The U.S. economy is in a self-fulfilling death spiral propelled by mistrust. There is a good chance that the same thing can be said of your industry, your employer, and your career.
Growth requires investment, and that requires confidence. You can’t cut your way to sustainable growth.
When trust is absent, people naturally protect their immediate self-interest. This will occur even if it leads to their long-term individual and collective undoing.
Examples are everywhere:
• Consumer confidence fell from 59.2 in July to 44.5 in August according to the Conference Board. The economy won’t grow until spending increases, and sustainable spending will not happen until trust in the future improves.
• People are abandoning investments that would contribute to economic growth. Gold, not stocks or real estate, is viewed as the best long-term investment according to a recent Gallup poll.
• Non-financial corporations in the Standard & Poor’s 500 were holding a record $837 billion in cash at the end of July 2011. This is money that would normally be invested in goods, services, or people.
• Trust in government to do what is right – especially at the federal level – is at an all-time low. The bungled debate and negotiation over raising the debt ceiling was simply the latest example of both sides protecting their own interests to the exclusion of what is best to generate confidence.
• 52 percent of American companies reported difficulty finding the right talent to fill jobs according to the Manpower Group’s 2011 Talent Shortage Survey. This issue isn’t the lack of people. It is the lack of trust that available people have the skill sets required to succeed in the job.
The Missing Ingredient
Several factors must be in place for an economy to grow:
• Confidence that the future brings opportunity from consumers, business owners, and governments
• An educated and available talent pool that can do the jobs that are needed
• A predictable, consistent set of regulations under which companies are encouraged to grow
• Reliable infrastructure to meet the needs of those who depend on it
• Available capital to fund expansion
The common ingredient in each of these is trust. We’re not talking about character. The mistrust that handcuffs us is driven by a lack of competence, consistency, communication and most important, courage.
Are We Screwed?
Corporations could take the first step. They have record profits and lots of cash. But, they are playing defense rather than offense. It is hard to blame them. They have just gone through the gut-wrenching process of retrenchment. And, few have any strong degree of confidence about where the regulatory environment will end up.
The banks could lend more money. But, they are still carrying toxic assets on their books. Their mentality is that it is better to preserve cash in case they need it later. There will come a time when they have to loosen credit to make money, but that isn’t a widespread strategy today.
Small business can and will look to grow. But, it will be difficult for them until a few of the other groups take action. We are on the precipice of the next great entrepreneurial generation, but they need help.
Consumers could pull us back into growth. You understand their being tentative, however. And, is that really what we need this time around? Unbridled consumer spending fueled by unsustainable debt contributed to the crisis we are in today.
The government could be the catalyst for jump starting growth. It has the resources. Unfortunately, we are entering the prime campaign season where action is often replaced by rhetoric.
Ultimately, trust and growth are driven by leadership that sees and advances toward a positive future. So who will show the courage to step up and take action?
It’s time for business owners and managers to stop playing defense. The one thing you can control in business is what you do. Be prudent, but realize that the great companies of tomorrow will be those that show courage today. Create an environment that attracts and retains top talent who appreciate the opportunity to contribute.
Individuals must take responsibility for developing and sustaining skills that makes them employable. There are vacant jobs out there. You can, at the very least, increase your employment options. Once you do that, start investing in the future.
And if you are an elected official reading this, you don’t have to do it all. You really don’t have to do much at all. Just be consistent; show that you can play nice in the sandbox with your opponents; and make it easier for those who want to create and fill jobs.
The only way to break the self-fulfilling death spiral is for someone to show some courage. Will it be you?