Did you listen to President Obama’s speech on the economy the other day? No? Me neither. At least not much of it. What little I could stomach sounded like the same old partisan politics, pointless policies, finger pointing, and pandering to middle-class voters.
Not to mention all the BS. It gave me a huge headache.
Why bring it up? Let me put it this way. If I stood up in front of a Silicon Valley company I was running and tried to blow that much smoke up everyone’s you know what, the employees would call me on it. Granted, not every company is run that way, but the good ones are.
The truth is, if you want to have a successful business or an effective organization, you can’t get away with all that nonsense. It would never work. Your employees would revolt. Your customers would defect. And that would be the end of you.
So how about a little straight talk about the economy, for a change? Without the dopey economists, the manipulated statistics, and the political rhetoric. Let’s just keep it real, you and I. From my perspective as a guy who knows more than a few executives and who runs a small business – not to mention a family – here’s what I think about the economy:
It stinks. America’s economic growth has virtually flatlined and so has household income. Unemployment has been so high for so long folks have given up looking for jobs. The cost of living is sky-high. The regulatory environment is stifling. The tax code incentivizes companies to move jobs and capital offshore. And ObamaCare has stopped small business growth in its tracks.
The only boomtown in America is Washington, DC. Our tax dollars fund an ever-growing, out of control government. The Treasury prints money while the Fed keeps interest rates down and stock prices up. China continues to eclipse our economic and political clout and owns more of our debt every day.
What’s wrong with this picture? Depending on which politician is doing the talking, you’ll always get a different answer, but one thing’s for sure. It’ll always be the other guy’s fault. The other party. The other branch of government. The finger will always be pointing somewhere else.
And while our situation may sound complicated, it’s really not. President Obama can talk about it for more than an hour and not even come close to getting it straight. I can do it in the next few paragraphs. It really just comes down to this.
We always talk about bubbles. How insidious, destructive, and of course, unsustainable they are. The high-tech industry had one. Americans lost trillions. Same thing with housing. That nearly started a great depression.
Now Washington, our entire federal government, has become a bubble. An overleveraged, unsustainable bubble. It keeps growing and taking on more debt. As with all bubbles, everyone inside it is fat, dumb and happy. They all live and work in a complete state of denial of their situation.
The most insidious thing about this Beltway Bubble is this: Since it makes and enforces all the laws, it can continuously generate more taxes, more regulations, more paper, more handouts, and more debt to sustain its growth. And since it governs the entire nation, that’s crushing the economy and all of us along with it.
The thing is, where you and I come from, we couldn’t get away with that. Whether you’re running a city, a corporation, a small business, or a family, it would eventually go under. Bankrupt. Like Detroit, American Airlines, or Dionne Warwick. But not the Beltway Bubble. There’s enough legacy prosperity in America to fund it for decades more. After all, it’s a big country with lots of big companies and people to tax and regulate.
So, if it feels to you like we’re still in a recession, join the club. It’s a big and growing club. Someday, it’ll include everyone outside the bubble. But there is one thing all bubbles have in common. No matter how big they are, they eventually have to burst. It happened to Greece. It happened to the Soviet Union. And it will happen to America.
Steve Tobak is a Silicon Valley-based strategy consultant and former senior executive of the technology industry.