The thought that all executives and business leaders might have one thing in common seems, on the surface, to be highly unlikely. We’re all so different, our backgrounds so diverse, the idea that a single belief unites us all seems more than a little far-fetched.
And yet, there is such a thing. A premise so fundamental we can all agree it must be true. It’s simply this: Businesses must grow.
Okay, maybe everyone doesn’t believe that, but I bet I know why. Everyone doesn’t understand the theory behind it. Now more than ever, Americans are questioning the wisdom of fundamental principles of capitalism, like why businesses must grow.
Here’s a story that explains not only why businesses need to grow, but why every American needs to understand the reason behind it.
We just had some repairs done on our house. Plaster work. The lead guy’s name was Primo. The other day, Primo and I got to talking about our lives and our work. Turns out we’re about the same age. And he emigrated here from Mexico as a teenager 40 years ago.
He told me how grateful he is to be here. To have a good, steady job. He doesn’t exactly love where he lives or his house, but it’s the best he can do given his level of education. And it’s certainly much better than if he’d stayed in Mexico.
He told me he’s making his kids work hard in school so they have a better life than he’s had. Funny thing is, my father did exactly the same thing, just one generation earlier.
I’m sure Primo’s kids will work hard to make him proud of them, the way I always worked hard to make my father proud of me. The way most of us do. But some people – an increasing number of people – don’t see it that way. Their goal is to do as little as they have to do and take as much from the system as they can get.
After all, they reason, that doesn’t hurt anyone else. It’s not a zero-sum game. If anything, all it does is maybe take some profits away from the rich, the privileged few executives and business leaders who run our companies, and give it to those who are less fortunate, who need it. Them.
Of course, none of that’s true. The system is a zero-sum game. It’s all connected.
Even though my parents were poor, I saw how hard they worked without ever taking a handout. And that taught me the importance of work ethic and personal responsibility. So I worked hard to achieve things, to earn what I wanted out of life, and grew up to be a successful executive. And I bet that one or two of Primo’s kids will do the same.
But it doesn’t stop there because successful executives and business owners are hard workers who love to achieve things. We could retire early, but we don’t because work is what drives us. It’s what we do. So we grow our businesses and create jobs and personal wealth for others, not just for ourselves. It’s a highly leveraged model.
Robert Browning said, “A man’s reach should exceed his grasp.” That’s called personal growth. But the missing piece is that, by doing so, by striving to achieve things and grow our businesses, we help many others. It’s a rising tide that lifts many boats.
That’s not only how poor people become wealthy people. It’s how small businesses become big corporations. It’s how the next generation ends up living better than we did. And, most importantly, it’s how a new nation became the world’s greatest nation.
There’s only one problem with this highly leveraged growth model. It depends on there being enough people on the growth side of the equation to support those on the handouts side of the equation. It has to be balanced, like assets and liabilities on a balance sheet.
When entitlements become too large and demanding, it drains and slows the growth side of the equation. So does overregulation. Not only does raising taxes and increasing debt fail to compensate, it makes matters worse because the former puts pressure on the asset side while the latter worsens the liability side.
That’s simply unsustainable. It’s an economic death spiral. It’s the same reason why socialism failed. As Margaret Thatcher put it, sooner or later you run out of other people’s money.
If you buy Browning’s view, which I assume everyone on the growth side of the equation does, you have to see that personal growth, business growth, and macroeconomic growth are all interconnected. They feed each other in an endless loop. And that’s why businesses have to grow. If they don’t, the whole system falls apart.
So, if you want things to get better around here, do three things:
1) The next time you hear people spouting off about how business growth is no big deal, tell them they’re full of it;
2) Practice and teach your kids the importance of personal responsibility and work ethic; and
3) Support legislation that removes barriers to business growth, you know, like repealing ObamaCare and simplifying the tax code.
Steve Tobak is a Silicon Valley-based strategy consultant and former senior executive of the technology industry.