As I’ve been on somewhat of a writing hiatus while building my new financial modeling software company, ClearFactr, I recently came across this CNBC video featuring Cypress Semiconductor’s CEO, T.J. Rodgers.
It really doesn’t get any better than this, so, yeah… what he said.
Happy Holidays to all!
Like lamenting against your ongoing inability to levitate, as hard as you work at it, you’re going to be lamenting for a long time, Mr. President, if you think the lack of economic progress by the middle class is going to change under your policies. Such will be the case when you fundamentally fail to understand where economic success comes from.
Throughout yesterday’s self-proclaimed “important speech” on our economy, you decried the seeming injustice of a person who “works hard”, only to come up short. But if hard work were all that was required for success, we could simply encourage people to repeatedly dig holes with hand shovels and then fill them back up. Backbreaking work for sure, and a task that has a great track record of not making people rich.
Where you and your fellow policy-makers consistently miss the mark is in never realizing that hard work for hard work’s sake achieves nothing. What really counts is pleasing people.
To please someone, you have to put that other person’s needs ahead of your own. It’s an inherently giving act. You have to know the wants of the other person, and then do something that they value. It’s the very opposite of the “Me Generation”, the rise of which might just correlate with your noted middle-class stagnation.
If you want to achieve a lot of success, do something that a lot of people value. And if you want extreme success, do something that a lot of people value, but in a way that very few other people can do. This, and only this, explains why top entertainers, for example, make what they make – they make a lot of people very happy, and their skills are incredibly difficult to duplicate.
No matter who wins today’s election, one thing is for certain: This country will remain deeply divided on the proper role of government. While the debate has been healthy in many respects, it has also been equally damaging. In many ways, the President-elect and his new Congress will greet tomorrow and find a wounded country. With all the talk of the “need to compromise”, “reaching across the aisle” and giving “everyone a fair shot”, the next President and Congress could do no better than to attack the biggest root cause of public acrimony: crony capitalism. In fact, to defeat crony capitalism, one can assemble a powerful coalition voting-block that defies simple “left/right” categorization.
Before going any further, let’s define “crony capitalism” simply as “capitalism” without a level playing field.
Where capitalism results from two trading partners making each other better off through free and honest trade, crony capitalism tips the playing field to one party’s favor. Maybe it’s a regulation that forces the one party to trade with the other. Perhaps it’s a special tax treatment that makes viable an otherwise non-economic transaction. Or possibly it’s a single paragraph inserted into the tax code, one that applies only to a single company. Favorably, of course.
Crony capitalism amounts to a thumb on the scales of economic justice. But the damage doesn’t stop there.
A friend of mine recently recalled the profound words of Henry Hazlitt, from his classic book, “Economics in One Lesson”:
The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.
In “the immediate”, the favored group gets their benefit. And as we shall see, the “longer effects” of this system are devastating to the very character of the country itself.
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