So what should President Obama do? Perhaps two recent articles provide a little guidance. The first was in Businessweek by Michael Porter:
In it, he outlines what has made America successful. The second piece appeared in the Wall Street Journal. It is an editorial by Henry Olsen published yesterday called "What would Reagan do?" In it, the key theme was "focus on freedom."
Both Porter and Olsen have as a foundational element this theme of freedom. Let's reflect and explore upon where our great nation must go to continue to be great. What makes us unique? Clearly freedom is a foundational element.
To summarise what I saw in Porter's article, he feels the keys to our past and future success are:
- Free enterprise: I believe in the entrepreneur. My father was one, and I guess for the time being, I am one too. The spirit of owning property -- real and intellectual -- and being able to make the most of it for yourself, your family and society, is at the bedrock of the Federalist Papers, and our Constitution. Being able to see opportunities outside of government, to solve problems via commerce, has been the driving force of creativity and employment for the USA. How do we make it possible for more people to create jobs for themselves and for others? How do we truly empower the people most engaged in this election; many of whom feel disenfranchised?
- Innovation: while this is closely linked to start-ups, it is not exclusively the domain of them. The government, mostly through the military, drives tremendous amounts of research & development. The airbag, anti-lock brakes, Google Maps, all came from our government. I am far from an advocate of bigger government (I believe George Bush and Congress have wasted trillions in the past eight years). My question is, "can we find ways to make available more of the R&D to the private sector, perhaps through the SBA, to get more people working on new business development in energy, technology, education and transportation?"
- Higher Education: we have the most robust university and college system in the world. Students and professors desire to attend and teach here. But the "feeder system" is in duress. We must find a new model to fund and insure excellence for all students in public education. We must also find ways to share best practices from the private, Christian and Catholic schools. My experience with private schools is that the teachers are not "in it for the money." With a mother, aunt, brother all in the teaching profession, I see that a true love for teaching is at the heart of their professional choice. How can we use technology and collaboration to provide more resources and support across the entire national system?
- Free markets for capital -- human, physical, financial and intellectual: We have demonstrated the ability to change faster than any other nation in history. We have restructured industries (agriculture, steel) and must do so again (autos, healthcare). We renew and restore as we innovate and grow. The key is efficient allocation of resources for optimal growth and prosperity. This means a focus upon productivity in all areas of commerce. Yes, change can be painful, but trying to avoid it just prolongs what will ultimately be much worse. Having the right programs in place to transition is key. Do we have any role models? Yes, we do. We should study how South Korea moved from ship building to autos in the 1980s.
- Decentralized governance of the economy: Porter argues that our nation has succeeded because we have not tried a "one size fits all" approach from Washington. Born from our federalist origins, the states and regions of the US have consistently addressed the unique problems they face on local basis. I have seen what good policies provide for urban renewal in Philadelphia (preparing for 1976 bicentennial celebration) and in Cleveland. I have seen what poor policies do as well in Detroit. Everyone should be familiar with what is going on in Nashville and Tennessee. That city has very progressive, pro-business tax and policies in place and it is exploding with jobs and growth.
- Acceptance of failure; learn and move on: No one likes to fail, but moving quickly beyond mistakes and getting it right the next time is a hallmark of American industry. I remember Alan Gilmour, Vice Chairman at Ford Motor Company, saying that a good strategy was being a fast follower. Ironically, some feel that this is not true to the American spirit, but that is far from the truth. Indeed, let people pioneer, but we must have those ready to pick up the pieces from any failures, and be the ones to learn and get it right the next time. Look at Apple. They did not invent the MP3 player. But they followed and got it right.
While I have laid out some suggestions above in response to Porter's plans. Let me be so bold as to suggest to our President-elect, what should we do now? My suggestions come from a profound belief in freedom of opportunity, but also a gentle hand to insure that equality is not reduced to "survival of the fittest."
- Let's get ready for the inevitable fragmentation which will follow the present state of consolidation. I have seen in my lifetime a consistent pattern WITHIN industries of consolidation then fragmentation. Look at airlines (mergers then start-ups, then mergers). Look at retail (start-ups then acquisitions, then spin offs). How can positive growth policies help people take advantage of new opportunities? As people "hunker down," can we not encourage small businesses in local communities. By getting stores back into the neighborhoods -- urban, rural and suburban -- we can increase law & order, education, and job stability. Why would we not wish to link our agricultural policy with the creation of retail neighborhood groceries?
- Trade agreements should not be tied to buying armaments. They should be tied to infrastructure investment. If they are loans, so be it, but if they are grants, then pay as the projects are accomplished. Many have lost faith in global trade, and this faith should be restored, but it will only be done by showing that our investments are yielding prosperity and stability abroad. We need strong markets for our exports, and viable trading partners for more than just commodities.
- Universities should be asked to use their endowments to promote research and development. And these projects should be used to create new businesses via Venture Capital and SBA support.
- Let's take Americorps, our National Service Corps, to another level. Remember, it was created by George H.W. Bush and strengthened under Bill Clinton. let's re-invigorate our Peace Corps with a specific commitment to a four year college education at the end of 2 years' service. Let's get a commitment from the best endowed universities to jointly fund this program, as sponsors of both the Peace Corps and Americorps. We have the national health services corps already. What is our plan to get people involved in fixing healthcare? I would suggest young people should be part of the solution.
- Let's get Social Security right! Let's make the tough call and move towards a Defined Contribution Plan rather than a Defined Benefit Plan for all pensions -- public and private. Let's set minimums and maximums. Let's put the funds into inflation-adjusted government bonds (TIPS). Social Security should be an incentivized savings plan for both unemployment and retirement. We should seriously look at revising our unemployment p0licies as we take on Social Security.
- Let's get serious about protecting intellectual property. The key for the 21st century is in authentication, validation and commercialization of software/hardware relationships. This is where some of the billions in university endowments should go. I believe both private and government R&D is making progress, but standardization in this technology could unleash billions of dollars of profit and investment if we can get a secure and stable platform.
- Separate public education funding from property taxes. It is a guarantee that poor areas do poorly. I also think a new alliance between private and public schools should be fostered to align excellent curriculum and professional development for teachers.
Those are my initial thoughts. More to come. The underlying support for these are freedom: freedom of speech, of thought, of property ownership, of assembly, and yes, of opportunity.