What? Can I be serious… a great gift? In 2008 many of us experienced a profound loss in wealth. The value of our homes and stock portfolios plummeted, and worse, many lost jobs and homes. How can this possibly be a gift? At best, this seems to be an idiotic statement and at worst, it rings as completely insensitive.
But wait, before we get carried away, let’s examine what really happened. True, some hard-earned wealth was negatively affected by the downturn and many hard-working individuals were caught up in a firestorm that was not of their making. I argue, however, that the vast majority of losses were due to an over-inflated housing and stock market; inflated by cheap credit, greed, speculation, over consumption and ignorance. We wanted to live the good life and bought into false notions that the gravy train would never end. Every time someone flipped a property or created a new financial instrument without adding real value to the underlying asset, the result was the creation of a layer of inflation; a tax on economic sustainability. The bubble continued to grow until it could no longer be sustained.
Okay, the bubble burst, now what? Where is the gift?
The gift is we get to come back to reality. And the reality is: we need to produce if we want to consume. I know this seems simplistic, but hey, I ‘m a simple guy. And what are we to produce? If we want to thrive once again, we will produce products and services that add “real value” for businesses and consumers and that create “real wealth” for our overall economy. Firms built on that premise are still with us and prospering, even if they were built during a bubble. Just look at those firms that were created during the dot-com boom and have thrived since the dot-com bust. Another reality is Americans are very good at making things. I believe we are about to see a resurgence of high value manufacturing in this country. Quality assurance and intellectual property issues are forcing companies in some industries to rethink out-sourcing and off-shoring.
We live in challenging, but very interesting…and even exciting times, don’t you think? We are about to experience real innovation in almost every facet of our lives: in politics, economics, education, health care, and energy, just to name a few! We are entering a massive reorganization of historic proportions. It will be “all hands on deck” as we retool our economy and retrain our workers. If we work together to carefully rebuild our foundation, the structure we build can be far stronger than we ever imagined.
One major risk to regaining our prosperity is the huge debt our nation is piling up. It is my hope that as we rebuild the nation’s infrastructure, we will concentrate on those projects (and people) that make us more competitive. As we rebuild infrastructure, we will also need to emphasize human capital by addressing education, training and retraining needs. If we are diligent in this massive effort, we stand a much better chance of paying off our debt by generating enormous growth.
There are many risks to overcome. We cannot tolerate waste, regional politics or earmarks for pet projects at this fragile moment in time. We cannot tolerate losing our international reputation in the financial markets. We cannot tolerate graft or corruption, at any level, in business or government.
The stakes are high, but the rewards can be significant. Or maybe the reward is “significance”. Deep down we know we have let our national reputation for excellence, work ethic, innovation and leadership slip a little…okay a lot. Now we have this grand opportunity to remount, reload and exceed all expectations. Like you, I am excited by this opportunity and look forward to a productive 2009!