A Consumer's Confidence

Today's release by The Conference Board of its monthly "Consumer Confidence Index" made for a very depressing read.   Click here for the press release in all of its miserable detail.  If you prefer to limit your misery intake for the day but still get the gist of the thing, the Los Angeles Times has a readable summary that can be found by clicking here.  In either case, it might be worthwhile to check out the same paper's comics page first--or after reading the news, or both before and after--for some diversion and amusement.

After reading the press release, the article, and some other information regarding The Conference Board and the survey behind the Index, these questions came to mind:  Who gets surveyed for this Index?  What are they saying to yield such a negative view of the future?

The Index showed a very large and unexpected drop from the previous month.  Apparently, the only time in recent history when the Index showed a lower result was in April 2009.  At that time, as we will all remember, the Great Recession was in full flower in the aftermath of the Great Credit Crisis and the Great Housing Bust, and the prior month of March had us all experiencing the finale of the Great Stock Market Collapse that came in the wake of the aforementioned-Greats.  Naturally, in April 2009 we did not yet know that the stock markets had reached their lowest point for that pricing cycle, and there was little in the way of positive news to make us feel better about the future.

Economic Salvation Prescriptions du jour -- The Frustration of Thrashing About

Here we are, almost at the end of the month of August, and it seems like this country and its economy are pretty much right where they were at the end of last year.  During these eight months we--that is, you and I, the "typical" or "average" or "middle class" or "non-politician" or "not-an-elected-official" or "not-a-captain-of-industry" type of person who comprises about 98% of the population of this country--have been suffused on a daily basis with competing ideas on how to best improve the American economy.  These "prescriptions du jour" for our economic salvation have apparently produced little in the way of tangible gain, as evidenced by the U.S. Commerce Department's report this morning which reported that real GDP growth for the second quarter of the year was 1% over the first quarter.

So many ideas, so much debate, so much noise, so much chatter, and yet so little to show for it.  That's a lot of thrashing about, and it is very frustrating.

In reflecting on this, it seemed to me that Mark Twain might have said or written something that could be an appropriate comment, and maybe even provide a hint of guidance.  Sure enough, after a little searching this dandy passage turned up:  "Soap and education are not as sudden as a massacre, but they are more deadly in the long run."  (From The Facts concerning the Recent Resignation Sketches New & Old (1900), p. 350.)

These "prescriptions du jour" are like the massacre.  They are described with embellishments of urgency, finality and calamity.  Soap and education is what you are getting if you have read this far, and especially if you continue reading:  it is analysis.  It is the process of cutting through the puerile posturing of the petty, pugnacious and pusillanimous from among those of our pundits, politicians and prophetic prognosticators of labor and industry who consume the nation's oxygen in order to out-speak the others; it is a process conducted with informed, thoughtful and critical analysis.

Business Operations: Emergency Preparations

Yesterday's moderate earthquake in Northern Virginia fortunately produced no injuries and little damage, although apparently the National Cathedral and the Washington Monument in Washington, D.C. sustained some small amounts of structural damage.  The quake measured in at about 5.8 on the Richter scale, and was felt over a huge area from Ontario, Canada in the north to Alabama in the south.

Probably a small number of unfortunate individuals and small businesses suffered some loss from this earthquake.  On a national scale, though, the economic impact of this event is nil.

Which causes a recollection of the massive earthquake and tsunami that hit Japan earlier this year.  Thousands perished at that time, many additional thousands had their personal lives upended in ways that will be felt for years yet to come, and the world's economy suffered greatly from the ripple effects that reached out to touch businesses in all corners of the world.

Businesses of all sizes in all locations would be doing themselves a favor if they were to look at this event as a catalyst to update their emergency preparedness plans.  Many organizations, especially the larger ones, will already be doing this; probably so, too, will large numbers of smaller ones.  However, far too many small and mid-size companies are not able to devote time and resources to activities that do not directly contribute to the growth or profitability of the business.  So, this writing is directed primarily at those business leaders of smaller companies who realize that making preparations to keep themselves in business in the aftermath of an emergency is important to the long-term success of the company, but who do not have time or staff to make a quick and comprehensive job of it.

Here is a list of design points that can be helpful in making business plans for actions that could be taken either prior to an emergency event or as a result of such an event:

Tom Campbell's "Jobs Plan"

Tom Campbell's "Jobs Plan" as presented in his recent opinion piece in the Los Angeles Times has merit and should be given respectful consideration by leaders in government and business.

This is not to say that I agree with all that he wrote the other day.  Mr. Campbell is a law school Dean and former Republican Congressman from California.  By any measure he is a highly-accomplished individual with a lengthy career in law, scholarship, politics and government, but apparently with scant--if any--business experience.  Nonetheless, his ideas to encourage job creation in the nation's economy deserve attention by business leaders and by our nation's governmental leadership.

Briefly, Mr. Campbell is suggesting that the Federal Government provide businesses with salary subsidies for hiring new workers from among the pool of people who have been out of work for at least six months.  He suggests certain conditions and requirements be attached to the subsidy so that it is properly used.  According to his logic, the goal is to have more people gainfully earning money so that they are able to become more active consumers once again.  Increased consumer spending begets increased demand for more services and products which begets a need for yet additional employment, thereby creating a positive feedback loop for the economy.

Business: Leadership to Grow the Business

Businesses will not hire more employees until they see more demand for the things that they sell.  Consumers--the biggest part of the US economy--will not spend more until they are more confident in their employment and financial security.

Which comes first:  the chicken or the egg?

This is a column about capitalism, free enterprise and business.  So let's look at a business idea that for most of the last sixty years has been considered mundane; today it might almost seem bold.

Here's the idea:  businesses should try a little harder to sell something, instead of waiting for somebody to come in and buy.  Business leaders:  go hire another sales person, and do something professional to help your sales team be more successful so that your business grows and it, too, becomes more successful.

Business exists to make a profit.  That is a "given."  However, selling is the one business activity that can most directly pay for itself, and that is also a "given."

During my selling career one of the professional foundations of the job, and one of the key leadership themes of the business, was to not wait for the customer to ask to buy; instead, it was to have us sales professionals reach out to the customer and learn what they would need to make them more successful, and then figure out what to sell in order to meet that need, and finally make the offer and close the sale.

And that is a short, simple description of something that is very complicated.

There is no "one size fits all" solution to accomplishing this, but many enterprises--especially the small and medium sized ones--can benefit from some guidance on how to most effectively hire additional sales people, and on how to get the most out of the salespeople who are representing the company.

Jobs: Getting and Keeping One -- Advice from One Boss

You looking for a job?  Or know someone who is, and you want to help?  Then read on.

(Potential employers are welcome to read this, too.)

America seems to be stuck with an unemployment rate of 9% or more.  But most people do not realize that even with so much unemployment there are still millions of job openings that are going unfilled.  Apparently, one of the big reasons that companies are not able to fill these openings is because they are not able to find enough qualified candidates.  Bloomberg Businessweek magazine has a current article profiling this situation; click here to read it.


When a business is hiring, the manager or owner usually wants to hire as quickly as possible, and hire somebody with the best possible qualifications to be successful in the new employment. Also, it is usually to the employer's advantage to choose an employee who will remain in that position for an extended period of time.  Most job seekers probably want to find a job sooner rather than later, and stick with it as long as possible.

So far, so good.

The Fed: Why Was It Created?

In 1873 President Andrew Dickson White of Cornell University refused permission to the Cornell football players to meet Michigan at Cleveland by stating "I will not permit 30 men to travel 400 miles to agitate a bag of wind" (from The Encyclopedia of American Facts and Dates - 6th edition).  President White seems to have possessed an ample ability to clearly express his decisions, and apparently he had no great regard for the sport of football, which at that time bore a close resemblance to today's game of soccer.  However, it is possible that fiscal prudence also freighted his decision-making, as the same source states that the "Panic of 1873" was triggered by the failure of the great banking house of Jay Cooke & Company on September 18 of that year.

The Panic resulted in a Depression.  The Encyclopedia of American Facts and Dates tells us that 5000 businesses failed during that time.  Think of that as seeing a headline a year or so after the Lehman Brothers bankruptcy in September 2008 yelling out "40,000 business failures!" since the nation's population in 2008 was about 8 times what it was in 1873.  (The US Census of 1870 recorded a population of about 38.5 million, and the US Census Bureau's population clock shows a current US population of about 312 million, for an approximate population ratio of 1 to 8.)  My guess is that the 5000 failures were among businesses that were of substantial size for the time, since the actual enumeration of very small businesses is a 20th century development.  So the 40,000 contemporary businesses would probably be from among those that are primarily larger than sole proprietorships or individuals acting as service companies or affiliates of much larger companies.

What is "The Fed" and Who Owns It?

"We shall deal with our economic system as it is and as it may be modified, not as it might be if we had a clean sheet of paper to write upon, and step by step we shall make it what it should be."  With these words, President Woodrow Wilson signed into law the Federal Reserve Act of 1913.  This Act created the Federal Reserve System, the central banking system of the United States that is commonly called "The Fed."

Earlier this week I was engaged in a political and business conversation with a good friend.  At one point, he asked the question "Who owns the Fed?"  Not having a ready and concise answer at the time I committed to doing research to answer his question.

The answer to the question he asked is this:  the US Government owns the Fed, and banks have a unique and limited ownership stake in the regional Federal Reserve Banks.

But the research revealed to me that my friend's question leads to another question covering a broader spectrum; the question is this:  Just what is the Fed?

Be the First on Your Block to Know This: The Business Case for Federal Stimulus Spending

It is within the power of the US Federal Government to increase the growth of the nation's economy through the use of selected governmental spending programs.  This was the goal of the American Recovery and Reinvestment Act (ARRA) of 2009, and there is ample evidence that this was achieved.  The evidence is available for all to see by visiting the web site of the Congressional Budget Office at http://www.cbo.gov/ .

The Congressional Budget Office (CBO) has a well-earned and much-deserved reputation for accuracy and bipartisanship.  During the period leading up to the agreement to increase the nation's "debt ceiling" that was enacted early last week, the CBO analyzed the competing budget proposals and identified errors as appropriate.  Both the Republican and Democratic sides of Congress, and the Obama Administration, accepted the CBO's critiques and reissued their proposals with the errors corrected.

Since November 2009 the CBO has issued a series of reports on the results of the stimulus program known as the ARRA.  Each report is entitled "Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output . . ."  The most recent report was issued in May of this year.  As indicated by the title, the reports provide the CBO's analysis of the effects on GDP and employment due to the stimulus spending of the ARRA.  The figures provided in the reports are all positive.

S&P downgrades US debt. . .but who actually looked at the announcement?

Today was a painful day to be a capitalist--either of the left wing or right wing variety.  Stock markets all over the world--and especially here in the United States--suffered terribly in the wake of Standard & Poor's announcement of its first-ever downgrade of its assessment of the credit-worthiness of US Treasury debt.  The financial carnage was so great that just about the only asset class that gained in value was that of US Treasury debt.

Wait a minute--that can't be right, can it?  The financial instruments that have now been deemed by a major rating agency to be more risky than they used to be are actually now more attractive to investors than had been the case before the announcement?

Yes and yes.

No jokes or entertainment here today; this edition is all in earnest.

Capitalists can lose money, too, and still love Lucy

In the 18th episode of the 3rd season of I Love Lucy--the episode is named "Oil Wells"--Lucy arranges for some stock market dabbling, but she and Ricky and Fred and Ethel end up holding the bag while others walk away with the winnings.

After this week's action in the financial markets, many--probably most--of us will feel that we have ended up holding the bag and somebody else, somewhere, has the winnings.  It's worth taking a few minutes to view the end of the show before reading the rest of this article.  See it at http://www.tv.com/video/10542494/i-love-lucy--a-bunch-of-dopes.  (Lucille Ball was born 100 years ago tomorrow.)

Wealth seems to disappear faster than it can be created, whether the disappearing act is caused by a "business failure" or a "stock market crash" or a "stock market correction" or simply by some kind of accident.  But none of those events by themselves means that building a business or participating in a business or investing in the stock market is an act of futility.  We use these endeavors as tools to help us get what we want in life.  This is honorable.

Add education and educators to help the nation's economy

"The inherent vice of Capitalism is the unequal sharing of blessings; the inherent vice of Socialism is the equal sharing of miseries."  So said Winston Churchill, according to a book in my library.  Maybe so; in any case, it's pithy.

The June 2011 issue of Smithsonian magazine contains a great article on some folks in the Columbia River Gorge area who are in the business of developing and producing aerial drones; this is a story about entrepreneurial small business, and it's a good one, currently available at http://www.smithsonianmag.com/science-nature/Drones-are-Ready-for-Takeoff.html.

Stick with me; there's a connection here.  By the time you reach the end, you might even agree with my case for increasing public funding for education!

More is needed

Here's a description of a thing called a "Congressional virus" which could infect your computer:  The computer locks up, the screen splits erratically with a message appearing on each half blaming the other side for the problem.

That's a modestly funny comment on the nation's political and governing environment.  But the most entertaining thing about this is when I first saw it--in November 1995!  Political dysfunction in the US Congress at that time caused short-term shutdowns of certain parts of the Federal Government.

Our recent--and perhaps current--episode of similar dysfunction has not produced any similar events because the Congressional passage and Presidential signing of what is apparently being called the "Debt Bill" has avoided the near-term possibility of the US Federal Government defaulting on payments which it is obliged to make.

So far, so good.