Saturday, January 3, 2009

Al Walsh on the US Economy

What to Do About the U.S. Economy
We need to change the way we think and act.




In order to understand where the U.S. is now economically, it helps to go back and review our history:
We started off as an agrarian society, with small cottage industries springing up here & there. Our cottage industries got a jump-start after the Revolutionary War when the British cut us off from many of their manufactured goods, out of spite, and we had to develop domestic supply-sources.


We then progressed through our industrial revolution, which was fed by a plentiful supply of natural resources and immigrant labor; plus technology bought or ”borrowed” from the British.
Our industrial revolution was prolonged and intensified by the supply demands of the Civil War.
Along came World Wars I & II, and the post-war reconstruction of Europe via the Marshall Plan: putting our industrial-capacity on “steroids” and promoting innovation.



At this point we were the economic “masters of the world”; and just about any citizen could start a business & succeed, often despite themselves, because of the massive global demand.


After the post-war reconstruction, other developing nations started progressing through their own industrial revolutions; taking away traditional U.S. industries and generating intense competition.


We’re now at a point where our few remaining manufacturing activities are under threat, and we’ve been reduced to a largely technology & service-provider role. Our technological strength, which ramped up during WWII and has stayed strong since, helped us maintain an edge. But other countries have now progressed to the point where they are doing the long-term basic research which is slowly chipping away at our technology lead.


In order to survive, many of our corporations have gone global; outplacing production and labor offshore.


Recent events in our previously world-dominant financial industry have left open questions about their future influence on global economics.


Our dollar, which has served as the world’s reserve currency since the collapse of the Bretton Woods Agreement in 1971, is under fire and waning in influence. The Fed & Treasury are creating massive dollar inflation to combat economic deflation; we have yet to deal with the ugly after-effects.


Our government has displayed gross ineptness in dealing with domestic affairs, let alone global ones. Massive debt is building that may take generations to dissipate. The Social Security mess hangs over everyone’s heads; and no one in government wants to deal with it.


Our natural resources are going offshore to feed other nations’ industries, and we have become a consumer society; serving as the world’s primary marketplace - however even that status is starting to wane as our societal wealth dissipates.



Our savings-rate has declined to near-zero; as a result, core-investment is declining.


We do a mediocre job of educating our youth and preparing them for adulthood.
So where does that leave us going forward?
In case you think we’re in for major realignment; we’ve already been doing it for decades - with global competition, and lack of response on our part, forcing fundamental changes across our economy. The trend will continue and intensify as China & India progress through their industrial development.
I think America is still in shock and hasn’t come to grips with the situation. We’re still trying to live and conduct business as if we’re in the post-WWII halcyon era.
What can we as individuals and a society do about it?
Our budding entrepreneurs are leading the way and providing the model. Just to get up & running and survive they must identify niche opportunities, and operate lean & mean. They must keep a good eye on the competition, and find ways to steal market-share. They forever seek ways to keep our bloated, unfocused government out of their affairs and their pockets. They’re reaching offshore and taking risks to pursue new opportunities. They’re developing new technologies, and leaner business models.
I’m not sure what will happen concerning our government. We have the government that we chose. Year after year we go to the voting booths; and what we have now is the result of our cumulative decisions as a nation. All I can offer to America is - “Wake up and smell the coffee”. If you don’t like the results, change them! Now! Please!
These days the news surrounding the auto industry encourages us to point our collective fingers and criticize. But ask yourself - Do you run your personal affairs any more efficiently? Most Americans spend more than they take in. Our national wealth is collecting into fewer & fewer hands. We elected the governments that have for decades created so much waste & inefficiency with our hard-earned dollars. We buy… and buy… and buy… while our savings accounts are collecting moths. We’ve transitioned from being a conservative, collaborative post-war society to a liberal Me, Me, Me… I, I, I - focused culture.
If you want to make a difference in our society, start by changing your personal habits. Then go apply good habits everywhere you can at work; saving money, promoting innovation & efficiency, and looking for every opportunity to take business from the foreign competition. Then go to the voting booth and make smarter decisions. We need leaders who can redirect our efforts to causes greater than our individual self-gratification.
Many business-people from other countries will probably read this article. I wish them well, but I also wish that my country would wake up and give them a better run for their money. They’re only doing what we would do in their shoes. Frankly, I think they wish we’d wake up too. After all: If we can’t save & invest, and generate true value in our businesses, we can’t retain the wealth that makes us good customers.

To quote the immortal words of Dennis Miller: “It’s just my opinion, I could be wrong”.
What’s your opinion?
Speak up and be counted!

5 comments:

Anonymous said...

Love these thoughts. Now let's put them into action.

Anonymous said...

Love these thoughts. Now let's put them into action.

Sandra Lampkin said...

Al Walsh tells it like it is. I like that and look forward to reading his next posts.

Larry M elby said...

You make some excellent points, Al. I find it really sad that information like this does not make it into our schools. I'm afraid that is where of deficits will ultimately sink us into a second rate country.

Al Walsh said...

Thanks Larry. Ever notice who the valedictorian is at graduation? It's usually some Asian kid who's parents worked with them. Good for them. The rest of us need to wake up and smell the coffee.