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On a trip away from Lake Wobegon, Garrison Keillor took time to talk to us at tompeters.com. He and Erik had a great conversation about his latest book, A Christmas Blizzard, and many other topics, including a note from Julie Christie. We know you'll enjoy reading his Cool Friends interview. View our Archives for past interviews.

Comments

Funny how quickly we forget.
From last year, from a Tom Peters rant.

"Like Greenspan, I definitely believe that I took my Silicon Valley lessons a bit too seriously and drank the "self-regulating unfettered capitalism" Koolaid. I remain a capitalist (it works) but I shall go to my grave beating the crap out of myself for not having seen the obvious and for not having used my not inconsequential bully pulpit."

In other words, 'Lost your house? Lost your job? Sorry, my bad'.

"There is a four-letter word for depending on big companies and incentives aimed at big companies to pull our irons out of the fire. Namely ... dumb."

Dumb? This from the guy who in 2003 peppered his powerpoints with bragging about the management style of Donald Rumsfeld?

Lets all go out and build websites and let all that heavy industrial work move off shore to China and India. Lets just bake some cookies and start catering services and consulting businesses - and be sure you have a cool looking business card and cool slogan - because these details really matter.

Posted by zorro at November 24, 2009 9:42 AM

"30 percent of all U.S. workers are free-lancers or part-timers who are not pocketed into any of the Bureau of Labor Statistics worker stats categories. "

Can you say 'underemployed?'

Posted by zorro at November 24, 2009 10:24 AM

It strikes me as a VERY large amount of job changes in a pool of jobs that perhaps number 250 million (admitedly a guess, one based on population and guessing high).

As I look around, are 1/5th of the jobs disappearing every year? I do not see that.

Posted by Stephen Garner at November 24, 2009 11:01 AM

I don't think that the churn numbers are so out of reach. Look at part-time, seasonal and temporary workers who do 'move about'. College students, people with second jobs (I have three, two part-time) and the economy effects would do it.

One tax year long ago my spouse had five W-2 forms, all very explainable and reasonable, not due to a bad economy, just school-aged kids and strange opportunities.

Compared to the underground economy, which is probably growing now, I find the numbers plausible.

Posted by WayneShipman at November 24, 2009 11:18 AM

(1) Zorro, you've confused me. Are you saying that (a) I've changed my tune? Or (b) that I hsve not changed my tune?

As to under-employment, some yes, some no. Even in good times there are a ton of non-9 to 5ers, more every year.

Numbers don't surprise me. At one point a few years ago we had created 26 million jobs over the prior X years. 26 million = 73 million CREATED vs 27 million LOST.

Posted by tom peters at November 24, 2009 11:26 AM

Sorry, 73M created vs 47M lost.

Posted by tom peters at November 24, 2009 11:27 AM

Afraid you're caught in a Catch 22 situation here, Tom. If you were right "then", you're wrong now; if you were wrong "then", you're wrong now, too.

Your observation is a good one.
Question: How does the "math" on this relate to the "math" on how many times one poor dollar is taxed during its "life cycle", and still remains ann alleged "dollar"? Are job creation/loss analyses based upon the same reasoning?

Posted by Randy Bosch at November 24, 2009 12:39 PM

I agree that the churn process will ultimately be beneficial, but more thought needs to be put in as to how to help people more easily transition from one type of work to another.

Even if there was a net gain of jobs, not all the people who lost their jobs will be qualified or capable of doing the jobs that were created, nor is everyone capable of succeeding as an entrepreneur.

Some of the money that might have (wrongly) been spent propping up GM should perhaps be spent in helping people retrain for new jobs.

Posted by annabel at November 24, 2009 2:07 PM

"should perhaps be spent in helping people retrain for new jobs"

Annabel, I agree. Except ...

I do not pretend to be an expert, but I have seen some [politically neutral] studies which strongly question the value of re-training schemes.

One hopes not ...

Posted by tom peters at November 24, 2009 5:08 PM

"(1) Zorro, you've confused me. Are you saying that (a) I've changed my tune? Or (b) that I hsve not changed my tune?"

You are stiil talking about the web and service industries - You are still putting down big government - the same government that created the internet and provided the money through the space program and the military to grow the electronics industry. Without gov't investment in the 1950's and 1960's do we have any economy at all today?

- also, what you've written in this post is at least as insensitive the comment about the recession going away -

"I do not pretend to be an expert,"

Sorry Tom, this is exactly what you have done your whole career. In fact, it is the definition of your career.

Posted by zorro at November 24, 2009 5:44 PM

Rather than helping people to retrain for new jobs, shouldn't we be building a culture in which people take more responsibility for their own development? It might be on-going professional training (whatever your profession) or the management degree we've talked about here before or more general skills. But if churn is the way, then people have to learn to roll with it.

And while we are it, maybe we should teach interviewers to look more at personal skills, aptitudes and attitudes than to look for someone with specific experience of selling product X to market Y in location Z.

Posted by Mark JF at November 25, 2009 6:57 AM

I am still talking about service industries because the world is about service industries. I have just returned from Angola, Saudi Arabia and Ecuador. They all have the same goal: create a service economy like ours. (Problems notwithstanding.) The manufacturing economy has been a myth for at least four decades. That is, among other things, over 90% of people in "manufactuting" companies work in service activities--design, engineering, logistics, etc.

(HP led the market yesterday because of surprisingly good results--from their services businesses.)

Posted by tom peters at November 25, 2009 7:02 AM

????? When did I "put down big government"? I do think government is too big, but I have, often to derisive response, cheered the government intervention of the last 15 months, from Mr Bush and Mr Obama alike. And some government regulation of derivatives would have been nice. (Ah, the joys of hindsight.) And I agree about the importance of government-funded R&D. So what's your point? Being "for" or "against" big government is simplistic nonsense. Government is enormous and always will be.

Posted by tom peters at November 25, 2009 7:08 AM

Back to manufacturing: A couple of years ago I saw a breakout of costs for a roughly $100 pair of Timberland boots. The Chinese made 'em, and got $4. The "other $96" was design, marketing, distribution, etc. We don't bag the $4, but capture a lot of the $96.

I am asked to visit China regularly. They are tired of being "the world's workshop." They want in on that "other $96"! Hence their growing attention to universities, R&D, etc. I'm much more worried about their coming SERVICES prowess than about their long-term manufacturing activities.

Posted by tom peters at November 25, 2009 8:26 AM

"The manufacturing economy has been a myth for at least four decades. That is, among other things, over 90% of people in "manufactuting" companies work in service activities--design, engineering, logistics, etc."

This can obviously go on and on. We have sent way too many jobs overseas in the name of globalization. We make much too much out of small enteprenurual start ups - the story of For example, Apple's success is way overblown in the sense that a big part of Apple's story is about Wozniac being able to get his initial integrated circuits from a workshop at Xerox where they were just laying around. What is missed it that they existed and were products of big industry. You make way to much hay out of the role of the indivudual when a very big part of the devlopment we've seen sine world war II (computers and the internet) are from big gov't - big company - BIG not Small. In the US we are great at building up the individual, but we ingore how important collective action is (this is why we fight so hard agianst taxes) - the South Koreans make good cars in part because it was a goal of the government to make good cars.
Our American auto industry may not be in the tank if Reagan had taken a note from Jimmy Carter and instead of rolling back CAFE standards, approached the energy crisis with the seriousness of war (like the Chinese are doing now with a 100 billion dollar investment in energy tech)
You are speak against anything big - you say it over and over. Why is there an Ipod - two things - Apple and the reaserch IBM funded in 1987 that lead to the engineering that allows the storage of 100 gig on something the smaller than a dime. But what do you tell stories about? The design of the Ipod - which would be totally impossible without the science that allows the design to exist. You leave out the complex side of everything in your little stories.

"I am asked to visit China regularly. They are tired of being "the world's workshop."
Bull.
Recently a company in west Texas began planning the building of wind mills for electricity - and they will get the wind mills from the Chinese.

The Timberland story speaks to how out of touch you are - the money 'we pocket' goes to a lot less Americans than it would if the shoes were made here.
You only tell one side of the story - the side that has short, simple interesting stories and you leave out all of the complex stuff. In other words, you are just part of the modern media.

Posted by zorro at November 25, 2009 9:46 AM

While pondering the role of small firms in this "job churn" I came across this piece extolling the innovation advantage of small firms - given their increased willingness to take risks. http://delanceyplace.blogspot.com/2009/11/delanceyplacecom-112409-more-innovation.html

Posted by John O'Leary at November 25, 2009 10:02 AM

I'm not your shrink, Zorro, but you are carrying around a lot of bitterness. I'm sorry about that.

Posted by tom peters at November 25, 2009 10:11 AM

Tom - I LOVE you and have read just about everything that you have written. Please know this. But this post frankly makes me ill. It probably brought on the same kind of illness that the line in Fortune produced for you. What kind of jobs are we talking about here? Are they part-time jobs? Sustainable one? Do they have benefits? Do they enable a quality of life? What is the ratio of private and public business in a place like China as opposed to America? Does this scenario of the high life where there are entrepreneurs throughout that massive country comparable? Are the Chinese mostly hired by the government, not that no other system should resemble it? But if you talk about global competition this has to be considered in the equation.

In the US government and big business have always worked side by side. In many cases this union has indeed done very well for the people indeed. But when we talk about whose side the government has been on through this crisis it is obvious it has not been on the side of the people. Without largely rehashing arguments that we have had here before, we bailed out banks for hundreds of billions of dollars that don’t produce anything nor add concrete value and complained about a bailout for the car companies that employed large numbers of people. The most disheartening thing about your post, Tom, is that you seem to assume that everyone will be entrepreneurs. Well, they're NOT going to be. Now, what?

I don't know the number of college educated people in this country in contrast to those who aren't, but I would assume that there are by far fewer who are not than are. These were employed by those large companies, nothing new here. Those who were hired by these companies were largely not college educated. Many have skill trades but how will they now use their trades? With the tuition hike of a whopping 32% in California I suspect that many of those who might have gotten a college education in that state will now not have the chance to do so.

Those jobs that you write about enabled parents, who often did not go to college themselves, to send their kids to college. The more I think and write about the baby boomers and what they didn’t do for the next generation, I get ticked off. Will they leave the planet in a better place then when they found it? Probably not. I guess more green cards from Asia will be needed in your beloved Silicon Valley. (There is no direct disparage meant on these at all.) There surely will not be native Californians who will enter this market that you so often praise in the future, if they are even doing so in large numbers now. How can they pay for college?

It's not only about Brand You. It's about Brand US. The "mega-churn" about which you refer is in one industry. What about the other industries. There was not such a churn for many years. Stability is necessary. I think the instability has a lot to do with this extended period of what the philosopher Derrida termed "deconstruction." In many ways what we are seeing though is pure destruction from which there is very little rebound. I think hope is important but I think displaced or dampened exuberance is dangerous, especially when we have not faced up to the many realities such as the ones that Zorro has pointed out above.

The churning that we're experiencing seems to have been charged largely by those advocating globalization without having first worked through its essence beyond mere shareholder value with legislation that favored profitability over people. What's interesting about this is that the shareholders in many cases have been duped. Just look at what happened in the Bank of America case. The government should be about the vested interest of the people however that is best. Currently, it works best for Wall Street and not Main Street and you cavalierly write as if that number of unemployed, not to mention the underemployed, is not incredibly disheartening.

Building to last still has value and that which turns naturally as a result of science and culture will evolve. The "mega-churn" about which you refer is basically in one industry. There is an unhealthy quality about the "mega churning" that has to do with psychology. While we know that nothing stays the same it is important to have a sense of stability. A balance is essential for health. Just imagine if you did know where you or your children would lay your head from night to night. Would that churning produce the best results? I think not. Would you like for their to be mega churning in hospitals? I think not. Science evolves. Business evolves. People evolve. We don't need the praise of churning or the advocation of it. Simply do what is necessary for sustainability and viability.

This mega churn that you refer to seems to be largely in technology which has brought on a kind of schizophrenic hyper nano-second reality that is not altogether healthy or sustainable. What about all of the other industries? Do you think that each American should, for example, mine for coal himself or herself? Should they open up their "mini" car company? Should they chop down their own trees? Policy enables large companies to benefit by hiring employees. Everybody is simply not going to be entrepreneurs. Do we want to largely become a welfare state? Do the rich want to pay more taxes to support the government? After all, it is the aggregate of the working people that enable our government to subsist.

By the way, Tom, I disagree with you with regards to Zorro. He may be hard-hitting and relentless, but bitter is not a label I would give him. He simply sees things differently from you and thinks that your take on things have been harmful. This is healthy, I think. He is a thoughtful well-read person with many ideas. His links are often quite enlightening. I have appreciated them here and elsewhere. I have disagreed with him here and elsewhere and have defended many of your positions. But more than a few of his points above I think are right on. (Thanks, Zorro!)

Tom, did I mention that I LOVE you? You are my favorite guru. Thank you.

Posted by Judith Ellis at November 25, 2009 11:12 AM

Judith, such a long post deserves a longer answer than i'm prepared to give. but the idea that churn is new is nutty. I BELIEVE UNEQUIVOCALLY THAT CHURN IS OUR GREATEST COMPARATIVE STRENGTH. I lived this for 35 years in Silicon valley. IBM becomes stodgy, lays off tens of thousands to survive--but, praise god, a jillion tech startups more than compensated. No other developed economy can come close to making such a claim. Churn has put us at the top of the heap, with no challengers in sight (China may surpass us, but not in my lifetime).

As to who employs whom, I think the big guys employ a disproportionate share of college grads--and have laid off a disproportionate share of college grads. The non-college grads are far more likely to work in the gazillion and gazillions of small businesses that in fact employ about 85% of us. The fortune500 has employed less than 10% of us for probably 20-plus years now.

Posted by tom peters at November 25, 2009 12:48 PM

FYI: Legislate against outsourcing, start a trade war, watch the trade war spread and deepen, stir up populist sentiment as much as one can, and within 10-20 years it'll be a shooting war--alas, nuke v. nuke in all liklihood.

Posted by tom peters at November 25, 2009 12:53 PM

Tom – Thanks for your response. Your voice and opinion matter to me.

1) Regarding churn, I agree. But the distinction, for me is not that it does not or when it began. It’s natural and where there is stodginess it has to be rooted out. For me, the significance is the stage it is given and how it is handled. Hence, my point earlier about what comes naturally via science and culture, internally or externally. I'm concerned with the instability of the economy and thus, the lives of people.

2) Your example of IBM is a good one and such an example is what I meant above when I said that it necessary to do what needs to be done for viability. (Again, your focus seems to be in the tech industry. What about the others?) We must also lead and manage in a way that profit does not supplant people. People are all we have really. The fact that those who were laid off at IBM probably had advanced degrees or at least a bachelor’s degree enabled such a spin off of various tech startups. Praise God, indeed! But such is not the case for the scenario I presented above for the workers. Again, I ask, what to do about these?

3) In companies likes GM, Firestone, etc., the garment district in New York or the textile business South Carolina, many of these workers were undoubtedly not college graduates. For those college grads the likelihood that they will find work is by far better. But these are not the majority, I suspect. Even these, are probably NOT entrepreneurs. It takes a special breed, I think, to go it alone. A good very successful executive friend of mine found that out when he decided to start a business over the past year. He now sees the struggle of my existence as an entrepreneur for so many years, first in the arts and then in business. It both toughens and humbles you. It’s not for most, I reckon.

4) What do you mean by "churn is our greatest comparative strength?" The faster we churn the more competitive we will be? I think that it is very possible to churn needlessly too, out of our own restlessness, sense of insignificance or out of sheer greed.

5) You make an interesting point about small businesses. But to clarify, are you saying that small businesses employed more people than the steel companies of PA or the car companies of MI? Oh, I just read the "20-plus years now" part. I breezed by that. Was this during the time of mass exodus of jobs overseas? Was this during the trade policies that happened under President Clinton? Frankly, I think a lot of this stuff is simply greed masquerading as globalization. But I believe that it doesn’t always have to be that way.

6) The example about the trade war speaking to a nuclear war is precisely our inability to see the full impact of globalization and touting it as a savior when, in fact, it has had been detrimental in many regards. The fact that we have run up the deficit and enabled others to influence our internal decision as they hold our T-Bills is not fault but our own. But we must begin to look at these things differently, I think.

7) Are you only concerned about your lifetime? I'm WAY concerned about those who will come after me and if the actuarial table is correct I would come after you.

"With long life I will satisfy you and show you My salvation." All my best to you, Tom.

Posted by Judith Ellis at November 25, 2009 2:27 PM

"The faster we churn the more competitive we will be?"

YES. PERIOD.

"I think that it is very possible to churn needlessly too, out of our own restlessness, sense of insignificance or out of sheer greed."

ABSOLUTELY. BUT IT'S THE OLD CHURCHILL SAW RE DEMOCRACY. IT'S NASTY, BUT BEATS ALL THE ALTERNATIVES. PART OF THE, ACTUALLY, GENETIC REASON FOR THIS IS OUR HIGH DOSE OF IMMIGRANTS. IMMIGRANTS ARE GENETICALLY RESTLESS PEOPLE.

"But to clarify, are you saying that small businesses employed more people than the steel companies of PA or the car companies of MI?"

ABSOLUTELY. NOT EVEN CLOSE. ALWAYS HAVE, ALWAYS WILL. SMALL BIZ IS, I'M QUITE SURE, THE TOP EMPLOYER IN EVERY COUNTRY IN THE WORLD.

"The example about the trade war speaking to a nuclear war is precisely our inability to see the full impact of globalization and touting it as a savior when, in fact, it has had been detrimental in many regards."

AGAIN, LEAST WORST OVER THE LONG HAUL. YES, BADLY OVERSOLD. BUT GLOBALIZATION IS HERE TO STAY AND WILL ONLY ACCELERATE OVER THE NEXT 25 YEARS, AFTER THE RECESSION, UNLESS WE DO SMOOT-HAWLEY II.

Posted by tom peters at November 25, 2009 3:00 PM

Tom - Are you swearing at me? What's with all the caps? :-) They reminded me of a recent "Curb Your Enthusiasm" episode that had me cracking up! Larry sent a text to a young person in all caps that was badly misconstrued. LOL!

I agree with the essence of the Churchill thought. I do wonder, however, about what we are hailing as democracy internationally. You have made a good point about our immigrant history. I am more inclined, however, to believe that we are perhaps by far more removed from the ethics of the immigrants so espoused in the writings Emerson and Thoreau and we seem to largely pervert the message of Adam Smith, stripping it of its responsibility and redefining it for our purposes. Globalization may be around forever, as trade has always been. But as trade it has not always been fair or been beneficial to all.

There is also something about the inevitability of your words here with regards to globalization that is a bit unsettling. It is result of legislation and legislation changes, no? I think it is interesting also that past is often only prologue when we want it to be. Often times we ignore all of the other conversations and consequences associated with a particular time which may or may not be relevant to ours. I shall now do a little research on Smoot-Hatley. Thank you for that mention. I am not a scholar of the Great Depression. But I don't feel terribly bad about that. Here we had an imminent scholar of that period our current Fed Chairman, Ben Bernanke, who is such a scholar and he watched this near second Great Depression occur.

Thanks, Tom!

Posted by Judith Ellis at November 25, 2009 4:46 PM

""The faster we churn the more competitive we will be?"

YES. PERIOD."

How much does your life churn, Tom?
I bet not a bit since your book hit it big in 1984. You understand as much about the average person as Paris Hilton does.
"I'm not your shrink, Zorro, but you are carrying around a lot of bitterness. I'm sorry about that."

Me bitter? (sorry I'm not. I'm not personally affected in any way by jobs moving away - but I've seen what it does to the working class - I've taught in an inner city high school)
Once again, you are pretending to be an expert. So what else is new.

BTW, I thought anger was what drove 99% of all innovation (That's BS but it what you believe - maybe you've got the problem).

The Chinese might very well kick our ass with Communism and autocracy - while we wallow around in absurdurities like fighting for the freedom to buy health insurace from whomever we want.

Posted by zorro at November 25, 2009 8:31 PM

"No other developed economy can come close to making such a claim. Churn has put us at the top of the heap, with no challengers in sight (China may surpass us, but not in my lifetime)."

From this, I take it you have no children -
BTW, how does all this talk of churm mesh with all your talk about empathy?

Empathy only matters when it can be used to manipulate your employees or customers. All else be damned.

Posted by zorro at November 25, 2009 9:07 PM

How do you feel about Sarah Palin? I'm not a fan, but those that are can thank her popularity to rationalizing all this 'wonderful' churn.

Posted by zorro at November 25, 2009 9:14 PM

Zorro - I figured out who you are!!!!!
Explains a lot!!

Posted by Sgt Garcia at November 25, 2009 9:42 PM

"I'm not your shrink, Zorro, but you are carrying around a lot of bitterness. I'm sorry about that."

This exactly what a lousy manager would say to a malcontent (the source of all innovation) - Its something the the Nurse from One Flew Over the Cookoos Nest would say to Jack Nicholson.

I've said this before - take your ideas on the road - try them out - test them - prototype them by actually running something -
become a high school principal at a charter school -
Run a chain of McDonald's - Coach a High School football team -
Show people how you would do it -
How would you handle the trouble employee who is 'the source of all innovation' don't tell us -
do it - action - a bias for action.

Posted by zorro at November 25, 2009 11:26 PM

This is a terrific discussion, but you've not gone far on the personal side of this issue.

If we are entering an era of more churn and more free-agents, it will require a radical mindset change amongst people throughout the economy. Right now, many people get their identities and security from organizations: they work for a company and the paychecks come every two weeks. This trend makes us all much more dependent on individuals (ourselves and our network) for that security and definition.

That is a radical change for most people in the economy: the idea that I must clearly define the value I create, and I must deliver that value in a way that someone else wants to pay for it. That's a tough (terrifying) fence for most people to jump!

Making that leap easier for people will enable all of us enjoy the benefits from that churn. How do we reach out to the people around us to make that jump?

Posted by Buckley Brinkman at November 26, 2009 9:13 AM

Buckley - Your words are simply beautiful. Thank you. For me, you have summed up my anguish and Tom's wisdom. It is the combination of the Brand You and Brand Us. I LOVE your thought on personal responsibility and on how to bring others along. This is the beauty of honest discussions. It enables a summation that matters most. Your words are much appreciated. On this day of thanksgiving I am thankful to you. Now, we must move forward in leading in ways that infuse personal responsibility, intergrate diversity, and spread the love. We are helpers one to another. Happy Thanksgiving!

Posted by Judith Ellis at November 26, 2009 9:56 AM

I love these threads. No bomb throwing, but unrelenting belief in one's own opinions. But like today's politics, I see very little budging off of one's mark, therefore, most of these discussions end up as mere bloviations. Let me add my voice to the chorus.

I must say that many comments on this (and other) TP threads are chauvinistic at best and stereotyping at worst. The very antithesis of the tenents of the left. Isn't it ironic that when one puts individuals in groups, it de-humanizes them? It makes it easier to create 'national' policy and control, but is it really in the best interests of the individual?

For the record, I am a non-honor student high school graduate. I did not go to college. I left home at 17 and joined the Navy in order to learn a trade because my parents couldn't afford to send me to school and, quite honestly, in 1972 it wasn't expected of them to do so. I was very technically oriented in spite of my school not having computers, distance learning, audiovisual aids (unless you count the occasional 16mm movie, overhead projector, or 35mm film strip projector that beeped for you to forward the slide) or other necessary tools to gain my education.

I started a computer business (see Malcolm Gladwell's Outliers) in 1982 with absolutely NO business training and I am still doing it. I have employed between 2 and 16 people over the years, settling now at 8, doing more work with 8 people than could have been done with 20 ten years ago.

My business has morphed (churned) from building Apple II clones at the kitchen table to having three retail locations, back to one retail, to inbound service, to outbound proactive network support with no retail (yet, I still sell a lot of equipment.)

To think that a person needs to be a college educated whatever to succeed in business is bunk. I don't think that they teach ANYTHING in college to prepare you to actually run your own business.

Government: My company used to depend upon the local military to purchase a lot of goods that we sold. What a hassle... late payments, razor thin margins, incessant bidding which was like rolling the dice, uneven playing field going agains the likes of 8a and other minority bidders. One day, the Navy changed how they purchased IT and WHAM, no more bids. It hurt, but we survived and we are better for it.

My expectations for the government is to keep the roads open and clear (FAIL), protect me from criminals and maniacal despots, pick up trash, put out fires and stave off anarchy.

<strong)Staying ahead: I read incessantly. I attend conferences and talk to peers. I watch for trends and try to jump ahead of them. And, I try to kinda-sorta keep up with technology. So far, so good. Should everyone be like me? I hope not. A small business owner's biggest uncertainty is hiring someone that is smart and aggressive. It works well for a while, but then that individual will most likely strike out on his/her own, leaving the owner in a lurch. That is the dichotomy. You have to balance it. Call it churning!

Service business: I am convinced that the idea of full employment for a nation is a myth. We bump into it from time to time, but is it sustainable? Back 100 years ago when efficiencies were minimal, we didn't have full employment, nor did we have anything approaching prosperity. As the economy grew and manufacturing got more efficient, mfrs could afford to pay workers more, but in order to compete globally (there is that damned word again) the biggest reducable cost was labor. Simple math. Plus... how many factory workers liked their jobs? (Think Norma Rae). Working in a factory was a J O B.

The only way to get full employment is through a service economy. I have made the same argument many times about the $4/$96 Nike example. More money is to be made ancillary to manufacturing than to be the manufacturer.

(NB Toyota auto recalls: who is going to make more money on the 4 million recalls? Toyota (mfr) or the dealers doing the repairs (service)?)

As long as the cash is flowing, services are the "self-licking ice cream cone."

So... add one more responsibility to the government's role: keeping the cash flowing. Regulate doesn't mean obstruct. People will ALWAYS find ways to circumvent laws and regulation (see modern Russia). The best the government could do would be to follow the money. If they see an entity making a huge amount of money (an aberration), that is where the focus should be. If it is not illegal, then back off. If it is dangerous, then look into it. The trouble is, it takes YEARS for the gov't to do anything. By then the damage is done and all that is left to do is affix blame.

Last comment: scrap the current tax system and go to a national sales tax on EVERYTHING. With the nation moving more and more to services and off-book transactions, the only way to capture funds for the government (I cringe when I say that...) is through point-of-sale taxes. There will always be the black market, but it can be managed.

Happy Thanksgiving everyone!

Posted by Randy Spangler at November 26, 2009 11:34 AM

Randy – First, thank you for your thoughts here. They're appreciated. But I think your assessment of "these threads" perhaps has more to do with you than others. I, for one, come with an open mind, even though I have definite opinions. If you can get me to see something differently, I am more than willing to change, not that there will not be a fight. :-) I have learned quite a bit from various threads on this blog and your comments here have me thinking. Here are a few more of my thoughts and some questions:

1) "The only way to get full employment is through a service economy. I have made the same argument many times about the $4/$96 Nike example. More money is to be made ancillary to manufacturing than to be the manufacturer."

Who makes the money here? Think of Walmart. The Waltons get billions annually while the workers who enable their wealth cannot even pay for health care. Let's not even talk about the sweat shops in India and China. This is shameful! But your focus seems to be mainly on profit.

2) "To think that a person needs to be a college educated whatever to succeed in business is bunk. I don't think that they teach ANYTHING in college to prepare you to actually run your own business."

That is a terrible overstatement. But you are probably less likely to know if you have not been. It's funny. Rarely do you hear college graduates making such definitive statements. By the way, college is cumulative. It's about a process of thinking and environment in which diverse thought is breed. It's a microcosm to a large extent of the world in which young people will enter. Of course, not everyone will go and some of our greatest entrepreneurs did not finish.

To disparage college is simply ignorant. If you have children, did you encourage yours to go to college? Why? Did they graduate with the major they entered with? I cannot even being to tell you how my experiences in college have enabled my success in business. A lot of it has to also do with the home in which I was raised that taught lessons that laid the foundation for success.

I am the youngest of 12 children. My mother raised us alone when our beloved father, who served valiantly in the Korean War, was not quite able to adjust thereafter. Mom said that our sensitive father was never the same when he returned for Korea. Without the help of the government, we would not have made it. Our uncles and aunts and uncles were quite wealthy, but my mother did not depend on them. She always had a job and the government assisted.

Within your system of government, we would not have had a chance of survival and there would not be these fiercely independent, loving, and opinionated professionals who are quite bent on giving back. We are all servants. Regardless to our profession, we were taught to serve. We are forever becoming, hopefully advancing. My mother was a stickler for this.

Today, we are all professionals and entrepreneurs, but were required first to serve in ministry. We are also missionaries, pastors and chaplains with multiple degrees and licenses. We are entrepreneurs and senior executives of Fortune 100 companies. Some do better financially than the others, but this is not our focus. We are all artists: singers, musicians, painters, and poets.

Many of us have had three or four successful careers. One served in the military. We have raised nearly 50 foster children, with my older sister serving as "Mom." Outside of my 26 nieces and nephews, these also call me Aunt Judith and I have loved them like family. We have sent most to college.

3) "I am convinced that the idea of full employment for a nation is a myth...Working in a factory was a J O B."

Who then should be employed, only entrepreneurs? Is a J O B a bad thing? Is a career by any other name in some essence a J O B? It provides for necessities. Do you think the service industry jobs are not jobs? Many people with careers see them as jobs. "Oh, I have to go to my career today." How often have you heard that?
Should careers and jobs be classified? Should society be broken into two: The employed (the entrepreneurs a.k.a. those with careers: the haves) and the unemployed those who used to have jobs (the poor: the have nots)? We can call it whatever we want but work is still a means for survival. Pope John Paul II wrote a wonderful thesis, "On Human Work," that I would recommend.

How should we classify the children of those jobless people? What will their likelihood of success be? Who pays for prisons? Should there be capital punishment for stealing a loaf of bread? Are your employees full-time? Are they contractors? Do you offer benefits? Do your employees have children? Who pays for health care? Ideal situations for most do not exist.

4) "My expectations for the government is to keep the roads open and clear (FAIL), protect me from criminals and maniacal despots, pick up trash, put out fires and stave off anarchy….scrap the current tax system and go to a national sales tax on EVERYTHING."

Without a J O B how will those who are not entrepreneurs pay for the basic necessities? Should this be an every man for himself kind of thing? Should we neglect the children whom the parents for whatever reason are unable to care for? Should we all home school whether we are educated and enlightened enough to do so? Government has a role besides what you have outlined here.

5) "Toyota auto recalls: who is going to make more money on the 4 million recalls? Toyota (mfr) or the dealers doing the repairs (service)?"
Are we then counting on recalls and systems' imperfections and planned obsolescence in order to keep the service economy afloat? (Why can't it be a diverse blend of both? Profit, right?) Sounds a lot like what the US automakers were doing that kept the car owner going back for repairs. Wasn't planned obsolescence a large reason why Americans lost faith in Detroit?

Posted by Judith Ellis at November 26, 2009 3:02 PM

Tom – I don’t think the “churn” you are talking about, and the “churn” that Wesbury presented in his Forbes article are the same thing. The numbers quoted by Wesbury came from the unemployment insurance reports submitted to the government, and only reflects “employee events.” Entrepreneurial activity is a different cat altogether. Based on the government’s reporting methods—and Wesbury’s posit—there could be a Billion “churn events,” without creating one new job, or one new business.

But, I do like what you are saying:

“IBM becomes stodgy, lays off tens of thousands to survive--but, praise god, a jillion tech startups more than compensated.”

This is not churn Tom, this is much, much more—I believe it is the heart and soul of American business, and should not be lumped in with government numbers and journalists interpretations of those numbers (which are wrong by the way). It is the jillion tech startups—better yet, ALL the startups—that should be the center of attention of the government, of the media, of the financial world, and of all of us. They need to stand out…as a movement if you will…separated from cold government statistics, with an identity of their own—and “entrepreneurship” doesn’t describe it. Your jillion tech startups are a lot more than just “entrepreneurship.”

Posted by Bob Foster at November 27, 2009 2:39 AM

Judith,

Thanks for the reply. I am more than willing to change my opinions on issues, but it has to get past my core beliefs and my suspicion gene.

In many ways I think the opinions we all hold are like the parable about several people being blindfolded and touching different parts of an elephant and hearing what they think it is.

For instance, I see the $96 going to 'us' and you see the $96 going to 'them'. Do the Waltons hold onto all of their money, or do they reinvest it in local economies, pay out stock dividends, hire 100's of thousands of skilled and unskilled individuals, pay taxes to local, state and federal governments and fund endowments, etc?

(Anecdote: a WalMart just opened about 30 miles from Charlottesville, VA. We drove by and there wasn't an empty parking spot in the lot. What were those people doing for goods last week? And if WalMart is so crappy, why did they all drive there to fight the crowds?)

I did not say that college was not a good thing. I have two years of scattered under-grad college work and I enjoyed most of the classes. It gave me a more broad vision of things, but so did living in two different foreign countries for a total of 6 years. Life is an amalgamization of experiences and there is no pre-requisite for where that experience needs to come from. My point, though, was to say that the perception if someone doesn't have college, they aren't going to be able to be very successful, is bogus.

I am not disparaging college, but after 15 years of school by the age of 18-19, most kids expect four more years as a birthright not to be denied. In many ways it just further delays the actual taking of responsibility for themselves, well into their twenties.

As for support for people that need support... In the case of a war vet that comes home with problems, it is truly the federal government's responsibility to take care of them and their dependents. One question concerning the rest of the 'folks' out there, is it the federal government's responsibility or the state's to provide for people? Is it in the Constitution (besides the omnipotent Commerce Clause?)

My comment about the J O B... I hear comentators waxing poetic about the great jobs being 'shipped' overseas. My point is that these jobs were not held in high regard until recently, now that they are gone.

Now that you ask, yes, I have employees, yes, I pay for all or most of their medical benefits (but not their family benefits). I don't particularly like the idea of being responsible for their health care benefits. I don't pay for their car insurance, home insurance, flood insurance, vacation insurance, food, homes, or any other 'necessities'. But I am saddled with an expense that rises 12-20% per year (plus more as my employees age.)

As for government responsibilities, I was speaking about the Federal government. I keep going back to that pesky Constitution thing. Why is the Commerce clause more important than the Enumerations clause? Until just 70 years ago and more or less that timeframe in the rest of the civilized world, every person was more or less, for themselves since the beginning of mankind. Now, in 70 short years, we are at the point where the mothership is going to provide for everyone's everything if they choose not to provide for themselves. I mean, where is the cutoff? How do you prove someone can, but won't? We are paying unemployment now, going on 5 quarters, but the highways and byways go unmowed because the state cannot afford to pay people to do the work. WHAT? Think outside the box! Why not ask people that have been 'looking' for work for over a year to help out 10-20 hours a week. Do daycare, help teach in schools, assist at the library, work at the public health center... anything. There are plenty of unfulfilled jobs to be done and we are at 10% unemployment. What is wrong with this picture?

Finally, Toyota. My point is that if you look at the ecosystem surrounding the automobile industry and the lifecycle of a typical automobile, the actual manufacturing of the vehicle is a small piece of the total value.

We are seeing the disintegration of old-school stovepiped big businesses. And with the crumbling of the structure that held them up, the 'displaced' people become less controllable. I can see where that would cause considerable consternation amongst the power brokers in the nanny state. There has to be a palpable fear that tax revenue will begin to tail off. That could be the subtext to the reason to focus on the 'rich' to fund everything and to make sure that the lower 50% don't pay any federal tax.

I just think that everyone should be taxed equally, even if they get the money right back in the form of a check. It is just the fair thing to do...

Posted by Randy Spangler at November 27, 2009 4:37 PM

Keynes on Globalization and Unemployment:

According to Robert Jacob Alexander Skidelsky in his recent book, Keynes: The Return of the Master, Keynes had "a bias against foreign lending. Not only did he think that the ownership of national assets by foreigners would 'set up strains and enmities' in moments of stress, but he believed that domestic investment was better because inherently less risky than foreign investment. 'To lend vast sums abroad for long periods of time without any possibility of legal redress if things go wrong is a crazy construction; especially in return for a trifling extra interest.'" (John Maynard Keynes, Collected Works, xix p. 278)

"Keynes believed that the "advantages of the international division had been overplayed. 'Experience accumulates to prove that most modern mass-production processes can be performed in most countries and climates with almost equal efficiency...Moreover, as wealth increases, both primary and manufactured products play a smaller relative part in national economy compared with houses, personal services, and local amenities which are not the subject of international exchange." (JMK, CW, xxi, p.238)

"But it does not seem obvious that...a close dependence of our economic life on the fluctuating economic policies of foreign countries (is a) safeguard and assurance of international peace. It is easier...to argue quite the contrary. The protection of a country's existing foreign interests, the capture of new markets, the progress of economic imperialism - these are scarcely avoidable specialization and at the maximum geographical diffusion of capital wherever its seat of ownership. Advisable domestic policies might often be easier to compass if 'flight of capital' could be ruled out. The divorce between ownership and the real responsibility for management is serious within a country...But when the same principle is applied internationally, it is, in times of stress, intolerable - I am irresponsible towards what I own and those who operate what I own irresponsible towards me...for these strong reasons, therefore, I am inclined to believe that...a greater measure of national self-sufficiency and economic isolation than existed in 1914 may tend to serve the cause of peace, rather than otherwise. At any rate the age of economic internationalism was not particularly successful in avoiding war." (JMK, CW, xxi, p.238)

"If nation can learn to provide themselves with full employment by their domestic policy...there would no longer be a pressing motive why one country needs to force its wares on another or repulse the offerings of its neighbour...with the express object of upsetting the equilibrium of payments so as to develop a balance of trade in it's own favour. International trade would cease to be what it is, namely a desperate expedient to maintain employment at home by forcing sales on foreign markets and restricting purchases which, if successful and will merely shift the problem of unemployment to the neighbour which is worsted in the struggle, but a willing and unimpeded exchange of goods and services in condition of mutual advantage."(JMK, CW, vii, pp. 382-3)

Hmm, what's going on in Dubai? It looks like their debt too was secured by the government.

Posted by Judith Ellis at November 27, 2009 5:42 PM

Beautiful distinction, Bob. Thank you. Your blog has been a source of entrepreneurial support.

Posted by Judith Ellis at November 27, 2009 9:22 PM

Because Obama was recently in China, NPR had a very short piece on the differences between China in 1998 (when Clinton visited) and now.
They pointed out that in 1998, our trade with Mexico was twice that of China and we owed more money to Spain than we did to China.

Posted by zorro at November 28, 2009 8:22 PM

What is your point, Zorro?

Posted by Judith Ellis at November 28, 2009 8:44 PM

Its just a fact. I'm not sure it a good thing. Things have changed quicker than I realized.

Posted by zorro at November 28, 2009 8:53 PM

I'm reposting something that fits here too
http://www.globalpost.com/dispatch/china-taiwan/091103/silicon-sweatshops-globalpost-investigation

Read the post and the answer the question - Is Apple or Cisco a good place to work for if you include the sweatshops that are respoible for the products that are actually sold?
How does anything Tom preaches about count at all if all Iphones and Ipods are assembled by people who are living in terrible conditions?
These people make Apple possible - but they are not on anyones radar -
including Tom Peters who claims to be a big humanaitarian.

Posted by zorro at November 28, 2009 9:26 PM

Zorro,

My sister is on a "don't-buy-anything-from-China" kick. She is doing pretty well at it (the fact that she doesn't have a lot of cash sloshing around, helps in the "don't-buy" part of the equation.)

Anyway, she went out last week to replace a broken laptop computer. She came back exclaiming that she could NOT purchase a computer that wasn't made in China. Not even the Japanese brands. Everything is made in China.

The other day I was trying to shove a plastic container in a kitchen cabinet where all of the other plastic containers congregate. It was full. In the back of the cabinet (it is one of those odd-shaped corner cabinets) was this gaudy orange juice jug. I pulled it out. You have probably seen one like it. Two plastic oranges, the size of grapefruits, stacked one on top of the other, with a green plastic top that looks like leaves and one of the leaves pops up to make a pouring spout.

Someone probably picked it up in Florida a long time ago. It hasn't held juice in probably 20 years. I was getting ready to throw it away (it was so poorly made, that the lid doesn't even screw in properly) when I looked at the bottom and saw those unfamiliar words "Made in U.S.A."

I didn't have the heart to toss it. Now it is sitting in another pile of stuff (outside of the cabinet) waiting for that golden moment when I get thoroughly tired of all of that junk and I will toss it all...

Posted by Randy Spangler at November 29, 2009 9:10 PM

One other thought about junk made in China. It wasn't that long ago that we talked about junk that was made in Taiwan, ROC. Before that it was Japan. Junky crap came from the US, too.

If you think about it, the US manufacturing sector has evolved like the Japanese and Taiwanese have, to where we expect higher quality all around.

When you get a product made in the US, or Japan, or Germany you pay a bit more for it and you expect that it is a better quality. Usually you are not disappointed.

If you buy a $9 pair of sunglasses, a $12 toy truck, $39 DVD player or a $39 pair of Sketchers shoes from Kohls, I don't think that most people's expectations are very high. The sunglasses will likely get lost, the toy truck smashed up and discarded, the DVD player used until something better comes along next year and the shoes get worn until the heels wearout and the uppers are all scratched up. These products are truly disposable, like razor blades, paper towels or medical supplies.

So we buy those glasses at $9. We get a summer's worth of enjoyment out of them. Would we have spent that money on a lousy movie (for just one person...)? What is the lasting value of a $39 meal at Appleby's?

I guess my point is that when a product reaches a cheap enough price point it becomes affordable to a LOT of people, where the decision to purchase becomes a whim. If those shoes cost $195, what would you do when the heels wore out? You would get a cobbler to put on a new sole or heel, assuming that you could find a cobbler. This would probably cost you $30, likely more. What self-respecting craftsman would spend 15 minutes doing a job like that as a business and not be worth at least $100/hour just to keep the lights on at his shop?

Like I said in a previous posting, it is all the ying and yang of life. Soon the Chinese will demand better and get it. Then, they will start complaining about shipping all of their good manufacturing jobs out to Africa.

And the cycle begins again...

Posted by Randy Spangler at November 29, 2009 9:28 PM

Zorro - Thanks for the article. Some years ago I nearly lost all respect for the civil rights leader Andrew Young when he was contracted by Nike to go to Asia to investigate sweatshops. Of course, it was undoubtedly believed that his position as a civil rights leader would add credibility to his reporting. It did not. He came back with a report which essentially said that there were no violations of civil rights in the sweatshops in China, Vietnam and Indonesia.

Everyone knew that this was not true and it remains untrue today, as your article asserts. The Young report came out in 1997 and back then I read many articles refuting the good reverend's findings. I'm sure they can be found online. What is for certain is that the "wealth of nations: has always been built on the backs of others. It does not take a very insightful person to recognize this which has very little to do with the natural processes of life but more with the balance of power, as in who has it and who doesn't. Frankly put, it seems to be largely a process of exploitation.

I wish that developed nations would lead more with a moral compass. It is indeed possible to be profitable and do what's right by the people. There is also another element here which probably includes the owner of these sweatshops in Asia. I assume that they too are benefiting from the back breaking hours of the workers and minimum pay.

Posted by Judith Ellis at November 30, 2009 1:26 AM

Andrew Sorkin wrote a great piece in the New York Times, "A Financial Mirage in the Desert", where he writes that "for the last couple of years, the running joke on Wall Street was 'Dubai, Mumbai, Shanghai or goodbye.' If you were the C.E.O. of a troubled investment bank desperately looking for cash, you made a pilgrimage to one of those three cities with hat in hand. They were the places most likely to write a quick billion-dollar check; their eagerness should have also been a tip-off. Now you have to wonder about Mumbai and Shanghai, too. Are they next in line to take a fall?"

I'm wondering if debt and the service economy go hand in hand and if our new economy is all a big mirage, for where there is decreasing production what is the basis for service? What's there to service? The mirage seems not only relevant to Dubai, but to our own economy if we are not careful. It seems to me that businesses, small and large, have to largely build and people need to work in order for there to be stability in the economy. This is how our middle class was built. How these Wall Street banks are currently investing can't be the bedrock of the economy if we are going to be viable, not to mention that they will undoubtedly need a hundred billion dollar bailout out again, perhaps this time over multiple trillions.

Citigroup lent Dubai $8 billion on December 14, 2008 after being bailed out by taxpayers for $25 billion and then another infusion of $20 billion the month before. Do you think they'll need another bailout? It seems that Citgroup hasn't learned its lesson on structuring risky derivatives even though the government has a large stake in this bank. While Dubai is building, largely on the backs of slave labor, it seems like a capitalist city built on debt that has gone amuck. David Rubenstein, the co-founder of the private equity giant Carlyle Group pointed out in the article, "You know, they don't have any oil."

Is our economy being built on debt which is in this case risky derivatives? Investments banks hold 6 trillion in financial assets while commercial banks hold 4 trillion. (The distinction is actually murky as Wall St. banks are acting as commercial banks with backing by the FDIC although they hold no deposits.) Is an economy built largely on service a "mirage?" Is service based on debt where there is decreasing production, in essence, a risky derivative?

As I write a wonder if there is a systemic flaw in the capitalist system, even thought there does not appear to be a better one? I will now re-read portion of the book I purchased over the summer, Creative Capitalism, in an attempt to restore my faith in a system that needs redefining and a people who need re-alignment.

Let me end by quoting a most eminent foreign policy expert, Dr. Zbigniew Brzezinski. When asked about Afghanistan's corrupt government and our efforts there he replied: "Who are we to seriously be preaching [such] a crusade? We have a financial sector that is voraciously greedy and exploitative, to put it mildly. We have a Congress which is not immune to special interests. And we have an electoral system that is based largely on private donations which precipitate expectations of rewards. The notion of us going to the Afghans and preaching purity is comical... I think we should just quit that stuff."

Posted by Judith Ellis at December 6, 2009 12:29 PM