June 27, 2011
I have developed many strategic plans for success throughout my 40 years of business experience, but the one I am about to present for the nation is the most humbling. Business strategic plans had to capture the keys to profitability and growth. This national economic vision must capture the keys to prosperity for everyone who has a desire to achieve their American dreams.
It starts with education, then a job, and then a career.
People who achieve “success” are able to get beyond day-to-day survival. They find a way to thrive, constantly looking for that next exciting opportunity. This thrive attitude can be rekindled here in this great country, because we have the resources, the ingenuity and that spirit of America that has allowed us to survive during hard times, and thrive when times were better.
Although our public education system has its challenges, we have seen time and time again pockets of excellence where students have defied the odds, when given a chance, to go on and find that elusive success. These exceptions along with the many private and homeschooling success stories are the nucleus for rekindling a results-driven economy.
As my dad and others showed during their generation, a good dose of common sense can go a long way to supplement any deficiencies in formal education if the opportunities are there for someone to better themselves.
For nearly 15 million people, that ladder of opportunity is not there right now. They can’t find a job. By unleashing the full economic potential of our economy, we would ensure there would be a job for every home, and a career opportunity from every job.
This economic vision must start with some economic guiding principles (EGP). As the saying goes, if you do not know where you are going, you will get there. We know where we are going. We’re headed to a thriving land of opportunity.
EGP #1: Production must precede consumption
You can’t spend your way to prosperity. The Obama Administration has shown that this does not work. Most families knew that it would not work because it does not work for a household. My dad had to produce enough cash for a down payment to buy his first home before he could get the keys to the new house. He had to work three jobs at times to produce enough cash, but he did it!
Production is the engine of any economic train, and consumption is the caboose. Before someone consumes, they must produce. The nearly $1 trillion in stimulus spending went into the caboose. They did not help fuel the real engine of the economy.
The engine of our economy is the business sector. It has received only disdain and lectures from the Obama Administration, instead of fuel in the form of lower taxes, less reduced barriers and more certainty about less government. (Specifics will follow in next week’s commentary.)
EGP #2: Economic growth is the result of risk-taking
Entrepreneurial spirit drives economic growth. Risk-taking is the expenditure of time, effort, resources, capital, creativity, energy and passion, all with the expectation that it will pay off, but with no guarantee it will do so. At the risk of his health, my dad worked three jobs with not enough sleep and rest, and little recreational time. It was his choice with the only kind of equity he had, sweat equity. It paid off for him. He achieved his American dreams. One of them is running for president of the United States of America.
Risk-taking is also the willingness to invest your capital in the ideas of others. It is the lifeblood of our economy. A capital gains tax is a wall between people with money and people with ideas. Remove the wall and more ideas will get financed, and more jobs will be created. It is the spirit of America.
When the economy is not growing, we must reduce the impediments to growth and increase the incentives to risk-taking. It feeds the engine. Regulatory burdens, trade restrictions and policy uncertainty all make it more difficult for an idea to get off the ground and the result is less economic growth.
EGP #3: Measurements must be dependable
Imagine what life would be like if we had to wake up in the morning and check the newspaper to find out whether the hour closed at 60 minutes, whether a foot closed at 12 inches, or whether a pound was still 16 ounces.
The economy would be filled with too much uncertainty and eventually become dysfunctional. But that’s exactly what is happening with the most important financial unit of measure in the world, the dollar.
It took my dad 12 years to save enough cash to buy that first house. He did it with the expectation that the value of the dollar would be pretty close to what it was when he started saving. It was, because this nation did not have the deficits we have today, which is forcing inflation and a weaker dollar.
The most solemn pledge a government can make to its citizens is to maintain the value of the currency. The 3rd EGP states that units of measure must be dependable. Dramatically reducing our national debt is the key to stabilizing the value of our dollar.
Prosperity is the natural state of our free-market economy if we get government out of the way, off our backs and out of our pockets. Prosperity begins with production. It requires risk-taking and a stable measure of exchange.
Good economic policy is guided by good principles, not politics.
It’s common sense.