Phil Hauck's TEC Blog

Monday, July 19, 2010

Comeback America: Turning the Country Around and Restoring Fiscal Responsibility, by David Walker

A very interesting book, well worth your time if you're concerned about the implications of the deficit. David Walker was head of the Government Accountability Office from 1998 to 2008, so has uniquely good insights into the challenge, and has recommendations. He maintains he's still positive that we can come back, but I don't see why. He says the changes have to be made soon, and it's unlikely they will be.
Some of his thoughts:
• Pentagon: "This huge bureaucracy is the only major agency whose books are so jumbled that it cannot withstand a financial audit." "Too many decisions are made based on local economic considerations rather than our national interest." (i.e., a political leader needs a contract.) "The financial cost of recruiting National Guard and Reserve volunteers: Rather than modernizing the model, money is thrown at it. Those who have compiled ninety days of aggregate service qualify for an enhanced GI bill that pays full in-state college tuition and fees, a monthly housing allowance, and a annual stipend for books and supplies. They are also eligible to be part of the military health system with its huge subsidies."
• Priorities: Require measures. Baseline national health care performance according to coverage, cost, quality, personal responsibility, and other factors. America's results with those of other industrialized nations." "At the bottom of the priority list we might find federal subsidies to sugar farmers, which were put in place during the New Deal, and will total $1.4 billion between 2008 and 2017. Should the federal government be subsidizing this "white tobacco," a leading contributor to our obesity epidemic?"
• "The government has overpromised and under-delivered for far too long. How can we fix things? Will we cut benefits, those mandatory payments that are chiseled into law? Or will we raise taxes to onerous levels? We will probably have to do some combination of both. That is, we will have to renegotiate the social contract with our fellow citizens and raise taxes. However we do that, our kids iwll pay the price. And the bigger the bill we pass on to them, the bleaker the future we will bequeath to them. ... So much of their money will be devoted to keeping the government afloat that they'll have relatively little for everything else in life. Their homes will be smaller and drabber. There will be less to spend for cars, vacations, dinners out, and big TV sets, all of which their parents took for granted."
In addition, he talks about the Social Security commitments whose funding has always been spent on other things, and of course, the health care challenge, pointing out that other countries put limits on how much will be funded by the government. He has lists of solutions that he proposes.

How You Say It Is All-Important!

In an article in the current Harvard Business Review, "Stop Trying to Delight Your Customers," authors Matthew Dixon, Karen Freeman, and Nikolas Toman cite this example:
The lighting company Osram Sylvania sifts through its call transcripts to pinpoint words that tend to trigger negative reactions and drive repeat calls -- words like "can't, "won't," and "don't" -- and coaches its reps on alternate phrasing. Instead of saying "We don't have that item in stock," the rep might explain, "We'll have stock availability of that item in two weeks." Through such simple changes in language, OSram Sylvania has lowered its Customer Effectiveness Score from 2.8 to 2.2 -- 18.5% below the average we see for B2B companies.

Wisconsin/Green Bay Econ. Devel. Rankings: Not Good! Shouldn't we be reacting? Or don't we care?

Recently, GB Chamber Economic Development VP Fred Monique gave a Wisconsin economic development overview to the Bay Area Community Council, which showed some disturbing facts about our state, if we care about economic growth:
1. Wisconsin ranks in the bottom half of states within the definition of "Pro Business". In 2009, it was ranked 35th.
2. How does our MSA rank?
• On current economic strength: 48th out of 366 areas in 2010, better than in 2009 but down from 20th in 2005.
• On initiatives to create jobs and growth: 171st out of 200 areas. (We're slipping in providing incentive.)
3. How does Wisconsin rank regarding factors considered by corporations for location expansion decisions?
Importance: Very High
Corporate Income Tax Ranking Grade: C
Importance: High
High School Completion Grade: B
College Attainment Grade: C
Right to Work Grade: F
Individual Income Tax Ranking Grade: F
Business Inventory Taxation Grade: A

In addition, Chief Executive magazine released a survey of CEOs looking at the best states in which to do business, and Wisconsin came in 42nd.
Number 1, again, is Texas, and Number 51 is, again, California.
Areas assessed: Taxation and regulation (we're a D), quality of workforce (B+), and living environment (B-).

There should be good questions for state government political candidates in these results!