pensions

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The New American Ethic: Revaluing Hard Work and Austerity

I recently reaffirmed my contention that not only are we in a recession, but we never truly came out of one in the first place. The term “New Norm” was once tossed around a lot, and I want to re-invoke it here in order to say that the economy is going to be like this for a long time. If you ask me, at least the next 5 years.

So what does that mean for the regular person? That it’s time to find pleasure in austerity.

Changing Attitudes

Part of the economy and its effect on us is our attitude towards it. If we change our attitude towards the economy we will be better able to bear the burden of this bear market environment, and we will minimize its impact on us and our country.

Now, that’s easier said than done. I can tell you to be happy with less far more easily than I can be happy with less. I won’t pretend like this is a picnic, but we need to start thinking differently if we’re going to make this happen.

In essence, we need a return to Max Weber’s Protestant Ethic. Maybe we don’t need a return to it, exactly, but we could use a secular reevaluation of its value – a New American Ethic. That is how we will change our attitude.

The Protestant Ethic Reapplied

Now, don’t balk at the notion of applying a Protestant Ethic because the religious undercurrent shocks you. An element of Weber’s reconfiguration in The Protestant Ethic and The Spirit of Capitalism was an emphasis on wealth and its accumulation as the result of a rational means of existence. This, on its surface, is actually rather secular, but I’m not proposing that wealth is the end-goal (nor, mind you, was Weber). We’re both proposing that the reality of this rational existence is hard work. The result is wealth.

For Weber, the historical emphasis on the value of hard work was born of the Protestant Reformation circa the early 1500s (think back to 10th grade history, Martin Luther nailing his Theses and the resultant religious uproar in Europe). Protestantism, notably its Calvinist manifestation, according to Weber, emphasized the value of all work – including and particularly secular work – as being extremely important and a path to personal salvation. That is, secular work was for God, too.

Weber contended that this attitude ultimately led to the glorification of secular work and the groundswell of capitalistic enterprise that occurred in countries where Protestantism was embraced (think northern Germany, England, the Benelux countries – places where the Industrial Revolution was taking off by the 18th century). Ultimately, this ethic flowed to America’s capitalistic beginnings and Protestant predilections.

While an emphasis on the inherent value of hard work is the first step, it is an outgrowth of this Protestant Ethic that is the necessary component in transforming America’s attitude towards our challenging economic environment: austerity. Wealth was not meant to be gaudy or filled with showy pageantry, or as Protestants would describe Catholic churches, filled with Popery. Like the austere churches in which Protestants worshipped, wealth demonstrated that those with it worked hard for what they believed in. They did not have to flaunt this wealth for it to be the natural and deserved outcome of their devotion to hard work. In fact, it was considered all the more commendable to live within humble means – to embrace austerity.

The New American Ethic

Hard Work and Austerity are exactly what we need in our current economic situation.

We need to see the value in working hard for what we have. I know that unemployment is high. In fact, it’s higher than what’s reported by probably something near to 150% due to contractors never having been on employment books and people losing benefits due to the length of time they’ve been out of the workforce. But that’s nearly 15% of the population that desperately needs to embrace what I am terming the New American Ethic.

We need a return to respecting the value of hard work and the entrepreneurial capitalistic enterprise that built this country in the first place. Starting a business is not for everyone, but there is tons of work to be done and had that does not involve conventional employment at a big company. Part of our problem in finding and doing this work is our attitude, though: that the only employment worth having is that which pays a standard and acceptable salary (what we can “flaunt,” if you will, or share proudly at our Thanksgiving tables with relatives who judge us). But this is wrong. We must rethink our emphasis on valuing the money and value the hard work instead.

This is not to pretend that it doesn’t take money to feed a family, but I’m not suggesting that we quit well-paying jobs for the noble feelings that could come with hard work and having less. I’m saying that all of us – from the unemployed to the 1% – need to think differently about our values in order to do two things. The first is rethinking the ways that we’re going to get America back to work, and the second is preventing ourselves from spiraling further towards economic disaster by not depending any longer on the broken systems we have in place for pensions, social security, retirement and future benefits. People’s retirement investments are not what we thought they would be, and pension funds are failing left and right.

In 2010, the Pension Benefit Guarantee Corp paid $5.6 billion in benefits for people with failed pension plans. The government is paying this money, which means that we are paying to fund other people’s underfunded pensions even though we have to make personal retirement sacrifices in the meantime. This is not sustainable, and if we’re going to stop relying on these increasingly broken and failed systems we’re going to need to rethink our attitude towards work and wealth.

For the Right Reasons

Coupled with an emphasis on the pleasure and value of austerity – doing more with less and living within humble means – the New American Ethic is one that values hard work for the pleasure and sake of that hard work. If we don’t start living that way we are going to die poorer and considerably less happy about it than we otherwise could be.

Our country needs to embrace this attitude, not as a mandate from above, but as a groundswell from the bottom up – the only way such a movement can work. Every individual needs to see the value of his time, his hands and his mind, and put all three to work in whatever way he can – not for riches or glory or as the Protestant Ethic would contend, God, but for himself, his family and our collective future.

It is this kind of movement, towards a New American Ethic, that will get us through these tough years and return the American economy to its position of power and success – but more sustainably this time. It is also these values that we can share with the world in order that we may all build and work ourselves towards a better future.

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Avoid America’s Bankruptcy by Bringing a Turnaround Guy to Washington and Treating the Country Like a Business

This article was published in its original form in the Atlanta Business Chronicle here.

The United States is a capitalistic society, so I often wonder why the government isn’t run like a business. We had a surplus 12 years ago, but now our debt is astronomical: nearly 14 and a half trillion dollars. This isn’t a political issue. It’s a business one – or at least it should be.

When a business finds itself in this much debt relative to its capacity to repay, the bank, Board of Directors or shareholders say, “No more!” and send in a turnaround professional. We are the shareholders, and it’s time to send a turnaround guy to D.C.

When my clients have problems with cash flow they don’t print money. They raise money, close plants, layoff people or cut spending; they tighten their belts to survive.

Despite insurmountable debt, the U.S. government isn’t doing those things. Businesses with negative cash flow would have been bought, liquidated, merged or otherwise gone at this point, and I don’t want to see us become like Greece or Iceland in five years. Worse still, I don’t want to be a part of the United States of China, since in the business world a company with increasing debt is subject to acquisition or dissolution by a larger and wealthier business.

I always say that 100% of spreadsheets and projections don’t work because the assumptions are wrong, yet people rarely revisit and alter the assumptions regularly to produce more positive results. Even today, the Office of Management and Budget, which hasn’t made an accurate P&L projection in years, thinks that our revenue is going to increase by x if we do a, b and c. But x is an assumption that’s based on the unlikely actualization of a, b and c, possible only if we overcome party politics. And as the deficit skyrockets, the assumptions are increasingly wrong and the parties are increasingly polarized.

The only way we’re going to resolve our financial crisis is by treating the government like a business.

As we repeatedly hear, a balanced budget is the first step. The second step, however, is a repayment plan of our foreign debt. Next, raise taxes. No one likes tax increases – especially me – but it’s part of the solution.

The corporate amnesty program allowed businesses to return profits from foreign soil to the U.S. at lower tax rates, which created more jobs in America. This was a wonderful and creative idea, but it equates to peeing in an ocean: it doesn’t change the levels. While thousands of these ideas will amount to an aggregated long-tail effect, we need to begin with more drastic measures.

Turnaround 101 dictates that we start by slashing all spending by at least 15%. We must tell every division, department and agency that it needs to cut its cash needs – no exceptions. The pain will be shared across the whole country as it would be across an entire business. This kind of mandatory budget cut provides time to fine tune operational requirements based on the improved results.

Before you ask, this 15% cut would affect entitlements, social security, health care, the military, and education – everything.

It’s easy to buck and cry, What about the children? Shouldn’t they be exempt from budgetary cuts? What about the sick and the poor? What about defense?

Here’s what I ask every department at a business: “Do you want your company to survive until tomorrow or do you want to quibble about who’s more deserving of money that doesn’t exist? I don’t care how you do it. Just do it.”

Internal politics kill companies in the private sector because politics and business don’t mix. Similarly, politics has no place in America’s budgetary discussions, and our issues must be addressed by those who can truly set aside political or personal biases and run this country like a turnaround professional in the private sector.

As a turnaround guy, I act like an ER doctor; my first step is to stabilize the patient and prevent shock. As a country, we’re already in shock. Nobody wants to lose an arm or a leg, but if there’s only enough blood for the torso and the leg is gangrenous, you better believe I’ll lop it off to save the body. In five years, the prosthetic surgeon can make us pretty again. I’m in a unique business, but it’s the business of making sure we’re still alive in 2025 with or without a leg.

In addition to the 15% cut, we must freeze all raises and expansions. That means no more foreign aid increases (also subject to the 15% cut), and we put a reasonable mandatory repayment plan in place for foreign aid. We can’t continue to write off receivables and survive. It doesn’t work that way in business, and it can’t work that way in government.

This also means no cost of living increases for government employees, social security beneficiaries and pensioners. In addition, congressmen can enjoy normal health care services – not VIP lifetime benefits for two years of service.

Unfortunately, tenured positions can’t be affected, but we can stop giving tenure. All rules for entitlements (e.g. pensions) must be reviewed. The private sector has largely eliminated pensions because it can’t afford them, and government needs to do the same. In capitalism when you can’t afford something you stop doing it.

I don’t have every last answer for how to save the trillions we need, but by making – and enforcing – these tough moves we can save America from bankruptcy, collapse and ruin. We must empower people to save money, and punish them for spending it needlessly in order to get a line item the following year.

Legislators keep asking that we have faith. Our economic stability has been built on faith: full faith and credit in the U.S. We can’t retain faith after twelve years of increasing debt. We need to deal with hard facts and run America like a business. Business is not about faith. It’s about trusting what works, and what works in business is what I know. Treat America like a business, and we’ll all live to buy another day.

I’m the Turnaround Authority and my bags are packed. Washington D.C., please call!