Mr. Fixit . . .

I will admit I grew up a while ago and the evidence is that I remember a TV show in the 50’s and early 60’s called Mr. Fixit.  In just a 15 minute slot, Mr. Fixit would show how to repair many of the common household appliances and plumbing and electrical problems around the house, as well as toys and other things.

All my life I’ve been more of a “Fixit” person than a “Debate” person.  I guess I believe that time is short and instead of talking and debating issues, it is more effective to get started on a solution, get something implemented, and then keep improving along the way.  That’s been my business philosophy throughout my career and it seems to also resonate well in the advisory work I do for CEOs.  I am not against debate, but while those who prefer to debate continue to argue, in many cases the situation goes from bad to worse, while those who get implementing have learned something valuable about the problem and are on their way to a solution.

Like most of the world, I watched the US Presidential race between Obama and Romney (actually it was hard to escape being bombarded by it for the past 6 months).  And for the life of me I don’t understand where the $1.7 Billion dollars spent by both candidates actually went, because neither of them used it to lay out specific actions or concrete plans to fix the deficit, balance the budget, improve health care, tackle the degradation of the climate and the planet, and bring America back to health.

A recent article in the Washington Post listing the spending on advertising shows that Obama spent $396M on advertising, of which 85% was negative ads.  In contract, Romney spent $472M, of which 91% was negative ads.  Okay, now I know why I don’t understand how they planned to fix the economy, they were too busy bashing each other.

We have become a nation of “debaters”, not a nation of “fixers”.

So, let’s suppose that we actually wanted to fix the US economy. I have my initial three point plan of action – initiatives if you like that word better.

Simplify the tax code:  The US tax code is so complex it is contained in 16,845 pages, printed by the US Government Printing Office. So complex that it has become relatively easy for major corporations to escape paying any tax. Currently there are 30 major Fortune 500 US corporations that over the past three years (2008-2011) have paid zero (none) US corporate tax on a total of $163B in profits. The tax code says the tax rate for US corporations should be 35%.  And there are 270 highly profitable US companies that have only paid taxes once in the past three years. (see the following report by the Citizens for Tax Justice).

To help their cause (pay nothing) these companies collectively spent $500M lobbying for tax breaks.  Assuming they actually paid their US taxes like all private citizens must, $57 Billion would have been available to pay down the debt.  As it is, it is the citizen taxpayer that must pay what the corporations don’t (won’t). If paying the least tax possible is an American right, then these are some righteous corporations!

The tax code is dead easy to fix.  Institute a flat tax, say 15-20% on everyone (except those individuals who are at a minimum level). Basically, you give the government 15% of everything you make and then you keep the rest, period. No exceptions. No offshore havens. No loopholes. Pay your fair share.

Suddenly, gone are the majority of tax accountants, tax lawyers and those working for the IRS (most of whom hate their jobs).  Gone are the long nights of figuring out your taxes.  Gone are the loopholes, offshore tax havens, billions spent on lobbying, etc. Simple and easy to administer.

Separate Investment and Retail Banking.  The current financial meltdown we experienced in 2008 was caused by the casino like behavior of investment banks having access to the capital put into retail banks by citizens who trusted their banks to be fiscally and morally responsible with their savings and their mortgages. For an excellent and readable paper on the current mess in banking, read The Origins of the Banking Crisis by Demetrie Comnas.

The solution is to reinstate the intent of the Glass-Steagall Act, which Senators Dodd and Frank tried to do in 2009,  that in effect separates investment and retail banks.  Basically the intent is to say to investment banks, gamble with your own money or the money of your wealthy clients, but not with money put into retail banks by average citizens. When you play with your own money it is amazing how responsible you become!

Then do away with the Federal Reserve, which basically uses government money to loan to big banks at minuscule interest rates.  It was the Federal Reserve which gave trillions in loans to banks that were basically becoming bankrupt prior to the 2008 mortgage meltdown. We don’t need to keep propping up the big banks.  Too big to fail should be seen as too big to succeed. Let them gamble with their own money, not the taxpayers money.

Overturn the Supreme Court Ruling on Campaign Financing: The reason we now have SuperPACs that can raise astronomical sums of money ($2.2 Billion was raised between the two candidates for the US Presidential race) is that the Supreme Court said it was fair for corporations to support political candidates.  And now we see in action the fact that politicians can be bought!

Why is Congress so deadlocked and not willing to compromise and get the country moving again? Because each side owes favours for the massive amount of funding it takes to get into office and stay in office these days. Why not put a reasonable and equal limit on campaign spending? If you can’t get your message across to the people in $X spending, what makes you think you can get it across with $10X spending?  And the money is not spent to come up with new solutions to fix the economy, it is spent on advertising (mostly negative ads) to get into power and stay there, and then come the favors that need to be repaid, hence the Congressional gridlock.

I have a few other “fixit” projects that the US should take on, but these three are enough to get us started down the road to a balanced budget and a robust economy.

However, it will take leadership with courage to get these, or other fixit actions, started.  My concern is not that these fixit initiatives won’t work (they will definitely improve things), but that we don’t have a leader, or leaders, with enough courage to take a stand for the future, not just for their election.  And more government spending and higher taxes will not lead to a balanced budget and fiscal responsibility.

(And the UK is facing similar challenges, especially when Starbucks, Google and Amazon pay almost no taxes on very large UK earned income and profits.  More tax loopholes!).

Tight Lines . . .

John R Childress

john@johnrchildress.com

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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11 Responses to Mr. Fixit . . .

  1. Great post. Why don’t you start a Fixit party and run for office? I would vote for that platform.

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  2. Suzan Joyce says:

    John: When 22 states start a petition to secede it truly is a time for change. Your outline is something I have heard from several different sources. Although my husband is a tax accountant he will be retiring next year and so I don’t worry about him losing a job…I do worry about the debt the US has and how in the world it will be paid down – in my lifetime. I just wanted you to know that you are definitely on the mark with you plan. Wouldn’t it be nice if you could get an appointment with the CEO of this country.

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    • Suzan: I am hoping that more and more people like you are looking for solutions and not rhetoric. We all will have to sacrifice something to get this great country back on its feet but it is a price worth the end result.

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  3. Raunak says:

    John, I agree with each of those proposals. I cannot state strongly enough the need to separate retail and investment banking. While studying derivatives, both equity and credit, I couldn’t help but feel that the system had turned into a game. The over-complicated tradable products were nothing but disasters. It was gambling where the players were the bankers while the real risk takers were the public. It was their money at stake while the rewards were being reaped by the bankers without much accountability.
    Flat tax is the need of the hour in every country. But the lobby against it is too strong. All the Chartered Accountants would lose their earning opportunities.
    As far as campaigns go, in the ones that I have managed, I have seen this utter wastage of funds on absolutely ridiculous things. Candidates need to learn how to better channelize their funds. I expected Romney to use his funds in setting up voting day mechanisms that would ensure a higher Republican voter turnout, especially in the battleground states.

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  4. Socially liberal and fiscally conservative I hope. That would be a winning ticket. The Republicans still don’t get it.

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  5. Good Deed says:

    Great to read first post, and than comments. It looks like you know what you are talking about. I have nothing to add since it’s not my field. But glad to read opinions from someone who knows knowledge…

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