Posts Tagged ‘entrepreneur’

Obama’s 2/24/09 economic speech to Congress

After being told by many of his fellow Democrats to back off “the sky is falling” rhetoric, Obama inserted some football coach “we can do it” pep talk stuff into his speech.

Let me tell you about the “we” in that reference.

How ‘we’ got to be ‘we’

America is not the world’s greatest country because “we” are located between Mexico and Canada. It is not the world’s greatest country because there is something in the water here. Or that “we” Americans have some unique ingredient in our DNA.

“We” are the greatest country because of certain crucial ingredients in our constitution and social compact, namely, the rule of law, free enterprise, private property, and reliance of our citizens on themselves to make their lives better, not on our government.

But the Bush-Obama laws of the last five months have to a large extent made those crucial ingredients illegal!

Obama celebrates how great “we” are and what great things “we” have done while simultaneously outlawing the great things “we” did.

Financial capital of the world

For example, the U.S. has been the financial capital of the world for about a century. The “we” who did that were the bankers and Wall Street guys combined with the U.S. laws and regulations that gave those bankers and investment bankers the freedom and leeway to do what they did.

Democrats now point to the subprime crisis as evidence that the bankers and investment bankers are utter incompetents who know nothing and whose activities need to be outlawed. For example, they are now micromanaging compensation of highly paid employees, including those paid by commission based on their sales or profits, and they are outlawing off-site business meetings according to demagogic, scapegoat stereotypes. What is the effect of this? The head of Morgan-Stanley was interviewed by Charlie Rose. Rose asked about these restrictions on compensation. The Morgan-Stanley CEO said the companies not covered by the new federal regulations on compensation are being gleefully headhunted by U.S. companies not covered by the new regulations and by foreign companies like Deutschebank. These are traders and star executives that those companies have been trying to recruit to work for them for years, with only partial success. Now, they are thrilled that the president of the U.S. has limited compensation. It will lead to an enormous brain drain of Wall Street talent to unregulated U.S. and foreign companies.

So while Obama is bragging about and almost taking credit for the great financial power that “we” created, and promising that since “we” created that financial center of the world, “we” can create it again, he is driving the “we” who actually did it and who know how to do it, away. He is also creating a structure of federal control and other laws that prevent a new generation of “we” from recreating the world’s greatest financial system. This started not too many years ago, in the wake of Enron etc. with the Sarbanes-Oxley new regulations which overnight made the U.S. IPO market number 2 to London after years of U.S. domination. The next great thing in Silicon Valley will have to go to London or Hong Kong or somewhere for financing because New York is now under the thumb of the Democrat politicians.

Obama and his Democrat allies say “we” can recreate our role as the world financial center, but he is simultaneously making it illegal for “we” to do just that. Yes, “we” can, but only if the Democrats change the laws back to permit it to happen. If it is illegal, as with Sarbanes-Oxley and the latest restrictions and nationalizations, it will not happen regardless of the fact that “we” are, as always, capable of doing it.

What about the fact that the bankers and investment bankers caused this problem? It’s true. They screwed up. Anyone who points that out should be congratulated for his grasp of the obvious. The bankers and investment bankers would, without the slightest action by the government, correct the mistakes. Their motive is to make as much profit as possible next year. They cannot do that by making lousy loans or by losing people’s money. They would adopt new internal controls to prevent the same mistakes from happening again. They would strengthen their balance sheets so they can again attract investors. This would happen fastest if there was absolutely no government intervention. The market would force them to do it and they would be rewarded to the extent that they get it right, fast. Some regulations relating to private businesses spending or risking need to be improved, but as always, the government needs to be careful not to overreach. Obama is not being careful to overreach. His picture is now next to the definition of overreaching in the dictionary.

Instead, we now have politicians and bureaucrats making business decisions. There is not a snowball’s chance in hell that management by the politicians and bureaucrats will do anything to the banks and investment banks but destroy them. Politicians and bureaucrats are the folks who run the Bureau of Indian Affairs, Katrina, and so forth.

London was the financial capital of the world a hundred years ago. If the British government does not overreact, London will again become the financial center of the world. “We” will be unable to regain our prior status in spite of our bigger market because our government will have made financial market excellence illegal.

Cars, too

The same thing applies to the car industry. Obama says we invented it, therefore we must save it. Actually, the Germans invented the car. Henry Ford just applied the assembly line (which he did not invent) to the manufacture of cars and applied a business principle other car manufacturers did not think of or rejected. That is, he assumed that low prices would increase the number of cars sold and that increasing the number of cars sold would let him lower the price still further, and so on.

The fact that we had the first successful manufacturer and marketer of huge numbers of cars has nothing whatsoever to do with whether the federal government should endlessly pump taxpayers’ money into the Big Three. We actually did invent the TV, but it has been a long time since a U.S. company manufactured one. No one cares.

The problem with the Big Three is their overly generous-to-the-union contracts. The solution is to renegotiate them either outside of or inside of bankruptcy. Taxpayer money should have nothing to do with it. The foreign car companies who manufacture cars in the U.S. are not in so much trouble because their plants are in the South and non-union.

Bankrupting the country

Then there is the issue of Bush and Obama bankrupting the country. When “we” made the U.S. the greatest country in the world, we did not have the ridiculous debt levels—either in dollars or percentage of Gross Domestic Product or whatever metric you want to use. Whether “we” can become great again while carrying this mind boggling debt weight on “we’s” back is very questionable. “We” did it before. And “we” can do it again. But “we” never did it with an $11 trillion dollar debt before. That debt that is now 79% of our gross domestic product and climbing by hundreds of billions or trillions a week as Obama passes one new monster program after another. Our national debt has not been that high since World War II/Korean War. During the Great Depression, the national debt was only about 20% of the gross national product.

It is fairly easy to come up with multiple scenarios in which that debt prevents us from regaining the greatness that “we” created in the past.

Obama is fond of saying we have to spend, spend, spend because we are facing the worst financial crisis since the Great Depression. Actually, at present, the financial crisis is more like the 1981 recession than the Great Depression. One could make a more compelling argument that we have to cut, cut, cut spending because we have the biggest debt since the World War II/Korean War period.

Wall Street has crashed and crashed again and crashed again as Bush and Obama have stumbled ineptly from one “try this” to another. Obama’s spokesman says he pays no attention to the stock market.

Say what? I believe the stock market is where the vast majority of Americans invested their life savings, their retirement money. The only reason Obama pays no attention to the stock market is because it keeps panning his “solutions.” The fact is until Obama causes the stock market to stop falling, everything else he does is just throwing gasoline on a fire.

The locomotive of the American economy is its entrepreneurs. Obama pays lip service to them, but all his policies hurt them. Monstrous borrowing by the federal government crowds out the entrepreneurs seeking financing or drives up the interest rates they have to pay. Raising taxes on the top 2% reduce the incentives that motivate entrepreneurs. Crack downs on Wall Street make it hard or impossible to do the initial public offerings that are the keystone event in the history of companies like Microsoft, Google, and Apple. Democrats would unionize their factories and burden them with greater health care costs. In fact, Obama really thinks jobs come from government and he will kill the private sector by draining more and more tax revenue from them and by regulating them out of profitability.

Yes, “we” can, but only if the government does not outlaw it. Government is outlawing and discouraging and elbowing aside entrepreneurial activities. Top talent in the U.S. will brain drain to the Middle East or London or Hong Kong or Singapore or wherever if the opportunities are better there. Obama seems to have no understanding of that.

We have been hearing for years that social security will bankrupt the country. And it will. The Baby Boomers start drawing their social security retirement benefits in five years in 2014. There is no money in the bank to pay them.

Medicare is worse Alan Greenspan was asked what will bankrupt the country first. He answered “Medicare” and gave the same answer years later when asked again. Medicare is a medical program for the elderly. The Baby Boomers hit 65 in three years.

Medicaid is another program we have been told will bankrupt us. And it will. It is also a program that will be hit by a Tsunami of Baby Boomers is a couple of years.

Several “progressive” states have tried to enact universal health care. All were forced to back off of it within months. It costs too much. Yet Obama is going to enact it right now.

He is also going to pay to send everyone in America to college or vocational school after high school. And spend hundreds of billions on solar and wind, which has already had tens of billions spent on it and it still hasn’t made economic sense. And he is still encouraging a trade war that will all by itself throw the world into a Depression. And he’s going to give 98% of the population a tax cut.

And who’s going to pay for all this? Not our grandchildren. gee, I’m glad to hear that. No, the top 2% who make more than $250,000 a year are going to get their taxes increased and all of the above will be paid for by them and only them.

Well, that would be me and my wife among others. Memo to Mr. Obama: We cannot afford to pay for all that even if we were stupid enough to do so. Richest man in the world Bill Gates’ entire net worth would not pay for even 10% of the “stimulus” bill. We are not stupid enough to do so. If you raise our taxes, we will look for ways to reduce them. I am the author of the book Aggressive Tax Avoidance for Real Estate Investors, now in its 19th edition. If I cannot find such legal ways, I will probably decide that making more than $250,000 a year is not worth the effort and let my income drop down to $249,999. It won’t affect our lives much. I expect most others will do the same.

Others will decide that cheating on their taxes is too valuable to not risk it. The higher tax rates go, the more people cheat. People can also move to other countries with lower tax rates, if they renounce their citizenship. Obama’s turning the U.S. into a socialist country will no doubt cause many to do just that, especially those with high earnings.

In short, Obama’s speech was incoherent. There is not enough money in the world to pay for all the stuff he promised. We cannot even afford the stuff we enacted into law before last year. And his additional promises that we will not leave a big debt for our grandchildren or raise taxes are even more at odds with reality. Yet every time he made another insane promise, the audience stood up and applauded again.

America has lost its mind. Reality, national bankruptcy or hyperinflation is what we will get. How many years from now? I will look for media stories by experts who run those numbers. It can’t be much longer.

I appreciate informed, well-thought-out constructive criticism and suggestions. If there are any errors or omissions in my facts or logic, please tell me about them. If you are correct, I will fix the item in question. If you wish, I will give you credit. Where appropriate, I will apologize for the error. To date, I have been surprised at how few such corrections I have had to make.

Leadership lessons for the military from ‘Deadliest Catch’ reality series

Discovery Channel’s Deadliest Catch TV series

Deadliest Catch, not to be confused with Ocean’s Deadliest, the series that was filming when Steve Irwin was killed by a stingray, is a weekly TV reality series about Alaskan opilio crab fishermen now in its third season.

It began as a single documentary about what they described as the most dangerous job in America. It is about eight crabbing boats and their crews fishing for opilio crab in the freezing waters and harsh weather north of the Aleutian Islands near the Bering Strait.

What the military claims to be

The Deadliest Catch crews are what the U.S. military claims to be, but generally is not. They are competent men, plus some rookies whose competence is yet to be learned and demonstrated. They face extreme danger for weeks at a time. Men die and get what the military calls “wounded” and disabled. They work extremely hard and are bone weary from doing so. It is mostly physical work. They must work as a team. They have a couple of leaders: the boat captain and the guy in charge of the deck operations.

See my other articles on:

whether there is any such thing as military expertise

• so-called ‘elite’ military units like the rangers or airborne

military medals

process- versus results oriented managers

famed on-time, under-budget contractor C.C.Myers

our recent wars should be run by lieutenants and captains

is military integrity a contradiction in terms?

the U.S. military’s marathon, 30-year, single-elimination, suck-up tournament OR How America selects its generals

is the U.S. military as good at producing leaders as it claims?

Results-oriented entrepreneurs

The crab fishermen are also what I hold up as the iconic, best examples of competent men:

• entrepreneurs, not government bureaucrats

• results oriented—they get paid by the crab, not for punching a clock or looking the part or talking a good game

• well led by men who all have different personalities and leadership styles

• brave, but not awarding or wearing any medals

• judged entirely by their performance, not but their degrees, appearance, or what tickets they’ve gotten punched

Not winning recent wars

It is the military’s job to win our wars. They have not won one since 1945 other than Desert Storm where the enemy behaved in a way that our enemies have not behaved since Korea—sat in easily visible trenches out in the open wearing uniforms—and are not likely to do again. Our military has not figured out how to win wars where the bad guys rely on hit-and-run type operations and either pretend to be innocent civilians or hide in the jungle. Consequently, that’s about the only kind of war we will have to fight in the foreseeable future.

It is the crab fishermen’s job to catch crabs. They get the job done. They have to. They only get paid if they do. They only keep their jobs if they perform well enough for the team to succeed. The boat owners only keep their boats and businesses if they choose and lead their teams and operate their equipment effectively.

Look at what they do NOT do

You learn the leadership lessons from Deadliest Catch best if you focus on the things that the military does that the Alaskan crab fishermen do not. They crab guys do not:

• wear uniforms

• salute the captain or deck boss

• call the captain or deck boss “sir”

• award or wear medals

• march in parades

• get trained in special schools

• look the part other than by coincidence

• use leaders or men assigned to them by some bureaucrat thousands of miles away from the crab fishing areas

• get paid by the hour

• keep their opinions that are contrary to the captains’s secret from him

• kiss ass

• get free medical care for life

• get a pension

• fill out forms in quintuplicate

• say “it’s not my job” when something needs to be done and is not happening

• wear badges or any other indicators of rank

• get paid and retained for decades in spite of doing a lousy job

• get paid and allowed to keep their boat and business if they don’t catch crabs

• allow their equipment to deteriorate to “deadlined” condition

• get promoted on the basis of efficiency reports or the current theories of far-away promotion board members

• have a bottomless pit of taxpayers’ money to endlessly spend in spite of not catching many crabs year after year

• routinely sign false documents or lie to each other

• get transferred to another state or continent or sent to yet another school on average once a year during their careers

If the Navy fished for crab

And if the catching of crab in the Bering Sea were done by the U.S. military, they almost certainly would do something like the following:

• require 80 ships instead of 8

• use ships that were at least three times as big

• use ships that cost 20 times as much—partly because they were built with components from every Congressional district, especially the districts of senior Senators who were on the Armed Forces Committee or senior Congressmen who were on the Armed Services Committee

• use crews that were three times as big and whose main activity was going on sick call

• have new captains who had never been on a crab boat before every year or so on each ship

• hardly catch any crabs

• give daily briefings on how much progress they were making toward catching crabs in the future

• and Alaskan crab would cost $200 a pound at your local grocery

If anyone in the U.S. Navy doubts this, I have a suggestion for them. Pick your best eight guys or whatever it takes to staff a crab boat. Rent a boat and put them on it for a season of the Deadliest Catch, which is a contest to see who can catch the most crab for the season. I’ll bet they come in last and make fools of themselves. What’s worse, I’ll bet that many of the actual Alaskan crab fisherman are military veterans. The problem is not the raw human material coming into the Navy compared to the raw human material coming into the crab fishing business, it is the incentives, or lack thereof, in the Navy, not the people. Although the longer a person stays in the military, the more he turns into a bureaucrat. I doubt long-term career military people could succeed on a crab boat. Whatever work ethic and results orientation they originally had would have been washed out of them by the years in the bureaucracy.

See my Web article on process-oriented people (bureaucrats) and results-oriented people like the Alaskan crab fishermen.

Study the leadership and teamwork, but mostly the incentives

They should be studying the videos of Deadliest Catch at the service academies and elsewhere in the U.S. military. But more importantly, those who are at the top of the civilian leadership of the military should look at the incentives and organizational structure of the crab fishing industry and mimic that in the military. The details of how the crab boats are configured and the personnel and teamwork and the rest all follow from the combination of the incentives and human nature. The same is true of the military. Their chronic ineptness and sloth follow from their incentives and human nature. And now, from 50 years of the same, from their habits.

Former Navy SEAL

On one episode of Deadliest Catch, their “greenhorn” (new guy) was a former “elite” Navy SEAL. He was unable or unwilling to work for much of the trip—on a boat where they have no spare employees, so the others had to do his job when he could not or would not. The crew did not like him at all and he was fired or quit during or at the end of the trip. He is not necessarily representative of all SEALs, but as far as I know no other SEALs have appeared in the Deadliest Catch series, so they are stuck with him as their only representative.

I am a West Point graduate and Vietnam veteran. My brief military bio is at my military home page,