The Moment of Truth

When the President announced his formation of a bi-partisan commission to look at the US government’s fiscal present and future, I was pleased. Better late than never. These commissions can be very helpful to a President. They can tackle the really difficult, controversial questions that are very dangerous for individual politicians to touch. A commission report can offer a President an opportunity to raise these difficult, controversial questions publicly without direct political harm, while also providing some constructive recommendations that have been designed by Republicans and Democrats, liberal and conservatives, working together. No small task in today’s America.

The report of the “Debt Commission”, as it was informally called, was released on December 1st of 2010, shortly after the President’s party suffered a serious set-back in mid-term elections, in good part due to issues surrounding government deficits and debt. This was a golden opportunity for the President to “get on top” of this issue for his sake, his party’s sake, but above all, for America’s sake, as President Clinton did in 1995 on the issue of welfare reform following his party’s loss of both Houses of Congress in November of 1994. He chose otherwise. I have no time to waste on the “sturm und drang” of what passes for American political discussion today, but I say that this came to me as a great disappointment, not for the President, but for the Presidency and for the people of the United States.

Nearly a year and a half later, this Commission’s report now gathers dust in the Oval Office’s file cabinet and the report slowly gets more and more out-of-date in its details every day. But in general, it remains as significant today, perhaps even more so if that is possible, than when it was written.

If nothing else, in honor of the hard work of that Commission (I can only imagine how tough some of the debate must have been for this group of varied backgrounds), I would like to “memorialize” it here at Future Brief by republishing the Preamble to the report in its entirety. These words are every bit as meaningful today as they were when they were first written.

The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform

Preamble

Throughout our nation’s history, Americans have found the courage to do right by our children’s future. Deep down, every American knows we face a moment of truth once again. We cannot play games or put off hard choices any longer. Without regard to party, we have a patriotic duty to keep the promise of America to give our children and grandchildren a better life.

Our challenge is clear and inescapable: America cannot be great if we go broke. Our businesses will not be able to grow and create jobs, and our workers will not be able to compete successfully for the jobs of the future without a plan to get this crushing debt burden off our backs.

Ever since the economic downturn, families across the country have huddled around kitchen tables, making tough choices about what they hold most dear and what they can learn to live without. They expect and deserve their leaders to do the same. The American people are counting on us to put politics aside, pull together not pull apart, and agree on a plan to live within our means and make America strong for the long haul.

As members of the National Commission on Fiscal Responsibility and Reform, we spent the past eight months studying the same cold, hard facts. Together, we have reached these unavoidable conclusions: The problem is real. The solution will be painful. There is no easy way out. Everything must be on the table. And Washington must lead.

We come from different backgrounds, represent different regions, and belong to different parties, but we share a common belief that America’s long-term fiscal gap is unsustainable and, if left unchecked, will see our children and grandchildren living in a poorer, weaker nation. In the words of Senator Tom Coburn, “We keep kicking the can down the road, and splashing the soup all over our grandchildren.” Every modest sacrifice we refuse to make today only forces far greater sacrifices of hope and opportunity upon the next generation.

Over the course of our deliberations, the urgency of our mission has become all the more apparent. The contagion of debt that began in Greece and continues to sweep through Europe shows us clearly that no economy will be immune. If the U.S. does not put its house in order, the reckoning will be sure and the devastation severe.

The President and the leaders of both parties in both chambers of Congress asked us to address the nation’s fiscal challenges in this decade and beyond. We have worked to offer an aggressive, fair, balanced, and bipartisan proposal – a proposal as serious as the problems we face. None of us likes every element of our plan, and each of us had to tolerate provisions we previously or presently oppose in order to reach a principled compromise. We were willing to put our differences aside to forge a plan because our nation will certainly be lost without one.

We do not pretend to have all the answers. We offer our plan as the starting point for a serious national conversation in which every citizen has an interest and all should have a say. Our leaders have a responsibility to level with Americans about the choices we face, and to enlist the ingenuity and determination of the American people in rising to the challenge.

We believe neither party can fix this problem on its own, and both parties have a responsibility to do their part. The American people are a long way ahead of the political system in recognizing that now is the time to act. We believe that far from penalizing their leaders for making the tough choices, Americans will punish politicians for backing down – and well they should.

In the weeks and months to come, countless advocacy groups and special interests will try mightily through expensive, dramatic, and heart-wrenching media assaults to exempt themselves from shared sacrifice and common purpose. The national interest, not special interests, must prevail. We urge leaders and citizens with principled concerns about any of our recommendations to follow what we call the Becerra Rule: Don’t shoot down an idea without offering a better idea in its place.

After all the talk about debt and deficits, it is long past time for America’s leaders to put up or shut up. The era of debt denial is over, and there can be no turning back. We sign our names to this plan because we love our children, our grandchildren, and our country too much not to act while we still have the chance to secure a better future for all our fellow citizens.
——–

If you like, a copy of the full report is available here.

The Globalization of Americans

I have a small piece of proprietary data to share with subscribers today. It won’t be published on those sites that usually republish my posts. It’s small, but it is a hint of more to come.

As many of you know from my writing elsewhere, especially Barron’s, that I and my American firm have surveyed the American people on the subject of relocation overseas on several occasions over the years. We have the only database of this kind in existence. We use the services of a well-established, well-respected professional opinion survey firm [IBOPE-Zogby, formerly Zogby International] to implement these surveys of a statistically-valid sample of the American population.

From 2005 through 2007, we completed seven surveys. The last 2007 survey served as the basis of my article at Barron’s, my interview with Erin Burnett at CNBC, and so forth. In June of 2007, the US public was still quite optimistic. The term “sub-prime” had not entered their vocabulary, the real estate market still seemed strong, and there was no talk of a “global financial crisis”.

We did another survey in March of 2009. Now the US public was fully aware of the financial crisis and of the collapse in real estate values in the US. By coincidence, the stock market fell to its lowest levels since the crisis began in late 2007 during that month. We had gone from “good times” to “bad times” in less than two years. As I expected, the number of those who had made the decision to relocate and were actively planning relocation fell sharply. We have several categories for people responding. This is the smallest group. Five groups who are at different stages of interest (including those who plan to buy real estate, but not relocate) were quite stable. It was the people who were on the verge of moving who had taken the hit.

Two months ago in March, I decided to contract one more survey to see if things had changed. I wondered if the percentage actually in the final planning stages of relocation had returned to the level of 2007 (which was also the average for all seven of the earlier surveys), or at least had risen since 2009. The graph below shows the results.

That was a big surprise. We had never had a shift of such dimension. The one from 2007 to 2009 had held the record, but it was blown away by the latest survey. That 2.5%, by the way, represents nearly 3 million households (around 6.5 million people).

The survey results are also broken down by 23 different variables including income, age, marital status, gender and far more. I wanted to know if there was one variable that had made the difference or several. The results of my analysis have been accepted for publication at Barron’s, but since Barron’s is a print publication with severe space limitations, it could be weeks before it is published. My editor kindly has allowed me to share the results elsewhere, as I see fit, without losing my “place in line” for publication at Barron’s. We will see. I am considering various possibilities, but I do expect to be sharing at least some of the results with you in times to come. For now, I will leave it at this.

There has been a dramatic shift, one that caught me completely by surprise. I like that! The public never fails to amaze me and they have done it once again!

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Future Brief will be updated as time allows. If you find it interesting, you are welcome to drop by whenever you like. But if you would prefer to save a little time and effort, feel free to subscribe either to the email alerts or RSS feed in the upper-right corner of the page and the system will automatically let you know. Thanks for visiting!

What’s Up (or Down) with Unemployment?

I have two data series to compare, one from the Federal government, the other from the Gallup organization. Both are concerned with charting unemployment and the combination of unemployment and underemployment on a monthly basis. They use different methodologies and, I am sure, somewhat different question and answer formats in their search for the same information, so it is no surprise that they do not provide exactly the same results. However, any divergence over time does catch my attention.

The Federal data is from the Bureau of Labor Statistics and the Gallup data is from their latest report. Note: Gallup polls on this question regularly and uses 30-day rolling averages. They report once at mid-month and once at end-month. I use their end-month stats to compare with the BLS stats.

The difference between Gallup’s report of 10.3% unemployment for February clashes with the BLS report of 8.9% and has caused me to look back over the last fourteen months to see if there was anything unusual going on. It seems that the last four months have shown a growing divergence between the two reports for both unemployment alone, and combined with underemployment.

It has taken me some time to put these graphs together and I face a series of meetings today, beginning shortly, so I am just putting them up for the moment without much commentary. The divergence may be explained by differences in methodology alone or perhaps it is temporary, but it is noticeable, so note it, I do. I will be keeping an eye on it in coming months.

Although I have no time for a detailed look at the two methodologies, I do wonder whether one factor, emotion, might make a difference during times when unemployment and underemployment are both unusually high for much longer than average periods of time. I have commissioned a couple dozen national surveys for various purposes from private services like those provided by Gallup, although I have used Harris and Zogby. So I also know from experience that who asks the question can have an impact on the response. I ask myself, is it possible that respondents respond differently to a government surveyor than they do to a private surveyor under these potentially emotion-driven circumstances? I can’t answer that question, but it does linger in the back of my mind.

Normally, I would not raise a question like this without first doing my own full analysis, but I know that is not going to happen given my current workload. So I am doing something irregular. I am posting these graphs just to share with you what I have noticed. If someone out there wants to do the necessary research to comment analytically, more power to you! In the meantime, I will watch this and see if the divergence continues and perhaps grows. It may be telling us something of significance or it may not, but it is interesting.

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Future Brief will be updated as time allows. If you find it interesting, you are welcome to drop by whenever you like. But if you would prefer to save a little time and effort, feel free to subscribe either to the email alerts or RSS feed in the upper-right corner of the page and the system will automatically let you know. Thanks for visiting!

Moment of Truth – R.I.P.

In early November, just prior to the mid-term elections in the US, I wrote an essay here at Future Brief titled, The Future of American Politics in a Single Word?. That word was “debt” and I explained why I felt that there are times in history when a single word can sum up a national crisis. Those who accept that “word” and focus on it can get a lot accomplished, while those who do their best to avoid the word or attempt to replace it with a word of their own choosing waste their time and everybody else’s.

These “words” have no power in themselves, their power is only derived from their acceptance as critical by the majority, whether in the US, Tunisia, or another nation. Years can go by, even a couple decades or more, without one of these “power words” (for lack of a better term at the moment) defining social, political, and economic behavior on a national scale. And the “powers that be” do not always recognize them. Talk to the former Tunisian government or President Mubarak, if you want details. But they do come from time to time. Now is one of those times.

In recent weeks, much has been written on the reaction of US state governors to their financial situation. Two Republicans, Gov. Daniels of Indiana and Gov. Christie of New Jersey, have received special note for their simple, straight-forward, blunt warnings to their citizens that the time has come for dramatic change or face disaster.

But it is not just Republicans. Gov. Brown of California and Gov. Cuomo of New York both have solid liberal Democratic credentials and both are as serious in their concern with the growing burden of state debt as either of their Republican counterparts mentioned. This is not my endorsement of any of these Governors’ plans to address their debt situation, that is up to their voters to decide, but it is meant to be praise of their willingness to look at the “word” and deal with it plainly. I wish them all only the best.

The sadder truth is that this has yet to happen on a national level. Of course, there is only one leader who can speak to all Americans as their leader and that is whomever temporarily holds the office of the American Presidency. Mr. Bush failed in that respect. Mr. Obama continues that failure today.

I had hopes last year. Not especially great hopes, but I had them. I recognized that President Obama had his own “moment of truth” coming along. His bi-partisan “debt commission” was to provide its report on the status of the US debt and what needed to be done. That report was issued on 1 December 2010. It was a very bold work and it was not unanimously approved by the commission’s membership, but it did command a majority that included people of very different political backgrounds.

It was a beginning of what could have been a very serious national discussion that eventually led to a consensus. My hope was that the President would sit down and speak to the American public, pointing out the major findings and recommendations of his commission. He could have made a serious attempt to focus his presidency on the “word”. He could have used it to co-opt that word from his opponents. I didn’t care. I just wanted him to see that report as a tool. Not an end in itself, not something to be accepted and promoted uncritically, but as a tool to help him and us to deal constructively with a national crisis.

It didn’t happen. Three months have passed and I have given up all hope that it will happen. The report’s title is “The Moment of Truth”. Well, The Moment of Truth had its own moment of truth and it has passed. I don’t think I’ve seen as important a document as this die so quickly as this one. Yes, it was dead on arrival. There is no other way to explain it.

I have been very busy in recent weeks. A big part of that has been work on my own analysis of the global political and economic scene to share with you here at Future Brief. But much to my surprise, despite my absence from this site for a month, people still keep on subscribing. I thank you for that, of course, and I feel I do have to share something while working on other matters.

So it is today that I wish to resurrect that dead report, if only briefly. Below you will read the preamble to the report. It is not the most eloquent statement on the topic. This is not Winston Churchill on his first radio address to the British people after assuming the title of Prime Minister. No, nothing that impressive, but pretty decent anyhow, especially for a commission made up of very different people, not a single man or woman addressing the public.

This is my way of showing respect for the dead. It is my way of showing respect for a document prepared by men and women who spent countless hours of argument, negotiation, and shared commitment to create it, only to see it dropped into the trash can of modern-day politics. A link to the full document will be included at the end for those who desire it.

The Moment of Truth
REPORT OF THE NATIONAL COMMISSION ON FISCAL RESPONSIBILITY AND REFORM
December 2010

Preamble

Throughout our nation’s history, Americans have found the courage to do right by our children’s future. Deep down, every American knows we face a moment of truth once again. We cannot play games or put off hard choices any longer. Without regard to party, we have a patriotic duty to keep the promise of America to give our children and grandchildren a better life.

Our challenge is clear and inescapable: America cannot be great if we go broke. Our businesses will not be able to grow and create jobs, and our workers will not be able to compete successfully for the jobs of the future without a plan to get this crushing debt burden off our backs.

Ever since the economic downturn, families across the country have huddled around kitchen tables, making tough choices about what they hold most dear and what they can learn to live without. They expect and deserve their leaders to do the same. The American people are counting on us to put politics aside, pull together not pull apart, and agree on a plan to live within our means and make America strong for the long haul.

As members of the National Commission on Fiscal Responsibility and Reform, we spent the past eight months studying the same cold, hard facts. Together, we have reached these unavoidable conclusions: The problem is real. The solution will be painful. There is no easy way out. Everything must be on the table. And Washington must lead.

We come from different backgrounds, represent different regions, and belong to different parties, but we share a common belief that America’s long-term fiscal gap is unsustainable and, if left unchecked, will see our children and grandchildren living in a poorer, weaker nation. In the words of Senator Tom Coburn, “We keep kicking the can down the road, and splashing the soup all over our grandchildren.” Every modest sacrifice we refuse to make today only forces far greater sacrifices of hope and opportunity upon the next generation.

Over the course of our deliberations, the urgency of our mission has become all the more apparent. The contagion of debt that began in Greece and continues to sweep through Europe shows us clearly that no economy will be immune. If the U.S. does not put its house in order, the reckoning will be sure and the devastation severe.

The President and the leaders of both parties in both chambers of Congress asked us to address the nation’s fiscal challenges in this decade and beyond. We have worked to offer an aggressive, fair, balanced, and bipartisan proposal – a proposal as serious as the problems we face. None of us likes every element of our plan, and each of us had to tolerate provisions we previously or presently oppose in order to reach a principled compromise. We were willing to put our differences aside to forge a plan because our nation will certainly be lost without one.

We do not pretend to have all the answers. We offer our plan as the starting point for a serious national conversation in which every citizen has an interest and all should have a say. Our leaders have a responsibility to level with Americans about the choices we face, and to enlist the ingenuity and determination of the American people in rising to the challenge.

We believe neither party can fix this problem on its own, and both parties have a responsibility to do their part. The American people are a long way ahead of the political system in recognizing that now is the time to act. We believe that far from penalizing their leaders for making the tough choices, Americans will punish politicians for backing down – and well they should.

In the weeks and months to come, countless advocacy groups and special interests will try mightily through expensive, dramatic, and heart-wrenching media assaults to exempt themselves from shared sacrifice and common purpose. The national interest, not special interests, must prevail. We urge leaders and citizens with principled concerns about any of our recommendations to follow what we call the Becerra Rule: Don’t shoot down an idea without offering a better idea in its place.

After all the talk about debt and deficits, it is long past time for America’s leaders to put up or shut up. The era of debt denial is over, and there can be no turning back. We sign our names to this plan because we love our children, our grandchildren, and our country too much not to act while we still have the chance to secure a better future for all our fellow citizens.

To download a full copy of this report in PDF format, click here.

Moment of Truth, may you rest in peace.

———

Future Brief will be updated as time allows. If you find it interesting, you are welcome to drop by whenever you like. But if you would prefer to save a little time and effort, feel free to subscribe either to the email alerts or RSS feed in the upper-right corner of the page and the system will automatically let you know. Thanks for visiting!

A Real Honker?

In an earlier post here, I discussed the importance of a single word to a particular period in US history. I spoke of “racism” as the word half a century ago and of “debt” as this period’s key word. But there is another word that I think is very significant during this period, but for another reason. That word is “vulnerable”.

We all know that an individual suffering from a weakened immune system is far more vulnerable to an infection. AIDS is one of the most commonly known, but something as simple as jet lag can lead to a cold that the body’s immune system might have fought off otherwise.

It is no different for societies or other “communities”. As a result of all the very obvious crises facing the global financial world today, the background problem in my mind is that of vulnerability. Without clear leadership and a sense of where we are going and why, we all become increasingly vulnerable to additional shocks to our systems.

I imagine most, if not all, of us are familiar with Nicolas Taleb’s “black swans”, those unpredictable events that, when they occur, come necessarily as a surprise (since they are unpredictable) and thus have great impact. A black swan need not be completely unknown or unconsidered, just unpredictable. And I should point out what a few people forget sometimes: a black swan can be a positive event as well as a negative event. Still, it’s the negative black swan that concerns us. Most of us can deal with success. It’s failure we have trouble with.

We have plenty of black swans out there that are being discussed. The default of a Belgium or an Italy, the downgrading of America’s credit rating, and a host of others that are considered possible, but the details of exactly when, to what extent, under what circumstances, and so forth are simply unpredictable. There are so many of them that another black swan may be noticed and the subject raised, but be ignored by or be unknown to those most likely to be hurt. There is a point of overload and I fear we have reached it.

So it was with interest that I read Bill Snyder’s “Tech’s Bottom Line” column at the Industry Standard, a major high tech publication. The article is titled, Hackers find new way to cheat on Wall Street — to everyone’s peril. The opening words are striking…

High-frequency trading networks, which complete stock market transactions in microseconds, are vulnerable to manipulation by hackers who can inject tiny amounts of latency into them. By doing so, they can subtly change the course of trading and pocket profits of millions of dollars in just a few seconds…”

I won’t take the space to try to explain the problem as a reading of his article does that, but I will take the space to express serious concern. Not only is there the obvious danger of someone gaming the system fraudulently, but there is the simple fact that is this is discovered after it has happened on a scale to be widely noticed, a new and real fear will enter into electronic trading which nearly every investor and speculator uses for stocks, options, futures and so forth. It could have an extreme negative impact on markets.

This article has been republished or referenced at some sites and blogs, as I am doing here, but I have not yet seen an in-depth investigation. I sincerely hope that is underway right now, but I have lost faith in the “system” doing what needs to be done to protect itself. A careful investigation and discussion before a crisis occurs makes a lot of sense to me. My experience, as I know I share in common with many, is that any activity that causes disruption will attract disreputable hackers and it will very likely happen. If the activity is also potential hugely rewarding financially, I consider that akin to a guarantee that it will happen if nothing is done to prevent it in advance.

I began this with reference to one word, vulnerable. The serious concerns raised in that Industry Standard report would be valid under any circumstances, but this is an especially bad time for something like this to be ignored, only to explode later.

Raising this matter today is partially a preface to my next commentary on “timing”, but it is also a real issue in itself. I sincerely hope there are teams of those who are skilled in the technology and skilled in market operations who are working on this right now. Regardless of its color, this is one swan whose honking we can get along without.

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Future Brief will be updated as time allows. If you find it interesting, you are welcome to drop by whenever you like. But if you would prefer to save a little time and effort, feel free to subscribe either to the email alerts or RSS feed in the upper-right corner of the page and the system will automatically let you know. Thanks for visiting!

Let’s Suck It Up and Get On With It

It was shocking to many. Then it was engrossing. Then it was sad. Now it borders on the pathetic. I am referring to the credibility of Americans as they confront the consequences of their financial irresponsibility, accomplished on a scale that assures it a chapter or two in economic histories to be written for decades to come, at the very least.

For many years as I worked in economic development with the old “Third World” and later with the emerging nations, I had a problem. I got too much respect. Why? Because I was an American. Back in the 60′s, 70′s and into the 80′s, that qualified you as an “expert” in many nations who had no experts of their own yet and who very much needed help. They would sit there across the table too often, waiting for the “American expert” to tell them what to do.

These folks were not stupid. But they had very limited experience and typically none outside their own nation. I brought a wealth of information with me from my own experience and that of many other nations where I had worked and consulted. I was happy to share that information and help them apply it to their situation, but they had to make the decisions, not me. I was not there for disaster relief. I was there to assist the economic development process, but it was their process, not mine.

They were also deeply impressed with all that Americans had accomplished. Those few that had visited, often as university students, only felt this more strongly. That was all very nice, but Americans had to do most of the work and make all the decisions on their own and that was going to be the same thing in their nation. I look back today with mild amusement, remembering how I struggled to get this across successfully in a professional manner.

Well, no need to worry about that now, folks. Over the last couple decades particularly, Americans have managed to trash their image and finally convince countless numbers of others that we no longer know what the hell we are doing.

It began not long after we “won” the Cold War and suddenly found ourselves without a major league enemy. The party started with high tech. We all know the results. Not that many years ago and after the 21st century was underway, we watched our stock market collapse. Trillions of dollars were lost, some of them by those folks in other nations who thought we knew what we were doing and where we were going, and had jumped on for the ride. Ooops. Sorry about that.

That wasn’t all bad. It may have gotten way out of hand, but that bubble was based on some dramatic progress made in science and technology that will repay us over and over for a very long time to come. And let’s not forget that if you invested 100K, only to see it fall to 30K when you sold, you indeed had lost 70K. That really smarts. But at least you had your 30K and there was no debt involved or further responsibility on your part. But it is definitely not something you want to repeat.

Needless to say, it didn’t impress too many people in other nations who had invested their money in the same American-made bubble and lost it along with everyone else.

Did that sober us up? Nope, no sooner did we finally accept that the first bubble was a bubble that had popped than we began working on the second bubble. We were going to make creating that stock market bubble look like child’s play and we did it! This time, we left ourselves with a huge mountain of debt and we continue to add to it as I write. Are we capable of a “three-peat”? God help us, I hope not, but if we can, I recommend you hang onto your money.

I am not going to waste your time and mine going into detail. You can find plenty, if you aren’t already overwhelmed. That’s not my point.

My point is simple. We have screwed up twice on a massive scale in full view of the global public. The first time could be “understood”, even if it hurt investors globally, but the second was stupid. Sorry guys, that’s how we look, in part because we were stupid, in part because we can’t stop hollering that we were stupid (and continue to be, if you listen to us) to anyone unfortunate enough to be within hollering distance. With the Internet, that means just about everybody who might even remotely care.

It’s one thing to be your own worst critic. It’s something else to be your own worst nightmare.

We have been doing this for the last few years and it looks like we have plenty more coming. I am not interested for the moment in names like Obama, Palin, Pelosi, Rand, and a whole slew of others. From outside where I live now and have worked for more than four decades, America simply does not have a leader. We have a President and plenty of wannabes, but no one who has successfully communicated with and gained the confidence of perhaps 60% of the people on a continuing basis. In other words, enough people to keep policy moving so that we appear to be a nation with a sense of purpose.

So let’s recap. We went from winning the Cold War to blowing up the stock market to shooting ourselves in both feet and a couple other appendages by trashing our real estate market and helping trigger a global financial crisis. In other words, we went from successful (and admirable) to foolish to stupid in two decades. Now, that’s pretty impressive. Who would have guessed two decades ago? With the latest crisis, we have literally outdone ourselves.

Mind you, I am amazed at the lengths our friends across The Pond have gone to in order to assure us that we are not alone. I suppose we should thank them for that, but it’s probably best that we stick to our own business until we get ourselves straightened out.

The last couple decades have shown two major trends among many. The first is the rise of the New World of nations that are beginning to really grow and profit from that growth. Sure, they have plenty of problems of their own and some are facing near-term challenges, but so did my home nation for many decades. After all, nearly a century after declaring its independence, my home nation was riven by one of the ugliest and deadliest civil wars in history. So let’s not be too quick to predict terrible consequences for these emerging economies that no longer need my expertise or any American’s. They have their own and, good or bad, they are on the move.

The other trend is the hard work of the Old World of the North Atlantic to wreck itself. We didn’t get to where we are today without having put our shoulders to it.

For now, we Americans need to do two things on a long list, but important things. First, we need to focus on the mess they have for themselves and cleaning it up. We all know that, but we haven’t put our shoulders to it yet. Second, we need to stop lecturing the rest of the world on what it is doing wrong and, while we’re at it, stop whining when they ignore us, politely or otherwise. If there is one thing that is clear to me in my global work over the last couple decades, it is that we have to re-earn our credibility and stop complaining that we have lost it. We can do it and I believe we will do it, but we have a lot of work ahead of us.

To those who want to see the world as if it was still the late 20th century, I can only say, forget it. Suck it up, you’re out of date. Enough whining (it has gotten very, very old). Every minute wasted on arguing the past is one less minute available to build the future.

For today, I will leave you with this thought. The United States of America is not the king of the hill. The question that remains, are we the Wizard of Oz or not?

———

Future Brief will be updated as time allows. If you find it interesting, you are welcome to drop by whenever you like. But if you would prefer to save a little time and effort, feel free to subscribe either to the email alerts or RSS feed in the upper-right corner of the page and the system will automatically let you know. Thanks for visiting!

On eating our cake and having it too

I want to share a recent poll that strikes at the heart of many an “Over-50′s” concerns. What will happen to Social Security and Medicare? These two huge programs consume about 40% of the US government’s budget. That percentage is unlikely to be lower in Europe, quite the contrary. Let’s take a quick look at the US federal government’s budget for Fiscal Year 2009 from Wikipedia.

Okay, that helps set the stage. So Social Security and Medicare/Medicaid consume nearly 40% of the budget already and I imagine you have heard that their proportion is growing (true). Since the “Over-50′s” are also “Boomers”, you know one big reason that the financial situation is going to get worse before it gets better, if we continue in the direction we are currently following. The reason? You (and me). Nothing new here. So, what do the American people think about all this? Do they believe social welfare programs are facing a future disaster? If so, what do they want done about it?

The Gallup organization asked those questions and here are the answers in percentages, followed by some of their analysis.

While fewer than half of Americans say they favor raising taxes or cutting benefits to address the economic problems they foresee from the government’s major entitlement programs, 62% do support one approach or the other. Specifically, 12% favor both options, 30% favor a tax increase but not benefit cuts, and 20% favor benefit cuts but not a tax increase. Still, the data show that there is little consensus on how to address a problem most Americans see looming, and more than one-third of Americans (35%) oppose both options. [full report found here]

Aha! Now we see the problem that can come from “entitlement” programs. Americans have been very aware of Social Security’s problems for decades, and for the medical programs more recently, but for a long time too. This is not a new topic. Indeed, it has been discussed so much that it bores most people today to hear any details. They know there’s a serious problem already. So the consensus that a serious problem exists is there, but there is no consensus as to what to do about it. That is a forecast for trouble ahead, big trouble.

Too many folks want the benefits, but at no cost to them. They want to eat that beautiful piece of chocolate cake tonight, go to bed, then wake up the next morning to see the cake still there, intact, ready to be eaten again. Life does not work that way. We know that, but we still have trouble accepting it.

After all these decades of a growing consensus that a disaster awaits us on these matters, we still have no consensus on what to do about it. As long as that is the case, nothing significant will be done…until it is forced on us. When that day comes, perhaps sooner than we think, it is going to be a nasty business trying to force a plan when there is no public consensus supporting it.

Two things to draw from this. First, we have to publicly recognize this problem, raise the issue openly, insist that a solution must be found, and allow the discussion/debate to help us eventually develop a consensus as to a solution. Don’t hold your breath.

Second, for your future planning purposes, just assume this will not be dealt with successfully in advance of blowing up. If you are assuming that Social Security, for example, will provide 20%, 50%, 80% or whatever portion of your income needs, based on the current situation, divide that percentage by half for ten years from now. Why half? Why ten years? No particular reason, but it helps you focus on the likely future need for more income beyond government checks than you might like to think now. If this leads you to seriously consider a Life Sabbatical, fine. If this leads you to put off retirement for a “few years”, fine. If this leads you to make a serious reduction in your standard of living now to protect your standard of living in years to come, fine. Whatever works for you, as long as it moves you to positive action of some kind, is fine.

Yes, either taxes will have to rise or benefits fall or both. I don’t know the outcome, but I suspect the taxpayers who will determine the final answer are more likely to favor reduced benefits over increased taxes. So count on that if you want to be safe.

Let’s go ahead and nibble at the chocolate cake if we feel like it, but let’s not expect it to be there, fully intact, tomorrow.