"The most significant threat to our national security is our debt," Admiral Michael Mullen, Chairman, Joint Chiefs of Staff, August 27,2010

Wednesday, August 13, 2014

Second best

How many times have you heard – well democracy may not be the best political system but it’s a lot better than what’s second best?

You can substitute the words “democracy” and “political system” with many other nouns, including:
·         Justice system
·         Foreign policy
·         Capitalism
·         The federal reserve
·         Debt and deficits
·         Entitlements
·         Government employee unions
·         Welfare programs
·         Post office
·         Obamacare
·         Social security
·         Veterans administration
·         Tax policy
·         Social safety net(s)
·         Minimum wage laws
·         Trial lawyers
·         Etc., etc., etc.
Most everything we listed above is now embedded in bureaucracies and laws that are decades old – in some cases (federal reserve for example) 100 years old.  We actually refer back to laws – words, concepts, sometimes vague descriptions that were written when there were no computers; no digitalization; no internet; no mass storage and instant access capability of data and information.  Our governance is not a market driven system – it does not need to change in order to survive.  All it needs for survival is money and it gets money today through an antiquated political system that collects money from an advanced system of commerce and accomplishment and feeds it back to the decades old mechanisms listed above.  The old steal from the new to survive.
This is a hidebound system guaranteed to always end up no higher than second place.  The market driven system will always be at least several steps ahead of the old system.  Age is just one characteristic:  The average age of the 111th congress which was seated in 2009 is: US house of representatives 57 years; US senate 63 years.  The oldest ever in US history!  http://www.slate.com/articles/news_and_politics/explainer/2013/01/average_age_of_members_of_u_s_congress_are_our_senators_and_representatives.html
In Silicon Valley the average age of company founders is 31; half the age of our senators.  http://blogs.hbr.org/2014/04/how-old-are-silicon-valleys-top-founders-heres-the-data/
Here is a contemporary example – Amazon is a new American company – created 20 years ago by Jeff Bezos when he was 30 years old.  Legend has it that he dismantled his crib when he was a toddler.   It is also said that he rigged an alarm to keep his siblings out of his room.  He was high school valedictorian.  And he also excelled in college.  http://en.wikipedia.org/wiki/Jeff_Bezos
When we think of our bureaucracies listed above and the bureaucrats who run them, we think there are possibly other high school valedictorians and top university students among them.  But we doubt that many of them dismantled their cribs and played with technology to find something new.  We know our politicians did not.
Bezos has one more thing going for him – he modestly decided to remove as many middle(wo)men  from the retail experience as possible – to bring efficiency, high quality, top service and low prices to buying almost anything.  And he succeeded.
He didn’t get there by keeping the old ways – or even trying to manage them slowly to a different process or place.  He most certainly did not use propaganda and politics to build his business.  He experimented – used what worked and dispensed with what failed and kept repeating that formula.  That formula has been repeated at Apple; at Google; at Intel and Cisco. 
At one of president Obama’s gatherings with these innovators Obama uttered a naïve statement addressed to Apple’s founder –
“But as Steve Jobs of Apple spoke, Obama interrupted with an inquiry of his own: What would it take to make iPhones in the United States?
Jobs' reply was unambiguous. "Those jobs aren't coming back," he said…”
Obama’s recent step – The Bring Jobs (no, not Steve) Home Act.  A nonsensical mishmash reply to years of bad legislation; bad bureaucracy; horrible litigation and more taxes and fees and other hidden charges than would fail in a NY minute in the marketplace.  In other words – same old stuff – he does not even attempt to try something new or different.
The answers to America’s decline are not well hidden.  We buy into that old fundamental – if you wish to conceal something hide it in plain sight.  Our governance system is old; decrepit; hidebound – it is a 70 year old post office building and a brand new 2000 page health care bill that no one understands.  It is a phony “bring jobs home” bill instead of the elimination of commerce, business and manufacturing burdens built over the past 100 years.

Recently Google co-GOOGL in Your Value Your Change Short position founders Sergey Brin and Larry Page, were asked if the company might jump into health care. "It's just a painful business to be in," Mr. Brin replied, later noting that "the regulatory burden in the U.S. is so high that I think it would dissuade a lot of entrepreneurs."  Source:  http://online.wsj.com  In case you’re wondering, Page and Brin were 25 years old when they founded Google.
We live under a governance system that is sustained by money earned by the best and brightest turned over to organizations that don’t even think about service level or accountability or quality or cost.  Second place for this gang would be an unheard of accomplishment; yet they pay bonuses and record high wages and benefits to themselves.  Not because they accomplished anything - because they can.

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