Washington Needs to Go on a Diet
When I joined Texas Instruments (NASDAQ:TXN) in 1980 the company had its hands in everything. It was the world’s biggest semiconductor company. It conducted oil exploration that employed the largest private navy on Earth. It made everything from guided missiles and minicomputers to calculators and digital watches.
Then companies like TI figured out they were overextended. They realized that, to maintain leadership or at least stay competitive in increasingly global markets, they needed to stop expanding and start shrinking. They needed to go on a diet and become lean.
To say it’s been a painful transition – divesting, downsizing and chopping entire layers of management – is a ridiculous understatement. It’s tough to suddenly start trimming down when you’ve been bingeing for decades. Nevertheless, learning to focus – to do more with less – has become a way of life for companies big and small.
The TI of today makes chips. That’s it, just chips. And not a lot of different kinds of chips, either. It makes analog chips and digital signal processors, mostly for cell phones. That’s pretty much it. And it’s number one in that market. Customers are happy. Employees are happy. Shareholders are happy.
Washington is like corporate America was thirty years ago. America is overextended. We’re the most overextended nation on earth by an enormous margin. We’re spread so thin it’s like trying to spread a 16 oz jar of peanut butter across an enormous slice of bread from sea to shining sea. That’s how overextended we are.
"How did the United States become a non-profit that serves the entire world – all funded by U.S. taxpayers and national debt?"
We’re in defense, national security, commerce, social security and Medicare. We have the treasury, the IRS, the VA and the SEC. We have our hands in everything from food and energy to healthcare and schools. We’re spread so thin that we can’t even control our immigration system. We have no idea who’s in our country and for what purpose.
And that’s just what we do within our borders. Our military defends and provides arms and logistics to nations around the world. We police international shipping lanes. We support humanitarian causes. We provide more food and supplies to other countries than any nation on earth. To the best of my knowledge, we do all of this free of charge.
How did the United States become a non-profit that serves the entire world – all funded by U.S. taxpayers and national debt?
We’re so overextended we’re broke. We’re so broke we’re $17.6 trillion in debt. So what do we do? We keep taking on more and more, growing the budget, creating departments and adding layer upon layer of bureaucracy. And that only makes us less efficient and less competitive on the world stage.
That’s a recipe for disaster just as it once was for corporate America. This isn’t rocket science. Washington needs to go on a diet. America needs to get lean. How do we do it? The same way TI and every other company did it. One step at a time.
We have an Internal Revenue Service to generate income from taxpayers. Why not an External Revenue Service to generate income from other nations for the services we perform? If the receiving country is poor, we should be paid from a fund supported by all the nations on earth that are in far better shape than we are. There are plenty.
Then we need to leverage corporate America. Our nation’s CEOs have been here before. We know how to do this. Why not outsource most of Washington’s functions to the private sector? It’ll be far more efficient and competitive. It will cost much less. We’ll be able to do more with less. Much less.
Which functions should the federal government keep? Just the ones it was created to do and the private sector can’t do better: defense, national security, immigration, a handful of regulatory functions and that’s about it.
In a recent interview with Charlie Rose, Apple (NASDAQ:AAPL) CEO Tim Cook said that “[striving] for being the best, for only doing the best products, for staying focused” was a core principle that Steve Jobs instilled in the company. Cook went on to say he could put every product the company ships today on the table they were seated at. And yet, Apple will be a $180 billion company this year. Not surprisingly, Apple is the most valuable company on earth by market capitalization. That’s what America can become if it learns to focus.
“It’s easy to add. It’s hard to edit. It’s hard to stay focused. And yet we know we’ll only do our best work if we stay focused,” Cook said, “And so the hardest decisions we make are all the things NOT to work on. There are lots of things we’d like to work on that we have interest in but we know that we can’t do everything great.”
That’s why IBM (NYSE:IBM) focused on being an IT solutions provider. It’s been selling off businesses for years. That’s why Procter & Gamble (NYSE:PG) recently decided to cut over 100 brands. That’s also why Sony should split into two companies. The Japanese giant may only do two things – entertainment and consumer electronics – but that’s one thing too many.
If we want to continue to be a world leader, we have to do this. We have to become a lean nation and outsource most of what Washington does. We simply have no choice. There is no silver bullet that will magically allow the federal government to continue on its present course without spiraling into financial ruin and global obscurity.
If there were another or a better way, one of the brilliant minds among the most innovative companies on earth would have come up with it by now. Make no mistake. The only reason American companies are still competitive is because they got lean. If the federal government doesn’t do the same thing, it will inevitably drag the entire nation down with it.