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American Heart

Even if I didn’t have a passion for business, I would still be an avid reader of The Wall Street Journal; I think it’s the best example of old-school journalism on the national scene. It is to business what my favorite magazine, Sports Illustrated, is to sports: It lays out the good, the bad, and the ugly, with a characteristic assumption that the reader is smart enough to tell the difference.

Yesterday, WSJ published an article that sent me to the Internet to find and listen to a song I had not heard before. I love the song and the vibrant, often familiar, images shown in its video presentation on YouTube.

Before you watch the video, take a moment to read the story behind the song and why its author, “John David” has gone incognito until now. You can read the article by
clicking here.


Maxine Weighs in on Health Care Reform

When Maxine weighs in on a subject . . . I pay attention, so here’s her take on the recently passed Health Care “Reform” Bill:

Let me get this straight . . .

We're going to be gifted with a health care plan,
written by a committee whose chairman says he doesn't fully understand it,
passed by a Congress that hasn't read it but exempts themselves from it,
to be signed by a president who also hasn't read it and who smokes,
with funding administered by a treasury chief who didn't pay his taxes,
to be overseen by a surgeon general who is obese,
and financed by a country that's broke....

What could possibly GO WRONG? Only in America!

A Not-So-Merry Christmas for Business

I hate feeling gloomy at Christmastime, but it’s hard not to. It’s now obvious that Congress is giving us a most unwelcome Christmas gift in the form of their massive health-insurance reform bill—even though the bill itself will be largely unknown to the Congressmen themselves, and completely unknown to the public and press. And just in time for an “historic” Christmas Eve vote, that is likely to go down in political history as one of the most cynical political maneuvers of all time . . . one that could possibly foment a grass-roots citizen revolt. I suspect life is about to be made as miserable for Democrats and Republicans as the past four months have been for concerned citizens, especially business people. This is not what I had expected to be contemplating over the 2009 holiday season: Last Christmas, I truly believed that by now we would be seeing a resilient private sector leading the way to economic recovery; that’s before I figured out how irrelevant the U.S. Congress and the Obama administration believe business people are to the country’s fiscal health. They really BELIEVE that more government is the answer.

The vote will be historic all right: The more than 3,000 pages of legislation promulgated by the House and Senate does make clear that the “reform” will represent the largest expansion of government since the New Deal; its more than 100 new regulatory agencies that will stand between you and your doctor are just the beginning. And this massive overhaul of one-sixth of the American economy (by the same folks who can’t balance a budget) will be done without the support of a citizen majority, which will either further poison the political well or hasten the revolt against the legislators who have made such a colossal hash of an issue that Americans want to be resolved in a common-sense manner.

I don’t know any business person who doesn’t want to see reform in our health delivery system that will allow portability, cover pre-existing conditions, and reduce costs so that individuals and government units can pay for reasonable coverage. Yet decade after decade government illustrates that its bullying cannot reduce prices, but the free-market can. However, free-market solutions are impossible when government controls insurance commissions and won’t allow competition across state lines; when government actually discourages tort reform; when government says it wants to hold down fraud and abuse that even IT admits is rampant in the bureaucracies it created, but then sees only more bureaucracies as the medicine to prevent it; when the Federal government refuses to implement the good-delivery models that some states have achieved on their own.

So I fear it will be a very blue Christmas for the business sector and for Americans who wish to retain their economic, social, and personal rights to health care centered squarely on an unfettered doctor-patient relationship. Even Mother Nature and 15 inches of snow couldn’t bust up the Congressional Cut-and-Paste Club that is determined to pass SOMETHING since the President has said that he will sign ANYTHING. Do it quickly, while the country is preoccupied with the holidays and digging out from under the snow!

This will be a victory for the ages—if you are to believe the tele-prompters—because America has been waiting for this since the 1940s. Hmm. If my parents and theirs could hear that fractured view of history, they would be laughing, then spinning, in their graves. This country’s inexorable march to socialized medicine was a subject of their great concern for most of my growing-up years, because my family had first-hand experience with government-run health care: We all spent many hours sitting in military dispensaries waiting to see a corpsman or nurse. Because I was prone to pneumonia as a child, my parents would pay out-of-pocket for a civilian doctor when I got sick, rather than subject me to the rationed care of our
free “single-payer system.” And they did the same for my grandmother, who lived a wonderfully productive life into her mid-nineties, free from fear that advancing age might foreclose sensible medical options.

To cause this amount of national dismay in the name of cost savings, is what galls me the most: Press and politicians alike have conveniently overlooked the phony-baloney math that undergirds this sham: ObamaCare requires FOUR YEARS of tax collections before the first year of “restructured benefits” (costs) kick in. How convenient: You get to run your new business with four years of revenues to make sure your first year in business will be “revenue neutral.” Oh yes, the cost-curve will “bend down” after that, they say. Right. Just like all the other innovative government programs whose upward-bending cost curves could turn hard-core Pollyannas into teeth-grinding poly-cynics. It is simply stunning that this bill requires 4 years of taxes to pay for 7 years of mandates. Once you understand this bizarre calculus, you understand the we’re dealing with a house of cards built on a massive ponzi scheme: Bernie Madoff Goes to Washington.


I’m very pleased to see that PPA has weighed in to tell the Senate that their bill is not good for photographers or other businesses. And they are encouraging all of us to contact our represesntatives. Please do. Even if they don’t listen. Keep it up; if you don’t raise your voice you’ll never be heard. To read PPA’s statement,
click here. PPA’s language was a lot kinder than mine would have been, but I’m really proud that my association is taking a stand when so many other organizations with constituencies that will be hurt by this legislation have either been paid off or are too fearful of Federal power to speak their mind.

The saddest thing of all for me this Christmas is seeing heartbreaking story-after-story of the hard times so many families are enduring because of joblessness, and knowing that their only hope for better times ahead can be provided to them not by bigger government, which serves to put the breaks on free enterprise, but rather by the private sector, which is the creative engine of job growth. It simply IS. Government can tinker around the edges, but it cannot create a robust and “real” economy. As they always do, businesses that are weathering this economic downturn are doing so by making the hard decisions and creating the out-of-the-box actions that government, by its very nature, finds impossible to manage, largely because its ranks are dominated by unions that demand wage and benefit increases, even in the face of a fiscal crisis and at times when the business sector obligingly downsizes, reinvents itself, and pulls its own weight so that government can hitch a ride. No big news here.

But there is something very new at the heart of this story, and for me it’s pretty chilling: Historically, government has respected and encouraged the unique roll the business sector has played in restarting the U.S. economy during hard times. But the table below made me wake up to why the Obama administration has been so indifferent to and even hostile toward the private sector. It points strongly to the unprecedented lack of private sector experience in the Obama cabinet and goes a long way to explain why the administration thought it could placate the business community with a one-day “Jobs Summit” attended by some big-business political allies, union bosses, academics, mayors, and non-profit representatives, while denying access to the three major advocates for business owners: The U.S. Chamber of Commerce, the National Foundation for Independent Businesses, and the National Association of Manufacturers. What a charade! They weren’t invited because they oppose the pending health care legislation. In the end, ideology trumped job creation, and the Great Recession has just become even harder to reverse. The chart below speaks volumes.

And as we near Christmas Eve, word is now leaking out about the sleazy backroom deals that Harry Reid cut to literally—LITERALLY—buy the votes of recalcitrant Senators: A veritable holiday tableau of what the public hates most about politicians, brought to you by the folks who promised change in business-as-usual Washington. Give me a break.

I’ve started my 2010 Christmas list a bit early: I’m keeping a list of the breathtaking deals that were cut to make this 2009 devastating “present” to the American people possible. I’m hoping that as fellow citizens see exactly how business is being conducted in Washington, some of the fine folks who sold out their constituents will find a way to put some coal (or other fossil fuel) in their stockings next November. Perhaps I’ll post something about this next year.

In the meantime, I’m heading for a family holiday in Deep Creek, and as it should be in this glorious season, I’m taking a most welcome time out from the real world.


Goodbye August . . . Glad to See You Go!

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Democracy in Action - August 11, 2009

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Health Reform or Massive Power Grab: You Decide

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Tea Anyone?

While I was in Ireland, I missed all the news about the Tea Party protests that were being organized for Income Tax Day on April 15. But I got home in time to see the news coverage . . . what there was of it. I was pleased to see ordinary citizens who are concerned about the direction of U.S. financial policy take to the streets. Since I teach and write about small business issues, I’m just as upset about what I consider to be reckless financial policy as the protesters. So I was delighted when I received the image above from my dear friend Helen Yancy. She took this picture of her husband, Foster, during a protest near her home in Plymouth, Michigan. Foster’s “Extremist” sign was prompted by a remark made by Michigan Gov. Jennifer Granholm who publicly referred to the upcoming protest as being organized by political “extremists.” Here’s the letter that Helen sent on to the Governor:

I am appalled that you disregarded the efforts of ordinary people like me and my husband and referred to the tea parties as "organized by the right extreme". This truly was a grass roots effort. I learned about it by accident, from a friend - and I am no activist, have never been to a demonstration before in my life, nor has my husband - but we decided to go, and stand up for what we believe in. We are not right wing extremists - we are patriotic Americans. Your off-hand statement diminishes us, and every American who has the right to differ with you. These were peaceful and patriotic rallies, the kind our forefathers attended. American history abounds with grassroots demonstrations when the people decided to stand up and be counted because we are troubled. I am very disappointed that you would make such a demeaning statement. Today, hundreds of citizens agreed with our stand, all around the state - people like us - ordinary people

I share the concerns that Foster and Helen expressed because I believe that so much of our government’s reaction to the current financial crisis will make it harder for small business to recover and prosper for lots of reasons that you could hardly call the fears of an extremist. For the record here are my concerns:
  • Without any debate among our elected leaders, our government has assumed authority to provide tax-payer subsidies that effectively decide which business will succeed and which will fail, rather than letting the free market dictate success or failure.
  • Congress has passed a stimulus bill without debate and without reading it, and apparently without much stimulus.
  • Without any debate, our government used tax payer’s money to bail out and take over banks and mortgage lenders and insurers, thus rewarding failure and not punishing wrong-doing in the process.
  • Congress has voted to confirm administration officials who can’t understand the tax code well enough to pay their tax indebtedness, and has given them a pass on what would be punishment for everyday taxpayers.
  • Congress has completely ducked the issue that the mortgage crises was largely brought on by the government’s insistence that Freddie Mac and Fannie Mae issue sub-prime mortgages to people who clearly could not afford to pay for them.
  • The Obama administration campaigned on a pork-free budget promise, then rolled out a national barbecue that doubled the dreadful Bush debt.
  • The Fed chairman Bernanke responded by printing a trillion dollars to capitalize the economy . . . doing so with no debate and with full understanding that this action could trigger hyper inflation.
  • The Government put a tax-the-rich target on the back of anyone earning $200,000 or more, one of the most hurtful of all possible strategies for small business.

So who are the extremists here: A government that has spent more money in a few short months than all administrations put together since George Washington, or every-day Americans: working people who love their country and who are alarmed about a government that is trampling on citizens’ economic liberties by creating taxpayer funded programs designed not to make the poor richer, but rather to render the rich poorer?

I don’t believe we’ve seen the last of the tea parities: What do you think . . . Tea anyone?

Polinomics 101: A Big Week for Federal Follies

It was hard to keep your eye on business this week, what with the incredible fist-banging-hair-on-fire-garment-shredding-rhetoric of both Republicans and Democrats in D.C., which was occasioned by the revelation that the very folks who brought on the need to bail out AIG Corporation with at least $170 billion in taxpayer money (yet to be collected from us) would be receiving some $165 million in “retention” bonuses.
  • Never mind that this $165 million payment represents only one-half of one percent of the recent Congressional Spending Orgy.
  • Never mind that the Congressional Budget Office reported that the budget deficits will average almost $1 trillion a year over the next decade, which is $2.3 worse than the administration is predicting.
  • Never mind that the guy they are now blaming for knowing about the bonus debacle (Treasury Secretary Timothy Geithner) is the same guy that couldn’t figure out his self-employment tax when his employer sent him a cheat sheet on how to do it; that was O.K., but knowledge of the unpopular bonuses . . . oh no!
  • Never mind that Mr. Geithner is home alone, with no assistants in the Treasury Department to help because of now-impossible ethics hurdles.
  • Never mind that the issue of the toxic assets that pollute the financial system continues to languish.
  • Never mind that while no one was looking, history was made on Thursday, when Federal Reserve Chairman Ben Bernanke printed $1TRILLION so that the Fed can begin buying debt from the Treasury; yes . . . that means moving money from one pocket to another; so Bernanke is either a world class genius or scarier than Alan Greenspan.
  • Never mind that it was New York Attorney General Andrew Cuomo who uncovered the bonus mess by reading the documents that the media failed to read and report on . . . and it looks like he’s still diving for the iceberg itself: if you want to know who did what at AIG, log on to Cuomo’s Media Center section of the AG website.
  • Never mind that the media still refuses to investigate the tough and most relevant question: the relationship between government and our failing financial institutions.
And the Biggest Never-Mind of All: An embarrassing number of this week’s Caterwauling Congressmen (Dems and Reps), who were determined to “punish” the greedy, voted for the recent omnibus spending bill that made this greed possible. So far none has stepped forward to say that he or she actually read the 1,000-page document, along with its 10,000 pages of reference material. God knows what will pop up next.

The Congress-Members-as-Populists-Parade was really quite a sight to behold this week: almost as interesting as watching a wild-west sheriff try to clean out the whorehouse by shooting the piano player.

Stay tuned . . .

Back to Basics

Over the last few months I’ve talked with a lot of people whose business skills I admire about where current economic challenges are pushing the photography industry. More importantly, I’ve been observing how photographers that I see through teaching and consulting are faring. I’m getting some pretty interesting anecdotal evidence from a variety of photographers in various stages of the business lifecycle, from beginners to veterans. Instead of reporting my observations as The Good, The Bad and The Ugly, which I did last fall, I’m labeling them as the Challenging, the Uncertain and the Hopeful, leaving the Hopeful until last because there is quite a bit more of it than you might think.

The Challenging

The potential for a wave of consumer optimism that sometimes accompanies the election of a new president—one that I believe was universally hoped for by both Democrats and Republicans—has failed to materialize. It has been overwhelmed by a free-falling stock market as well as news of banking chaos, business closings, job losses and political rancor. Until consumers get over their fear of the unknown—or learn to live with it—most businesses, including photographers, will be in for a struggle.
It doesn’t help that the explosion of new photographers in the industry over the past five or so years has created chaos for both photographers themselves and for consumers who are bewildered by marketplace extremes in pricing and business practices. The addition of so many newbies in such a short time has destabilized the industry because it has escalated the number of fragile businesses in several categories: hobbyists who don’t care about being profitable as long as they are bringing in a few bucks; wannabes who don’t know what’s up; once-profitable businesses that have not responded properly to increased competition, old-time businesses that are in decline; newer businesses that are just holding on; and marginally profitable part-timers who would collapse if they went full time prematurely.
Economic downturns always shine light on one of the real downsides of running a small business: Most small business owners in distress have fewer jobless benefits than company employees. This is especially concerning at a time when health care premiums for non-group plans are increasing dramatically.

The Uncertain

The possibility of a bipartisan approach to solving economic problems appears to be doomed. In its place I believe we have entered into an era of heightened “polinomics,” in which we will witness an epic struggle between two long-standing ideological factions: the proponents of big government as the solution to economic pain and those who believe that private enterprise is the best engine for creating economic growth. The outcome of this struggle is likely to determine the length of the current recession and possibly even the future character of America and Americans. Of all the challenges we face, this causes me the greatest concern because it most directly affects the future of small business and the economic legacy that we pass on to our children and grandchildren. I fear that hastily adopted, short-term economic solutions are most likely not the best long-term solution for America. This is, I believe, the lesson of history, and it is being obscured because of a willingness of bureaucrats and citizens alike to accept that we are “in uncharted territory.” Several months ago I pretty much thought this to be true, but that was before I started digging into economic history. This is something I hope many small-business people will do, then draw their own conclusions and make their voices heard to their elected representatives. I say this because I am just cynical enough to believe in the wisdom of the well-known quote of economist Thomas Sowell:

The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.

In the brave new world of polinomics, few things are clear except for the fact that politics and economics always make uncertain bedfellows, especially for those who are sleeping on the floor and kept awake by their snoring.

The Hopeful

  • This might sound strange, but I believe that the very best news there is for the professional photographic industry is the fact that most—and I do mean most—photographers are not very good at business simply because they never try to be. When they get over their fear of, their loathing for, or their indifference to business principles and finally start to learn what they need to know, their progress can be stunning. I see it all the time. Every week I get encouraging emails and notes from students who have achieved impressive successes because they grasped the tools they were given in class and did nothing more than put them to work. So I am convinced that many photographers can move forward during this recession by reading a book or taking a class or implementing well-known success strategies that are not as much fun as trying new photographic techniques or buying more photographic stuff.
  • Small businesses have greater flexibility and can more easily adjust to changes in the economy than their larger counterparts. You probably know people whose jobs have disappeared or who recently received pink slips tucked into their paychecks. They have far fewer options than those of us who have learned to work by our wits. Even though the marketplace for photographers may be difficult for a while, we can change directions, use our creativity, and start thinking outside the box. This may mean cutting back regular studio operations several days a week to save on expenses and use other skills to get different kind of business, such as helping families to create decorative wall groupings from their family portraits and snapshots. And recognize that you can cut back your expenses a lot more than you know. So take a deep breath, push away the tendency to panic when your phone is not ringing as much as usual, and make use of the character-trait advantage that self-employed business people have over those who depend on others for their livelihood: self-reliance. You have more options than you think.
  • I’ve always believed in the business premise that you should never underestimate the value of a good crisis . . . another way of saying that when the economy gives you lemons, open up a lemonade stand. The fact is that smart business owners view a crisis as a wake-up call to buckle down, refocus, assess options, recognize opportunities, and restructure for future profitability. I know this to be true because Jim and I opened two businesses during recessions, and we bought our vacation home on the tail-end of another, as we saw its potential as a rental property. Was any of this easy? No. But it was possible because we learned from past mistakes, worked the current problem, and didn’t panic. Perhaps we were too tired to panic :-).
  • One of the harsh realities of a recession is that some businesses will not withstand it; but it is also a fact that the “pruning of the business tree” infuses life in the ones that are left. This is bound to happen in the photography industry.
  • One of the often-overlooked benefits of a recession is that local business people who trade with a similar market are often more willing to engage in partnership marketing than they might be otherwise. So seize the initiative and invite several non-competing vendors to go to lunch with you to talk about cooperative marketing ventures, such as a charity event or a “night out” that will lift people’s spirits and call attention to your businesses.
  • The best way to make the most out of times when people are down in the dumps or shell-shocked by media scare-mongering is to reach out and touch your clients. Take a few loyal clients to lunch to see how they are doing. Ask their opinions about new directions you are considering for your business. There is nothing more valuable than seeing through the eyes of an intelligent, caring person who is interested in what you do. As my good friend and Marketing Goddess Carol Andrews often says: “You can’t read the label when you are inside the bottle.”

Recently I’ve been asked the same question over and over: What should your marketing message be when consumers are fearful of the future? In my opinion the answer to that question is no different from what it should be in good times: It’s the value of thoughtful, artful photography in the lives of the families we serve. People know this, but they forget it until the water is rising or the brushfires are threatening, and inevitably the first belongings they pack are their family photographs. In bad times and good, we have to be better storytellers, because the benefits of what we sell are so much easier for the heart and the mind to recognize than all the “stuff” that so many retailers have a hard time defending during a recession.

At last month’s Studio Management Services workshop in Atlanta, Carol Andrews brought along a full newspaper page ad for De Beers, the diamond company of “A Diamond Is Forever” fame The ad talked about “ living in different times,” and the importance of “fewer, better things.” They clearly understand how to communicate the value of a product that last and grows more valuable every year. This sentiment could just as easily describe the portraits that comprise the history of a family.

Last Saturday I spoke to my blogging buddy
Carrie Viohl, who called my attention to a wonderful Allstate TV commercial that delivers a similar message . . . about how families get “Back to Basics” during hard time. It is illustrated with photographs, and in my opinion it reflects the perfect message for us to convey to our clients and for ourselves to take to heart about our businesses. If you see through these eyes, I believe you’ll conclude that we all have a lot going for us.

As the Allstate ad says: The basics are good.


Confessions of an Economic Conservative

Since I was a child I’ve been bullish about small business: By age six I was hand crafting woven potholders and selling them from door to door. A born entrepreneur, I guess, I instinctively understood that if I wanted to achieve a higher standard of living than what was afforded to me by the meager $.50 a week allowance my parents provided, I would have to get off my butt and learn how to earn money by my wits. Some 500 pot holders later, I was committed to the romance of entrepreneurship. By high school I had a part-time job in a department store, so that I could start saving for a VW bug. During college I earned $.50 a page typing manuscripts and term papers for fellow English majors and worked summers as a typist for an Intelligence branch of the government. I thought the Signals Intelligence job would be exciting, but all I did was transcribe tapes forwarded to the Army by a chronically inebriated operative whose job it was to map all of the public phones in Jamaica. This was my first taste of government waste . . . one that required a Secret clearance no less!

By then a streak of 60’s idealism convinced me that I wanted to become a senior high school English teacher, and my practicum experience teaching 11th and 12th grade English exceeded my hopes that I could make a difference in the lives of kids by exposing them to the power of language. This sense of purpose didn’t last long, as I quickly ran afoul of the local branch of the Pennsylvania State Teacher’s Association. A representative informed me that the union did not look kindly on how many hours I was spending after school helping students and meeting with parents, as it put undue pressure on regular teachers to do the same. I also received information on the union’s political positions, which included opposing English as the official language of the U.S., a position that in good conscience I could never support because I believe so strongly in the need for a common language as vital cultural glue.

So much for idealism . . .

By the time Jim finished his MBA studies at Wharton and we got married and moved to Annville, it was obvious that if I didn’t agree to join the teacher’s union my life as a public school teacher would be made miserable, so I decided to apply for a position at a local college; I wasn’t looking for a fight in those days. Many years later I would run up against the union again—during a eight-year foray into education politics—during which the confrontation escalated from slashed tires to death threats and finally to a physical attack by a union rep, which led to his arrest. But that’s a story for another day.

The local college hired me as director of publications (I was grossly under qualified), and later I was promoted to director of public relations. These jobs allowed me to finagle myself back into the classroom as a part-time journalism instructor, advisor to the school yearbook, and manager of several community internship projects involving English students. All the while I also did part-time feature writing for the Harrisburg newspaper, which allowed me to illustrate my stories with my own photographs. I had begun learning photography from Jim, who had become a hobbyist in graduate school, as well as from a very talented student photographer with the yearbook. When I won a local newspaper’s Kodak snapshot contest, I was convinced I had what it takes to be a pro.

The original soccer mom?

By the mid-1970s I was one of the few moms who kept on working after having kids, and my after-hours writing and photography jobs allowed me to purchase more equipment. I looked forward to the day when I could quit my job at the college and build a small studio in a garage that sat on the farm property where we lived. I guess you could say that I was one of the very first “soccer moms.” Those plans changed dramatically when Jim came home one fine fall day several years later and announced that he had decided to quit his well-paying job as general manager of a plastics company to help me start up my photography business that he now intended to join. That decision, which I fully supported, set into motion a series of events that severely jeopardized our then pleasant way of life and hopes for the future. In the process, I learned a lot about the banking industry.

Most of my business students know the story of how I came to owe $187,000 at 23% interest because of the bad decisions we made investing borrowed money at a time when America’s banking system was out of control and inflation threatened every family’s way of life. During this period, many hard-working farmers lost land that had been in their families for generations. Fund-raisers were held around the world for these American farmers, who, like anyone who borrowed money during this period, had been victimized by banks and savings-and-loan institutions that racked up commissions by convincing farmers and others like Jim and me to keep on borrowing because the value of our land was escalating, and it represented the vehicle by which we should fulfill our dreams. When regulators got nervous about this frenzy, lending institutions began calling in loans, and the house of cards began to collapse, precipitating what became known as the Savings and Loan Crisis. If you want to read more about the history of the origin and effects of this debacle,
click here. It illustrates that we’ve been down this path before, and it begs the question: Why are we repeating it again?

Surviving economic disaster

Jim and I were among the fortunate few who survived this bleak period by liquidating personal assets and working double shifts in the studio so that we could pay down debt. Early on I was fortunate enough to meet the late Bud Haynes, who became my business mentor; he made me understand that creating a business could be every bit as creative and rewarding as making photographs. Eventually, Bud recruited me to teach with him, which developed in me a sense of calling because of my gratitude to him and other PPA instructors who helped our business to succeed. Furthermore, I had learned so much from the School of Hard Knocks that I wanted to do what I could to help others from making bad business decisions. The experience also strengthened my awareness of the importance of sticking to fundamental business principles such as the importance of staying out of debt, creating a plan for every aspect of your business, and practicing fiscally conservative oversight in all affairs of business and personal finance. Having watched so much harm come from government manipulation of markets also hardened my belief in the wisdom of allowing free markets to function, even if it creates financial pain and hardship. Unfortunately pain sometimes is the ONLY path to wisdom and progress.

If you’re still reading, I want you to know that I’ve recounted this personal history as an explanation as to why I have more than a passing interest in the state of our economy. When the banking system began to implode last fall, I began using what little spare time I had to learn more about the worldwide banking system. (This activity is the main reason that my blog has been so quiet lately.) The more I studied, the more convoluted the subject became, and I began to understand how a nerdy guy like Bernie Madoff (whom the media inexplicably calls “charming”) could cheat his clients out of so many billions of dollars: When so few people understand the complexities of international banking, you can get away with almost anything . . . until the Ponzi scheme finally plays out.

One thing has become abundantly clear to me: The same kinds of greedy manipulators who orchestrated the Savings and Loan debacle were alive and well and flourishing in the 21st century, and if you peeked into their business plans, you could find
government lending a helping hand. I have no doubt that government bureaucrats (under both Clinton and Bush by the way) had very good intentions in promoting and tolerating sub-prime loans: They wanted to increase home ownership, a noble ideal to be sure. I doubt if they envisioned the spectacle of houses replacing land as the new free ride to the top. I’m sure they regret cracking open the door for lenders with visions of non-stop commission checks to break it down.

Bad behavior with the color of money

As an unabashed advocate of capitalism, it has been extremely discomforting to witness the parade of capitalists—especially those in the financial sector—behaving so badly; but I am mindful that layers upon layers of government bureaucracy make it so much easier for bad financial behavior to go unnoticed. It is instructive to note that it wasn’t the FBI that “got their man” with Bernie Madoff; he turned himself in when his evil house of cards began to flutter. With a few more layers of bureaucracy, perhaps he would still be in business “spreading the wealth.”

So for the last four months I’ve been looking to see which way government would go in addressing our financial crisis. The years I spent in politics made me fairly cynical about politicians on both sides of the aisle. It’s been pretty hard to tell a Republican from a Democrat for a long time or even to define if there is a “center” operating anywhere in the political spectrum. I’ve been watching closely and hopefully, but the recent unveiling of a so-called stimulus package, followed up by the pork-laden omnibus spending bill that represents an all-out assault on the business sector, has set me to emailing and calling my elected representatives. Their mindless responses have not lifted my spirits.

So what’s next?

At this writing our government seems hell-bent on repeating the mistakes of the past: thinking the government can supplant the private sector, and by sheer force of will and taxation reverse what it helped to cause, using the same tactics that precipitated the problem in the first place: spending money we don’t have to subsidize failing institutions; borrowing from nations who may not have our best interest at heart; and targeting the “rich,” so that government can orchestrate the next rocketing bubble that will do what all bubbles eventually do: burst when they have wreaked maximum havoc.

Most concerning of all is the prominent lack of a concerted effort to attack the proximate causes of the problem: housing and banking. Instead we are told that we must undertake to fundamentally restructure education, medical care, and the electric grid. Give me a break! What I’ve heard from my elected representatives is that we have no choice but to do so because of the Mother of All Cop-Outs: “We are in uncharted territory, so we need to act boldly and swiftly.” In other words: We will exercise our cluelessness by experimenting with your money and that of your children and grandchildren. They have learned NOTHING from the past.

Checking in with Dow Jones

So it is no surprise the Great Global Financial Scorekeeper at the New York Stock Exchange keeps heading south. I know it’s hard for Main Street to care much about Wall Street these days; I agree that these folks need to spend some time in the national naughty chair. Jim and I got burned twice by the Market, so we got out years ago when we were sick of worrying about the market’s volatility and how value could drop every time Alan Greenspan caught a cold. But the most sobering fact of all to me is that the financial wellbeing of more than half of America and a lot of the world is tied to the stock market. Consumers won’t regain confidence until the Market rallies. So attention My Government: It’s about the Market! It’s about the Houses! Tell the guy in charge (who couldn’t figure out how to pay his self-employment taxes) to pick up a book!

Also tell Mr. Geithner that it’s also about the small business sector that powers economic progress in America: Encourage us, then get out of our way! Don’t tell us you will punish us if we get rich. Most small business owners, such as photographers, will never hit that magic $200,000 + income level in the proposed Tax Code revisions where the government will start lowering deductions for state and local taxes, mortgages, and most cynical of all—charitable contributions. Just the specter of economic punishment will rob small business people of the desire to takes risks. As an economic growth strategy, these proposals are about as foolish as trying to strangle a hen in order to make her lay more eggs.

Reading about the budget’s provisions has made me wonder what I would be doing today if my parents hadn’t encouraged me to sell potholders door to door when I was six years old. What if they had told me that I could do it, but I had to give them more than half of what I earned? I suspect that single act would have robbed me of the great gift of Hope.

When the history is written . . .

I don’t much like labels, but I am just fine with being called an economic conservative, because most of us who identify with this mindset believe that if it looks too good to be true . . . it simply IS too good to be true. We tend to trust what we know to be true from personal experience and what we can learn from history. When Enron collapsed, I studied the reasons why. The reasons no longer matter: what I learned is that if a company cannot explain to you what it does to earn money in less than three sentences, then you should not go to work for it or invest in it. What I’ve learned so far about accumulating wealth is that is fine to want to get rich, but the best strategy is to get rich SLOWLY! And you’d better have a plan to do so. What I’m afraid I will be studying in the years to come is what happened when the government couldn’t explain its economic recovery plan in less than 1,000 pages and the Congress voted it through the day they received it without reading it.

I feel better now that I have gotten all this off my chest. I’m finding that writing about my concerns is cathartic. I don’t know whether I’ll write about this subject again, but if I do, I promise to keep it short. I’m learning every day, and perhaps I’ll pass on some of the resources I’m looking at in case anyone out there is interested.