Saturday, November 12, 2016

The American Dream

I have listened to a lot of radio since the election.  I’ve read a lot of articles online and heard all sorts of opinions too.  It helps to have perspective.  Sometimes, it even helps to have a little knowledge when forming an opinion.  I also have the rare but welcome inspiration that allows me to propose the occasional hypothesis. 

I was reading about strategic mistakes made by the DFL Party during this past election cycle.  One of the proposed errors caught my eye because it was a comparison between the two candidates’ core message.  On one side, it was “Make America Great Again”.  The DFL proposed a series of ideas regarding jobs creation, education, and getting more people into the middle class.  The proposal centered loosely around the idea that the DFL would build “an economy that works for everyone, not just those at the top.” 

Yes, the most outstanding problem is that the message was way too complicated.  It’s far easier to grab onto a slogan.  Regardless of your political leanings, slogans work. 

Today’s brilliant inspiration derives from the more complicated message.  It seems to explain some things.  Or maybe I had too much wine last night. 

The real message here has to do with the disappearance of the American Dream.  In fact, I doubt that many people actually hear those words these days.  My baby boomer generation grew up with tales of rags-to-riches business types.  If those didn’t hold our attention, there were still plenty of retirees around who were living just fine off their savings and a social security supplement. 

What always fascinated me, though, were the stories of people who put their hearts and souls into their small businesses and then one day sold them for a good sum of money and retired to live a wonderful life in some nice tropical place.  The hours of labor and the small salaries during their working years paid off.  Even more plentiful were the stories of immigrants who took whatever menial job they could find, saved carefully, raised children who became doctors and lawyers and eventually retired to enjoy the rest of their lives with their grandchildren.

That was the American Dream. 

The Dream disappeared during the past thirty or so years.  About five years ago I discovered that my business would not be worth enough to allow me to sell it and retire.  There is no more capital gains reduction, no more income averaging.  Selling a business has become complicated and is worth a whole lot less than it used to be. 

This led me to realize something about the current generations going into the workforce.  Young people are being educated.  They are being encouraged and they are being told that we need them.  They are not being given a Dream.  They see their working life as something that won’t be a joy.  When we of my generation run into snags or start getting burned out because of the long hours, we look ahead with some small remainder of that wonderful Dream and say ‘Don’t stop now.  Retirement will bring a great future.’ 

These days, our children know that Social Security will be running out, that there is very little profit sharing happening in companies and if there were, they’d be taxed to death on it.  Instead of working long and hard for an employer, they are mobile, not loyal and they tend to see work as a means to a pleasant trip, enough money for the weekend’s entertainment, or some other personal pleasure.  It is absolutely no wonder that less effort is put into the day’s work. 

It is no surprise that we allow manufacturing to go overseas.  I no longer wonder why I can’t find reliable young people of U.S . origin who might be interested in the embroidery business.  It’s simple.  I have nothing to offer but work.  I can’t make them rich, give them a share of a very slim profit, promise them the end of a rainbow.  All I can do is tell them that we have schedules to keep, minimums to produce and that we need to run fast to even pay for ourselves.  For them, there are easier and better ways to make money.  Machine embroidery is no one’s passion.

Millennials and so many others do not deserve to be blamed for their attitudes.  We tried to give them a work ethic.  We forgot to tell them that there could be fun at the end.  Or in the middle.  Instead we suggested that life pretty much sucks these days. 

Maybe we should try a slightly more positive approach to our grandchildren.  Maybe we should try figuring out how to recapture the American Dream.  

Wednesday, November 2, 2016

The Easy Way Out

It seems like the popular thing to do these days is to ask rich people to pay more taxes.  I hear the shouts that ‘They don’t pay enough!”  As a former CPA who did a lot of very rich peoples’ tax returns, I can tell you that those people will never pay as large a percentage as the average American.  Get used to it.  Never gonna happen.

You can tax rich people.  They’ll leave or expatriate their incomes though.  They will look for, and find, loopholes that reduce their taxes.  They will never pay what you would expect them to pay.  And the economic bottom line will be that instead of getting a rich person to be more supportive of the government and those who are less-rich, they will become more reclusive and less participative.  Or they will use their income to generate more power and control over the government. 

Regardless, the less rich will always cry out against the more rich.  The poor will be angry with everyone.

There is also no way to eliminate competition, either physical or economic or mental, and still have people.  We grow due to competition.  There is always someone out there in the world that we want to beat.  More often than not, there are always many people that we want to outcompete.  There may or may not be animosity involved.  There is always some jealousy.  We don’t get better by doing less than the next person. 

I can understand the desires of the less ambitious folks in our country.  They are competing by working to slow other people down and by discouraging them to work less.  Who hasn’t heard the phrase “Hey, slow down.  You’re making the rest of us look bad.”  I hear it sometimes in my shop, much to my own personal dismay.  Those folks don't last long, by the way.

This attitude seems to have gotten worse during the past few years.  The outcry against the very rich has actually been translated into proportionately higher tax rates for that class of people.  It is a tragedy. 

The less ambitious are working side by side with the less rich to raise minimum wages, create a shorter work week and allow for more paid vacation and family leave.  Corporations should pay for all of this because they make lots of money.  Oh, and the big rich companies don’t pay a lot of taxes. 
The outcry does not consider the fact that small businesses, who are in the less rich category, comprise nearly fifty percent of the work force and create nearly sixty-four percent of the new jobs in this country.  (SBA FAQ) Every new tax and wage hike and family leave allowance that is imposed on the large corporations takes a much larger toll on the small corporations.  It is no wonder that new business startups are falling behind business failures (Gallup Business Journal).

The past couple of generations of people in this country have subscribed to the idea that we can take an easy way out.  We can just vote for higher taxes and higher wages and more vacation.  Social media says that will solve our problems.  Thankfully, I am not part of the latest generations.  I really don’t want to see the consequences of the easy way out.  For my part, I’ll keep my head down, manage my small business and keep people employed for as long as possible.  And hope that I can survive the easy way out for long enough to get at least one or two days of retirement.