the Invisible Hand

Nothing heats my blood more than the blind indifference I feel from society, government, and large organizations. Although there is an awakening occurring in the country as exemplified by Tom Peter's "Brand You,” Daniel Pink's "Free Agent Nation", and Mary Foley’s “Bodacious Women”, we are the most underappreciated segment of the country, and the world. I do not mean the occasional lip service from the political class - I mean by their actions.

Let me give one example that will serve as the rule - taxes. Have you scratched your head watching the debate on taxes; individual or corporate? If you had an economics class, you know people are supposed to be rationally motivated and act in their self-interest. So in the debate on who should pay and how much, you would expect the conflict to be between the rich and poor and yet that is not the case. The already rich act with indifference to tax policy, tax cuts, etc. Just think of Warren Buffets comments about the low level of federal personal taxes or property taxes in California - how can this be? It is because tax policy in the United States focuses on earnings, not wealth. The poor don't pay much if anything (the lower 50% - under $30k pay only 5% of the total tax) and wealthy do not pay on their assets, not on income derived from sheltered assets such as municipal bonds (which many times is tax free). It is the productive that support the system (the upper 10% - over $150k pay 67%), a tax on adding value! Moreover, if you follow this logic out, taxes have a consequence of adverse impact - the higher the tax, the less of that activity, less of that good produced, etc.

My intention is not to engage in a political dialog - what you believe and who you vote for is your business - my point is it's us - entrepreneurs and business owners who generate a considerable part of the countries GDP, provide the majority of jobs during expansion and job loss during recession. We were the 8.2 percent growth of the first quarter of 2004 and yet have no allies - we pay the bill for their avarice without the return. Why have we been ignored given the obvious significance of our contribution? My belief it is because we are an independent, disparate gaggle that does not join; we really do not want help from Sacramento, Albany, or Washington DC - otherwise we would have real jobs working for somebody else.

It is the same issue with large corporations. Most companies target B2B or B2C in their business plans while the entrepreneur/startup (B2E) is ignored. They think of us as the local mom & pop dry cleaners or sub shop, not people with dreams, aspirations, and the ability to grow into partners or competitors. They understand the numbers, almost 100% of us will go belly-up within 7 years, and ignore the reality we do not give up - we just start repeatedly until it sticks; one good contract or order from them would have made the difference.

Part of me wants to keep the secret - I loved the ability to take our small consulting operation against the big players - McKinsey or Anderson (Accenture) and steal the business. The truth is we are just like entrepreneur and owner. Examine a senior executive of any large and fast growing company and you will find our heart beating in their chests, our intelligence running their CPU’s. We are the heart, soul, and brains behind real growth in any economy. We suffer the brunt of the bear when the economy tanks and loose our fortunes, devastate our credit, and are forced to dodge foreclosure and bankruptcy as a result. There is no one out there with our best interests at heart.

Next time somebody talks about the invisible hand of the market - look in the mirror. It is not invisible – the hand has your face.

We will become visible because this new century is OURS!

Globization of the marketplace not only has companies competing everywhere, the same dynamic is happening to countries. Government is a very blunt instrument and is only effective when a hammer is the right tool, certainly not in circumstances that demand finesse. Globalization means governments really do not control their borders in terms of money and brains. Countries are finding that bad economic policy means flight or scarcity of capital and talent. I witnessed this first hand in Africa where the vicious cycle of bad economic decisions and the inability to entice investment capital (except World Bank loans for ill advised projects that provide little return except to the ruling class and put the country further in debt) leads to tighter currency and immigration controls. You want an example of the logical extension of government with upside down priorities - think Zimbabwe.