Monday, December 29, 2008

Warmest Wishes in 2009

Legacy institutions are partially to blame for our country’s current recession. America has industrial-age business models functioning in a twenty-first century governed by knowledge workers and technology. Unfortunately, the automotive industry, government (think public schools, Social Security, Medicare/Medicaid and the postal service, for starters), airlines, printed news and people are struggling to adjust to the realities of today’s marketplace. Some have already gone along the wayside, like Anheuser-Busch!

As I have disdainfully listened to the debate on bailing out the auto industry, I am reminded about how many of the aforementioned industries in our country need change, but not in the form of a taxpayer bailout. I’m reminded of the system of government that we have adopted in America called capitalism. Pure capitalism was conceived as a self-regulating and self-adjusting economy, which does not have significant economic intervention by government. So, how did we get here?

America has become a country where failure is not an option even though our economic system demands it. This holiday season, my family has counted our blessings as we have friends and family members out of work, struggling and wondering when the recovery will begin. For the most part, they are victims of a culture of culpability, not their own. At its core are some American industries’ refusals to change from doing things the way they have always been done.

A few suggestions:

Auto makers might consider eliminating the dealer model. Bargaining at a point of sale for a product which has fixed costs that do not change once the car is off the line does not make much sense. The out-of-work sales staff of dealerships is a victim in the change. Also, the obvious reorganization of union contracts is a must.

Social Security needs to be privatized so people can safely invest their retirement in interest-bearing accounts that they control, not the government. The current “Social Security Trust Fund” model is inaccurate. There is no trust and there is no fund. Also, raise the age. Americans live longer today than when the program was started.

Medicare and Medicaid need to be completely overhauled. It is so convoluted that this blog does not have time to discuss. Gov. Bobby Jindal (Louisiana) has good ideas.

Public education is broken, but hope abounds with variations of private fee-for-service schooling models popping up everywhere. The Constitution does not specify that the government should pay for schools. Lets blow up the current model and have a mix of public, private, religious, charter, etc. schools from which parents can choose. They should be publicly subsidized, but not at today’s levels. Each community should choose a mix that is right for them. There is no one-size-fits-all.

The United State Postal Service needs to be sold to Fed Ex or DHL (or the highest bidder). This is an easy one.

Airlines are above water today because of low gas prices. All legacy airlines need to reorganize and adopt a better business model (think Jet Blue or Southwest). Some may actually try to predict future consumer behavior like personal air travel on smaller jets. Also, the obvious reorganization of union contracts is a must.

Printed news is almost dead. In an obvious innovative move, the Detroit Free Press and the Detroit News plan to go paperless. Printing a paper and delivering it to consumers’ door is no longer a requisite for news gathering. Especially when the internet and radio and television can deliver the same news. Dogs everywhere may protest the elimination of picking up the paper for their masters. Plastic sleeve makers may go out of business. Thought leaders will still read the news and opinions of the day, but maybe not in print. Advertisers will still buy online and in limited print.

People need to adjust as well. With a new administration coming into office, the euphoria of new entitlement programs is sure to grip hard-working Americans. People must resist asking the government for a further bailout. Times are changing. Two hundred-plus years of capitalism has served America well. We will emerge from the recession a stronger country only if our behavior changes and we believe in overcoming personal challenges. Legacy institutions are part of the problem. We need them, but we need them operating from the realities of today’s economy.

I’ll save what this means for the future of public relations for another conversation. Next week (yes, this time I mean it) I will blog about my New Year’s resolution accomplished.

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