Strong Opinions @marksbirch

I am going on a bit of a tangent today to follow up on my response to an article asking whether “Algebra is Necessary”.  There are many ways to rebut such an ill-formed opinion, but what I found most irksome* was the complete lack of faith in US students.  The article essentially made the argument that because our students have difficulty in higher level mathematics that the solution is to not require such courses.  In short, US students are simply not able to handle it.

The story of America can be summed up in the can do spirit of its people.  From the earliest pioneers to the waves of immigrants pouring in from around the globe, America was a place where anyone could make their dreams a reality.  While the roads were not paved in gold as described in immigrant folklore, the opportunity was there for anyone to grab and build their own road of gold.  This is a country that built a railroad from coast to coast, built skyscrapers, invented the computer, sent man to the moon, won the Cold War, and created one of the greatest economic engines in the history of mankind.  Impossible was not an option.  Difficulty was simply a given and something to overcome, not an obstacle to cause us to give up.

That can-do spirit however seems to be taking a backseat to tired resignation.  Every sector of our society seems to be infected with this malaise.  Our politicians do not challenge the status quo or propose grand visions, but merely measure and manipulate opinion to extract the most votes in the most cyclical display of pandering ever seen.  The big corporations pull the strings of their Washington and state house puppets to protect their turf and prevent innovative ideas from taking hold through patent stranglehold and government regulations.  Even in the innovation economy itself, it is rare to see anything truly revolutionary get funding or support as investors play their own version of follow the leader to fund copy cats of small ideas.  Who can then blame entrepreneurs for starting yet another subcom service or niche social network when that is where the money flows?

The new defeatism has been most at home however in the US education system.  The strange thing is that while the schools that train our nation’s teachers have been active in researching new teaching methods, none of these “innovations” have done much to improve results across the board.  One school produces excellent students and the next one produces dropouts.  One school ignites the imagination of kids and the other squashes dreams.  The only constant is the race towards the least common denominator of achievement which is simply a mask to ensure that the gap between the worst performing schools and the best is not even greater than it really is.

It is not simply lower standards however that punishes students.  In what I refer to as the “everyone wins” culture, schools are actively rewarding students for every single insignificant “accomplishment”.  Kids are teamed up and everyone on the team wins some reward regardless of individual contribution.  Games and sporting events now do not have winners and losers, but rather everyone gets a trophy or award for simply participating.  While self-esteem is not a bad thing, this fakery sets up children with a mistaken belief in their own abilities.  Americans are definitely not lacking in self-confidence, but this is to their detriment.  It breeds an overinflated sense of entitlement so that when things get slightly difficult or they are not getting enough praise, they simply give up and quit.

I am fully aware that higher expectations can be a difficult goal to achieve.  Some people will be left behind.  However, is it better to have a larger set of students that are incapable of basic concepts but have satisfied the barest minimums to “graduate”?  Do we need a populace of dunces just because we fear that it will create an unequal society?  Guess what, it is an unequal society and our educational policies are hastening, not eliminating, the widening gap in achievement.  Is it really so hard to teach algebra, science, programming or other “difficult” subjects in US when plenty of schools elsewhere manage to succeed in teaching students these subjects?  Maybe we have become resigned to being mediocre.

It is mediocrity that is the true danger of lowered expectations.  It is a cancer to achievement and innovation.  When people set lower expectations, it lowers the bar for quality, productivity and progress.  Taking the easy road kills inspiration and discovery.  What people do not appreciate is that it is in the struggle to solve the hard problems where breakthroughs and innovations often hide.  In turn, that is where true self-esteem and confidence is found, and the virtuous cycle of inspiration begins.  We as a nation need to stop saying things are too hard and become inspired to achieve great things.  If anything is un-American, it is accepting that giving up is an option.

*Actually, there were many irksome points that were infuriating, including specious using of dubious statistics (from a political “science” professor no less), poorly formed logic, and a complete disdain for the field of mathematics.

America is experiencing a rough patch.  From politics to the economy to jobs to education, nothing seems to be going in the right direction.  In the midst of this maelstrom, our middle class is being assaulted and abused in every possible way.  While much of the discussion centers on things like taxes, regulations, corporate malfeasance, excessive executive pay, consumer debt and wages, I believe at the crux of our failing middle class and society in general is the loss of empathy.

Empathy is defined as the capacity to recognize and share feelings expressed by another person.  I prefer however the more expansive definition by D.M.  Berger which is the capacity to know emotionally what another is experiencing from within the frame of reference of that other person…or to put one’s self in another’s shoes.  We have lost that collective consciousness that bound us and our destinies together as a nation.  Where we once cared about the conditions of others as part and parcel to our own condition, any empathy we once felt for others has faded to the brink of extinction.

It is important to recall that the American middle class is a modern phenomena.  It was only out the intense disruptions of the Great Depression and World War II that a prosperous middle class American society came into being.  Many lost businesses and fortunes and possessions during the Great Stock Market Crash of 1929 and the dramatic contraction of the economy.  People were standing in soup kitchen lines as equals.  People worked alongside each other building the next generation of national infrastructure.  Even the ultra-wealthy felt the sting of the depression, though obviously not to the same extent, and began distributing their vast wealth to the aid of others through foundations and charities.

World War II further fostered the sense of shared purpose.  Ivy Leaguers fought side-by-side with high school dropouts on the battlefields.  There was not a distinction between rich or poor.  They were all simply soldiers and airmen and seamen working together to fight for freedom.  Social and economic class was not something that entered the equation, particularly when getting shelled and fired upon.  Everyone was sacrificing for the war effort, whether in the war theatre or on the home front,

America still had its hands full after the end of World War II.  The Soviet Union was on the rise, China fell to the communists and the free world was in economic and physical shambles.  The US had become the de facto leader of the free world.  The US was the economic engine for the global recovery, the protector of freedom and democracy and the shining light of hope to the world.

This is why they were called the Greatest Generation.  They fought against tyranny, they survived great economic hardships, and they learned the hard lessons of life.  They wore the scars to prove it, but did not boast.  They simply did what they had to using a healthy dose of American optimism, confidence, ingenuity and hardwork.  From that experience, they built companies and paid taxes which in turn funded government infrastructure projects that in turn drove even more economic output, thus creating that virtuous cycle of economic growth.  Everyone was a winner in this new economy, and it gave most Americans the disposable income to buy homes, acquire possessions, pay for education, and save for the future.

Somewhere between then and now, that virtuous cycle stopped working.  Wages stagnated, costs went up, jobs decreased, and the gap between the wealthiest and the poorest expanded exponentially.  At the same time however, we still acquired more things, bought even bigger houses, and took out greater loans to pay for the stuff and the homes and the college costs.  We got drunk off of the excess and in turn we looked inward at ourselves.

There is a saying “keeping up with the Joneses”.  It is human natures to compare ourselves with our neighbors and peers.  However, when the collective lot is dismal, then this part of our nature takes a backseat.  We need others and the community takes on greater importance.  When everyone is doing well however, the competitive spirit takes root and community takes a backseat.  It becomes all about “me”, which is exactly what we saw develop during the 80’s.  The political dynamic changed as well to reflect this growing self-reliance.  This meant initiatives to lower taxes, shrink government, reduce regulation, and dismantle welfare policies.

It was 25 years ago that the phrase “greed is good” entered the everyday lexicon.  In the intervening years, that quote has become an ethos ingrained in the American psyche.  Markets could do no wrong, we spent like fishes drinking water, and we shopped till we dropped.  All of this was egged on by government policies and juiced by corporations.  Because all ships were rising (or so we thought), the inequities in wages and the fact that the richest were accelerating their wealth did not bother people as much.

Now we are staring back at those years and wondering what went wrong.  It is scary to see how far down we sank as a country and how readily we were accepting of the status quo.  We are undergoing a collective hangover and it is probably sticking around for awhile.  And we are staring at our prospects alone and disconnected.  The collective consciousness we had has eroded and now it is dog eat dog and every man, woman and child for themselves.  We lost our sense of empathy; most people are just trying to get their own houses in order.

You cannot manufacture or legislate empathy.  However, through this extended downturn, we might be able to right the ship by fixing policies that are clearly broken.  That requires leadership from the top, and there has been a dearth of real leadership in our political class.  Even many of our business elite have been silent.  Outside of Warren Buffet, Bill Gates and a few others, most have spent more time wringing their hands about higher taxes rather than lend a helping hand.

What gives me more hope though is what is happening in the trenches.  I see some of this happening in the startup ecosystem where a greater sense of community has taken shape to help each other.  The growth in crowdfunding activity through sites such as RocketHub and Kickstarter to support creatives is encouraging.  More and more people are sharing their knowledge and experiences through classes on TeachStreet, Skillshare and other platforms.  Individual acts of kindness are on the rise, such as the campaign to support Amit Gupta’s leukemia treatment and Scott Britton’s involvement with the homeless.  Even the new tech elite, fresh off recent startup exits are paying it forward through investments and advice to budding entrepreneurs.

People are offering more of themselves freely is the first step in moving away from the “me first” attitudes that have prevailed the past few decades.  This is not socialism, it is commonsense.  Capitalism works when the largess filters through the entire society and all can reap the benefits as a society.  Look at countries that have great disparities in wealth and you will find dictatorships and corrupt oligarchies.  We are better than that, but it requires digging deep and learning to care about others as much as ourselves and putting that into practice.  We need a return to our collective empathy and I am bullish on our ability to get there.

There is plenty of disingenuous discussion when it comes to entrepreneurs, businesses and their contributions to America.  The most recent polemic is that the business class is not doing their fair share to help America by paying it forward.  Thanks to some catchy political word slinging from a certain Senate candidate from Massachusetts, many people are banding together to rail against these greedy entrepreneurs.  Unfortunately, such rhetoric runs counter to reality and offers no tangible solutions.

Businesses pay taxes as well as the entrepreneurs that build those businesses.  While much of the press attention is dedicated to stories about businesses that pay no taxes and executives that pay less tax than their assistants, the truth is that the tax burden falls heaviest on businesses and business owners.  We are not talking about Fortune 500 companies and their CEO’s or hedge fund managers.  We are taking about people that actually built their own businesses from the ground up that helped make America the economic power it is today.

The contributions of entrepreneurs however fall on deaf ears in Washington.  Entrepreneurs take all the risk, drain their life savings, and sacrifice their time and energy and families to take an idea and mold into a real profit generating enterprise.  If they manage to get traction, they hire employees, buy equipment, lease office space and pay taxes.  How much tax do these businesses pay?  If they are a C corporation, they pay 35% of income per year in federal tax, not including additional state and city taxes that may be imposed.  While deductions and credits can be applied, the taxes that companies pay, particularly small businesses, do not waver greatly.  Remember also that businesses pay payroll taxes, various excise taxes based on industry, and a host of other taxes and fees.

The sleight of hand by liberal politicians, union leaders, Wall Street protesters and others of like mind is in obscuring these facts from Americans.  They want to make us resent the business class as ungrateful, greedy robber barons that steal from the middle class.  We should storm the offices of these fat cats because they are not giving back to society and government.  On the surface, the idea of “paying it forward” makes sense and has been a key part of the populist thread driving the current political conversation.  This is simply an extension however of a broader political narrative that has been broken for the past three decades.

The turmoil of the late 60’s fostered the first inklings of suspicion about the broad role of government.  While much of the attention centered on Vietnam and civil rights, some witnessed other troubling trends such as the decline of cities, costly urban planning experiments, expanding government programs and growing bureaucracy.  Thus the beginnings of the great schism in liberal and conservative political thinking began; liberals stood for strong government institutions and programs while conservatives stood for smaller government and greater individual enterprise.

Our current political debate can be summarized as “government is incompetent” versus “business is greedy”.  There are elements of truth on both sides.  For example, Wall Street continues to shirk its responsibility for its role in causing the current economic situation, while government continues to spend money it does not have on massive entitlement programs.  The sheer complexity and size of our country necessitates a large government.  At the same time, business is ultimately the generator of economic output.  When the two worked well together, we built the space industry, interstate highways, ports, nuclear energy, the Internet, and many other highly valuable assets that are pillars of the US economy.

What gets lost in this political shuffle however are the vast majority of businesses and business owners that are merely trying to stay alive and be profitable.  In fact, businesses contribute 10% of overall tax receipts in the US.  Instead of browbeating them for building something and insinuating they do not contribute, it might be wiser to implement policies and tax reforms that distribute the burden more fairly across businesses by using progressive tax structures ,(it starts at 34% as low as $75K) , closing loopholes, and ending politically motivated subsidies.  Small businesses and startups should pay significantly less taxes so that they can have more cash to take advantage of opportunities, hire more employees and focus on growth.  Smarter tax incentives and credits can be implemented to encourage companies to repatriate foreign cash and to spend their cash reserves (which total upwards of $1.2 trillion right now).

You know where those roads and police forces and fire departments came from?  Tax dollars collected from people that earned incomes from jobs created by entrepreneurs risking it all.  To be clear, if we want a country where our government creates jobs and drives economic growth and spurs innovation, that is a very different country than the America that has existed for over 225 years.  The problem is that planned economies run by government minions have been proven to be utter failures.  The America we know is one that celebrates risk taking and entrepreneurs, fosters innovative and creative thinking, and is proud yet hard working.  Let’s not make the mistake of dividing government and business and creating an “us vs. them” dynamic.