HR ... Still Searching for an Identity

I have been following on LinkedIn several group discussions regarding HR issues.  One topic that seems to re-occur involves the HR Role.  Apparently the obvious seems to elude many practitioners.  

As a retiree, I do have the luxury of Monday morning quarter-backing, to own up to my biases and pet peeves, and to even meander in the controversial realm.

So permit me to say that this continuous conversation about the HR Role leaves me wondering what cool-aid are we still drinking in the 21st century.   

A Little History

It is no news that HR is held in low esteem by many managers and employees.

In my view, management and employees might have solid reasons for their disdain.  It is also no secret that HR is often seen as a black hole ... where resumes disappear, where grievances or suggestions vanish, where sense of urgency and practicality  are absent, where form seems more important than substance, where change is advocated but hardly enacted, and where slogans are often used to mask left field solutions.  My list is incomplete.

I also want to point out that not all HR departments are the same.  There is a noticeable minority that is  doing an exceptional job in a sea of obstacles, dilemmas, and elusive solutions.   This number has been growing steadily over the past 25 years.  

I do remember a study conducted some time ago.  Eighty organizations were polled: the CEO's, the top HR executive, senior management, a slice of the employee population, and the entire HR staff.  The key questions addressed:

1.  The extent to which the HR department was seen as a functioning business partner.

2.  The extent to which the HR staff understood the key business issues.

3.  The extent which the HR staff performed "completed staff work."

4.  The extent to which HR contributed to the resolution of key business issues.

The results?  Most top HR executives and HR staff members  rated their function as truly functioning as a business partner, while most CEOs and senior managers rated the HR function poorly as a business partner.  The study went on to point out that most HR practitioners lack the rounded preparation needed to fulfill the coveted role of business partner.  The perception of the employee population slice mirrored the view of their management.  

The lesson?  Wishing it to be so is not akin to being so .  Business partner is not a job descriptor, in my view, but the result from providing exceptional HR work.  Beauty, they say, is in the eye of the beholder -- management (HR's client) and the employee (the user of HR services).  Changing our name to one in vogue at the time gives us the illusion that we are changing and that we are keeping pace, when in reality, when we are merely improving incrementally rather than transformationally.

During the past quarter century, much developmental emphasis has been placed on the "soft" skills, relegating the "hard" skills to the dustbin of the "old" ways.  Soft skills include interpersonal competence, internal consulting skills,  facilitation skills, coaching, problem solving, and so on.  Hard skills include the technical skills to effectively design and implement HR policies and practices such as selection, compensation and benefits, safety and health, succession planning, organization and job design, and so on.   We have also come to realize that leadership and management do matter.  In my view, soft and hard skills are two sides of the same coin.  One is not better or more essential than the other.

Research conducted some time ago at Arizona State University, Santa Clara University, and the University of California Irvine, regarding the role of service organizations, revealed an important differentiator:  Skills and knowledge needed to make you successful in the front room activities are not the same as the skills and knowledge needed for success in the back room. The front room, where service provider meets service seeker, must be staffed by individuals with superior interpersonal skills and generic knowledge of the service options, while in the back room what counts more is in-depth technical skills and knowledge.  The research went on to suggest that selecting and rewarding service staff must take these difference into account when deploying and motivating staff.

So what is the problem?

Unlike finance, engineering, marketing, and other technical functions, HR folks do not share a common education or similar experience. Its roots are quite modest.  It emerged as a separate function when the people-related amount of administrative work required exceed management's span of attention.  As a result, the "HR" work was assigned to the best possible administrative staff member, often the CEO's secretary.  As collective bargaining emerged, complexity gave way to the realization that legal and negotiating expertise were required.  The technical HR elements were farmed out to the industrial engineering department, seen as more capable of addressing issues of compensation, job analysis, and selection methods.    In the past 75 years, we have seen the level of complexity increase whereby other disciplines have been brought in to improve the quality of selection, team development, job design, change management, and so on.

A side problem that remains is the perception that HR is a necessary evil, rather than an essential component to the success of an organization.

Experience teaches us that management's expectations are quite different than the employees'.  Management wants compliance and flexibility, while employees clamor for more involvement and participation in decisions affecting their work, as well as better or more (financial and non-finacial) rewards.  HR can play a great role in mediating this exchange.  There are many opportunities available to the HR professional to help improve the organization's ability to engage people through more better job design, tailor-made compensation and benefit schemes, to encourage strategic conversations between employees and senior management, to build effective areas of practice, to celebrate the unique value of each person, and to create a superior work environment.

There are many other areas where HR can shine ... I am sure you have your own list.

So let's stop debating the HR role and instead focusing on making HR contributions felt and more relevant to the business demands.

Enjoy your ride along the learning curve!  

In Search of Elixir ...

Definition

The dictionary defines elixir as the philosopher's stone.  The term comes from the Arabic word al-iksir -- a word to describe alchemists' attempt to find the potion that would turn ordinary metals into gold.  Another definition describes it as sweetened aromatic solution of alcohol and water containing, or used as a vehicle for, medical substances. Synonyms include: cure all, panacea, principle, solution, and remedy.

A Little History

During medieval times, obsession for ways to prolong life indefinitely reached its peak. Experiments abounded in all walks of life. Monks started to distill essences and spirits in their quest to create the ultimate liqueur. Some derivatives were even forbidden by governments because they believed, that drinking them, would surely drive people crazy.  

During the frontier days, the wild West was invaded by so-called "snake oil" salesmen. Men that would go from town to town selling concoctions that would cure any and all ills. Soon the term "snake oil salesman" became synonymous  with untrustworthy sales people.  

This preoccupation, and indeed obsession, with the "magic bullet" is nothing new.  People have been looking for the remedy of all remedies for centuries, if not millennia.  No culture seems to be immune to it.  We all seem to be looking for that extra something that would give us an edge, that would enhance our success, and improve our lives.  

Management Education

I have seen the mania for elixir cross into American management education.   

It started, it seems to me, during the 1960's with Robert Blake and Jane Mouton's Managerial Grid. Their model of managerial styles suggested that there is a perfect style for managing people and that they had a way of measuring it.  Thousands, if not millions, attended the Managerial Grid phase 1 seminar.  Participants discovered their style and received suggestions for improvement.  Blake and Mouton were proponents of the one best style where the management leader shows high concern for people and high concern for results.  

During the 70's two professors from Ohio State University, Paul Hersey and Ken Blanchard, argued that there is no one best style, and that it all depends on the maturity of each subordinate. Their argument was convincing enough to generate a large scale movement toward Situational Leadership.  The seminars that follow taught management leaders how to be an effective situational leader.  Hersey and Blanchard's work generated many copycats and contributed to increased availability of off-the-shelf questionnaires that people could use to measure and analyze their own style.   

Concurrently, psychologists began offering interesting ways to examine more deeply one's behavior and motivation, and assess one's personal strengths and weaknesses. More questionnaires generating more data for the layperson to interpret and draw conclusions from.  

Mainland Europeans were initially skeptical. They saw the Americans' preoccupation with styles as a superficial and a meaningless exercise.  They watched with amusement what Americans were up to, but were reluctant to join the parade.  Soon, globalization changed all that as American multinationals began to export their management development practices to their subsidiaries and branch offices.  As managers and executives began to migrate from company to company, and from industry to industry, and as Europeans began to populate American business schools' programs, the all-on-board movement gained speed.

So What?

At this point you might be wondering what is the point of this blog.  After 50 years of experimentation, the market has pretty much reduced the number of copy cats and it has forced the distillation of what I believe is the essence.

My conclusion?  There is no one best way to lead, that it all depends on circumstances.  

The management development market is quite efficient. Over time, it eliminates the stuff at the edges, the fads,  programs of the month, and concentrates its attention to the more serious findings.

Successful leaders are remembered fondly, not so much for their style, but for what they managed to accomplish during their tenure, and, of course, the legacy they leave behind. They are also remembered for what they stood for much more so than what they were against.  They are easily forgotten when people cannot associate results with them.  They are vilified whenever their leadership caused physical or mental anguish.

I have grown skeptical of the premise that starts with "everything being equal..." this is better than that.  Little or nothing seems to be equal from one organization to another ... Cultures, product cycles, market conditions, technology, history, and other factors make it almost impossible to generalize one company's experience, let it alone, duplicate it.

Having the wind behind one's sails can make heroes of most of us.  As Elvis Presley was quoted to have said:  You cannot knock success!  Being at the right place, at the right time, with competent and dedicated colleagues is certainly the best wind behind a leader's sails.  Innovative products and a friendly market place cannot hurt.

I have become partial to leadership development programs that teach us how to to capitalize on our core strengths rather than focusing on our weaknesses.  I have become an advocate of programs based on sound research data, and I have grown distrustful of personal leadership philosophies. I am now more and more keen of programs that focus on continuous learning rather than programs that promise magic bullets or been there, done that.

Old age or wisdom?  You decide.  What are your thoughts regarding leadership and management development?

More on Inequality ...

A few years back in graduate school at Oxford, I learned, that we face two types of problems in life.  The majority of problems are "tame" -- that is, there are specific solutions in place to address them.  A few, called "wicked," are extremely difficult to handle.  There are no easy solutions for them, and no one has the ability to solve them alone.  These problems require the involvement and participation of many.

Growing inequality in America is indeed a wicked problem!

A couple months ago, I wrote a long blog on this subject.  While traveling through Europe late in December, I ran into an article posted in the Wall Street Journal by Robert E. Grady, managing director of the private-equity firm Cheyenne Capital Fund and chief economic advisor to Governor Chris Christie. 

The article was commenting on the speech by President Obama on the growing inequality in America.  In the article, Mr. Grady challenges the President's assertions and assumptions.    After reading the article, I concluded that I should include the highlights of his argument in my blog to round out the picture I presented in my previous blog.

Lee Ohanian and Kip Hagopian, in their seminal paper "the Measure of Inequality" (Policy Review, 2011) point out that the Census Bureau's definition of income leaves out taxes, transfer payments such as Medicaid, Medicare, nutrition assistance, the Earned Income Tax Credit, and even costly employee benefits such as health care insurance.

Thus, we are reminded, that "the data conventionally used to calculate the so-called Gini coefficient -- the most commonly used measure of income inequality -- ignore America's highly progressive income tax system and the panoply of benefits and transfer payments." 

Messrs. Ohanian and Hagopian go on to tell us that "once the effect of taxes and transfer payments are taken into account, inequality has actually declined by 1.8% during the 16-year period between 1993 and 2009 when the Gini coefficient dropped from .395 to .388."  

In his speech President Obama cited a study by economists from Columbia University to bolster his case.  But, this study also found that already enacted benefits and tax programs have reduced America's effective poverty rate by 40% since 1967 -- to 16% from 26%.   Mr. Grady points out that this observation makes Ohanian and Hagopian's research more accurate, and less than an outlier.  

The Congressional Budget Office (CBO) released a study in October 2011 that came to a similar conclusion.  In it, the CBO study picked an artificial starting point of 1979, amid a a crushing period of stagflation.  Yet it showed that family income, including benefits, on average, experienced a 62% gain above inflation from 1979 to 2007.  It also showed that all five quintiles of the income distribution spectrum experienced real gains in family income.  This study seems to contradict President Obama's claims during his 2008 run for the presidency that the middle class was "falling behind." 

The real concern, it seems, is that some people were getting too far ahead.

Longitudinal studies conducted by the Treasury Department have found that there was "considerable income mobility" in the decades 1987-1996 and 1996-2005.  Roughly half of those in the bottom income quintile in 1996, for example, had moved to higher quintile by 2005.  

So what is the bottom line, according to Mr. Grady?

In periods of high economic growth such the 1980's and the 1990's, the vast majority of Americans gain, and have the opportunity to gain. In periods of slow growth, such as the past four and a half years since the recession officially ended, poor people and the middle class are hurt the most, and opportunity is curbed.   

If the goal is to deliver higher incomes and a better standard of living for the majority of Americans, then generating economic growth -- not income inequality or the redistribution of wealth -- is the defining challenge of our time.  This is the conclusion Mr. Grady makes.  

What do you think?

If I knew then, what I know now ...

How often have you heard seniors say if I knew then, what I know now? Not only I have heard that many times, I have also said it often myself.

An admission, perhaps, that, as youngsters, we are ill prepared to tackle complex life challenges or that we could have avoided some mistakes with a good dose of experience.  Unfortunately, when we get older, many of the mistakes we made along the way are not repairable.  So our experience and learning seem to have little or no value to us because, as the cliché teaches us, it is difficult or impossible to put toothpaste back into the tube.  Does it have to be this way?  Maybe not!

Three weeks ago, I emailed my good friend Allan Katcher, Ph.D. to wish him happy holidays.  I have known Allan since 1972 when he certified me in the use of an instrument he and Stewart Atkins had developed to measure interpersonal styles (LIFO).   From the moment we met, we liked one another and became friends.  I later asked Allan to serve on my doctoral committee.  Allan is a brilliant psychologist and a great teacher.  I have admired his style and bubbly personality ever since.   During our exchange of emails, we talked about our current interests and activities.  I asked him to read my blog.  After perusing it, Allan said that I might be interested in reading his latest publication. 

Two weeks ago I received a copy of his book entitled If We Knew Then, What We Know Now, available through Amazon.com.   The co-author is Irving S. Newmark, a retired dentist and psychologist.  The book reflects the accumulated knowledge of two octogenarian students of human behavior.

What Allan and his colleague Irving have written is a magnificent compendium of resource material for improving important elements of our life.  They provide tools for self-examination and suggest strategies for improving a number of challenges:

·              Improving intimate relationships

·            Raising emotionally healthier children

·           Achieving financial security

·           Finding enjoyment at work

·          Healthy aging

·         Reducing Stress and distress

The running theme of the book is the power of possibilities for a longer, happier, and healthier life.  Allan and Irving share freely with the reader invaluable insights and their experience gained over many years, with personal anecdotes. 

The book includes personal assessment questions, goal setting prompts, way to establish key success factors, guides for exploration of what is possible, and a variety of suggestions for making better choices.  As a result, the book serves as a study guide for managing one’s journey more deliberately and more successfully.

In today’s fast moving world, we seem to rush through life without the opportunity to stop and deliberately reflect on what is important to us and how to improve important elements of our lives.

Katcher and Newmark make a great contribution to us.  They share freely what they have learned so that we might benefit from their experience and, perhaps, make better choices.  Thank you, Allan and Irving!!!

The Growing Inequality in America

Background

The article Poof Goes the Middle Class in the Los Angeles Times by Doyle McManus (10/23/2013) and the documentary Inequality for All featuring former Secretary of Labor Robert Reich, currently playing in theatres, have inspired me to write this paper. 

The subject of rising inequality has been a hot topic ever since the US economy began contracting in 2008.

McManus' dire predictions describe an America “in which real wages for most workers decline year after year, a future in which middle-class jobs disappeared in the Great Recession, and a future in which young Americans either squeeze into an increasingly wealthy elite or tumble to the bottom”, fewer and fewer, in what we once called the middle class.

At the current rate, economist Tyler Cowan in his book, Average is Over, predicts, based on current trends, over the next 20 years:

·       More wealthy people than ever.

·       More poor people than ever.

·       Automation and outsourcing will continue to eliminate many jobs.

·       Downward pressure on wages for all except the most skilled.

·      Growing inequality between the wealthy and everyone else.

·      Officials incapable of slowing these trends, let alone stop them.

·      Rather than balancing the budget with higher taxes or lowering benefits, real wages for many workers will continue to fall.

·      Resulting in a growing underclass.

Dismal predictions?  That’s not all!  Cowan goes on to point out that employers will constantly measure employee productivity, and will quickly weed out underperformers. He sees a scenario where retirees, their savings exhausted, move to newly built shantytowns in low cost regions or to developing countries, where cost of living is much lower.  Rather than rebelling, the underclass will console itself with online entertainment and improved narcotics in order to make life more livable. 

As the American economy, spurred by global competition, becomes ruthlessly more efficient and more productive, Cowan forecasts that the economic elite will grow to 15% of the population.  They will be the elites of today, plus technologically adept professionals from the fields of robotics to heath care whose jobs cannot be exported overseas, below there will be a servant class of service workers to the rich.

Social mobility will still be there.  On-line education, within reach of most Americans, will permit the most gifted and motivated in the underclass to rise.  But they will have to be very smart, very diligent, and highly motivated. 

Secretary Reich, in his documentary Inequality for All, traces the root causes to five main events:

1.    Changes in the taxation system during the Regan administration.

2.    The start of globalization in the mid-1970s.

3.  The excesses of the financier class throughout the last 30-50 years and the years preceding the 1929 crash.

4.   The introduction of stock options in executive compensation, starting in the mid 1990s.

5.  The decline of the American labor unions from 35% to less than 10% of the workforce.

He illustrates the phenomenon of increasing inequality in America with a brilliantly clear presentation of economic data from 1929 to 2008, the peak years preceding the two dramatic declines in GNP. 

Reich sounded the alarm in the early 1990s but few, if any, paid attention.  He was the lone man in the wilderness warning us of the impending crisis.  Many dismissed his message as that of an alarmist and of a union sympathizer.  Others accused him of being a socialist or a communist.  With self-deprecating humor, Reich dismantles the logic of his critics.  He tells us that he left government after Clinton’s first term, frustrated by the lack of attention to this emerging debacle. 

The documentary features a successful CEO and wealthy investor to debunk faulty economic assumptions.  For example, it is customers who create job, not wealthy people. (demand-side or mid-class up rather than supply-side or trickle down economics).  As an investor in Amazon.com, this CEO points out that Amazon is able to do with about 60,000 employees what previous methods would have required 600,000 employees.  He makes a good case for consolidation in order to achieve economies of scale. 

Reich also walks us through the increasing role of women in the workforce, initially to supplement family incomes as male wages began to stagnate or decline.  He goes on to suggest that declining wages encouraged people to over-extend themselves and out-of-control credit card borrowing, all encouraged by a growing housing bubble.  Many folks were encouraged to take home equity loans to finance a lifestyle beyond their means.  When the bubble burst, many lost their homes, as the value of their value submarined.

Reich shows a table ranking several nations with respect to the differential between top earners and the working class.  The US occupies a dismal 46^th place, closer to developing countries and much lower than most developed countries.  This comparison alone justifies the need for change.    

Reich’s documentary closes with a call for viewers to take action, and to get involved in pressuring our politicians to fix the problem. 

Historical Tidbits

Is inequality something new?  Primitive man started to domesticate animals so that he would have easier access to food, clothe himself, and help in his burden.  He mastered agriculture so that the soil would produce what he needed in quantity that he could trade. He established hierarchies so that those at the top would have more food, more privileges, and more security. 

It was during the Renaissance that the middle class got its spurt with the recognition and appreciation of the contribution of the guilds.  Prior to that, there were only two classes:  top and bottom.  The elite populated the top: nobility and military brass.   During this period, we see the elite recognize and reward the most talented amongst the painters, architects, writers, sculptors, etc.  Thanks to the largesse of patrons, a class of masters (middle class) and apprentices was created, permitting with time apprentices to rise to the master level, and a few to migrate to the elite group. 

During the Enlightenment period, we witness, for the first time, the preoccupation with equality under the law.  The concept was enshrined in the American (All men are created equal) and French (egalite’) constitutions.   Prior to that, the top enjoyed unquestioned mastery over the bottom – often of the despotical kind. 

Darwin discovered that species evolve and adapt to change in order to survive and grow, and that the stronger have a better chance at survival.  This principle was in evidence during the Industrial Revolution.   Scientific management made it possible for the unskilled, illiterate bottom to work in factories and earn substantially better wages.   From this workforce, the middle class emerged in grander numbers.  The economic boom following WWII accelerated the middle class’ growth.

Lenin’s musing that capitalists would sell you the bullets needed to kill them summarizes the antipathy of the proletariat toward capitalism and their sympathy toward laws that help the masses.

Judeo-Christian principles, all throughout history, have tried to temper man’s unbridled urge to profit from or exploit others.  Islam too has counseled its believers to be generous toward others.   

A strong realization emerged during the past century that, given natural man’s primal urge, regulations would have to be put in place to prevent certain business behaviors.  We see the enactment of strong laws to prevent monopolies, restrain of trade practices, unsafe, unfair or discriminatory labor practices, and to ensure consumers’ protection. 

My take-Away

Few predicted the side effects of a globalized economy. 

The developed world saw globalization as an opportunity to buy desired goods at a cheaper price.  The developing world saw it as an opportunity to increase its exports and thus increase the number of jobs and standard of living.  The higher the demand for cheaper goods, the higher would the wages in the developing countries would be.

The effect on wages has reached unexpected proportions.  When globalization started, most countries relied on a 4-tier compensation scheme.  Most jobs would pay according to prevailing local rates, some according to regional rates, a few according to national rates, and a tiny minority according to international rates.  The 4-tier scheme evolved in the 1990s to a 3-tier as regional and national rates began to converge.  In this century, increased skilled-level employee mobility has shrunk the 3-tier scheme to a 2-tier as local rates have become somewhat national.  As lower level wages reach global equilibrium, in 10-20 years a global rate scheme is likely.  At that time, the differential between workers’ pay throughout the world will pretty much disappear. 

Countries must then find a different way to gain competitive advantage.

Unions share responsibility in the decline of the middle class.  With their aggressive and unchallenged approach to collective bargaining, they saddled many industries, primarily in the manufacturing area, with exorbitant wages, rigid work rules, and unfunded liabilities.  The labor costs in the auto, rubber, and steel industries climbed so much that once global markets opened-up, companies were unable to effectively compete.  As a result, the destruction of our manufacturing base was sealed. 

Soon work performed in developed countries by marginally efficient operations began to migrate to lower cost countries leaving many workers in the developed world unemployed.  A structural class of unemployed folks emerged.  People whose skill set and education are obsolete.  Attempts to re-train them have yielded marginal results.   

The middle class shares also in the debacle.  Nurtured over the years by consumerist propaganda, it abandoned the true and tested teachings of the previous generation … "to save for the rainy days."  In fact, the very notion of saving was seen as passé and an unfortunate legacy from the Great Depression.   Americans have the lowest saving rate in the developed world.  Immediate gratification fueled spending beyond one’s means in the hope that the nest egg would continue to grow thanks to the housing market bubble and inflation.   Keeping up with the Joneses became the norm. 

Another factor that has made the problem worse is what has been happening to the nuclear family.  The number of one-parent families has increased substantially during the past 50 years.  The result has been that many families now cannot make it on a single wage earner’s income, especially during an inflationary period such as the one we have experienced since the mid 1970s.   Coupled with a culture based on consumerism, many families have been forced to make up the difference by borrowing. 

People managed for years without 3-4 cell phones per family, without cable or satellite TV, with a 19” or 36” TV, etc.  Now these expenditures are a must.  Living within one’s means is no longer an honored principle.  A culture of excess is tough to reign even during a time of austerity.

Soon politicians started to step in.  Moved by compassion or opportunism, they began to carter to a growing constituency of unhappy campers.  How?   

·     War on poverty programs.  Billions have been spent since the mid-1960s.  Yet the percentage of poor folks has not budged.

      Union contracts in the public administration sector, that gave employees exorbitant pensions, often unfunded, and other costly perks to secure the votes of union members.

·        Pressure on banks to approve mortgages for people who were unqualified.  100% loans were approved.  Many loans were made based on false financial statements.

·         Bail-outs to cover unfunded private sector's liabilities or to provide cashflow relief.

·       Economic assistance available to a single parent with two children continued to grow. 

  

    In the state of Hawaii, the amount in tax-free economic assistance is over   60,000dollars, in California, New York, Massachusetts, and several other states over 50,000.

·       Segmentation of the population to show greater impact on chosen constituencies, e.g., Blacks, Hispanics, undocumented, etc.

·         Poorly administered financial assistance, often used to supplement income rather than complete valuable education.

·        Polarizing policies and solutions.

·       Tea party fanatics.

We see, in some cases, an underclass stuck in comfortable misery, lacking the motivation or rational basis for escaping current conditions.  The response from the electorate to perceived abuses has been swift and brutal.

Needless to say, the answer is never at the extremes, but in the center.  We are still debating the role of government in polar terms, when we actually need to have a balanced approach.

In my view, the real culprits of the social problems are the financiers.  Someone from Wall Street always manages to show up as our Secretary of Treasury, regardless of who is elected, democrat or republican.  They manage to push through loopholes that favor them.  For example, taxing the income of traders at the 15-20% level.   It is an abomination for a billionaire to pay a tax rate lower than an office worker.  Fixing this problem should be priority one.  Private enterprise often gets unfairly blamed for the actions taken by a a handful of financiers.

The discourse has been high-jacked by activists and politicians that pit one class against another, the poor against the rich, the nativist against the immigrant, one region of the country versus another, and so on. 

In my view, the root cause of inequality comes from lack of economic and political leadership. 

We can only solve inequality by raising those at the bottom, not by bashing those at the top as greedy, heartless, and unscrupulous sobs. 

Americans are the most generous people in the world.  Avarice is not in the American DNA.   The issue of growing inequality is a national issue, not one that affects others, it affects all of us, whether we are rich or poor.  It is to our country’s benefit that we fix it.

Solving the Root Problem

If we examine those countries where the gap between the top and the bottom is the smallest, we will find many Northern European countries.   Sure, their population is more homogeneous than America’s, but immigration is increasing there too.  What is unique about them?  Some generalizations ...

·    The tax rate for the top is significant higher than in America, e.g., fewer loop holes, fewer lawyers and accountants driving the tax code.

·        They are OK with solidarity toward the less successful.  It is probably a legacy from their Protestant roots.

·         They are industrious and law abiding.

·         They are more communal than their US cousins.

·         They tend to work to live, not live to work.

·         They have more progressive national economic policies.

The Germans, in particular, offer a great example that America could emulate. 

First, identify niches where our expertise is strong and capitalize on it.  Second, identify areas that we want to be an expert in, and invest in becoming one. 

By doing so, the Germans continue to enjoy an expanding economy, low unemployment, and a generous welfare system.  Solidarity to Germans is not a dirty word.  It is part of their culture and history. 

In America, its individualistic history and its multicultural milieu see solidarity as a ticket for deadbeats and profiteers.  No doubt, some will do just that, but not the great majority.

Americans may not admit it, but we are not a melting pot, never really were.  Each group looks at the other with suspicion and, in some cases, with contempt.  Some groups think of themselves as being in the right or better than their cousins, based on flimsy rationale:  I was born here, this is our country, we were here first, we are a Judeo-Christian nation, etc.  Wedges, designed to keep folks separated and at each other’s throat.

We need to marshall the will and the resources to attack this issue before it gets out of hand.  I welcome your thoughts and ideas.