Archive for the 'Politics' Category

After a Lost Decade, the REAL Economy Is Ready for Expansion

There’s an old joke about a person paying last respects to an atheist friend. Looking into the casket, the friend lamented, “All dressed up, nowhere to go.”

Thinking about the U.S. economy makes that joke come to mind. Almost a decade since getting really sick, but not dying, America’s businesses – especially the small ones – spent the last nine years all dressed up, nowhere to go.

Since the 2008 financial crisis and associated Great Recession, which actually began Q4 2007 (a year before Barack Obama was elected), the economy has recovered at less than 2% GDP growth – never reaching expansion altitude. Because of the aggregate contribution of America’s small businesses, we know that at least half the missing growth, and millions of new jobs, didn’t come from Main Street. Here why:

One of the historic markers of the small business sector is an optimistic pathology that makes Pollyanna look like Negative Nellie. I never thought I’d see a political/economic environment so demoralizing as to effectively dim the American entrepreneurial floodlight into a glimmer. If you think this characterization is hyperbole, study the NFIB Index of Small Business Optimism – as I have. Alas, that proof in the Main Street pudd’n has been almost a decade of consistent and unprecedented pessimism.

Why so much dourness? Since 2009 the rhetoric and policies of the Obama administration made small businesses feel inconsequential at best, and the enemy at worst. Rhetoric like “You didn’t build that!” doesn’t make business owners feel froggy about capital investments or new hires. Nor do policies like tax increases, Obamacare, piercing the franchise industry’s employer/employee status, the Overtime Exemption rule, and an unprecedented regulatory assault, just to name a few. But wait! There’s more.

Whether through ignorance or ideology, too many talking heads perpetuated the fake news that the economy languished because banks wouldn’t make loans to America’s small firms. But anyone who cared to check heard small businesses calling out these false prophets by reporting, month after month, that they could borrow if they wanted – but didn’t (NFIB). In fact, they’ve spent a decade deleveraging. Which brings me to the single silver lining in all of this: By deleveraging and belt-tightening, small business balance sheets and cash accounts became stronger than ever. I’ll come back to this in a minute.

You’re no doubt wondering how I’ll reconcile my story with the record-setting stock market. First, for generations it was an article of faith that whether stocks were trending up or down, that trajectory was a leading indicator of the economy six months hence. But today, the stock market is merely a leading indicator of itself, and the real economy is on its own. Two prime reasons include:

1) the crossing of the moral hazard Rubicon by the government with bailouts of too-big-to-fail corporations and banks,

2) the Fed’s counterfeiting policies ($3.7 Trillion in QE). Both spawned empty-calorie financial capitalism at the expense of muscle-building market-based capitalism.

Help me reconcile how GDP went negative during Q1 in both 2014/15, and almost did again in 2016, but the Dow reached new record highs in all three quarters. Only in Bizarro World is that a sustainable reality.

And then we had an election. Out here on Main Street, you’d think the phone rang and the warden said it was the governor with good news. Most people don’t need me to catalog the good, bad and troublesome about President Trump. But, warts and all, small business owners are attracted to at least four of his credentials: 1) he knows how to make a payroll; 2) he knows what it’s like when the government gets in your grill; 3) he understands the incongruity of over-taxing and over-regulating a group sorely needed in America today – job creators; and 4) he hates Obamacare.

For the first time in a decade, there is simultaneous, almost giddy optimism on both Main Street and Wall Street. The NFIB Index just reported the highest one-month jump in small business optimism in the survey’s 43-year history. They know those squeaky balance sheets will deliver unprecedented profits in the hoped-for expansion. Meanwhile, incredibly, the Dow-Jones has added 2,000 points since election day, to push through the 20,000-point milestone/firewall.

With all of this pent-up energy, investors and job creators of all shapes and sizes are all dressed up, looking for a place to go. We’re thinking economic expansion, but unfortunately, what happens next is not up to us.

Write this on a rock … Note to President Trump & the Political Class: Don’t screw this up!

When small business gets organized, the world will change for the better

The election is over and we have a new president-elect. When I polled my online audience in October about who they would vote for in the upcoming contest, two-thirds of our respondents said Trump, while 13% chose Clinton. After the election, when I went to the same online network to ask how they felt about the election results, six-of-ten were “thrilled,” 29% allowed they were “glad it didn’t go the other way,” with only 8% saying they were unhappy with how it turned out.
When you understand that there are approximately 100 million American voters directly impacted by a small business, responses to our polling, as well as others with which I’m familiar, make me believe small business voters contributed to Mr. Trump winning 30 states. Consequently, small business owners will be justified in watching Trump’s actions to see if he is as much of a payroll-making, job-creating kinsman as they apparently think he is.
But the small business sector has to do more than just hold someone else accountable - we have to hold ourselves accountable. We need to participate in the public policy debate and contribute to the results. Otherwise, we’ll be relegated to taking what we’re given by policy makers who can presume that we don’t care.
Engagement in public policy should be a small business priority for two reasons:  politicians and bureaucrats. These are the people with the power to levy taxes and impose regulations, both of which can negatively impact your business. The first element of this priority is to identify local, state and federal elected representatives, and make a plan to contact each one this year. Every year these individuals pass laws that spawn regulations and mandates that have an impact on your business. Unfortunately, too often that impact is negative.
It’s dangerously naïve to expect policy makers to intuitively act in the best interest of small business.  Not that they intend to hurt us, but there are at least two reasons why small businesses often draw the short straw:
  1. Too many politicians have never made a payroll, and consequently know little or nothing about the challenges small business owners face.
  2. Our message gets pushed aside by that of more organized and better-funded interest groups (read: unions and corporate America).

Small businesses have to find a way to get more involved, either through our own direct efforts, or indirectly through organizations that advocate for us. Excellent ways to do this is to first find out what’s being debated and weigh in based on your position with a letter, phone call, or even a visit. Next, learn about the voting record of your Congressional delegation on laws that affect small business. Then write a letter to them and/or attend local meetings they conduct, to congratulate them if they have a supportive voting record, or express your disappointment if they don’t, and encourage them to do better.

Yes, I know you probably don’t have time to get directly involved in public policy or politics. But here’s good news: There are a number of advocacy groups that track key small business policy issues and defend and advocate for Main Street businesses at all government levels. Here’s a short list I recommend:
  • Local and industry: You should always be a member of your local Chamber of Commerce and your industry’s trade group. Both have policy advocacy efforts.
  • National and state: Small Business & Entrepreneurship Council, (sbecouncil.org); National Federation of Independent Business, (nfib.com); Competitive Enterprise Institute (cei.org); National Taxpayers Union (ntu.org). There are others, and you can’t go wrong supporting more than one. Your support, especially financial, contributes to their voice at the policy table.
Regardless of your party affiliation or how you voted, as the Trump administration works with a GOP majority Congress over the next two years, many issues will be debated that impact your business. Find a way - directly or indirectly - to make your voice heard.
The choice is yours: Participate in small business policy-making, or take what you’re given by those who can rightly assume that you don’t care.
Write this on a rock … At 100 million strong, if small business stakeholders were organized, the world would change - for the better.

Which presidential candidate is best for small business?

As a leading voice for the small business sector, one of the factors I track and report on is public policy. In my advocacy role, I vociferously support those issues that benefit small business and pugnaciously oppose those that don’t, regardless of political party origin.

Before every presidential race since 2000, I’ve reconciled the policies of the two major party candidates with the top concerns that keep small business owners up at night. Here are those comparisons for the five small business issues that currently find their way to the top of every survey.

“We need more business”
Admittedly, this is the default lament of almost every small business. But in the past seven years, business leaders have reported that the greatest factor in their investment/risk-taking/hiring calculus has been an unprecedented high level of uncertainty. When asked about the source, the answer is invariably anti-business policies and rhetoric from Washington. Uncertainty manufacturing examples include, but are not limited to: direct expensing limits under Section 179 of the tax code; the Obamacare roll-out roller coaster; policies skewed in favor of unions; and now, the upcoming DOL overtime exemption rules.

Hillary Clinton 2008 might have been better for the economy than Barack Obama, but not Hillary 2016. She’s been pulled too far to the left - read: anti-business - to do anything that would promote business risk-taking.

In almost every way, Donald Trump will likely be more to the left than a true-blue fiscal conservative. But he does have an advantage regarding the economy in that he knows what it takes to create a job. Clinton doesn’t.

With their Big Lobbies, Big Business will do okay in the economy regardless of who is president, because crony capitalism will thrive under either Trump or Clinton. The problem for small businesses is we’re not organized and we’re no one’s crony.

On the economy, I’ve got to go with the one who’s made a payroll.

“Our taxes are too high”
Essentially by definition, the most troubling hit to the precious working capital of a profitable small business is taxes. Hillary Clinton’s vow to raise taxes will hurt small businesses. Donald Trump said he plans to reduce taxes. I don’t know if either one will be successful in their pledge, but I have to go with the one whose plan includes a downward arrow. Some say tax cuts will increase the deficit. But that belies the fact that the U.S. government does not have a revenue problem - it has a spending problem.

“Health care costs are prohibitive”
As I and many others predicted, Obamacare has become a nightmare for small businesses, and by extension, their employees. In a recent online poll I took of small business owners, two-thirds reported that under Obamacare their health care insurance expense has gone up significantly, if not prohibitively, as have the deductible level for employees. And the new enrollment period is bringing new pain.

Clinton thinks Obamacare didn’t go far enough, while Trump has pledged to “repeal and replace.” I don’t know if Donald can deliver a health care cost silver bullet, but we do know that Obamacare isn’t the answer, or what Hillary has in mind.

“Stop the regulatory assault”
According to the Competitive Enterprise Institute, regulatory compliance - aka stealth tax - is beginning to take more off the bottom line of small businesses than their income tax bill. One perfect example is the new DOL overtime exemption rules, which in addition to increasing payroll without increasing productivity, will become a work schedule, record-keeping nightmare for millions of small businesses.

Again, I’m going to have to put my faith in correcting this with the person who knows what’s involved in making and administering a payroll.

“We need more qualified employees”
You may be surprised to learn that in many surveys, this is the number one concern of small businesses. In fact, economists have reported on my radio program that there are millions of good-paying jobs going unfilled due to a lack of qualified candidates. Sadly, in the past 20 years, I haven’t heard any president, or candidate, address this problem, including Trump and Clinton. It doesn’t say much about a government that won’t help small employers find qualified workers, while actively putting regulations between them and the employees they have. But I have to give a slight nod to Trump, because he has actually conducted business in the current human resources environment.

Finally
I know of no other election where both presidential candidates of the two major parties are as deficient in exemplifying the best America has to offer. One of the markers of a true leader is someone followers want to look up to. Who in either party can truly say they could look up to either candidate? Another leadership trait, especially in a president, is someone whom we believe we can trust. Essentially by definition, neither a pathological liar nor a pathological narcissist fits the profile of a trusted person.

In 1831, Alexis de Tocqueville said of the American political system: “In a democracy, the people get the government they deserve.” Whatever we did to deserve this, please join me in asking for forgiveness. Because I’m truly sorry. How about you?

#GODHELPUS

Write this on a rock … America has bigger problems than who will be the next president. But on balance, I think Donald Trump will be the best one for small businesses.

What you should know about the Internet before we give away ICANN

Allow me to tell you a story of innovation bordering on the miraculous, scientific stewardship driven by professionalism and shared values, and global leadership that qualifies as agape. And the possibility that all three could be headed for an intersection where the best intentions of good people could be in jeopardy.

Approximately 23 years ago you and I were given access to the Internet, an invention that a generation earlier would have been considered science fiction. Most experts define the headwaters of this seminal invention to be the digital protocol work of Bob Kahn and Vint Cert, both researchers for a division of the U. S. government. Subsequent to its commercialization, these two and a few other geniuses created a number of digital innovations that enabled the Internet and established it as an unprecedented resource.

First question: How did the rest of the world get the Internet?

Since it was initially considered part of national defense, all of this mad scientist stuff was funded by the government’s National Science Foundation and its various contractors. As it became evident that the Internet had commercial applications, the U.S. began sharing with the world what we knew and what we had. Nothing was withheld, enabling the Internet to rise in every corner of the world.

Second question: Who operates the Internet?

Think of it like a private toll road system. The U.S. government allowed private investment to create interconnected computer networks into a “backbone” system that, for a “toll,” delivers our digital business around the world using the protocols created by Kahn and Cerf, and later applications like browsers. Similarly, more private investment built out the infrastructure to transfer digital info from the backbone to last-mile users, like you and me, at the speed of light.

Third question: Who’s in charge of Internet governance?

Who runs the Internet is more complicated to explain, but it’s important because of that intersection thing mentioned earlier. In fact, the U.S. government allowed Kahn, Cerf and others to create governing bodies like the Internet Society, the Internet Engineering Task Force, the Internet Architectural Board, and the World Wide Web Consortium, as organizations overseeing governance, access and standards for the global proliferation of the Internet. The Internet Society, which is the incorporated parent of two of these organizations, has 80,000 stakeholders and 110 chapters in 140 countries. That’s a lot of shared governance with one goal – a free and open Internet, sans politics.

The reason I’m telling you about the origin and governance of the Internet, is because a very important, last piece of U.S. direct influence of an Internet possession is about to be lost. The 18-year contract between the U.S. government and the Internet Corporation for Assigned Names and Numbers (ICANN) expires on September 30, 2016. When you create a new website it actually has two addresses: 1) a name, like abcsupply.com, for humans to remember and manage; and 2) a number value, like 207.111.167.145, for the way computers work. If you type either the words or numbers assigned to your website into a browser, the same page will be delivered.

According to NetChoice.org Executive Director, Steve DelBianco, in 2014 the Obama administration instructed ICANN to create, and transfer itself to, a “global, multi-stakeholder community.” On my radio program recently, DelBianco reported that this new body has been created and will take over on October 1. As part of the transitioning team, he says the new ICANN will be not unlike the other bodies mentioned earlier who’ve been governing the Internet for decades. That’s the good news.

Last question: If the Internet had been the property of Russia, China, or even France, would access and control of such a powerful resource have been so freely shared?

I think not. Consequently, in spite of my confidence in DelBianco and his colleagues, I’ve been very outspoken in the past three years against this plan for ICANN. I’m concerned about the loss of the last thread of direct influence by the U.S. government. I’m worried about what will happen if when we reach that intersection in the future, global, multi-stakeholder organizations, who’ve governed so dispassionately – without ideology – for decades, somehow become influenced or overridden by bad actor states, or possibly worse, the United Nations. The UN has a long history of coveting control of the Internet.

The United States is the most benevolent broker on the planet and has never let geopolitics influence Internet access or governance. With so many experts projecting that cyber-attacks pose a more imminent threat to our sovereignty than nuclear weapons, I fear the best intentioned Internet governors and investors may ultimately be no match for someone named Putin, Jinping, Khamenei, Jong-un, or their proxies.

Write this on a rock … Pray the world doesn’t regret America’s divesting of this last vestige of U.S. Internet ownership and control.

Online Poll: How do you feel about the future of America?

The Question: As you contemplate Independence Day, how do you feel about the future of America?

8% - America’s best days are still ahead.
6% - America’s best days are behind us.
83% - America’s in trouble, but we can still turn it around.
3% - Never mind America, the whole world is going to hell!

Jim’s Comments: As you will see in the results of our recent online poll above, more than eight of ten of our respondents have serious concerns about America’s condition and future, with only 8% who’re optimistic about how things are. By comparison, the national average reported by Real Clear Politics — which homogenizes seven large polls — reports two-thirds of Americans think we’re “on the wrong track.” Perhaps the reason our folks rank their concerns a little higher than other polls is because we’re responsible for making payroll every week or two, which, under the current regulatory and economic conditions, is getting more and more difficult.

The last time I saw this level of concern among Americans was almost 40 years ago, during the Carter Administration. In fact, President Jimmy gave the name to the general national feeling that was pervasive during the last half of his one and only term. In a television address, he actually said there seemed to be a kind of “malaise” in the country. He was right.

Jimmy Carter is a good man, but was a poor leader. Granted, he inherited some challenging issues, but he wasn’t a problem solver and didn’t inspire confidence. Does that sound familiar? Replace the name at the beginning of that sentence with Barack Obama and everything to follow fits, with one exception: Obama has had two terms to make a difference. Sadly, if you converted the polling numbers for our national condition under this president’s watch to letters they would spell: malaise.

And my criticism isn’t political — I worship at the throne of results. Two things cause Americans to have a positive outlook: feeling secure and feeling successful. Unfortunately, looking at the facts — and the polls — in front of our eyes, these two areas are not positive.

Here are four simple traits that I would like to see in our next president, and I don’t care which party the possessor of these comes from:

  • Proven leader who hates mediocrity
  • Passionate about America’s greatness
  • Politically incorrect about defending America
  • Believes economy can grow at more than 2%

    What does your list look like? If you’d like to tell me, leave a comment.

  • What politicians, small business and mice have in common

    Almost 20 years ago, Dr. Spencer Johnson wrote a legendary book titled, Who Moved My Cheese? It tells a story about four characters who ate only cheese.

    Early in the story all four characters went to the same place in their world – a maze – to get cheese. The first two were not picky about their cheese or where they found it – it was just food. In fact, the current place in the maze where they found and ate cheese was literally just that. So when someone moved their cheese, they immediately started looking for the new place where cheese was being put.
    For the second two characters in Johnson’s story, cheese represented more than food; they had allowed themselves to become defined by the specific cheese found in that specific place in the maze. To them, this cheese was more than nourishment, it also represented their esteem, success and happiness. You’ve heard of being hidebound. Well you might say these two were cheesebound (my term, not Johnson’s), which really wasn’t a problem until someone moved their cheese.

    Twenty-five years ago, in his book (and film), Paradigms: The Business of Discovering the Future, futurist Joel Barker defined a paradigm as a set of rules that: 1) establishes/defines boundaries; and 2) tells you how to be successful within those boundaries. Barker says paradigms, both written and unwritten, can be useful until there’s a shift, which is what happened to the cheesebound characters in Johnson’s story. When someone moved their cheese, instead of looking for new cheese like their maze-mates, they whined and dithered so long in the old place – now devoid of cheese – that they put their survival in jeopardy.

    Johnson’s cautionary tale – and the two sides of Barker’s paradigm coin – apply to all parts of life, especially politics and business.

    For generations, the Democrat and Republican Parties each showed up at the same corner of their own political maze where they had always found the same cheese. Like the second characters in Johnson’s story, both parties had been nourished and defined by the cheese they found in that specific spot. But when someone moved their cheese, as the electorate is doing now, the cheesebound members whine and struggle to maintain their identity instead of taking action to find new cheese. In his book Johnson says, “Old beliefs do not lead you to new cheese.”

    Meanwhile, Bernie Sanders and Donald Trump are like the first two characters in Johnson’s story. Neither define themselves by the old cheese in the old location. They went looking for and, to the surprise of their party leadership, found new cheese. Johnson says, “Movement in a new direction helps you find the new cheese.”

    Small business owners should watch the clinic that the Democrats and Republicans are putting on this year on the wages of being cheesebound. Like the electorate, customers are moving cheese and shifting paradigms all over the marketplace. You cannot afford to become cheesebound.

    Write this on a rock … Blasingame’s Law of Business Love: It’s okay to fall in love with what you do, but it’s not okay to fall in love with how you do it.




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