Magical Economy - TownSpeaks

The Magical Economy

As in life, we always look for miraculous events along with rainbows and unicorns. The state of our nation is no different and most importantly, we rely on our magical economy to keep us afloat. $20+ trillion (with 12 zeroes) in debt but no problem. In our magical economy, we can just print more money. Need a boost in the stock market? Let’s send it soaring in our magical economy by printing so much money that we can pay our own debt with the money we print. How magical is that?

The Magical Economy and Football

I am a big fan of football. I am giving away my age but my team used to be the Houston Oilers. In fact, the last year Earl Campbell played for the University of Texas was my first year at my old Alma Mater. Then the unthinkable happened. Bud Adams moved the Oilers to Tennessee and renamed them the Titans. That was a sad day for me and basically left me teamless since, as a diehard Oiler fan I was not able to switch to the Dallas Cowboys.

Fortunately, or unfortunately depending on how you look at it, I moved to the San Diego area and was able to change my allegiance to the San Diego Chargers (sigh). I will admit thought that, since they hired Mike McCoy, the seasons have looked a bit more promising, but if we are looking at the economy the we are off topic. Or are we?



After football (and being the gracious husband that I am) my wife and I watched a little of the 2015 Emmy’s. I have to admit that I was moved by Tracy Morgan’s speech, his down to earth approach and his determination to work at rehabilitation. The Emmys 2015 version was littered with the political rhetoric and innuendo that I am not fond of, but I do recognize there is a great deal of entertainment value and comedy in the current political environment. Where it departs from entertainment however, is in the promotion of one ideological value over another which has no place in either the 2015 Emmys or in the entertainment industry as a whole.

So what does all of this have to do with our economy? Pittsburgh Steelers, San Diego Chargers, Green Bay Packers (Aaron Rogers looked great by the way), New England Patriots, Emmys 2015, Scorch Trials vs Black Mass. What do any of these have to do with our economy and the general health of our nation? Answer: They are distractions from reality. Just like any good magician, he or she takes our focus off of what is going on in the right hand so that we do not see what is happening in the left. Let’s take a closer look at our magical economy.

The Magical Economy and Minimum Wage

Football salaries. Venture to guess what the minimum salary is for an NFL rookie? If you guessed almost a half a million dollars then you would be right, that is minimum wage. Being a fan of football, I get the entertainment value, but as fans, we support salary levels for people who play sports while the educators of our children don’t typically make enough to live on individually and they even get attacked with little to no recourse for the aggressors? To me, this is short-sighted and inexcusable. Even our college professors have been herded into the adjunct space which means that they are transient for the most part and less likely to get tenure track. But football is shiny so let’s focus on that.

We have become a nation of distracted individuals working harder and harder to keep up with the pace of life to the point where we only have time to react. In fact, millennials have gotten so ingrained in the immediacy approach to life that they find it rude if they text and don’t receive a response back right away. It is ridiculous that others, including our bosses, now have 24/7 access and expectancy.

The same is true in business. Once the world’s technology powerhouse, companies in the US and even the US government have reduced R&D spending year over year for at least the last 10 years. How can we be expected to innovate when we decrease the budget for research? A perfect example of the shift in ideology is portrayed by this Harvard Business Review article (https://hbr.org/2015/01/sometimes-cutting-rd-spending-can-yield-more-innovation) which points out that Cisco is better off utilizing exploitation and acquisition as primary innovation strategies rather than actually innovating.

The chart that they present for Cisco clearly shows a drop in patents based on a 3 year lag time, yet the authors argue in the first half of their article that exploit based R&D yields better returns. Fortunately, in the latter half of the article the authors back-peddle and concede that a mixed approach between exploitation and exploration is necessary for R&D growth. They further acknowledge that exploitation is a means to acquire and monetize innovation rather than create long-term value by innovating. So then we have to ask why.

Why shift focus from longer-term R&D benefits to a shorter term, bottom line approach to innovation. Simple answer is that CEO’s are now only as good as this year’s net profits. There is no longer any room for R&D as CEO’s raid this business segment in hopes of squeezing every drop of revenue from operations and sales so they can continue to show improved performance in the bottom line to keep their jobs and get their bonuses. Why? Because stockholders demand it. In fact, with diminished regard for future value, R&D along with long-term employment appears to now be the first to go. Because we have decided to put all of our eggs in a short-term basket, we have become a transient, service-based and immediacy focused economy depending on short-term results rather than long-term growth. The magical economy.

This is true in business and it is true in government and politics as well. Stock prices rise with no basis, national debt is a bank account that we don’t have to pay for, politicians are focused on re-election rather than health of the economy and strength of our nation. We are a country whose entire political system is based on Judeo-Christian values, but that doesn’t serve our politics today so we discard them without a second thought. Why? Because those in power don’t want you looking at the left hand. They wave the right hand harder and harder to get you to look at it, but there is change in the air and hopefully, the middle class will wake up before it is too late. It is time to open our eyes and look behind the curtain at the travesty and damage this magical economy has inflicted on us individually and on our nation.

The magical economy is short-term and our focus must swing back to a longer-term view and we have to quit kicking the can down the road. Single term limits for politicians, pay them what the average American makes and forget the health care and perks. The magical economy creates establishment politics and career politicians, but if they are going to be a career politician, then they can work 40 hours a week at their job. Let them clock in and out.

I am thankful for those who serve our nation as public servants and who are working toward a better America. Those people do exist but they are few and far between in our political system. History has proven one thing – we can change voluntarily or we can continue to abuse the system until it is no longer bearable and change happens whether we like it or not. Time to put the distractions aside and remember how to be the greatest country in the history of mankind.

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