In September of 1998, President Clinton announced America’s first budget surplus in nearly 30 years. We’ve heard lots of politicians take credit for that accomplishment, but in reality, nobody saw it coming. It was the mother of all fiscal surprises.
What pulled Washington out of debt and put $70 billion of profit in the U.S. Treasury was a huge surge in tax revenue from the stock market’s unprecedented bull run. That surplus lasted until the turn of the new millennium, when the technology bubble burst.
That’s when everything went to hell. And nothing’s been the same since.
Sure, the technology industry and the stock market eventually recovered, just in time for another bubble to burst. This time it was the sub-prime mortgage crisis and a nearly catastrophic worldwide banking meltdown. And of course, the market caved in again.
What’s next? I have no idea, but what I do know is this: For the last quarter of the 20th century, the stock market grew at a relatively steady rate and America’s Gross Domestic Product grew an average of 3.2% per year. Since then, annualized GDP growth has been about 1.7% and the stock market has behaved like a giant rollercoaster.
None of that is conducive to a prosperous nation.
Yes, there are economic cycles. At least that’s what the economists tell us. But if your gut tells you that what we’ve been experiencing for the past dozen years or so is not part of an economic cycle, you’re in good company. Every clear-thinking executive and business leader I know would agree with you.
Make no mistake, we did this to ourselves. And while we did manage to avoid a worldwide depression, we’re still stuck with high unemployment, a sluggish economy, and record debt. We are not on the road to recovery. Actually, I’m not sure where we’re heading. And that’s a big clue to the problem in America
You see, some time ago I was reading about how Barack Obama and George W. Bush are the most polarizing presidents of the past 50 years. They apparently had the largest gaps in approval ratings between Republicans and Democrats. And they’ve been running the country for, let’s see, the last 12 years.
Coincidence? Nope. I subscribe to the principle known as Occam’s Razor which suggests that, all things being equal, the simplest explanation is the right one. And the simple explanation for America’s dilemma is this: as of late, our leaders in the Washington have not been very good leaders. Sure, they got some things done. They somehow managed to lead us into this mess, which was no easy feat. But they’re not strong enough leaders to lead us out of it. Therein lies the rub.
Look, people will always disagree on things. I don’t care if it’s politics, economics, religion, sports teams, or beer. We’re a nation of individuals with free speech. Opinions and debates come with the territory. Why can’t we all just get along? Because we can’t. That’s not how things work.
But sometimes, we somehow manage to get things done. That’s what happens when leaders are effective.
Effective leaders aren’t polarizing or divisive. They’re the opposite of that. By definition, effective leaders are able to get people with disparate views to come to agreement and move in the same direction. That’s how things get done.
In fact, leaders just need to come up with three things for any organization, business, or company to prosper over the long haul. And yes, it’s true of nations, as well.
A Shared Vision and Common Goals
If you don’t know where you’re going, you have no chance of getting there. Not only that, but when there are warring factions within an organization, I guarantee that no good will ever come of it. That’s why putting political party ideology ahead of the needs of the entire nation never works. If half the nation is all for it but the other half is appalled by it, forget it.
Instead, leaders have to present a compelling vision and a set of goals that most people can get behind.
No, it isn’t easy, but it’s doable. Strong leaders can do it. They do it all the time in the business world. And they’ve done it before in Washington, too.
I would think all clear-thinking Americans want to have a prosperous nation, a nation that’s strong and undivided so future generations have a better life than the previous ones had. At least that seems straightforward enough.
Winning Strategies to Achieve Those Goals
It’s said that doing the same thing over and over and expecting different results is a sign of insanity. It’s fascinating how we continue to spend more and more and grow the size of government, and yet, we somehow expect our debt to shrink and our economy to improve.
So much for winning strategies.
Still, during the presidential debates I was surprised at the level of agreement on several key strategies that I think will go a long way to bringing America back to prosperity:
- A new, simpler tax code that gets rid of most of the deductions and loopholes, including a reduced corporate tax rate that’s competitive globally and incentivizes the right kind of corporate behavior, like repatriating profits instead of parking them in offshore accounts.
- Energy independence. An “all of the above” strategy that includes safe nuclear, clean coal, oil, and natural gas as well as renewable initiatives. And while government funding of pure research has always made sense, it should leave investments in individual startup companies to venture capitalists and investment arms of private companies.
- A budget surplus that, over time, will reduce the national debt to something the nation can afford. Companies and families need a healthy balance sheet, revenue growth and profits for positive cash flow. Our nation is no different. And I bet there’s a huge amount of waste, redundancy, bureaucracy, and fraud in the budget, especially in entitlement spending.
- A strong defense and international presence to protect American’s and American interests at home and abroad.
I can go on but I think you get the point. This isn’t rocket science. And with strong leadership, maybe, just maybe, some of those strategies might actually get done some day.
Holding Certain Core Qualities in High Esteem
One thing every business leader or chief executive quickly learns is the power of human culture. If a company holds certain core qualities or attributes in high esteem, consistently reinforces them, and they prove beneficial to the entire organization, people will emulate that behavior.
On the other hand, the success of corporate turnarounds and mergers are often dependent on the ability of leaders to drive cultural change. So, when it comes to change, culture can be a great facilitator or a huge obstacle.
Clearly, America is in the midst of cultural turmoil, but I think our polarizing leaders have reinforced a lot of that behavior. In other words, not only have they failed to bring people together, they’ve actually fomented an “us against them” cultural divide.
Just consider the rhetoric we hear all day, every day: Wall Street versus Main Street, the 99% against the 1%, the millionaires and billionaires aren’t paying their fair share, unions against right to work, big business versus government regulators, and on and on it goes.
With all the divisive rhetoric all over the airwaves, the blogosphere, and social media, is it any wonder that nothing gets done in Washington?
Clearly, there needs to be real change in America. For that to occur, there has to be a sense of crisis. People have to bottom out. We can’t just want to change. We have to feel the need to change. That’s how change works. It’s true for individuals and companies of any size. For example: Lou Gerstner was able to turn around IBM, but I doubt if that would have happened if the computer giant wasn’t on the brink of disaster. It was either Gerstner’s plan or break up the company. Sounds like an easy choice, but changing the culture of a century-old company was anything but easy.
Steve Jobs once said that getting fired from Apple, the company he co-founded, “was the best thing that could have ever happened” to him. He said, “it was awful-tasting medicine, but I guess the patient needed it. Sometimes life hits you in the head with a brick. Don’t lose faith.”
When Jobs returned to Apple many years later, he had grown up quite a bit. And that enabled him to save Apple from bankruptcy and create the most valuable technology company on Earth.
How does that relate to America’s leadership crisis?
Well, I know we have plenty of competent, capable leaders ready to step up to the plate. And I feel pretty confident that, eventually, things will get bad enough, Americans will have their “aha” moment, and elect one of those leaders. My only hope is that it happens sooner rather than later. In any case, I haven’t lost faith. You shouldn’t either.
Steve Tobak is a management consultant, former senior executive, columnist and author of the upcoming book, “Real Leaders Don’t Follow." Tobak runs Silicon Valley-based Invisor Consulting where he advises executives and business leaders on strategic matters. Contact Tobak. Follow him on Facebook, Twitter or LinkedIn