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Focus on the Long View

I have a natural antipathy toward politics, but more so toward the political parties that comprise America’s polarized landscape this election year. I typically avoid any discussion about subjects that hint of even slight political overtones, but a recent article provided enough encouragement to at least nibble around the edges.

Newsweek’s January 23 issue contains a cover story written by Andrew Sullivan that raises questions about the deeper contributions made by President Obama. While Sullivan admits his distaste for many actions that have and have not been undertaken, he points out that, to understand this president, one must understand the art of the long view.

When Obama was elected in 2008, the US was losing approximately 750,000 jobs per month, annualized growth had declined by close to 9%, and debt was at an all-time high (soon escalating further due to a $787 billion bailout). However, as Sullivan points out, since the low point in 2010, 2.4 million jobs have been added, which is more than during the eight years under Mr. Bush. In 2011, 1.9 private sector jobs were added while there was a net reduction of 280,000 public sector jobs. Overall, government employment has been reduced by 2.6 percent, more than the 2.2 percent during President Reagan’s first term when he was flexing his conservative muscle.

During the recent chaotic recession, the auto industry was bailed out but is now doing reasonably well, and most TARP funds loaned to banks have been paid back with interest. Sullivan seems to advocate and perhaps celebrate the common management approach of putting First Things First, which ranks #3 in Stephen Covey’s list of habits of highly effective people.

While Mr. Sullivan makes a reasonably strong case for all the good that has been done, he also makes a somewhat oblique case for embracing the value of the Long View. Peter Schwartz, co-founder of the global business network, twenty years ago made a potent case for scenario planning and a focus on a longer-term future in his book, The Art of the Long View (Doubleday, 1991). I share this view because the future is all that really matters. It is what the present is all about – providing a platform for sustainable growth, economic development, cultural normalcy, and social harmony that serves the common interest of all citizens. Sullivan describes a minor epiphany wherein he recognizes that maybe, just maybe, this president has a broader view and deeper commitment to the future than previously suspected. Perhaps he does indeed have an eye on national long-term strength and more sustainable well being while the nation is struggling to re-center after a horrific downturn.

Conor Friedersdorf, a writer for The Atlantic has responded (January 22) that, while much good has been done, there is a litany of negatives ranging from indefinite detention, the continuation of policy that allows spying on citizens, TSA expansion, escalation of drone warfare, reauthorization of the Patriot Act, and failure to prosecute Wall Street criminals. In all, he lists 14 negatives that he attributes to this president. All warrant discussion and critical analysis. But, I see a common theme that seems to elude far too many planners…the need to let some things go while working on broader, more essential foundational activities. Of course, the value of any and all such activities can be endlessly debated, and most will evoke deep emotion and even conflict.

But the broader view must turn to where we want this country to be in five, ten or twenty years. We cannot immediately fix the economy or produce millions of jobs overnight. These are long-term strategies that require a steady hand, clear vision, and an understanding of First Things First. Ratcheting down spending and taking a more conservative approach to how we buy, live and plan will allow most Americans to prepare for anticipated challenges. Pay down debt, save more, spend less, get healthy, collaborate more, and invest in things that have long-term value; these represent an approach that worked well for our parents and grandparents.

Gregg Easterbrook wrote The Progress Paradox (Random House) in 2004, with the subtitle, How Life Gets Better While People Feel Worse.  In it, he expresses the revelation that, while life has gotten remarkably better for virtually every American, something is missing. Expectations are off the charts, recreation seems to be the greatest motivator, and few seem to care much about the future. Myopic vision is endemic; we are fascinated with electronic gadgets, travel, staying in touch, and celebrity. Educational performance has declined, savings have been depleted and the search for gratification continues to escalate. Life is good, but, intuitively, many people sense they are on the wrong path.

Circling back to Sullivan’s article, he seems clear in his factual comparison of the eight Bush years against what was inherited by the current administration, and what has been done to date. Friedersdorf is just as accurate in his assessment and is not unkind to Sullivan, his former boss. The underlying message is essential for all public managers, regardless of party affiliation or beliefs. Those who are currently in control have an obligation to mobilize available resources to achieve the greatest long-term value. In this Blog, I have raised rhetorical questions about why the art of triage will become more critical. What has the greatest value, in a new park or additional school funding? More law enforcement or better roads? Safe water or more economic development activities?

Whoever wins in November inherits the collective past with all its detritus and promise. There must be more attention paid to the evolving world and America’s role in it. I predict that more manufacturing will return to these shores as costs soar overseas; we’ll see more foreign companies building plants here to be close to our markets; Europe will struggle and even decline due to broad mismanagement and societies that have vacationed and celebrated their histories for too long. A major shift is occurring; there is a huge game afoot and most don’t even recognize it.

Again I ask, ‘Where is your community?’ What is happening with re-centering and re-thinking various institutions? Is evolution proceeding in a thoughtful or chaotic manner? More than ever, the lead must be taken by state and local government, while political parties focus on the wrong things, eviscerate each other and escalate senseless blathering and blame. The great challenge is to make real progress while the national political spectacle once again distracts and de-unifies a struggling nation. This very serious game is ours to win or lose. Visionaries from either party can surely see that.

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal government long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). His 2010 book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, is being hailed as the best book for public managers and community leaders who are committed to building a sustainable future.  An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at www.futurescorp.com).

Embracing the New Year

As I begin this New Year, I am drawn to a comment made by the extraordinary Christopher Hitchens, who succumbed to cancer on December 15. With his typical mix of droll wisdom, disdain and brilliant articulation, he promised to address the prospect of death as an active participant- one who ‘did’ death almost as an elective activity and not as a passive recipient of fate. If you haven’t read much of Hitchins, I encourage you to do so…but be prepared for his incandescent honesty and towering intellect.

Regarding 2012, it seems that there is a message for us in Hitchins’ final joust. The underlying message is about facing inevitabilities with passion and spirit, while also finding the will to resist the malignant forces building against humanity. Believing we can change the future is fundamental to changing it. And, for the most part, it is not too late.

Just the number 2012 brings a mix of apprehension and allure that is both troubling and somewhat mystical when compared to other years. It an important election year that bridges a confluence of cultural, social, generational and economic norms, but is also a reference point for the 2,500 year-old Mayan calendar that predicts the end of an age. If we thought 2007-2011 were landmark years, we haven’t seen anything yet.

As Europe struggles with solvency, it also struggles with a much deeper and more complex challenge: a formula for accommodating evolving globalization, religious nationalism, cultural integration and historic patterns of dissent. So much is in flux in Europe and throughout the Pacific Rim, it is difficult to comprehend. Add the rapid development of India, Brazil and Argentina, the continued success of Canada, New Zealand and Australia, and a growing chasm between developed and developing countries, you have the ingredients for chaos, growth, prosperity, conflict, and rampant confusion.

As we analyze current status, we see declining unemployment, growing consumer confidence, and more decisiveness among EU members. There seems to be greater commitment to long-term stability in Pacific Rim and European countries and several major economies continue to provide the foundation for slow but steady growth. Globally, an emerging middle class will steadily improve markets throughout this decade, with slightly more upward acceleration during 2012. Not to say we’ll turn the corner, but a turning point will be more apparent within 12 months.

Technology will drive progress and global integration in more ways than we can possibly imagine. People are talking; entire cultures are now able to bear witness to atrocity, innovation, celebration, and misfeasance in real time. People seem to know things, care about things, desire things, and understand more than ever. How this flight from ignorance will drive the future is hard to fully imagine, but the amount of globally generated social energy is enormous.

Outdated institutions (U.S. Post Office) will continue to fade while new institutions (ASEAN) will seek broader economic growth and stability. Prepared and prescient businesses and public organizations will morph and prosper; those refusing to interpret patterns of change will struggle and many will die. This New Year is a transitional year. While many are tired, confused, and enamored with the past, those who embrace new challenges and seek to understand new opportunities will reap tremendous rewards during this decade.

The huge IF that is associated with the previous statement depends on a single element: leadership. Far too many leaders in our political, government and corporate institutions are driven by various combinations of avarice, control, power, ego and a compulsion to perpetuate historic norms. The great thing about Generations X and Y is that they, for the most part, seek newness. Among this very large complement of society, many realize that capitalism does not necessarily equate to avarice and that ego can be a good thing. Most seem to be driven by a sense of community, collaboration, and living a ‘good’ life. If they can establish these elements as essential norms while energizing an entirely new culture that preserves the best American values, there may be a more positive future than some would predict.

It is time to understand that foolish decisions, greed and myopic planning led to the current predicament. Virtually all celebrated economists encourage patience during this 6 to 10 year re-centering period. Careful, deliberate, and prudent community planning, along with deeper market understanding and commitment to value will generate growth. Critical questions center around what constitutes leadership and what this country needs during such a transitional period. Vision, insight, purpose and planning must integrate with value, equity and the common interest. The ultimate questions must pertain to what is in the best common interest of all citizens, not only in this country but in every culture. Who will work for the common good? Who will confront reality and have the courage to speak the hard truth?

As 2012 dawns, keep these questions, and your own private answers, in mind. Above all, believe in the future…it will be challenging but bright for those who choose to make it so.

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). His new book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, was released in October 2010. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at www.futurescorp.com).

Deep Breath, Step Forward

The admonitions to pay attention, remain vigilant, and confront reality have never been more relevant as 2012 begins. To retain a reasonable measure of optimism, one almost has to ignore ominous signs and focus on those with less potential of tipping us into the abyss. However, because time is relentless, we must remain just as relentless in our commitment to emerge stronger than ever. It’s not merely the American Way; it is also the best alternative.

As we seek a rationale for believing and committing to an optimistic vision, we must first face reality. There remain major obstacles to global and national economic, physical and social health. Aside from Europe’s enormous interconnected fiscal crisis, resources are dwindling at an increasing rate, promising higher prices and more competition. The global population is now over 7 billion and is driving demand. There are 313 million people in the United States and the number living below the poverty level is approaching 50 million. It was ‘only’ 36 million five years ago. Immunization rates are declining and formerly vanquished childhood diseases are escalating as more people follow fictitious warnings driven by irrational and unsupportable Internet rants. Diabetes is predicted to impact up to 30% of the population and add trillions to heath care costs within twenty years if the national obesity epidemic is not curtailed.

In the U.S. alone, infrastructure has eroded to the point it will take an estimated $2.2 trillion just to return various systems to functional, safe levels. And, though most assume the discussion is about roads and bridges, it entails a much more comprehensive report card involving sea ports, airports, air traffic control, levees, dams, power grids, water systems, waste water systems, and pipelines carrying steam, gas and oil. The American Society of Civil Engineers has given this country a ‘D’ grade for virtually every aspect of infrastructure. It is old, it is failing, it is dangerous and repair costs will be huge.

Climate change is becoming more apparent and the data seems conclusive that major shifts can occur within a single decade. The combination of horrendous drought (Mexico and Texas come to mind) or historic rainfall (Southeast and Eastern U.S.), record-breaking tornados and streams of hurricanes are wreaking havoc with communities, local economies and the insurance industry. The impact on agriculture is growing more severe as crops or livestock either wither or drown. On the bright side, even though the cost of food is escalating, farming and ranching have entered a new era of profitability, which appears to depend as much on new weather patterns as on markets and expertise.

As of this writing the DOW is slightly over 12,000, but seems to fluctuate weekly. The mess in Europe erodes market confidence and makes prediction difficult. Germany has become the EU ‘parent’ economy. In a remarkable turn of events, Polish Foreign Minister Radek Sikorski just last week encouraged Germany to take a greater lead in Europe. To a largely German audience in Berlin he stated, “You know full well that nobody else can do it. I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity.” Italian leaders have made similar statements…Germany is the EU’s largest and most potent economy and is probably the best organized, most prudent and insightful. A remarkable shift since the mid-20th Century.

As unemployment dipped to 8.6% about ten days ago, NPR guests David Brooks (NY Times) and E.J. Dionne (The Washington Post) noted that, while this is good news, it is not enough. It helped rally Wall Street, but, with around 320,000 people dropping out of the job market, many question the value of the announced decline. I found their comments somewhat myopic and perhaps disingenuous. Historically, whenever an economy experiences major recessions, the result is re-centering that involves workforce evolution. Losing a portion of the workforce is a natural phenomenon…many just retire and others who are ill-prepared for new realities give up. Economists have predicted this for some time. So, it is silly to say an unemployment decline to 8.6% is irrelevant. It is merely another sign of economic re-centering that will continue for several more years.

Real estate is following a similar course. During this past decade, the U.S. overbuilt residential and commercial real estate, so, at some point, correction had to occur. Financial factors tied to mortgage shenanigans finally ignited an explosive mix of greed, ignorance, regulation and hedonism. It led to the current predicament, but it will correct within another five to eight years (some sectors will take longer).

So, with this dose of reality, what can 2012 possibly bring?

I recently met with a group of 15 business owners and found that every company is now or will be hiring in 2012. All are proceeding with care and deliberation according to their strategic plans, demonstrating cautious optimism. Their main concern? Finding people with a work ethic who can do the job.

GDP growth will be around 2% in 2012 but inflation should remain low – also around 2%. Manufacturing will continue its resurgence, as more firms bring production back from China due to growing labor, transport and storage costs. Interestingly, some foreign companies are relocating to the U.S. to take advantage of an abundant skilled labor force and imbedded technology and to avoid escalating operating costs. This is a remarkable turn of events that bodes well for the U.S. economy. New firms are also emerging, as population growth builds demand in various sectors. While there will be growth, unemployment will hover around 9% due to the long-term specter of economic re-centering. This will just take time and people need to get over it. Folks, there will be jobs.  The question is, can the unemployed qualify for them?  Unfortunately, many cannot without retraining.

Due to the enormous numbers of people in Generations X and Y (born since 1964), there is a huge positive real estate bubble waiting for the right opportunity. With several million young families and individuals seeking homes, when the dam breaks, it will break with a torrent of buying. It appears that 2012 may see some of this occurring, but look for much more to occur in 2013 and 2014. My question is whether anyone has learned the critical lessons from this Great Recession. I encourage careful, moderate growth that follows a sustainable path.

Construction will grow in 2012, as more infrastructure projects are funded and more investors see returning values. Private-public partnerships will contribute to this resurgence. Power plants and grids will get more attention as energy demand escalates, but balancing clean air standards will be challenging.

My greatest concern is the lack of congressional leadership. Problems do not reside with government agencies, but with those making rules and budgets. As noted previously in this Blog, regardless of one’s party preference, the call for strong, decisive and collective leadership is needed if America is to recover its global status as an economic, academic, social, and cultural power. The imbalance between revenues and expenditures is ludicrous and dangerous. Difficult changes must be made immediately. There will be politically inspired movement in 2012. I fear it will be ill-conceived, illusory and driven mostly by political gain.

Final Thoughts

Planning holds the key to 2012. Especially if you are a Baby Boomer or early-stage Generation X, give thought to your personal vision for your life and work. What is your destination and timeline?  How do you define success? What path will take you to your goals with the least amount of turmoil and uncertainty? Take time to consider these and other questions. As always, communities must pay more attention to what is occurring globally and nationally. Transitions will abound in 2012 and beyond, so mayors, councils, commissions, and managers must prepare to take advantage of new options and opportunities. This coming year will be a barn-burner.

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal government long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). His 2010 book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, is being hailed as the best book for public managers and community leaders who are committed to building a sustainable future.  An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at www.futurescorp.com).

Programmed, Tactical Failure

As a creature of habit, you will generally find me on Sunday mornings watching NBC’s Meet the Press with host David Gregory. For several months, it has for me devolved into a flagellation of sorts, with me hoping for some rational discussion and any indication there is someone willing to raise enough hell to move things off dead center. Listening to Senators Kerry (D-MA) and Kyl (R-AZ) this past Sunday I felt like throwing a shoe at the television.

To compound matters, even with respectful commentary from Mike Murphy, Dee Dee Myers, Eugene Robinson and Ed Gillespie, there was no one blasting the total ineptitude or morale failings of the ‘Debt Reduction Super Committee.’ Rather, within a context of charming jousts and disarming ideology, these ‘roundtable’ pundits shared their perspective without focusing on a very clear truth. Driven by a total disregard for what is best for the country, this committee continues to neglect the very good work of last year’s Simpson-Bowles and Rivlin-Domenici commissions, which made almost identical, very difficult but very well researched and prudent recommendations. From both, we heard admonitions to abandon the Bush tax cuts, reduce discretionary government spending, and begin reeling in entitlements. Both suggested economic programs that would begin the process of revitalizing the workplace and laying the foundation for job creation. Having read both committee reports, I can recommend them as thoughtful, no-nonsense, tough reviews of what must be done and why.

As noted in this commentary some weeks ago, decisions are being made without regard for America’s near- and long-term future. Recommendations are driven by power and greed, both of which provide the foundation for modern American politics. The era of representing the highest and best common interests of citizens is over. Sadly, it may never again flourish as it did in the mid-1900s.

Business and banks are sitting on enormous cash hoards. At a time when investment is crucial for growth, there is reluctance to open the coffers. Why? Simply because confidence in long-term solutions is lacking, gridlock has demonstrated an almost total absence of congressional leadership, and the global economy is being torpedoed by historic disregard for prudent spending, and even more prudent living. Greece, Italy, Portugal, Spain and other European Union countries have run aground on shoals of indifference and profligacy. A 60-year history of letting others pay their way has bred generations of narrow thinkers, vacationers, and apologists. Theirs is a platform of reparations and disregard for a global future. It is myopic and toxic, but more critically, it is dangerous.

The Debt Reduction Committee has failed. Even with a clear and somewhat simple task that involved embracing former Republican positions to which Democrats now adhere, committee members reversed field and refused to compromise. Behind the scenes, the Beltway word is that dissention is contrived by strategists who are counting on twelve more months of unrest to unseat the president. Not by any measure a strategy born from a commitment to the common wellbeing of citizens, but rather, it is a tactic driven by calculated degradation of this country for political gain.

The U.S. doesn’t have another year to dally. Europe is in a lifeboat reaching for the oars. Both China and India will see contracting economies beginning in 2012 and other stronger economies (Brazil, Germany, Canada, and Argentina) cannot carry the load. Newsweek’s Niall Ferguson has just commented that, to grow, the U.S. economy must enjoy robust exports at a time when Europe is contracting into an economic death spiral. We can’t count on either sales or loans much longer.  That game is almost over.

So, here’s the deal.  The U.S. can grow, albeit slowly, if it can weather the current storm, which will last for another three to five years.  Count on it. In this space, I have noted that the recession or its first cousin will linger for much of this decade. The U.S. gross federal debt is approximately 100 percent of GDP. Just four years ago, it was 62 percent. It is growing, with little sign of slowing, unless decisions are made NOW. Based on the abject failure of Congress and this ridiculous Debt Reduction Super Committee, I suggest we continue working at the local level to build, grow, encourage and collaborate. Local economies can surge during slow economic times. Yes, it will be slow, but forward movement is possible and can be accomplished with careful planning and thoughtful resource allocation. We can do this, but it is time to stop expecting much help from Washington.

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal government long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). His 2010 book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, is being hailed as the best book for public managers and community leaders who are committed to building a sustainable future.  An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at www.futurescorp.com).

Information Overload

During a recent program I mentioned that over 4,000 new books were published every day and that there had been more new information created in the past 30 years than in the previous 5,000. The accelerating pace of change and emerging data streams are converging to deluge even the most prolific reader. While new information is good, one must wonder if it really matters. And, if some of this information torrent matters, how does one determine what to discard and what to retain?

Valiantly attempting to keep pace with new information on the economy and to understand what exactly happened over the past four years, I recently elected Free Fall – America, Free Markets, and the Sinking of the World Economy by Joseph Stiglitz (W.W. Norton, 2010) and All the Devils are Here – The Hidden History of the Financial Crises, by Bethany McLean and Joe Nocera (Penguin Books, 2010). Certainly, there are hundreds of other books on the same or similar subjects, but Stiglitz and McLean are hard to beat.

The real issue comes from the volume of information and exceptional reporting found in both books. What is one to do with such information? Other than understand what occurred, there is also the tendency to get agitated over the stupidity, arrogance and avarice that fueled the recent (and subtly continuing) financial meltdown. If even 10 percent of the information is accurate, and I’m certain it is carefully annotated, we have been led onto a slippery slope that leads to a very dark place. The quest for power is only exceeded by the level of greed that underpins this country’s most celebrated and iconic financial and political institutions. For the common citizen and typical community, there are few options – at least not in the short term.  And none are without risk.

Most communities and families can hunker down, save more, pay down debt, and do without. But this is occurring in juxtaposition with extreme corporate earnings and Wall Street profits (and salaries) that exceed the levels of four year s ago. Though teetering on the brink of a second recession (or deeper continuation of the first one), politicians dither and joust while Wall Street wallows in enormous profits – all at the expense of those who have returned to savings as the best preparation for an uncertain future.

On other fronts, the new book, The Fate of Greenland: Lessons from Abrupt Climate Change, by Philip Conkling, Richard Alley and Wallace Broecker (MIT Press, 2011), provides exceptional reporting on climate change in Greenland – probably Earth’s best barometer for the future affects of global warming. Reported without pedantic environmental fervor or overstated science, the data offers a potent review of what we might expect IF. Of course, the IF pertains to mankind’s continuation down a path of rampant fossil fuel utilization, which, though slowing in the U.S., is rapidly increasing in most developing countries (India, China, and Brazil to name a few). This, and other similar books, would appear to offer admonitions similar to the old Fram oil filter commercial, in which the mechanic simply noted that, ‘You can pay me now or pay me later.” Of course, if you chose later, your costs for that new engine would be MUCH higher than an oil change and new filter.

European economics, global warming, the war in Afghanistan, escalating transportation costs, declining infrastructure, eroding pension funds, community security and economic doldrums are all subjects with enormous impact on America. Add these to education issues, crime rates, the number of people incarcerated in America, declining immunization rates, the rise of gang violence, growing air traffic incidents, and literally a hundred other issues and you can easily reach a threshold of despondence, apathy, fear, or anger. Perhaps a combination of all four better expresses the mood of those who comprise the OWS movement. 

Communities don’t have a choice…they must rally to the common good and to the futures they prefer. That takes insight, prescience and leadership. It will require uncommon courage to do what is right while others are raiding the cash box in D.C., but local control and local progress is the key to this country’s future, as it has always been. There is no time to lose…we need progress now, as we approach 2012. It promises to be another difficult year, with many variables out of our control. The key is to control what you can, understand what is uncontrollable and create a culture of integrated, shared resources that brings a new age of efficiency, quality and sustainability. This is the path of progress…more consolidation, more shared resources, more collaboration and a focus on the long view.

We have the skills and expertise. The question is, ‘Do we have the will, commitment and courage to lead?’  The next 10 years will not be like the previous 10 years.  Do current leaders understand this?  Again, the new norm will not mirror the old norm.  Times are a-changin’ and we need the wisdom to understand this and become architects of the next phase of American life.

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). His new book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, was released in October 2010. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at www.futurescorp.com).

The Value of Austerity

During troubled times, it is often wise to seek counsel from history, but more specifically from our forefathers. A common tribute paid to our parents and grandparents is the recognition of their willingness to do without. Those who lived through the 1920s and well into the years since 1945 can often attest to the value of thoughtful saving and prudent spending. Choices were governed by need, value and long-term contribution more than by status. Unfortunately, lessons shared by parents and grandparents with those born during the second half of the previous century seem to have been largely forgotten.

As noted in previous Blogs, when reviewing the past 60 years from a macro perspective, global growth and development have been awesome. Space travel, communications, the Internet, commerce, transportation, and free market expansion have grown to amazing levels. Through this period, there have been those who seemed unmoved by reason, empathy or the common interest as they relentlessly sought power and market share, but they were also the drivers of what now constitutes the global economy. During this time there were also those who shared cautionary tales of past societies that squandered wealth and opportunity. Historians have offered comparisons that revealed remarkably similar circumstances that ended badly for those who lacked the wisdom to heed admonitions to curb the desire for more – especially if gain for some meant loss for those less empowered.

History tells us that periods of rapid growth and expansion are typically followed by periods of contraction and recession. While this cycle over time appears to result in an upward spiral, to those living a diminished middle class dream, it will appear as a Sisyphean cycle of relentless tribulation. We are in an extended recessionary period because of a profligate federal government, the financial sector was (and remains) over-leveraged, and personal debt was at an all-time high. People have enjoyed several decades of government subsidies, personal expansion, hyper-recreation, expanded vocational opportunities, and residential options never before seen in this country.  During the current decade, much of this will change.

Most economists agree that jobs are created by a confident business community, which, in turn, depends on confident consumers. When consumers are hunkered down trying to recover savings or save their homes, they are not in an expansionary mood. And it is just such a mood that must drive the world economy from its current rut.

There is no real evidence that an economy can grow itself out of the type of situation the U.S. is experiencing. Growth can neither be legislated nor dictated. It is a natural social and economic phenomenon that results from balance…reasonable debt, opportunity, markets, and demand. All of these, of course, require confidence.

Europe and the U.S. must embrace realistic expectations. Both sides of the Atlantic have experienced enormous development over the past 50 years, but neither pace nor trajectory is sustainable. Not to say there cannot be a continuation of free market democracy and sensible growth, but it is a new age that requires new expectations. Developed economies will not grow at the rate enjoyed in previous decades. It will be 1% to 2% below those norms. Because unemployment typically increases by around 7% during severe financial crises and often remains high for up to a decade, job recovery expectations must also be more realistic.

Unemployment will remain high as society sorts out and re-centers, and business will continue to cautiously assess options and opportunities. The sooner we embrace the need for even moderate austerity, the sooner the economy will find a new center and begin its recovery. Paying down debt, careful spending, innovative marketing and enhanced education will become new cornerstones for development; and each must be driven by more targeted strategic and operational planning in government and industry.

Austerity is not a negative option for government or business.  The world has changed and we must embrace new realities. Currency and economies are fully interconnected; markets rely on one another; banks operate globally. The U.S. still has huge loan issues that inhibit confidence and undermine otherwise reasonable economic options. The sooner we get serious about austerity, write-down unrecoverable debt, and begin building a new foundation for a sustainable future, the sooner America will recover.

In the meantime, I encourage you and your community to move into the fourth quarter with a recommitment to the future and to careful planning. Stay vigilant, stay current, pay attention, make good plans, and seek new opportunities to serve the common good. Above all, confront reality as never before. Many of us have faced difficult times and prospered through them. We, and America, will do so again.

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal government long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). His 2010 book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, is being hailed as the best book for public managers and community leaders who are committed to building a sustainable future.  An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at www.futurescorp.com).

The Search for Certainty

Two societal characteristics will become more prevalent in coming years. The world will face more ambiguity than ever before. What does this mean to our communities and leadership? Along with an escalating hunger for clarity and security, we will face a greater number of conflicting opportunities, needs, demands, and threats. The sheer number of variables is increasing exponentially. This phenomenon can be calculated through simple data analysis as well as being felt intuitively in every community.

What does this mean for public leaders and strategic thinkers? Due to the Internet and the enormous intrusion of public media into our lives, people are more aware than at any time in history. As awareness grows expectations grow, but fear and apprehension does as well. This has given rise to the second social characteristic that people are seeking – stability. During the period 1990 through around 2005, early and mid-career workers had a tendency to follow opportunity and money. Times were good and opportunity was abundant. There was a feeding frenzy of jobs, salaries, and benefits. This is no longer the case. Social scientists and more prescient economists predicted that this phase would end and it did. Today, the predominant need being expressed among working people in every community is the desire for stability.

For planners, managers and elected officials, this has great value. For many years to come, perhaps the remainder of this century, there will be a preference for stability. This will be accompanied by the desire for clarity, direction and truth. Strategic plans must therefore address major issues and challenges and clearly express impact. People want to know the truth. Those who believe that most people would rather remain ignorant will be rudely awakened to this evolving social attribute. I encourage you to gather factual data, analyze it for predicted impact, and share it openly with the community. Then ask, ‘Given the facts and circumstances, what do you (citizens) prefer?

The Illusion of Understanding

An element related to the discussion above is that people tend to create an illusion that they truly understand a phenomenon or event when in fact there is absolutely no grasp of what occurred and why. For partially predictable events, we know some of the factors and forces that are in play and that, given certain circumstances, a major event will (not may) occur. Again take tornados, earthquakes, hurricanes, epidemics, fires, water system failures, etc. We have the data, we understand the potential and why the event is probable.

But for totally unforeseen events, the Black Swans, there is a tendency to explore, analyze, and poke at them until we create an understanding of why they occurred. One can say that the advent of penicillin was just a matter of time. Or air travel, television, computers and the Internet were all certain to occur given the level of creativity available. None of these major events could have been fully defined prior to their occurrence. While there were those who predicted aircraft and man’s ability to achieve flight, travel to the moon or explore the oceans in submarines (Jules Verne wrote about air, space and underwater travel in the latter part of the 1800s) many believed those predictions were utterly mad. We tend to return to early musings to gain the illusion that various events or developments were a predetermined factor in the progress equation. In my view, this is perfectly fine. Why should we care if we believe today that there was a predictable pattern of development? Black Swan theorist Nassim Taleb feels this is a human weakness that leads to errant focus on events that cannot possibly be predicted. I don’t see this as a weakness but an attempt to comprehend.

The only danger for public managers lies in either not investing the time to think about the future or thinking and preparing too much. As noted earlier, this is a precarious Catch-22.

Avoiding the Big Whoops!

Every reader will know about the tremendous growth in the southwestern United States. Cities in Arizona, Nevada, New Mexico, and Southern California have attracted millions of people over the past 40 years. City planners and zoning commissions have struggled to accommodate the rush of new construction but communities have enjoyed great prosperity as populations expanded and businesses relocated to open-armed chambers of commerce, city councils and warm climates.

There is one slight issue… water. Research is now generally conclusive that annual precipitation in that geographic area has been unusually high for about 100 to 150 years, and many years during that time have been considered drought years. Unfortunately, the region appears to be returning to historic norms, which over the past thousand years have been approximately 40 percent less than this recent period. This is not to say that there cannot be years with high rain and snowfall, but overall the trend seems to be downward. And, as a side note, the most recent full decade (2000-2009) is now officially the warmest decade on record, and 2009 tied with five other years as the second warmest year on record.

In addition, rationalists and naysayers are quick to discount historic data due to occasional precipitation surges. The winters of 2010-2011 were good years for both snow- and rainfall, allowing streams and reservoirs to regain much of their lost volume after several years of reduced precipitation. The Pacific jet stream created a classic El Nino weather pattern, bringing heavy rain and snow to Arizona and New Mexico, allowing a reduction of drought conditions. While this respite is welcome, it does not signal an end to drought issues. And, those issues weren’t helped by the enormous amount of rain produced in the East by Hurricane Irene. 

Recently recharged reservoirs and underground aquifers can provide water for some time, but fossil (non-recharging) aquifers will soon be depleted and, without sufficient rain and snowfall over a period of years, recharging aquifers will not recharge fast enough to accommodate demand. If the data is even remotely accurate, what will the consequences be for the communities and people in this large area of the United States? Without adequate water the alluring qualities of sunshine and annual warm weather will be less magnetic. The potential for escalating out-migration of both businesses and taxpayers is quite possible and certainly, expansion will be curtailed. Economic development will be inhibited and overall quality of life may suffer. This may seem a stark and rather gloomy assessment and some may question the data. But what if it proves to be accurate? Clearly it means that we made a very sizeable miscalculation that could have serious consequences.

Community leaders and elected officials cannot afford to ignore available data and must plan for the worst case scenario. I suggest planning for various eventualities but ALL stakeholders must have the opportunity to consider the data and its ramifications. One cannot blithely say, Whoops! and expect the community and deeply invested local business leaders to forgive and forget. When it comes to personal livelihood and business survival, a lot of negative energy can be generated in a short time.

Look at the data, consider various scenarios, and proceed with clarity, direction and as many facts as you can muster. If you understand social dynamics, you will understand that those who openly share information are typically accepted as the leaders.

Risk and Public Leadership

Community leaders and public must err on the side of disclosure. Citizens have a right to know the extent of issues and challenges. They pay taxes that support programs and services and their awareness and understanding is crucial to gaining their support. Predictable and quasi-predictable events distill down into If-Then scenarios: If this occurs, then this will be the probable impact. If we take these preventive actions, we will 1) avoid the event, 2) delay its occurrence or 3) moderate its impact.

 Public administrators and elected officials are central to every equation related to the provision of general operating services and to understanding and preventing potential harm to the community. They therefore must understand and accept a unique aspect of risk. One aspect of this risk deals with the personal risk associated with both identifying major potential events and preparing for them. My feeling is, if you are in a position of leadership, go ahead and take the point – walk out front. You are in a precarious position either way but greater strength comes from a leading position than from an avoidance or deflective position. Gather the data, check its veracity and share it with others in the community. There is greater risk in not taking this approach than in taking the lead. If there is danger that the dam will break in specific circumstances, a true leader will know the facts, understand the consequences, openly share the information and facilitate dialogue about strategic approaches to avoid or delay the event or reduce its impact. You don’t want someone to ask after a catastrophic event, Didn’t you know this might happen? Didn’t anyone warn you? “Well, er, yes, I think I might have heard something” just won’t do.

 The other facet of risk is really a corollary of the first. I meet many managers who take only ‘good news’ to elected officials. Or, they exclude harsh reality from plans and reports because elected officials accuse them of grandstanding to gain a greater share of the budget and might say that the numbers don’t reflect a truth the public is willing to hear. I am a hard liner. Professional public mangers know their stuff and, if they conduct accurate analysis and make valid conclusions that reflect harsh reality, they must then take this to elected officials and they must listen. Many are unwilling to ‘risk’ sharing bad news and, if they do, many officials do not listen.

 Elected officials must know the truth. Conversely, they need to actively seek the truth and to listen to experts who live their work every data. Take time to review the data, consider various scenarios, and proceed with clarity, direction and as many facts as you can muster. If you understand social dynamics, you will understand that those who openly share information are typically accepted as the leaders. Are you ready to step forward?

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). His recent book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, was released in October 2010. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at www.futurescorp.com).

The Plot Must Turn

In late 2009 Niall Ferguson wrote a piece for Newsweek (An Empire at Risk, December 7, 2009) that outlined a sobering sequence of decline – one the US seems to be following. Among the most prominent contributors to this devolution are runaway debt, restricted growth, high (and foolish) spending, warring political factions, low consumer (i.e. citizen) confidence, armed foreign conflict, and inequality among economic strata. I would add declining infrastructure, unwillingness to focus on the essential, a disregard for common community interests, and a general disregard for predictable outcomes. No one seems willing to reflect on even medium-term impact of these converging variables, which will bring enormous and complex consequences.

At a time when most Americans prefer debt reduction and ending unnecessary foreign conflicts, Congress dabbles in political brinksmanship bordering on criminal neglect. If Congress were a major corporation with competent management and a serious board, it would have taken action long ago. Debt would have been retired, new revenue sources would have been explored and new enterprises launched. There would be retraining, retrenching, re-visioning, and general operational restructuring. It would cut costs, eliminate nonsensical services and focus on ROI. Right the ship, THEN return to more sustainable management. Any fool knows the key is to act…now.

China holds around 13% of US government bonds and other notes. That’s leverage we should avoid. However, China has the cash and we need it…much like those hideous payday loan agencies that prey on those so far behind the 8-Ball they need cash, now. While state and local governments have done an increasingly good job of tamping down debt and balancing revenue with expenses, the trend is leading to greater contraction in services, maintenance, and community development.

As we head toward Labor Day, it seems clear that government must attend to several things. At the federal, state and local level, focus must turn to economic development. The same old tired approaches won’t work. Why? Because every state and community is offering the same things to attract commerce. Let’s get innovative.

Second, we must invest in our people, with training programs that not only build essential core competencies, but also build a public employee system that is much more efficient, effective, ethical and future-oriented.

Third, we are digging a hole from which this country can’t possibly escape without a totally ridiculous amount of economic growth, reduced spending, AND higher taxes. Rapid growth is a fantasy; this will be a slow growth decade – count on it. Spending reductions are possible but must follow a formula that has criteria grounded in a vision of a preferred future…and not a serendipitous approach driven by power and influence. Balance is the key. School districts are now charging for participation in non-academic activities. Not a new concept, but one that reflects loss of revenue for basic services. Unfortunately, many families will be unable to afford the cost of participation. Who will pick up the slack? Value added taxes will become more prominent, allowing those who desire certain services to elect to pay for them. The critical question will become, “What does this community need and what are people willing to pay for?’ Are parks more important than fire protection or police services? Who makes the call?

The question, ‘Are you prepared for challenge?’ is central to future decision making. What are the issues and challenges that are impacting your community? Who define ‘priority’ and who leads triage efforts that ultimately guide budget allocation? As a country, are we in an unrecoverable decline or can we pull out of this descent?

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). His new book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, was released in October 2010. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at www.futurescorp.com).

Past the Tipping Point

With the summer more than half over, things have not been going as well as America had hoped. I would imagine that this observation is shared by many readers and has the potential to recast earlier feelings of optimism. To be truthful, these are troubled times. While exacerbated by Washington’s political gridlock, the greater fear is that they portend a future governed by small-minded powerbrokers who fail to grasp the complex needs of a great and growing nation. Decision-making should never be about power, influence and insuring one’s financial future after politics. It must be about serving the common good…the common interest. This has not been the case in Washington.

 At the state level, governors Chris Christie (R-NJ) and Jerry Brown (D-CA) have repeatedly and strongly stated that their states must begin to make very tough decisions. They believe that society must live within its means and that every service to which we’ve become accustomed must no longer be an entitlement. Both have also said that they would do what is right even if unpopular and the citizens could agree to a new level of fiscal restraint or vote them out of office. Leaders at the city and county level are leaning the same way- making the best possible choices to preserve their communities.

 Watching the wags and nincompoops who blather on talk and ‘news’ shows, it is clear to those paying attention that political guests and their advisors spend most allotted air time bashing the other political party. Blaming, deflection and outright lying have reached a level not seen in US history. And, there is no sign of abatement. At the federal, state and local level, common business sense must become the rule. It is always difficult to reel in emotional and fiscal entitlements. The longer they continue, the more vital they become to the recipient; and, the more they will be defended with anger and irrational exuberance.

 For rational people, it is clear that you can’t spend what you don’t have. While credit is available, too much too often leads to a deep, dark hole. The rule is simple: If the American people want a service cornucopia, it comes with a cost; government cannot keep borrowing to maintain programs and services (even those held dear) if revenue can’t support predicted need as the population grows. At some point (now), the country must decide what is important and what it can afford at current revenue levels, then ask society what else it is willing to contribute. It must not be about political control; it must be about a properly envisioned and managed government.

 Intelligent budget decisions need to be made now. Even though Congress has raised the debt ceiling 11 times in the past 10 years with no ill effect, the recent posturing associated with such classic housekeeping was unconscionable. Predictably, it has ignited a serious stock market decline – one that could erode many of the gains made since 2009. In terms of debt reduction, cutting small, targeted programs will not impact the nation’s debt. A broad and prudent plan is required – similar to the Bowles-Simpson Fiscal Responsibility and Reform Commission Report that published thoughtful but tough recommendations in December 2010 (similar recommendations were presented by the Debt Reduction Task Force of the Bipartisan Policy Center, in the Domenici-Rivlin Report, November 2010). Or, if you want a rush from good but frightening data, read Peter Coy’s analysis in the August 1-7 edition of Bloomberg Businessweek. Talk about a well-document dose of reality!

 This is not a time for party politics, nor a time to support officials who are not fully dedicated to the long-term common interest of all citizens. This is a time to determine what this society deems important enough to pay for and what constitutes a practical vision that preserves American ideals and the opportunity to build a sustainable economic future. There are many paths forward; isn’t it time we chose one?

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). His new book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, was released in October 2010. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at www.futurescorp.com).

Surprise!

Brutal drought has captured much of the Midwest and Southern U.S. as record temperatures threaten crops, health and already struggling economies. For those who take time to discuss the probability of future events the 2011 drought is hardly surprising. While this does not diminish its potential to bring great harm to the 17 states that are being affected, it does underscore the power of predictable surprise.

Reviewing meteorological trend data, it was clear some time ago that a very strong La Nina would shut down the moisture ‘pipeline’ that typically runs through the Midwest and South. This abnormal cooling of Pacific water normally follows El Nino, an abnormal warming of the same waters. A similar pattern was recorded in the early to mid-1950s, which remains a record-breaking period that impacted the economy with higher prices while reducing the availability of produce and beef.

With the recovery still bumping along, this does not bode well for state and local economies. People and enterprises remain in various stages of assuming or living a bunker mentality and many have been left with few resources to weather this storm. This is a sad play on words except, of course, when clashing weather patterns bring horrendous downpours and flash floods, or provide germination for tornados that decimate entire communities. We were told the climate is changing and would grow more violent, extreme and unpredictable. Are there any believers? Anyone? Anyone? By the way, similar weather is predicted for 2012.

The phenomenon of predictable surprise occurs when people cannot accept facts that would allow them to properly prepare and plan for anything other than immediate disasters. It is easier to react to a flood or tornado than to prepare for weather that may or may not happen. Even when the data and attendant probability calculations begin to tell us that it is a reasonably good idea to get ready, we often choose to wait to see what happens. By then, of course, it is often too late.

Recent news stories have trumpeted that, due to weather-related issues, hope for strong economic recovery is all but tabled for another year. Business vitality is declining along with optimism and cash. Many ran out of savings a long time ago and struggling banks are more unwilling than ever to assist. In Texas alone, 213 out of 254 counties have been designated as natural disaster areas. They are eligible for aid, but it most likely won’t be enough to sustain every farm, ranch, business or community hit by various elements of this disastrous weather pattern. Similar scenarios are playing out in Nebraska, Kansas, Oklahoma, Georgia, Florida, New Mexico and other states at a time when the federal government is reeling from Congressional budget ping-pong. States are receiving aid, but it will probably be insufficient to counter predicted impacts, much less energize recovery.

Folks, it was clearly predicted that more jobs would be lost and that job recovery would be the slowest aspect of economic recovery. We are not merely recovering; we are transforming a global economy. With government downsizing, around 660,000 public sector jobs have disappeared in the past 12 months.  You can’t rant for reduced government then gripe that jobs are being cut…you can’t have it both ways. Virtually all economists predicted that unemployment would stay high. So why do so many people seem surprised that unemployment has not declined? While there has been a net job gain, it was only around 18,000 jobs last month – not enough to move the needle much. Certainly, this is a political tool for those seeking office, but the reality is that nothing can be done about jobs until the transformation is close to complete. 

Housing prices and sales remain low and may even drop more this year. In terms of economic recovery, if you toss in the impact of severe weather, banks continuing their reluctance to lend, Congressional diddling, and an abundance of consumer discontent, we will see slow growth into 2012. In fact, count on slow growth through 2014.

When you review all the converging variables – the level of deferred maintenance (for roads, sewer and water infrastructure, airports, ports, buildings, and various federal, state and local systems,) an educational system under fire, Medicare and Medicaid issues, questions about the longevity of Social Security, escalating health care costs, and the ongoing total cost of dubious wars – you have the ingredients for predictable economic struggles. There should be no surprise.

I do not wish to imply that one can fully prepare for weather disasters. But I do encourage a commitment to data analysis to determine reality. Once you and your community understand what IS occurring and what might occur with some predictability, sensible preparations can be made. Don’t be surprised if the river floods when engineers have emphatically stated that a certain rainfall or snowmelt would produce flows that would overwhelm existing levees. And, of course, when meteorologists have explained new weather patterns that will bring three times as much rain to the area in heavy downpours. Pay attention and take heed.  Don’t be surprised when conditions change or challenges emerge when they were clearly predicted and/or predictable through simple analysis and scenario planning. I wonder- is your community confronting reality? Is it prepared for the predicted challenges ahead?

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). His new book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, was released in October 2010. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at www.futurescorp.com).

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