A visitor to my blog recently asked:
“I’m interested in your perspective on the recent government stalemate regarding the debt ceiling. Is this a total disregard for serving the public or rather two sides that are firmly looking to serve their constituents? Your book addresses how to reconcile the seemingly different objectives of pursuing revenue and customer satisfaction. How would you apply the same thinking to this problem?”
In business, the debate nowadays is less about revenue performance – or more correctly, earnings performance – versus customer satisfaction. That debate has largely been reconciled although, in truth, much lip service still surrounds the need to serve customers with alacrity. Executive leaders are now nearly unified, however, in their belief that a satisfied customer is a most desirable long-term corporate objective.
The battles that now rage are more tactical and center mostly around the planning horizon over which the benefit of achieving high customer satisfaction ratings should be measured. Most executive leaders, unfortunately, are still of a mind that undertaking initiatives on behalf of the customer are fine if the benefit of such initiatives can be seen on the bottom line in the short term. This behavior, of course, is born of ingrained compensation schemes that reward executives for financial performance, this month, this quarter, this year. And, until such time as this myopic view of corporate performance is altered executives will flail in pursuit of sustainable competitive strategies while ironically lining their own pockets at the expense of shareholders.
THE DEBT CEILING DEBATE: A FINGER IN THE EYE OF THE U.S. TAXPAYER
Our political system lacks a unifying principle or metric, other than the vague aspiration of serving the public and providing for the “common good,” to guide the actions of elected officials. The upshot of such ambiguity is that if in our wildest dreams we could imagine a Congress populated largely by self-less public servants the lack of a concrete metric to gauge the so-called common good would lead to endless divisions and debates. Clearly, if a metric lacks clarity prescribing a course of action – never mind judging the merit of an action – is hardly an objective exercise.
The debate over the debt ceiling referenced by the reader is a telling case in point. Total public debt in the United States is currently running at 105% of GDP [in the 1980’s, the ratio of debt to GDP hovered around 30%]. As a consequence, each U.S. taxpayer now carries approximately $154,000 of national debt on his back. This is roughly twice the debt-load citizens carried when President Obama came to power. That administration was all about spending, driving total debt from around $10 trillion – or about 67% of GDP – to roughly $20 trillion, while stifling GDP growth by enacting endless regulatory roadblocks, and raising taxes. It is no wonder that the nation’s annual growth rate of 2% was the slowest in almost a generation. You don’t have to be an economist to conclude that our nation’s lot has not improved over the last ten years and it can be argued, quite convincingly, that it is twice as worse off.
Political leaders in other countries, in contrast, have become more responsive to their citizens by coalescing around a national metric of financial prudence. Countries such as Switzerland, and Germany, have instituted “debt brakes” to keep spending within specified limits subject only to emergency conditions. Others, notably Poland, have constitutionally mandated debt-to-GDP ratios.
The U.S. Congress, despite jawboning the matter for decades, has failed to set a similar objective standard of performance for which we as citizens can hold its members accountable – at least insofar as the nation’s debt management is concerned. It is true, that a coterie of GOP senators has long argued for instituting spending cuts to offset debt limit increases but their enthusiasm for such an initiative has never been shared by the big spenders across the aisle. And, so the hobos dance around the barrel fire while taxpayers endure an eroding standard of living.
When the reader asks if the stalemate over the debt ceiling constitutes a total disregard for serving the public the answer must be a resounding “yes.” The behavior of politicians in this debate has been nothing more than political theatre and posturing. And, until unifying principles emerge that can rally a bi-partisan Congress to satisfy the will of the people the answer will continue to be “yes.”