Archive for February, 2013

Can sequester work? Ask Texas

Many thanks to the political class in Washington for sophisticating our nation’s vocabulary. I can’t say I would routinely use “sequestration” without its inspiration. The concept is presently at our doorstep in the form of automatic federal budget cuts.

A brief review: In 2011, Republicans in Congress would not agree to allow the country to borrow more money (i.e., raise the debt ceiling) unless there was a plan to reduce (1) the national debt in general and (2) annual budget deficits in particular.

So, Congress created a bipartisan “super-committee” to find ways to balance the budget. With appropriate prescience, Congress also provided a fall-back plan in case the super-committee crashed and burned. Plan B consisted of across-the-board budget cuts esoterically-known as sequestration.

Well, the super-committee lacked superpowers to overcome Washington partisanship. Its failure was D.C. comical. Now we face $85 billion in spending reductions. The amount is a laughable one-half of one percent of the $16 trillion we owe, but it’s still creating a stir.

President Obama surrounded himself with public servants last week to sound the alarm. He cited the jobs that will be lost, the services that will stop, the offices that will close. With every rousing cadence, I kept thinking: “That’s the point.”

Every year, we spend more than a trillion dollars more than we take in. We simply don’t have the money to do what we’ve always done. To find out what that’s like, ask a business owner, maybe one in the construction industry, whose revenues dropped 50% in 2009 and then again in 2010.

Of course, jobs got lost, services stopped, offices closed. If some didn’t lose their jobs, all would have lost their jobs. That is, the company would have gone out of business. The same is true for us as a nation.

If some expenses don’t get cut, all will get cut in the form of dollar devaluation, price inflation, slow growth, rising taxes and high unemployment.

True, the government can do something businesses can’t: force its customers to buy more goods and services. But, as a college professor once told me, just because you can do something doesn’t mean you should.

Can this sequester thing work? It has worked for Texas.

In 2003, Texas had revenues to pay for about 90% of its planned expenditures. When Governor Rick Perry presented his budget to the Legislature, it had all zeroes in it, as if to say let every state agency, court and university system justify its existence.

In subsequent lean years, if the revenue estimate from the state’s tax collector was less than the previous budget, Perry and Republican legislators required all departments to show how they planned to reduce expenses.

Perry et. al exempted certain services from reduction, e.g., public education, just like the feds exempted Social Security from the pending sequester. But the assumption was simple: there is always room to trim. The choices will be hard; opponents will cry “draconian”. Still, making hard choices is part of being an adult, part of “sustainable” living.

One can find pet statistics to argue Texas has under-spent itself into sub-Mississippi status. But we certainly don’t hear Texas in the talk about state financial troubles and credit downgrades, something we can’t say for the nation as a whole.

Kevin Thompson writes weekly for The Boerne Star in the Texas hill country. Follow him at http://www.kwt.info.

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Confessions of an introvert

For many years I considered myself an extrovert. I tried to be “friends with everyone.” I won good citizen awards. I stayed on the lookout for people to please.

Home, school and church reinforced these behaviors. The more friendly, the more mature; the more mature, the more Christian. The more outgoing, the more destined for influence and success. Shyness was a pathology to overcome, not a signal to some inner strength.

Culture had laid the groundwork. If nineteenth century America was a culture of character,  twentieth century America, with the rise of movie stars and salesmanship programs, became a culture of personality. This according to Susan Cain, author of “Quiet: The power of introverts in a world that can’t stop talking.”

Cain cites several studies that have found a third to a half of the U.S. population is introverted. By introvert, we don’t mean hermit. We don’t mean black trench coats or multiple personalities. We don’t mean anti-social.

We do mean people who get more energy from being alone or in a small group than from being in a crowd. We do mean people who think first and talk second. People who dive into a problem like a pelican toward a fish. Who prefer to write out a response than extemporaneously speak. Prefer uninterrupted concentration to multi-tasking. Working alone to working in groups.

Our “culture of personality” has left little room for the introvert’s natural habitat. Starting in kindergarten, desks are grouped into pods. High school and college students are instructed into study groups. Professional workplaces have open-aired cubicles and open door policies. The idea: the more stimulation, the better.

Not so, says Cain who claims creativity is actually stifled in group settings where the biggest egos or the most eloquent communicators lead the mass into “groupthink.” It’s no footnote, she says, that history’s two biggest technology empires were largely born of the solitary study by their introverted co-founders: Bill Gates of Microsoft and Steve Wozniak of Apple.

Yet business schools champion leaders who “light up the room” with larger than life personas. Students are expected to think out loud all day and mingle in social settings well into the night. A quiet evening of reflection is viewed as falling behind.

Ironically, it was in my own MBA program that I first discovered my introversion. Previously, I diagnosed my desire to work alone, my fatigue from “working a room,” my bent toward the contemplative life, as burnout or even depression.

I would self-talk myself back into a social mood with contemporary wisdom about the importance of networking. “It’s not what you know, but who you know…”

But in that graduate school class I finally allowed myself to answer a personality test relatively honestly. I didn’t try to game it into a type I believed a promising young executive should exhibit.

The result: I was one of two introverts in the 30-person class. My terror was only mitigated by the fact that the other introvert was a suave salesman of business intelligence software and arguably the coolest guy in the class.

Today, I trust my deeper desires more. I still love working with people but remember my renewal comes from being alone. I try not to forget that saying “no” to a world that can’t stop talking can mean saying “yes” to so much more.

Kevin Thompson writes weekly for The Boerne Star in the Texas hill country. Follow him at http://www.kwt.info.

Comments for the under-committed

Last week I offered “Comments for the over-committed”. Now, with Valentine’s Day upon us and the state of marital love in America continuing its decline, I hold forth comments for the under-committed.

My family relations professor said if marriage were a house, commitment is the foundation. The longer I’m married, the more I believe there is no greener grass than commitment. It’s where children play freely and where love strolls wholeheartedly. It provides the soft carpet on which the hard knocks of life can fall.

I suppose most failed marriages once proclaimed the traditional wedding vow “for better, for worse, for richer, for poorer, in sickness and in health, til death do us part.” But then things changed. Circumstances changed. People changed.

In some respects, marriage does seem like a cruel joke. You marry and your mate begins to decline. He gains weight. She gains wrinkles. He goes bald. She goes gray. He loses his strength. She loses her mind.

Today, a new marriage has the chance of a coin flip. Perhaps this updating of the traditional wedding vow would paint a clearer picture of the challenge ahead for the newlywed and of the covenant necessary to beat the odds.

***

I, bride, take you, groom, to be my lawful wedded husband (and at times my awful, three-headed husband), to have and to hold (and sometimes to scold) from this day forward.

Through pay raises and unemployment, whether fit or fat, straight up or bent over, whether bald or hairy and when both bald and hairy, in good smells and bad, whether helpful in the kitchen or comatose on the couch, in hunting season and out, in conflict with your family and not, through long hours at work and lonely hours at home.

When I don’t feel like looking at you and you don’t feel like listening to me, when kids overrun our lives and days overrun our nights, when things don’t go as planned and I would not choose you again if given the chance at a do-over.

Then, will I stay committed. Then, will I stay the course. Then, will I believe in you more than you believe in yourself.

***

And I, groom, take you, bride, to be my lawful wedded wife, to have and to hold from this day forward, even when I’d rather be holding a remote control and a beer.

Through emotions and tears and illogical fears, when babies come and leave their mark, whether dinner gets made or laundry gets done, when my family drives you crazy and my driving makes you mad, whether supportive or negative, weepy or needy.

When I don’t feel like listening to you and you can’t stand to look at me. When the jokes that once made you giggle make you mad as a hornet, when I can do no right and your family can do no wrong, when I get home late and your day starts early, when the kids misbehave and you say they take after me.

Then, will I stay committed. Then, will I stay the course.

For the benefit of the generations, for something bigger than just you or me. For us and the notion that two can actually become one and not ever be two again.

Til death do us part because to part would be, well, death.

Kevin Thompson writes weekly for The Boerne Star in the Texas hill country. He can be reached at kevin@kwt.info.

Comments for the over-committed

Do you have more tasks than time? More obligations than energy? More demands than endurance? Are your responsibilities spread so wide that you are spread too thin?

If you’ve recently responded “Busy” to the question “How are you?” If you’ve thought, “Just let me get through this or that, then things will slow down” this article is for you.

Maintaining a reasonable and sustainable pace of life is a great challenge of our time. For most families, calendar-filling opportunities are ubiquitous.

No one could imagine fifty years ago the options available to us today. With fast food and email and networked files, not to mention caffeine, we can work until the cows come home – and go to sleep and wake up and get milked and…

Besides work, we can fill untold hours with other activities. Politics, genealogy, sports, technology, history, spirituality. Opportunity abounds for for-profit networking and non-profit volunteering.

Parents face the brunt of the modern schedule assault. Traditional activities (e.g., Little League) have elevated to “select” and “competitive”. Formerly obscure activities (e.g., lacrosse) have become commonplace.

Any sport, any musical instrument, any interest. Private tutoring is available, with a college scholarship hanging in the balance.

It’s all well and good until it becomes all too much. When we parent predominantly through a rear view mirror. When the dinner table becomes mainly storage space. When an evening with nothing to do feels like a waste of time.

I can’t remember when I last uttered the phrase “I’m bored.” What a luxury the words we detested as children would be today.

Boredom is obviously not the goal. Balance is. And so some tips for maintaining balance from the physiological realm; that is, from my circuit training class at the Boerne YMCA.

Point One: The stronger you are, the better your balance will be.

Previously, I could scarcely put on a sock (while standing) without tipping over like a sippy cup. I would hop around searching for a vertical object to back into.

But the stronger my leg muscles have become, the more I can stably stand on one foot and slip a sock on the other.

A balanced schedule requires strength to say “no” to time-consuming activities, even well-meaning ones. Saying “no” may offend someone or preclude you from future opportunities.

But the results are well worth the risks. You will stay rested, relaxed and ready for your highest priorities, which leads to point two.

Point Two: The more focused you are, the better your balance will be.

In the YMCA class, we do exercises that require us to stand on one foot. When doing so, our trainer instructs us to focus on a spot on the floor. If we look at our swaying neighbor, we’re more likely to lose our balance. Focusing on the immovable keeps us straight and steady.

Likewise, if you stay focused on your established goals, on your anchor of faith, on things that do not sway or change, you will stay upright. You will stand firm. You will remain balanced.

Balance holds at bay the stress of over-commitment. When other inevitable stressors appear, balance provides the emotional and physical margin to handle them, leaving as little collateral damage as possible.

Kevin Thompson writes weekly for The Boerne Star in the Texas hill country. He can be reached at kevin@kwt.info.

Debt vs. Leverage – there is a difference

Though I work for a lending institution, I enjoy a periodic dose of Dave Ramsey. For those unaware, Mr. Ramsey has built a small empire helping people get out of debt and manage their money better.

Through radio, books and conferences, he has almost single-handedly turned “debt” into a four-letter word. His “Total Money Makeover” takes readers through a handful of “baby steps” that result in their being able to call his daily radio show to give a “debt-free scream”.

Dave’s logic is sound, his examples clear. For instance, if you invested the equivalent of an average American car payment in a growth stock mutual fund every month for forty years, you would finish with more than five million dollars.

Without a doubt, many Americans find themselves in precarious positions financially. Student loan debt that never turned into a high paying job. Car loans that eat up too much of a family’s budget. Short-term credit card debt that has turned into a long-term problem. A death spiral of pay-day loans.

These scenarios, and a spendthrift U.S. government, have given debt a bad name. But there is another side to the story.

In the finance world, debt and leverage are used interchangeably. Not so in everyday life. “Debt” has a negative connotation, as in something you (or your federal government) get buried in. “Leverage”, meanwhile, conjures a more positive picture of something moving or lifting for the better.

Leverage is not a dirty word. When an entrepreneur hires an employee, she is leveraging that person to expand her capabilities. When a professional takes out a mortgage, he is leveraging his future earning potential to increase his standard of living.

Leverage is a form of teamwork that accomplishes more good collectively than the individual parts could do on their own.

Now, if you’re eating rice and beans on the Dave Ramsey plan, I’m not trying to sell you a steak. Healthy discipline should follow unwise spending. It’s always the right time for self-control.

What I am suggesting is that careful lending has as healthful a place in an economy as currency itself. “Careful”, of course, is the operative word.

It makes no sense for me to loan the recent high school grad $40,000 for a new Mustang when the payment will be more than his apartment rent. It makes no sense for our federal government to be in $1.6 trillion of UNSECURED debt (though “only” $1.1 trillion is held by non-US government entities).

It makes a lot of sense for me to loan the single mom $10,000 to buy an efficient, reliable car with which to get to work on time. And it often makes sense for someone to borrow money at X% if he/she can in turn likely make X+Y% from another investment.

Appropriate leverage presents a borrower with an opportunity to keep a promise. It implies that he is trustworthy and capable of acting responsibly. We humans grow in positive ways when we make and meet commitments. In general, leverage promotes ownership and ownership strengthens a society.

Moreover, one could make a strong argument that the finance industry drove the technological and industrial innovations that have improved quality of life the world over.

In a perfect world, we all would have ample liquidity to bankroll all our purchases. Interest expense would be nonexistent. But in a balanced approach to pursuing life, liberty and happiness, interest expense may be a small price to pay for the progress it provides.

Kevin Thompson writes weekly for The Boerne Star in the Texas hill country. He can be reached at kevin@kwt.info.


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