President Obama addresses the nation at a joint session of Congress about his plans to expand job growth. Here’s what he should say:

My Fellow Americans:

Our country is facing a jobs crisis of major proportions, the greatest since the 1930s. This nation’s strength is based on its strong economy and the global corporations that dominated their industries and fueled growth throughout the world. But now that strength is waning, as other nations, from China, India, Singapore, and Brazil to Germany and Switzerland, threaten to outstrip us in competitiveness.

In the 1990s our economy produced 23 million jobs and three consecutive years of budget surpluses. The combination of the Bush tax cuts and spending to finance two wars and entitlement plans created an enormous debt burden that future generations will be forced to carry. The historic downgrade of the U.S. debt rating from AAA to AA+ by Standard and Poor’s is a warning we cannot ignore.

The excesses of the past decade have imperiled our fiscal stability and left 25 million Americans – 16.2% of the workforce – unable to find full-time jobs.  As a result, the United States has its smallest full-time workforce – less than 55 percent – and hundreds of thousands are dropping out each month.

When I came into office, I inherited a broken economy. Our banks, insurance companies and automobile makers were on the brink of bankruptcy. We took aggressive steps to stop the bleeding, and prevented the world from depression. I launched a $893 billion stimulus package but it had limited impact on the structural jobs crisis.

A robust recovery must start with jobs growth. Recent figures confirm that jobs are not growing, and there is no indication they will return without aggressive actions on our part. Yet we continue to get pulled off course by partisan showdowns over the budget and debt ceiling.

We need to stop making it difficult to grow businesses and hire workers in America. In response to excesses of the past, we overregulated our industries. With domestic growth approaching zero and the challenging regulatory, tax and political climate, companies are investing instead in rapidly growing emerging markets in Asia, Latin America and Middle East.

As a result, the jobs crisis is more severe than ever. The U.S. has sunk further into debt, and the country has reached the limits of its borrowing capacity. Our political stalemate has paralyzed our ability to take decisive action.

Therefore, I will use the powers entrusted in me as your President to take the actions required to put Americans back to work and restore domestic growth. All these steps must be taken without increasing the budget deficit.

Here is my plan:

  • Restore fiscal stability by implementing the proposals of the Simpson-Bowles Commission to bring revenues and expenditures in line and reduce deficits by $4 trillion.
  • With the recent debt downgrade, the government cannot subsidize federal jobs; therefore, I am appointing John Bryon, my Secretary of Commerce nominee and a former CEO, as Jobs Czar to work closely with American employers, large and small alike, to stimulate domestic investment and create 10 million jobs over the next decade.
  • To create a positive climate for business investment like that of the 1980s and 1990s under Republican presidents Ronald Reagan and George H. W. Bush and Democrat Bill Clinton, I am ordering all federal agencies to reduce or suspend unnecessary regulations and focus instead on expanding private sector jobs in the energy, transportation, health care, information technology, and financial service industries, as well as small businesses.
  • To prepare unemployed Americans for 21st century jobs, I will reprogram existing funds to invest in retraining and vocational/technical education.  
  • To make America more attractive for investment, I propose reducing the corporate rate to 20 percent, while eliminating complex deductions and credits.
  • For the remainder of my term, I will suspend taxes on repatriated foreign profits for corporations that reinvest their portion of the $1 trillion in cash trapped overseas in manufacturing, research, and job creation.
  • I will expand the number of H1-B visas, travel visas and green cards to make America an attractive place for immigrants to visit, work and start companies.
  • To expand exports, I will implement a free trade policy by moving ahead with free trade agreements with South Korea, Columbia and Panama, while working with nations of this hemisphere to turn NAFTA into the Americas Free Trade Agreement.

 

As your President, I am prepared to put my re-election on the line to put Americans back to work, reignite economic growth, and restore America’s competitiveness. While my plan will not please the extremes of either political party, I ask all Americans to join me in this commitment by putting their country ahead of partisan politics.

Leadership Kudos and Gaffes: Schultz leading globally and domestically, Boehner’s leadership relying on chaos

Leadership Kudos this week go to Howard Schultz, founder and CEO of Starbucks,for his courageous restoration of Starbucks to a pioneering coffee house, nowexpanding around the world under Schultz’s leadership. When Schultz returned as CEOin early 2008, most observers were predicting that the Starbucks mystique was waning and its growth was doomed. Schultz jumped in and addressed the problems head on, even closing all stores for a day to get his employees retrained on customer focus. Since then, Starbucks’ revenues have grown in double digits, earnings have tripled, andfrom its low point in the fall of 2008, Starbucks stock has quintupled. Who says founders can’t successfully go back home?

Leadership Gaffes go to House Speaker John Boehner for explaining Republicans hard line on the debt ceiling on talk radio, “A lot of them believe enough chaos would make opponents yield.” He and his fellow Republicans were certainly successful in causing chaos and contributing to the historic downgrade of the U.S. credit rating from AAA to AA+. But the deeper issue here is that Boehner sees everything as a win-lose contest between parties and isn’t focused on the country’s pressing problems: jobs, growth, and deficit reduction. With 25 million Americans unable to find full-time jobs, don’t we have enough chaos?

Debt-Ceiling Agreement: No Cause for Celebration

This week’s agreement to increase the U.S. debt ceiling is no cause for celebration.

Regardless of what the spin doctors tell us, there are no winners here. The political landscape is covered with the blood of all the politicians who were losers in this “no win” battle. Among the losers are:

  • The President, who lost the leadership on U.S. deficits last December when he ignored the thoughtful recommendations of the bipartisan Bowles-Simpson Commission, leaving deficit reduction up to the politicians in Congress.
  • The Republican Party, which let itself be dominated by Tea Party extremists, ignoring the wishes of the majority of Americans, walking away from a sound agreement and demonstrating its willingness to let the country sink for political gain.
  • The Democratic Party, which has rigidified into the party of more spending and higher taxes while ignoring the country’s mounting deficits. It even undermined its President as he attempted to negotiate an agreement with House Speaker John Boehner.
  • The United States, which has lost credibility in the eyes of the world as a constructive democracy and sound fiscal system which other countries can look to for leadership of the global economy.

The last minute agreement to avoid an historic default did not solve anything. It merely postponed the disagreements and set up yet another committee to resolve these complex issues.

“Gridlock” has become the new order of U.S. politics. Politics as the art of compromise has been abandoned by the current group of politicians who are willing to jettison the country’s best interests in order to gain short-term political advantage.

This is the third time since the November elections that the country has been traumatized by political deadlock:

  • In a single weekend last December, shortly after the Bowles-Simpson Commission proposed a bi-partisan $4 trillion deficit reduction plan, the President and Congressional leadership went in the opposite direction.  They lowered taxes and increased government spending by a combined $4 trillion, intensifying  the problems that lay ahead. 
  • In April, unable to agree on a budget for this fiscal year, the politicians once again took the country to the brink of shutting down the government. The midnight agreement involved more compromises that kept the country running on an empty tank.
  • For the past month the country has been paralyzed by the artificially-created debt ceiling duel. While mounting deficits are a growing concern, the politicians on both sides of the aisle were far less concerned about reducing them than they were in gaining political advantage through an historic game of “chicken.”

The biggest loser in all this is the United States and its citizens. Why? Because we are losing confidence in our elected leaders to put the interests of the country ahead of their political ideology and to reach sound agreements that enable the country to grow and produce jobs while putting the country on a sound fiscal footing.

Meanwhile, this debt ceiling tug of war distracted our leaders from the real issue: the sagging U.S. economy and jobs crisis. The U.S. continues to slip into a “no growth, no jobs” malaise, as recent GDP growth figures prove and twenty-six million Americans (16.2% of the work force) are unable to find full-time jobs. Until people get back to work and the economy starts growing, we will just continue to fight over a shrinking pie, as deficits continue to mount. The only solution to this dilemma is to get the private sector growing once again in the U.S.

However, the CEOs of companies, both large and small, that I have talked to in recent weeks are completely fed up by the political struggles in Washington.  They are turned off and tuned out. They want to have no part of the debate, unless they feel that they have to weigh in to protect their best interests.

These CEOs are pragmatists, not political idealists. In the absence of domestic growth opportunities, they are looking overseas where great growth potential exists. Meanwhile, they are shedding U.S. jobs in favor of productivity gains, which are substantial. Privately, they don’t believe that the President or either party in Congress is committed to building the private sector and removing the myriad barriers that are preventing growth in the U.S.

How can this dilemma be resolved? By presidential leadership, in which President Obama puts himself and his re-election on the line by taking a series of actions to restore private sector jobs and growth while cutting the deficits. President Obama is an extremely smart, savvy leader who knows what to do. Now he must take the political risk to do it because the risks to the country of inaction are far greater.

The Obama 2.0 Series

I have written on the importance of investing in America as a way to rebuild the economy and create jobs, not only replace the ones that we have lost.  It is time for Obama 2.0.  Below I’ve pulled together my series on the emergence of Obama 2.0 as the President. 

 


Time to Invest in America

 

In talking with dozens of chief executives, I hear pragmatic managers focused on building their businesses and earning fair returns for shareholders, yet extremely concerned about government policy. Here are the real reasons they are not investing in America:

  1. They expect no real domestic growth for the foreseeable future. In contrast, they foresee emerging markets sustaining double-digit growth. As a chief executive at a large consumer products company told me: “Half our revenues already come from Asia; within 10 years it will be 70 percent. Naturally, we are shifting more operations there.”
  2. To compete with local companies, global companies are investing overseas in factories and sales and marketing personnel. Foreign governments like China and Singapore make investments very attractive. One chief executive noted that he chose China for his $62 million factory because local subsidies reduced his investment to only $13 million.
  3. Companies are also moving infrastructure support from the United States to lower-cost areas in Asia. Unable to obtain visas for its Indian employees, a major computer software company moved most of its software operations to India, where well-educated employees enjoy higher standards of living at one-quarter of the cost.
  4. Without domestic growth, there is no need for additional employees. Instead, companies are achieving productivity gains by running lean. Mounting costs of doing business and increased benefit costs have created so much uncertainty that chief executives are reluctant to hire, especially small business owners.
  5. Chief executives feel they have access in Washington, but limited influence. Without any business people in the Obama administration, there are no advocates for sound business policies. A successful commercial banker described how open the president appeared to his concerns, yet the next day — without any consultation — the administration announced a new $50 billion bank tax.

Ask yourself: if you were faced with these conditions, would you be investing in America and hiring more people? Unless the climate in Washington changes dramatically, this no-growth, no-jobs environment will continue indefinitely.


 

It’s Time for Obama 2.0

In Obama 1.0, the president stabilized the economy with government spending that minimized job losses and personal bankruptcies. But the economy has stagnated as these policies have been ineffective in stimulating private sector growth, jobs and innovation. Relying on monetary policies and deficits to drive consumer spending is not working, because the economy is experiencing fundamental structural changes that are impervious to these macroeconomic approaches. That’s why there are 26 million people — 16.5 percent of the workforce — who would like to be working full time but are not.

Now is the time to introduce Obama 2.0 by initiating pro-growth economic policies that will invigorate job growth. This means investing in America to unlock the $2 trillion currently in corporate coffers and to stimulate private-sector hiring. Mr. Obama also needs to make fundamental changes in relationships with the business community, overcoming the distrust that has developed on both sides.

The president’s Labor Day proposals were encouraging. He offered a 100 percent deduction for capital investment until the end of 2011, an increase in research and development tax credits that would make them permanent, and an additional $50 billion in infrastructure spending. All three initiatives suggest Mr. Obama is finally moving away from trying to cure the economy’s ills with deficit-fueled government spending and beginning to enact policies that foster private-sector investment and job creation.

 


What He Should Say at the State of the Union

 

Health and Wellness The health reform act granted access to 25 million more Americans, but offers no concrete way to pay for their health care. The president should declare a “national health and wellness campaign” and charge Americans with taking responsibility for their health. Incentives need to be reversed to reward people for staying healthy and holding medical systems responsible for keeping people healthy.

Education The United States is rapidly deteriorating into a two-tier education system, which can only lead to greater unemployment and political rifts. Education Secretary Arne Duncan’s “race to the top” is on the right track, but we need to educate people for 21st century jobs.

Infrastructure The antiquated infrastructure in the United States will take huge investments to bring it up to world-class standards. Are we prepared to raise the bar to the levels of Europe, Japan and even China?

Jobs With 27 million Americans looking for full-time jobs, America cannot have a vibrant economy until people get back to work. This requires investments in retraining and vocational/technical education.

Manufacturing and Exports The manufacturing sector and exports are suddenly showing signs of life, led by the resurgence of the Big Three domestic automobile makers. President Obama’s new Jobs and Competitiveness Council, led by Jeffrey R. Immelt of General Electric, is an important first step. New tax incentives will spur investments in automated, high-tech manufacturing and increase exports.

Innovation Entrepreneurship and innovation are America’s competitive advantages. We need to stimulate investments in research and development, inventions, breakthrough ideas and venture capital.

New companies and small businesses New jobs come from start-ups and small businesses. We need to ease regulations to let companies build their businesses and expand hiring.

If the president begins such an “Invest in America” program and asks Americans to make sacrifices to bring this country back to global leadership, he can set off an American renewal.

Collaboration necessary for positive change

Minnesotans have long recognized the value of individual freedom and the merits of initiative and creativity. Yet we live by the collective — our schools, our security, our environment, our parks and lakes, our safety. We know we cannot thrive without it, either nationally or locally. But many people resent its intrusion into their lives and its claim on their earnings.

The political parties in recent years have sharply divided: to the left — in support of the collective, largely through government actions and laws — and to the right — in support of the rights and freedoms of individuals. Those of us in the middle are in “no man’s land,” trapped in the crossfire between left and right and between increasingly strident voices in politics and in the media.

Most people desire both individual freedom and the support of the collective, even if they don’t articulate it that way.

There is a better way that offers the promise of enhancing individual initiatives while providing “common” benefits for all citizens. I call it “community-building through collaboration and creativity.”

Last October, Indiana University Prof. Elinor Ostrom became the first woman to win the Nobel Prize in economic sciences. The Nobel Committee cited her breakthrough research in the management of common resources like forests, fisheries and oil fields.

Commonly pooled resources

In her book “Governing the Commons,” Ostrom outlines a thoughtful approach that she labels “commonly pooled resources.” Her work stands in sharp contrast to several Nobel laureate economists of the past decade who have argued that people only operate in their self-interest.

 

Originally Posted in The Star Tribune on May 16, 2010

Overzealous Punditry Is Hurting America

Walter Cronkite once said, “Objective journalism and an opinion column are about as similar as the Bible and Playboy magazine.” 

In my opinion, when the latter begins to masquerade as the former – when journalist’s opinions adorn the garbs of objectivity – we face a crisis of journalistic integrity.

This is precisely the situation we find ourselves in today.

A highly partisan culture has emerged in the mainstream and side stream media, releasing a rancor which perpetuates the single-mindedness and inflexible partisanship that now roil the country. “Info-tainers” and shock-jock radio hosts, with rants against opposing party politicians and lambasts of differing viewpoints, contribute little to the constructive debate about how we can fix today’s true problems and continue ensuring that America stays at the respectability forefront.

These media rabble-rousers would not necessarily concern me if they were TV, radio, and internet aberrations, the exceptions to the broadcast-news rule.  But they have become the standard, setting a bar for irrational and incendiary political reporting and bouncing the “vitri-ball” back-and-forth from station to station, from blog to blog.

The sharp divide they engender between parties and politicians is a direct threat to American productivity and progress, and therefore eventually our respectability as an economic and political leader.  Their brand of demonizing politics fosters a culture wherein political stalemates are valued over prudent legislation.  This needs to stop, for everyone’s sake.

As David Gergen and I explored, this socio-political reality can permanently cripple America.  From healthcare reform to climate change, from economic relief to the wars in the Middle East, Americans remain seemingly incapable of reaching anything resembling consensus because politicians and constituents alike have been feeding on this tradition.

Gergen took this conversation a step further in his recent article for the US News and World Report.  Discussing what he sees as a leadership deficit in America, Gergen observes that the current media tone does not help the situation:

The president and his supporters have tended to blame the blogosphere and 24-hour news channels that feature extreme voices and manufacture artificial controversies. They have a point. There was a time in the lives of many today when the culture and the media environment were more civil and the country was more united. The 1940s, ’50s, and early ’60s had ugly moments—remember McCarthy? And Dallas?—but the overall tone was more positive. Was it any accident that those years also spawned Truman, Marshall, Eisenhower, and Kennedy?

Today’s leaders are facing a no-win situation because the media have pinned them in a corner.  Every decision is either overly lauded or ruthlessly decried.  While accountability is imperative, and while we should continue to ask tough questions, we should also realize that the “shout-them-down” approach serves no long-term purpose and only brings momentary self-satisfaction.  This is engendering a culture of skepticism, disbelief, and partisanship that is detrimental to our hopes for continued progress.

And while I wouldn’t say that overzealous punditry is the root cause of partisan disconnect in America, it is certainly more than just a symptom: it is an accelerator.  Today’s news culture makes things worse.

The President has called time and time again for our country’s leaders to rise above pettiness and assume the mantle of dispassionate, consensus-centric leadership.  I agree wholeheartedly that this culture shift is the only means by which we can hope for a return to prosperity, and must acknowledge that any effort counter to that is hurting our country.

Talking heads cheapen discourse.  They tout easy solutions.  They speak in truculent soundbites.  Their invective hurts America.

Our problems are real.  Let’s discuss them in a real way.