Competition ensures that winners won’t buy their own excuses.

Competition, a concept much loved by anyone attending a professional sporting event, seeks to have the best contend against the best for the enjoyment of all.  Top level competition reminds me of my youth, when NBA legends Larry Bird and Earvin “Magic” Johnson, both intense competitors and quintessential winners, were first entering the professional ranks.  The battles between the Lakers and Celtics became legendary as each team made constant adjustments to improve against the other.  The NBA turned into a fan favorite, selling out once empty stadiums, in a large part to the competitive greatness displayed by Bird and Magic.  Sadly, competitive greatness, this key ingredient to keeping a country productive, is being lost in the business world as entrepreneurs, fed on a diet of government subsidies and tariffs, become more like bureaucrats than business owners.  Can you imagine the outrage if, after a Lakers loss to the Celtics, the Laker team, rather than confront their lack of execution leading to the loss, instead chose to run to the California congress, seeking a tariff restriction against Celtic basketball the next time they entered California?  I can see the arguments now in congress, the Laker team provides jobs for Americans, it has been an icon in the NBA for years, we cannot allow Laker basketball to fail; therefore, we must support a tariff restriction against the uncompetitive practices of the Celtics, those egregious winners.  Ok, one might be thinking the author is getting carried away as there are no tariffs between states.  This is correct, certainly one of the best decisions our Founding Fathers made was to eliminate all tariffs set up to protect the states against competition from other states.  The Lakers are forbidden by law to seek protection against the Celtics and must learn to adjust to the competitive pressures applied by the Celtics, if they wish to compete and win. The Founding Fathers, although they understood the importance of each state having to compete on its own merits without tariffs, interestingly allowed tariffs on an international scale between countries, claiming the need to protect new American industries.  They agreed with competition within the country, improving the output, quality and price, but wavered in principle when discussing competition amongst countries.

Let’s revisit our NBA analogy with a twist, more representative of international business conditions.  Bird and Magic, even though intense competitors on the court, were good friends off the court, having a mutual respect for each other gained over the years.  They, along with many other Hall of Famers (including Michael Jordan), joined together to create the 1992 Olympic Dream Team, possibly the most talented team ever assembled at one time to compete in the history of basketball.  The Dream Team went on to dominate the Olympics, winning their eight games by an average of forty-four points, displaying the competitive greatness of the NBA athletes to the rest of the world.  Imagine the response in America and the world if, before the Olympics started, the rest of the Olympic teams filed petitions to their local governments initiating a forty-four point tariff on competitive basketball teams entering from the USA market, arguing that the USA had implemented “unfair dumping” of Hall of Fame players into their home markets.  Basketball teams imported from America would now start with a negative score of forty-four points against the home team players.  The idea itself is ludicrous when discussing competitive sports, but accepted practice in international business, called tariffs. Tariffs are created, ostensibly to protect jobs in the home market, but actually to raise revenues of governments (like they don’t have enough of our money already) and to protect special business interest against more competitive international competitors by applying a tariff paid for by all consumer in higher prices. Basketball teams from around the world now routinely compete against the NBA’s best in Olympic competition without needing tariff protection from their local governments.  The best in the NBA have lost to the best of other countries in world wide competition.  Do you believe this would have happened had local governments implemented tariffs against American basketball players?  Competition always benefits society by forcing all teams, companies, and organizations, to compete with the best ideas, plans and leadership in the world for the benefit of all consumers, allowing no special deals for uncompetitive coaches and players.  We expect nothing less when it comes to competitive sports, but sadly lose our resolve when discussing competitive businesses.

Competition ensures that winners do not buy their own excuses.  Everyone seems to love competition until the subject turns to their personal profession.  Doing a 180, business people who profess a love of free enterprise principles, will start sounding like a socialist, demanding protection against competitive pressures in their industry.  No one likes losing, but seeking protection against your own or your companies incompetence is not the answer.  Only when honestly looking at why your company is losing, only when confronting the facts as they are, not as you wish them to be, will your company change and grow.  It’s competition that keeps people and companies honest with their current performance.  Without a scoreboard, or with a rigged scoreboard due to tariffs, true competition is not allowed to thrive, with the end customers paying the price a businesses lack of results. Tariffs increase the price of all incoming products into a country, leading to higher prices for the goods imported into the home market.  Instead of local companies confronting and changing, they are allowed to retain their uncompetitive practices thanks to a protective tariff paid for by all consumers.  Owners become wealthy, not by performance, but by government protection, creating special deals for the few at the expense of the many.  Politicians are happy to help the business especially if that business is willing to help the politician get re-elected, creating a breeding ground of corruption; all because we allowed government into another area they do not belong.

Imagine a tariff as a blockade on foreign goods into the home market.  Blockade?  Isn’t this a war term, only happening when one country blocks another’s home market from receiving products of the world, with the hope of destroying the will to fight of the opponents citizens?  That’s correct, but a tariff is even worse than a blockade, since its a blockade created by the citizens own government.  A government mandated to protect its citizens becomes its citizens oppressor by blocking the free flow of superior goods at better prices by taxing the goods before they can enter the home market.  countries own government against its citizens, making it easier to enforce than an enemy blockade.  To break this blockade, companies must pay a tax to government officials to get into the market, called a tariff.  Who ultimately pays for the tax?  It’s not the companies as they must pass this on to the end consumer in order to receive a profit and stay in business.  If the tax is too high, the product simply becomes unavailable in the market, making the government blockade on its own citizens complete, reducing the choices for consumers around the country, thus increasing prices in the home market.  America must not be afraid to compete against the world, just as the world was not afraid to compete with America in basketball, focusing on improving themselves, not blockading the competition.

One might be thinking, this sounds good on paper, but what if foreign markets place high tariffs on American products?  At the end of the day, all goods must be paid for by the trade from other goods with money as a medium of exchange for convenience sake.  In other words, if a country doesn’t open up its borders to America, it hurts its own ability to trade with us, because we cannot buy their goods unless they allow us to exchange our goods with them.  Creating reciprocal trade agreements among the nations, preferably lowering tariffs to zero, but certainly lower than the twenty, thirty even forty percent plus, routinely seen among countries should be the first order of business.  The more trade, the more choices, the more effective the division of labor, thus increased production for all countries involved.  The wealth of a nation is the production of a nation, not its ability to print money, nor its ability to tax the production of others.  Sport teams would not leave the country if they were hit with thirty to forty percent reduction in performance levels, merely to enter another country’s market, subsequently hurting all customers (fans) of the game.  Thomas Friedman wrote, “The World is Flat,” and he is correct.  America can and will compete in the world market, not through tariffs, not through government intervention, but through the revitalizing effects of a scoreboard.  When winners lose, winners change.  All companies, organization, and individuals will experience losses, but winners experience losses only as a learning step to improvement and future wins.  Government intervention through import taxes in the world economy must be reduced, and eventually terminated, so all countries can compete.  This improves the quality of life for all by providing the best products at the best price to the end consumers with no special deals to preferred businesses.

One final thought, if you disagree with the freedom to trade principle discussed here, believing protection is good for jobs, good for a country etc, I cannot blame you.  Having been indoctrinated from the news, schools, and politicians since birth, on the benefit of protection, its not surprising that freedom principles are not easily comprehended on the first exposure.  A helpful technique in thinking is to apply the proposed principle into society and see where it leads. Let’s do this with the protection principle and imagine the fruit produced from this application en masse.  Suppose we were to rescind the Founding Fathers ideas on state level tariffs and allow California to protect its products from the greedy Arizona manufacturers to name just two of the fifty states who will quickly implement tariffs.  Increasing the prices of all products to consumers, increasing taxes to all states, decreasing trade and productivity of the country as a whole. If tariffs are good at the State level, then let’s apply tariffs at the county level as well, protecting Lapeer county from the competitive pressures of Genessee county in Michigan, to name just one of thousands counties and states that would implement tariffs.  But we can go even further, let’s protect our subdivision against the competitive nemesis of our neighboring subdivision, implementing a tariff on any product bought from our “enemies.”  Reducing still further, we end up finally, with each home against every other home in a dog eat dog world of tariff protection.  If we believe in tariff protection, then carrying it to its logical conclusion, we end up with every house protecting its output from its neighbors goods, leaving division of labor in dust, taking us backwards further than the darkest of the dark ages.  Division of labor allows each of us to use our gifts and skills in the way most beneficial to us and society increasing productivity by specialization.  History teaches repeatedly that every increase in the division of labor has corresponded to an increase in productivity of the society at large; conversely, every decrease in the division of labor has led to a corresponding decrease in productivity of society at large.

The Founding Fathers correctly saw free competition among the states as a benefit to all citizens.  I propose we take this concept one step further, instead of living in fear of competition, let’s thrive on it, opening up a “Flat World” to free trade, like the Founding Fathers opened up the states to free trade.  If any country is willing to compete, reciprocating with the American market for low, if not not no, tariffs, then let’s begin free trade immediately for the benefit of the citizens in both countries.  Free trade is the great engine for freedom around the world, relying on service to other countries needs for profits, not coercion of other countries for profits.  Free competition makes all of us better, forcing us to confront weak areas, improving society and ourselves.  God Bless, Orrin Woodward

It’s hard to light yourself on fire with your dream when you are busy wetting yourself with your dread.

All achievers, in every field, visualize successful outcomes before making them a reality. From athletes, salespeople, musicians, business owners, and many others, top performers understand the power of vision.  The ability of your subconscious mind to lead you towards your dominating vision is little known and rarely tapped into amongst the masses, but his must change.  If someone plans on breaking out of the crowd, learning to feed the subconscious mind the vision of the future isn’t a nice add on, but an absolute necessity.  Author Vince Poscente, a world class athlete, wrote in his entertaining and informative book, The Ant & the Elephant, on the difference between the conscious and subconscious mind, teaching that the conscious mind in one second of thinking through words stimulates 2,000 neurons, while the sub-conscious mind in a second of imagining through images stimulates 4 billion neurons.  That’s 4,000,000,000 neurons, literally 2 million times more neurons stimulated in your subconscious mind than your conscious mind in one second of activity.  Poscente called the conscious mind the and and the subconscious mind an elephant.  Loving analogies, I have used the ant and elephant concept numerous times to teach people the power in their imagination.  The great Albert Einstein said, many years ago, “Imagination is more important than knowledge,” so these concepts are not new, just rarely applied in people’s lives.

Henry David Thoreau, a famous American transcendentalist wrote, “Most men lead lives of quiet desperation,” believing few ever accomplished what they dreamed, quietly resigning themselves to their fate.  Sadly, a true picture of most lives, but it doesn’t have to be this way, changing one critical habit can make all the difference. Feeding the elephant subconscious is the key to breaking out of the crowd. Many people will discipline their ant to perform work, creating habits that produce results and routine like waking up, leaving for lunch, and leaving work, all routinized by daily disciplined habits, but few seem to discipline their elephant in the same capacity.  If people would learn to discipline their elephant like most already discipline their ant, we would have a productivity revolution in the world.  I like to imagine the discipline of your elephant as aligning your elephant to move in the same direction as your ant.  If they are moving in the same direction, the ant can hop on the back of the elephant and ride to success.  But, if not aligned in the same direction, one has a huge problem, the ant and elephant are in a tug of war over which direction to move, causing a civil war inside one’s brain, leading to indecision and inaction.  Examine your own thinking and imagination.  Are you moving in the direction of your dreams by focusing only rationally disciplining your ant?  This is an important step in the process, but not all of the steps in the process.  You must also take time to feed your elephant since an elephant can travel much faster than an ant, making the trip to success easier and more enjoyable.

Simply put, if you are heading out into the jungle, having an ant and an elephant as your resources, why are you hopping on the back of the ant instead of the elephant?  Leaving the elephant behind, while expecting the ant to carry you to success is back breaking work for the ant and a frustrating ride for you.  Perhaps, a better plan would be to feed the elephant the image of an oasis (your dream) off in the distance, exciting the elephant to charge ahead, hopping the ant and you on its back all the way to success.  Don’t misunderstand me, this isn’t some magical elixir, but a logical plan to utilize your whole brain to achieve what you want out of life.  It will still take work, effort and drive to achieve, but by lining up the ant and the elephant, you end the civil war inside of your mind, creating the conditions for massive success.  This civil war, inside of one’s mind is what short circuits success, not a persons starting conditions.  It’s not the outside circumstances that count near as much as the inside alignment.  You may not control the outside issues, but you certainly are responsible for the inside as feeding the ant and elephant is an inside job.  If you want success, don’t waste another day riding the ant, go back to base camp and ignite the elephant with an image of a brighter tomorrow.

The elephant refuses to starve, meaning if you will not feed your elephant someone else gladly will for you.  Every advertisement watched on TV is geared towards your elephant, not giving a list of functions, features and benefits to your ant, but feeding your elephant an image of success by using its products feeling.  Advertising agents speak right past your ant, feeding your neglected elephant, creating needs in your elephant by repetition of the messaged image over and over.  People end up buying things that they don’t really need, not even understanding rationally why they did it.  Remember, people make decisions emotionally (elephant) and then explain it rationally (ant).  Let me use just one example, of many, from TV advertising.   As a kid, I loved sports, watching football, basketball and baseball anytime that I could.  I must have seen thousands of beer commercials over the years.  Slogans like, “Taste Great; Less Filling,” and many others, still are in my head after all of these years; even though, I have watched little, if any, TV in over a decade.  All beer ads are fed to your elephant, not your ant.  Have you ever seen a beer ad where they explain the ratio of carbonated water to barley and hops?  Can you imagine an ant version beer ad explaining how alcohol blocks oxygen from the brain, causing impaired thinking and motor skills? I don’t think we will see an ant ad in our lifetime.  Instead the ads implant images into your elephant.  The ads run images of guys popping open a beer, and mysteriously beautiful women, many clad in bikinis pop up out of nowhere.  Rationally, guys know this isn’t going to happen, but the elephant charges to pick up the beer anyway.  Maybe the first time you see the ad, your elephant resisted, but through constant exposure, feeding the elephant daily, eventually you will act out your elephants vision. We know this to be true; otherwise, ad executives would not pay for time slots on TV.  I didn’t create a beer drinking habit in high school because I was training all the time for sports, fearful it would hurt my performance, but after high school all that changed.  Finishing an intramural basketball game, I found myself creating the habit of heading to the bar with the guys for a cold one. It wasn’t until years afterward that I realized my elephant had been programmed by someone else, acting out the vision that high paid TV ad executives had given me.  Your elephant will charge, the only question is, is it charging for your dream or someone else’s?

If dreams are compelling visions of the future being fed to your elephant, then dreads are fearful visions of the future being fed to your elephant.  Just as a dream inspires your elephant into action, dreads immobilize your elephant through fear and worry.  Your elephant move in the direction of the images provided to it, why feed it the images of your fears?  Everyone has fears, but winners learn to feed their elephants images of faith.  Thinking of a better tomorrow with your ant, while feeding your elephant your dreads of a fearful tomorrow is a perfect example of the civil war.  Align your elephant dreams with your ant thinking, and you will change your destiny.  Every winner has the confidence inside of them, knowing where they are going, believing they will get there, willing to endure any hardship to fulfill their calling.  You cannot set yourself on fire with your dream when you are busy wetting on yourself with your dread.  Do not leave this page without a clear plan to start feeding your elephant YOUR vision of the future.  Quit worrying about what has already happened; quit worrying about what might happen; instead, start focusing on what you want to happen, aligning your ant and elephant to make it happen.  Success is available to all when you decide to discipline your elephant with your dreams as much as you discipline your ant with your responsibilities.  God Bless, Orrin Woodward

Leaders always choose the harder right rather than the easier wrong.

Character demands strength of mind, heart, and will.  Choosing to do right, regardless of what others are doing, isn’t easy or natural, but leaders refuse to surrender their character, considering it more valuable than any earthly possession.  Many talk glibly of character, boasting loudly of its importance, who, when circumstances press against them, quickly run to the easier wrong than the harder right.  Character is less about head knowledge, nearly everyone knows when they are doing wrong, but more a matter of heart knowledge, doing right when it hurts.  In life, one can choose to produce results or search for ways to exploit others results. Producers create value by serving people, either directly in the service fields, or indirectly by producing products that people desire.  Producers do not look for handouts, only hand ups.  Given the right training, they can achieve nearly anything by their efforts and tenacity.  Maintaining a productive existence requires character as people will not remain in business with exploiters unless coerced. One of the quickest way to recognize producers, is by the long term relationships built through serving others through win-win principles.  Character based people refuse to be exploiters, even though it looks easier, it always ends up hurting the person more than it benefits the pocketbook.

Exploiters, on the other hand, produce nothing or nearly nothing, relying on privileged positions gained through their political maneuverings, rewarded from the fruits of someone else’s labors.  Exploiters seek out producers, needing their production in order to live parasitic existences, hoping to fatten themselves from the fruits grown in others gardens.  Exploiters flock to professions in which tracking performance is difficult, like government, large corporations, and even the church.  These fields are ripe for exploiters because it’s easier to remain hidden, being far enough removed from the customers satisfaction.  Any field protected from the reality of the market allows exploitive means to grow and productive means to shrink. For example, a person in direct sales position gets immediate feedback if he or his product does not get the job done, but someone can hide out for an entire career in large companies never talking to a true customer.  A perfect field for exploitation. How do you accurately gauge what a person is worth to the end customer or even internal customers without a profit measure? Government exploiters can run up debts and taxes while blaming the other party; corporate exploiters can increase their salaries, stock options, or corporate expense accounts while the company and investors lose money, church leaders can manage churches into the ground, passing off there poor leadership as God’s lack of Providence. Don’t misread me, not everyone in these fields is an  exploiter, many are hard working producers that love what they do.  Not to mention, you can find exploiters in any profession, anywhere, where they have discovered how to gain at another’s expense without serving.

Free enterprise works because the customer is sovereign over his personal wishes.  Please ponder this, if anyone else is sovereign over the customer’s choices, the customer has lost his freedom to choose.  Without the freedom to choose, how can we be free?  I believe this is the biggest lesson to learn about freedom, that without economic freedom there isn’t true freedom at all. In free enterprise, if a customer isn’t happy, they vote with their feet finding someone who will serve them.  Freedom ensures that money is made through service to customers, not by control over them.  This is why it takes character to support Free Enterprise, because it gives the power to the consumers, not the State or Big Business to choose for them.  Any alternate economic system, denies the consumer his right to choose, leaving someone else as the final arbiter of the customers wishes, making a mockery of freedom.  Sadly, it doesn’t take Sherlock Holmes to understand why exploiters do not like Free Enterprise.  If all businesses were to remain free of government partnership, exploiters would lose the foothold gained in the economy.  Forced to serve the customers, the companies would either change or go out of business. Government will always provide the largest field for exploitation since they have no competitors, which makes it critical to keep government out of the economy, as this only expands the fields for exploitation further.  Free Enterprise, by making the customer king, ensures that all businesses are created to serve customers, not customers created to serve businesses.

In contrast, much that is written on the alleged benefits of socialism, a sad economic system debunked in theory (see Ludwig Von Mises) and in practice (see everywhere it has been attempted), has been written by exploiters, seeking a place to hide from their personal and professional incompetence.  Why would an exploiter write anything truthful about a free system assured to condemn in principle and deny in practice his privileged and unearned position?  Instead, exploiters will blather on about equality and fairness, without clearly defining the terms, keeping the customers confused of their rights as sovereign over his own economic choices.  I am reminded of a famous quote from credited to Winston Churchill who said, “If you aren’t socialist before twenty-five, you have no heart; if you are socialist after twenty-five, you have no brain.” Sadly, in our society, many are losing their brains, with producers being attacked by a growing legion of exploiters, demanding more of the producers fruits of their labor by stigmatizing unequal results.  Socialism is an acid, decaying the roots of our freedoms, feeding the worst aspects of human nature, giving pride, greed and envy free reign to destroy everything in its path. Is this the future we look forward to in this once great nation?  Let everyone examine himself.

This leads us full circle in our discussion, leaders must choose the harder right than the easier wrong.  America, as do other countries, stands or falls based upon the amount of producers compared to exploiters in society.  The more exploitation is rewarded, the more difficult it is to produce.  History teaches that when a country develops more exploiters than producers, the country falls.  I, for one, am hopeful, seeing many leaders developing, leaders unwilling to surrender this nation to exploiters looking for a free ride.  Just because it would be easier to become a member of the thriving exploiters community known simply as the, “Something For Nothing Club,” SFNC, doesn’t mean you should join.  One person of character standing on principle produces more than a thousand who have surrendered their character to the SFNC.  Be a producer in life, refusing to make decisions based upon conveniences; instead, make your choices based upon your character.  Perhaps your choice will be the tipping point that makes all the difference.  God Bless,  Orrin Woodward

Average leaders raise the bar on themselves; good leaders raise the bar for others; great leaders inspire others to raise their own bar.

What is it about leadership?  It seems as if the more we talk about it the harder it is to understand.  It is a topic that refuses to be quantified and escapes our airtight definitions, no matter how many hours we spend on the subject.  But all of us know when leadership is present, and sadly, when it’s not.  When a leader moves, the team moves, accomplishing record breaking outputs, while creating cultures that produce results for the long term.

Attempting to define leadership reminds me of the story of the blind men who were feeling different parts of the elephant.  When attempting to describe what they were feeling they described a truthful summary from their own perspective, but certainly not an accurate record, because each was missing huge parts of the overall picture.  If we take any of the blind men’s description as an all-inclusive answer, we will be led astray and will miss huge parts of the picture.  With that qualifier, let me share with you part of the leadership elephant this “blind” author is feeling.

An average leader raises the bar on himself by pushing past his former limits.  Internally driven to improve, he settles for nothing less than his personal best, achieving more by believing more, breaking his previous records.  Since example is so important in leadership, modeling the proper behaviors for the rest of the team becomes one of a leaders key assignments, accepting no excuses from himself or others, constantly seeking to drive leadership improvement.  Example alone, will move a team forward, but will not create championship organizations by itself.  A good example which confirms this principle is Michael Jordan’s early professional career.  By driving himself to fanatical levels to improve, holding himself accountable to the highest standards, he achieved personal success at the peak levels, winning multiple scoring championships, but regretfully, no team championships.  The joke around the league nicknames the Bulls, Michaels Jordan and the Jordanaires.  Being a top performer in one’s field is not enough; building a winning team requires more, such as the ability to empathize with others, to listen to their fears, and to coax the greatness out of them.  Jordan eventually became a champion, not because his personal skills improved, although they did, but because he learned to play as part of a team through the influence of Phil Jackson.  Jackson taught Jordan a key lesson that all top performers must learn, mainly, to be patient with the weaknesses of others, to empathize with their fears without sympathizing, while consistently inspiring them with their dreams.  Jordan learned to lead on the court, including the team more through sharing the ball, and in essence playing the lead instrument, but not the only instrument, in the Bull’s five-man basketball band.  The Chicago Bulls went on to win six NBA championships, a phenomenal feat in any sport, especially the grueling game of NBA basketball.

Leaders must help raise the bar on others by expecting more, believing more, and allowing others to do more.  Remember, individuals grow, but teams explode.  Winning teams form when everyone on the team is increasing his or her skills through the influence of leadership.  Wherever you see a team growing, whenever you see an organization breaking through, it is for certain that somewhere in that company a leader was hard at work raising the bar on his or her self and on others.

The highest level of leadership, an extremely rare level, achieved by only a few individuals in any particular field, is when the leader inspires other performers to become leaders.  It’s tough enough to perform, tougher still to perform while leading others to step up their game, but dynasties are created when leaders surround themselves with other leaders, raising the bar of excellence throughout the organization.    Leadership at the highest level demands a lifetime of serving others, surrendering recognition, serving unconditionally for years, and believing in people when everyone else has given up on them.  True leadership then, is less of what you do and more of who you are.  People follow you because they know you are trustworthy; because you have proven yourself over the years to be who you say you are.

Leaders willingly sacrifice in the short term for long term results. I love the old saying, “If you are growing tomatoes plant for a season, if you are growing oak trees, plant for a lifetime.”    Top leaders deny the urge to control others, realizing that leaders do not need to be controlled.  Instead, top leaders inspire others with a compelling vision of the future while other leaders, buying into this vision, because they have previously bought into the visionary leaders character, align themselves personally and professionally to achieve greatness together.  Dynasties are created when groups buy into the team’s vision, surrender their personal egos and replace them with a team ego, demand excellence from themselves, and compel others to raise their own bar through the power of a unifying vision backed by trust in character-centered leaders.  This is the top, the peak of leadership, which creates a vision from the mountaintop, a culture of excellence, and the birth of a dynasty.

When I was eighteen, I had, in one day, two life changing experiences, both coming on my first day of work.  One for good, the other, not so good.  All of the new co-op students for AC Spark Plug, then a division of GM, gathered around a long wooden table in a conference room, to learn of their roles and responsibilities.  It was at this meeting that I first met Chris Brady, my good friend and business partner.  This was the good life changing event, as Chris and I have partnered in business over the last fifteen years, producing results and memories that will last a lifetime.  I will save my Brady stories for another time, mainly, because I want to discuss the other life altering experience that day.  I was an A section student at GMI-EMI (now Kettering), so I went to school during the summer while B section students worked in the summer, with each section rotating between work and school every twelve weeks.  Because I was A section, I was only at work one day that summer for my initiation, meaning AC had to cut a check for that day before I headed to school the following Monday.  You can imagine my anticipation, after leaving work, making my way to my rusty Chevette, when opening my first ever paycheck.  I made a whopping sixty-four dollars minus,  Federal withholding, Michigan State withholding, Flint City witholding, and FICA, leaving a grand total of around forty dollars.  I couldn’t believe the taxes taken from my check, over one third of my check vanished, but still a nice amount for a broke eighteen year old.  I quickly reviewed the taxes and acknowledged some legitimacy (the tax, not the amount) for the Federal, State, and City, but what is this FICA (Social Security)?  No one told me about any FICA tax, exactly what is FICA Tax?  I raced home to talk to my financial guru, my mom,  sharing with her my concern at this extra tax.  Laughing at my ignorance, she shared with me that our benevolent government withholds a certain amount of money from your paycheck, planning to take care of you when you retire.  “But I don’t need the government to take care of me when I retire,” I emphatically stated, “I’m going in there and telling them to stop withholding that FICA tax.”  My mother chuckled at me, like she has many times over the years, figuring I would have to learn this truth the hard way.

Imagine how strange I felt, realizing for the first time, that the State can help itself to my paycheck, not just for protection of my life, liberty, and property, but also to provide nanny services in my retirement years.  I appreciate the offer Mr. State, but I will take care of myself through my own savings plan; sadly, that isn’t an option as we are forced to save our money with the State.  Always the curious one, I asked around, seeking wisdom from some of my older co-workers, learning that employees and employers both pay half the bill, totalling over 12.5% of a employee’s income.  What I learned, that government can take our money, becoming a mandatory bank for us, didn’t sound like freedom as I understood the term.  But like most eighteen year olds, my mind quickly lost focused, conveniently forgetting about my lost freedoms, reassuring myself that I could trust the Federal government to save my money; after all, if you can’t trust your own government, the one assigned to protect our life, liberty and property, who can you trust?
What’s most surprising to me, looking at our Social Security system, isn’t its upcoming bankruptcy, nor its over 12% tax on every incomes, but the curious lack of concern by the American citizens.  Look at the latest statistics from the Mark Crovelli, writing for Mises Institute, on our American Social Security system.

For those people not gifted with accounting ESP like Lindorff, Social Security’s unfunded liabilities are conservatively estimated to be around $17.5 trillion. Oh yeah, and that “trust fund” that Lindorff mentions as if it were really overflowing with saved money — all the money has already been spent by Congress. As you can see, the numbers are not exactly as rosy as Lindorff’s ESP has led him to believe.
What is really interesting is that even while Lindorff is trying to make the case that Social Security’s fiscal condition is not all that serious, he concedes that Social Security will indeed go bankrupt this year. He writes:

So with beneficiaries rising faster than anticipated, and the total national payroll in sharp decline, of course things have gone negative for Social Security earlier than originally anticipated.

One would think that an institution going “negative” (i.e., bankrupt) is a sign that there is something fundamentally flawed with it. For Lindorff, however, bankruptcy is nothing to get ourselves worked up about, especially since the bankruptcy is only caused by the demographic problem posed by the baby boomers.

Lindorff thinks the boomers are only a “demographic wave that will eventually pass.” He’s right — we only have around 30 more years until the “wave” passes. Thirty years of bankruptcy is nothing that need trouble us!

Now, let’s see if we can understand these figures.  The unfunded liabilities is $17.5 trillion, that’s a boat load of money, even if your last name is Buffett or Gates, certainly enough to bankrupt the 100 wealthiest Americans with plenty of room to spare.  The tax money, taken from us against our will allegedly for our own good, because it was assumed government would be more responsible than its citizens, saving it for us until we retired, is missing in action.  Politicians transferred the money out of Social Security into other projects, violating our trust and their fiduciary responsibility, exhausting themselves in an orgy of spending, leaving a huge IOU to unsuspecting Americans.  The problem, as I see it, is our government has proven incapable of balancing the budget with the Social Security surplus; how will they balance the budget and fund Social Security when there is no surplus?  Can anyone say higher taxes or inflation?  I heard recently, that Social Security is now paying out more in benefits than its receiving in taxes; simply put, this means it’s time for us to reap what we the State has sown. Believing Americans, from all regions of the United States, allowed the federal government to go beyond its normal responsibilities, surrendering their money to FICA,  assuming their savings is secure.    Every year, for approximately the next 30 years, the numbers will get worse, accumulating more debt as baby boomers retire faster than the younger generations enter the workforce.  Remember,   currently, the State relies on the tax from the workers to pay the benefits of the non-workers.  If the pool of workers reduces while the pool of non-workers increases, exactly the condition we find ourselves with the Baby Boomer retirements looming, the State is in trouble.  The Social Security system is a classic example of a Ponzi scheme, where people get paid only if new people join fast enough to compensate existing beneficiaries.  If new members do not appear, the system collapses. Population growth, not to mention the economic conditions, are not cooperating with the needed tax revenues to fund.  By reviewing the State’s results, it’s clear to me, that Social Security isn’t going to be social and it certainly isn’t secure.

After hearing the dismal record of government involvement in Social Security, one can only pray for leaders to arise and address the root causes.  America is suffering a courage crisis at the highest leadership levels.  It’s time for government to stop trimming the leaves, calling this change; instead, start pulling out the failed government bureaucracies root and branch.  Leaders in the business community, that want to serve their customers, not partner with the State, need the freedom to do so.  Only production can generate real GNP and job growth, hiring more government employees only means higher taxes for the few courageous enough to still produce.   Perhaps the biggest lesson learned in the Social Security mess is that government is the wrong place to look for retirement planning.  We can make politicians our scapegoat, but the system rewards the wrong behaviors; changing politicians will do nothing, until we change what we ask government to do.  Of course the politicians, tempted by potential votes, increased the Social Security benefits; of course the politicians, enticed by the “free money” surplus, spent it all, writing IOU’s that come due after they leave office.  Social Security is in shambles, whether the government inflates its way or taxes its way out of the mess is the only question. We can complain about how poorly the Social Security system has been managed, but government wasn’t designed to manage our affairs, placing the responsibility upon citizens to clearly define and limit government’s roles.  Politicians, by their nature, cannot think long term, having to stand for re-election every two, four or six years; when you consider that Americans live over seventy years on average, making life a long-term project, even retirement happening after thirty or more years, you quickly see the fallacy of our short term government involved in our long term lives.  This is another example of the “Destruction of the Commons”, the politicians choosing their personal short term “good” creating the public’s long term bad.  A simple way to remove the risk of “Destruction of the Commons” is to privatize, similar to what the airlines did in the early 1980’s, ensuring there is no commons to destroy.  Government has always been a hot bed for short term fixes, pushing the long term consequences off into the future, a future that never comes for them, since they are out of office, being replaced by others who quickly learn the rules of the political game.

The problem, even though accurately defined and easily predicted, is not simply solved.  Because of the politics associated with Social Security, every electable politician is afraid to touch this with a ten foot pole, assuring the problem isn’t addressed, passing the buck into the endless future.  By studying the failure of Social Security, learning the “Destruction of the Commons” principles, seeing the political take over from the economic any field government enters, one becomes certain of the proper course, keeping government out of people’s affairs.  Americans, if we include colonial times, without the help from government, saving their own money and relying on family and friends, survived for 250 years without a Social Security system. Government, it seems, by offering to care for us in retirement, taxed our incomes, reduced our savings, forced us to hope in government’s solvency, a hope perpetually deferred.   I have mentioned only one area of government intervention, but there are plenty of others to choose from.  Each of the areas have their own particular facts, but all have the same underlying failure modes – “Destruction of the Commons.”   Without looking at Public Schools, Medicaid, Federal Housing Aid and many more, don’t we already have enough knowledge to know that less government intervention is better?  Is anyone truly going to argue that a $17.5 trillion deficit in one program is a success? With that said, is it really in our best interest to sacrifice our Health Care system on the State altars?  You don’t have to be a prophet to see the effects of the “Destruction of the Commons” in the Health field, offering slower services, less doctors, but always the higher taxes as our reward for trusting in the State.  As a leader, I learned a long time ago not to listen to what a person or organization says.  Instead, I learned to watch what they did and the results they achieved.  The rhetoric out of Washington may tickle the ears, but it empties the pocketbook.  We can and must do better.  God Bless, Orrin Woodward