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The Allure of Water

Despite the twisted and inaccurate fulminations of climate deniers, we are experiencing a serious decline of water resources in the western U.S. that will have enormous economic repercussions. It is not so much that some refuse to recognize drought when they see it, or that they can’t seem to grasp the origin of well-proven causative factors that frustrates and confounds. The greater concern is that the volume and passion of their denial will inhibit real progress toward solutions. Those of us who deal with strategic planning understand that declining water resources is a legacy issue. Whatever decisions we make or don’t make now will haunt many future generations. By wasting time pontificating about causation or responsibility we merely create a more substantial foundation for a serious and prolonged disaster…one that could last for decades or even centuries. Recognition is one thing, action is another. But both would be better supported and energized by common vision, shared resources, and collective will. One of the feature stories in the March 18 edition of USA Today dealt with drought in the western US. In it, data clearly indicated that state reservoirs in California have only enough water for approximately one year. Since that article, Governor Brown has declared an even higher level of emergency with mandatory water rationing. Prior to that, Bettina Boxall reported in the Los Angeles Times that parts of the San Joaquin Valley are ‘deflating like a tire with a slow leak’ due to wells going dry and the earth settling into vacated space. Overpumping has been a natural response by farmers who are desperately trying to grow crops and avoid economic disaster. Many of the less fortunate have already been bankrupted by water related crop failure. Claudia Faunt, of the U.S. Geological Survey noted to Boxall that aquifers are “like a bank account. If the money you put in is less than what you’re taking out, it’s a deficit. How long can you withstand that?’ Not only in California are surface and underground reservoirs declining or going dry. The same is true in the Midwest, Southwest and parts of the Northwest. Boxall’s comments were based on the research of USGS hydrologist Michelle Sneed, who studies earth subsidence, or its sinking into space vacated in underground aquifers. Over half of the entire central valley of California has dropped by more than a foot. Even if aquifers rebounded, this shrinkage has permanently reduced their capacity, adding even more concern for the future. If you haven’t seen the astounding pictures of Lake Oroville, in Oroville, California, or Folsom and Shasta Lakes, take a look. What were once large and picturesque lakes now look like small ponds or sand pits with rivers running through them. Just looking at the NOAA map depicting the U.S. Seasonal Drought Outlook, released on March 19, is enough to give you the willies. Talk about another fire season! California’s Central Valley extends for around 400 miles beneath the Sacramento and San Joaquin valleys, holding water that entered the ground ten to twenty thousand years ago. With little snowpack, which is at a 25-year low, to provide spring runoff and much less annual rain, this and other aquifers will rapidly go dry or recede so low that it will be impossible to reach the remaining water. In the best cases, water may be reachable, but doing so will be costly, and those costs will be passed on to farmers and, ultimately, the consumer. As with all human challenges, the biological ‘pleasure/pain’ principal is prominent in the ongoing water dilemma. This principle is simply that, in biology, and certainly with humans, organisms do not migrate, evolve or actively address negative conditions until the pain becomes unbearable. Once that threshold is reached, there will be migration (think dust bowl era for us humans), or evolution, which for people means policies, process and economic manipulation. Areas with ample water and the promise of seasonal replenishing will be highly attractive for those considering migration. While Idaho, Oregon and Washington are experiencing reduced precipitation, many areas enjoy enough annual rainfall and runoff from snowpack that serious drought is not yet a huge concern. This means, for those states with interest in economic growth, that water has become the most valuable asset for attracting business investment and workers who are either victims of drought or wise enough to migrate ahead of the rush. This potential loss of commerce and workers is serious business for states reeling from drought, but just as serious for those interested in economic vitality. As I see it, water is now an enormous attribute for any state, county or city with the good fortune to have ample supplies. However, the key question will be how to balance in-migration of users with water supplies that could, based on the vagaries of a capricious jet stream, dwindle over time. While there is heartfelt compassion and empathy for what is occurring in Arizona, Nevada, Utah and California, there are emerging opportunities for businesses, farmers, and workers who seek new options. We must begin to grasp the full measure of what long-term water shortage will do to the national and regional economy and its impact on families, communities and the workforce. Water is powerful. While we recognize its power as a natural force, we must now accept its power to erode, alter or build various facets of modern human society. Throughout history, water has given rise to civilizations and the lack of it has helped destroyed them. For a while, we may have tamed rivers, built reservoirs, and harnessed the power of water. Perhaps we must now recognize that we have little control over some natural forces that will ultimately find their own course. Our best option is to respond with wisdom and prudence to salvage what we can and build on what nature brings in the years ahead. JFL Pic Blue Shirt-Yellow TieWith 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). Reprints of his book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders (2010) has sold out three times. 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 http://www.futurescorp.com).

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Woulda, Shoulda, Coulda

This short essay may imply a tinge of retrospection that may result in revelation or at least casual rethinking. We launched into 2014 with anticipation of a reasonably productive year and maybe some real progress in several areas. The good news is that that economy does appear to be gaining overall strength even though it will no doubt fluctuate a bit as the world turns. While I embrace a measure of optimism and continue to assume the best, I am somewhat troubled by continuing reports of unemployment, underemployment and, perhaps more worrisome, the growing number of people dropping out of the workforce. The latter phenomenon skews employment numbers but the emerging stories behind this mass abandonment seem to signal a deeper, more pervasive malaise.

The central and most troubling social questions are, ‘What were people thinking all those years when times were good? Did they plan for the potential of a downturn or for the prospect that their job might not last forever? Did they save money, live within their means, and acquire additional skills while times were good? Did they pay attention to the many campaigns encouraging retraining or take advantage of myriad retraining programs?’

Stories abound of struggling breadwinners underemployed in minimum wage jobs, if they can find work at all. Displaced workers lament they have looked for months or even years for work after having been displaced or abandoned by their former employers. There is no way around the fact that this is sad and troubling. However, when one begins to explore the deeper circumstances contributing to the current dilemma, it becomes clear that many of these people were good folks who never, ever thought, ‘What if?’ Many purchased homes they really couldn’t afford, had little in savings, splurged on every conceivable toy, did not seek new knowledge and skills, and for years generally ignored admonitions to, ‘live within your means, save, and prepare for a challenging future.’

The ongoing debate over extended unemployment benefits is illuminating the plight of millions. To be sure, some were victims of scams (which, with good counsel might have been avoided) or medical emergencies that drained precious financial reserves, but on the whole, these were rarer than you would think. Others had grown up in environments that did not promote education, advancement, or a bright future. But millions of the citizens now struggling were complicit in their predicament. The underlying debate over unemployment benefits is now subtly addressing the value of continuing benefits to those who did not actively participate in their own preventive measures. Will these benefits merely extend the malaise or, worse, promote it? Are we creating a broad, deep stratum of America that takes little or no responsibility for their own misfeasance or lack of foresight?

Those advocating ongoing assistance for those actively seeking retraining or repositioning for the future are addressing this social challenge. This country must take care of those who cannot care for themselves, protect those who are unable to protect themselves, and extend a hand to those who have experienced unavoidable catastrophes. However, there must also be a clear message sent to those who have consistently had the means to change their lives but have chosen not to do so.

Another round of unemployment benefits was prudent under the circumstances. The future, however, will belong to those wise enough to recognize the value of knowledge and skill acquisition in stable or emerging industries. Education and continuous training is essential in a global market that is increasingly technical, computer-driven, and skill-specific. Those who for the past several decades have lived for the moment are now caught in a whirlwind of new concepts, technologies and expectations that are difficult to grasp, let alone master. So, with a nod to Darwin, they are passed over for those more adept in this rapidly evolving world.

There is no castigation or admonition here. Reflection and a retrospective view can, at least on the surface, seem cruel. But the real message is that most of us, at some point, and often at many points in our lives, have choices. It is said that to become wise, you have to have been unwise. The real test is whether we, as individuals or as a society, will have the wisdom to see the future and have the discipline to make sensible personal and collective decisions that prepare us to thrive in the 21st Century.

JFL Pic Blue Shirt-Yellow Tie

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). Reprints of his book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders (2010) has sold out three times. 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 http://www.futurescorp.com).

Resilience & Stability

My first blogs of 2013 were cautionary but generally optimistic, citing recent oil discoveries, job growth, growing consumer confidence and a stock market that at the time hovered around 14,000. As the year began, there were many conflicting variables, some promising a strong year, others indicating emerging options that could tip either way. And, of course, the global economy was struggling, with some doubt whether the EU could sustain itself or would spin out of control like some ill-conceived South American junta. War, political and sectarian conflict, famine, drought, floods, tornados, and just about every other conceivable calamity were part of our daily lives. Even with all the drama and turmoil available to dampen optimism, on the whole, 2013 began well and seems to be ending reasonably well.

As I write, the DOW is well over 16,000, around 2,000 points higher than a year ago indicating, at least to some degree, returning optimism. The reasons for this are diverse, but business has done reasonably well, savings have increased, consumers are cautiously spending, home sales continue to rebound, and the economy has grown around 1.7%. More importantly, the economy has gained momentum during the 2nd half, which, if continued, should carry us to 2.5% growth in 2014. While not a huge boost, it reflects a level of stability and caretaking America must have to rebuild its base.

Based on recent Kiplinger reports, we may see unemployment continue its downward drift to around 6.9% in 2014, along with a significant decline in the federal deficit, down to 3.3% of GDP from 4.1% in 2013. These alone are good signs, indicating to the observant and rational that at least some federal policies are working as intended. Of course, if you reviewed the March 25, 2011 Kiplinger Letter, you would see a growth prediction of 3.1%, which proved to be overly optimistic for 2011, 2012, and again 2013. The difference going into 2014 is that new oil reserves and supplies are driving down the cost of crude, and if some estimates prove accurate, prices will fall to the $85 range, providing a significant economic boost. Even at $90/ barrel, there will be a positive ripple effect across the economy that was not available two years ago.

The Fed has shown remarkable prescience and restraint in not only formulating a coherent fiscal strategy but in its implementation. While the financial and health care industries seemingly remain outside the bounds of rational control, there are signs that people have had enough. Whether Congress will act is another question, but monitoring is underway and new legislation, if implemented, may begin to curb the grotesque predatory practices that plague certain elements of banking and healthcare (for those inclined, read Elisabeth Rosenthal’s article, As Hospital Costs Soar, Even Stitches Cut Deep, New York Times News Service 12/3/13).

From all accounts, Europe will continue to struggle, hurting U.S. exports and continuing to limit our economic growth. This will be the third year in a row that we have not had much support from our largest trading partner and, with global economies struggling, the prospect for any more than moderate (3%-4%) export growth is slim. Overall, not dismal but below desired levels.

From my vantage point, there is reason for optimism, but only if tempered with understanding. Clearly, growth will be less than robust. However, keep in mind that the U.S. and all world economies are still undergoing a major decade-long transformation, with multiple converging variables. Powerful forces are at play and many are uncontrollable in the short term (climate change, poverty, famine, deforestation, ocean degradation, sectarian conflict, territorial disputes, etc.).  Business and government must form stronger coalitions to forge sustainable strategies and a new foundation for long-term prosperity. While desperate, ill-conceived interventions harm private enterprise, so does the proliferation of rackets, scams, accounting fraud, and avarice that are hallmarks of uncontrolled capitalism. Balance, vision, planning and mutuality are the keys to strength. They are also the keys to a future that is not characterized by destructive private or public policy but by collaboration, commitment and equality.

2014 is dawning relatively bright. Though guarded, there is optimism mixed with prudence- a good thing for a consuming public used to an endless cycle of spending, acquiring, and discarding. The prospects for a fairly strong year are growing. Janet Yellen should keep the Fed on track, business will invest as opportunities emerge, Congress may see the light (doubtful), and the public will begin to demand greater progress in the areas of health care, banking, education, infrastructure and the environment. I believe in self-determination and resilience. The Futures Corporation remains committed to achievement, to helping others fulfill their dreams and to contributing to a bright, sustainable future. It won’t be easy, but good things can happen if we stand together.

jfl-pic-blue-shirtyellow-tie.jpgWith 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). Reprints of his book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders (2010) has sold out three times. 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 http://www.futurescorp.com).

Education and the Future

A tectonic shift is occurring in America’s education system. Common core standards have been accepted by 45 states and are now being recognized by many as the country’s best chance for a vibrant economic future. This flies in the face of budgetary limits and the narrow views most legislatures demonstrate regarding funding for education. While the business community and more enlightened legislators seem to understand that the 50 million children now in the nation’s K-12 educational system are the foundation of the future, others seem more comfortable with substandard test scores and achievement far below that of many other countries. This narrow provincial view is eroding America’s options for long-term economic vitality and creating limited opportunities for our young people to compete in a global marketplace.

The fourth annual NBC News Education Nation Summit was held October 6-8 at The New York Public Library. Moderated by Brian Williams, the Teacher Town Hall portion aired live on MSNBC on Sunday, October 6 and was extraordinarily powerful. To say the least, the 2-hour fact-based program was moving but probably left many viewers with feelings of anger, frustration and exasperation. From virtually any perspective, as with many other current challenges, many of the country’s educational troubles lead directly back to the Congress and state legislatures, neither of which seem enlightened enough to triage school funding to achieve the greatest gain.

It is clear that teachers are spending on average from $150 to $400 a year out of their own pockets on classroom materials due to state and local funding shortages. And, when compared to similarly academically prepared and continually educated professionals, they are paid around 30 percent less. Many districts are wholly unprepared to implement common core programs due to insufficient funding for materials and teacher training. Yet, the business community has acknowledged that national standards leading to greater skill acquisition are absolutely essential if this country is to remain competitive.

A dominant question pertains to the nation’s future workforce. With 78 million Baby Boomers either retired or heading in that direction, workforce planning and development has become a Tier I priority. However, it must be considered in concert with K-12 preparation if we are to develop the technical skills required for a globally competitive workforce. U.S. schools are losing over a million students a year before they graduate. This is an enormous number of non-educated individuals entering a workforce that demands rapidly escalating knowledge and intricate new skills. Even though the national on-time graduation rate (74.9%) is the highest in 40 years, there is a long way to go.

From a purely selfish and performance-driven view, it would seem wise to invest in education if, for no other reason, to access the knowledge and skills required to operate in complex, technology-dependent organizations. But investment requires understanding what teaching and educating is all about, which is curious because all of us have experienced the entire educational process. Even with profound personal experience, few seem to grasp that teaching is about relationships and connecting with each unique student. It is not about rote drills and introducing technology. All the new technology will not improve learning if a student is unwilling to invest the time or has been raised by parents who do not support the educational process by reading to their children, helping with homework, and generally reinforcing good study habits. It is even more essential that parents believe that education is important and valued in the family.

It is important to realize that teaching is not a program but a process. Just as important is the understanding that teaching means caring about the ultimate success of our children. Teachers don’t teach math, English, or science…they teach children, and every child is unique, complex and worth individual attention. Unfortunately, our system is becoming driven by the belief that technology is the panacea that will save the educational system by introducing a new learning environment that creates a more modern, hyper-prepared graduate. So far, the exact opposite is proving true. Children still need individual attention, nurturing, counseling, guidance, encouragement and mentoring that only professionally prepared and experienced teachers can deliver in concert with family support.

We must keep in mind that, as one teacher noted during the MSNBC program, ‘We are not going to test our children to greatness. We are going to teach our children to greatness.’ By using emerging tools, such as the Kahn Academy, teachers may be able to provide more individual attention. The conundrum is that integrating technology requires constant training and investment. It requires a broad master plan with a vision of what we are trying to accomplish. In addition to teachers, three tiers of education are required: parents, communities, and students. It must be an integrated system with broad support and financial backing. Even more critical is that legislatures and Congress are the wrong institutions to create policies and regulations. These must come from the educational community, which, until recently was reluctant to embrace performance reviews and higher practice standards. This is rapidly changing and will continue to require patience, innovation and vision.

The future depends on educated people who can compete and prosper in an evolving world. Is the U.S. ready to refine, upgrade and promote its educational system? There are good signs, but financial support is sorely needed. Before this happens, I predict that more integrated private and public sector involvement is essential. It’s time to define the desired educational outcomes needed to meet predicted challenges and build a system to suit. Moreover, we need responsible citizens who understand freedom and know their history, geography, science, English and math. We can build a remarkable future through education but must begin now. The title ‘Education Nation’ is worth adopting. Becoming such a nation will require much more effort and commitment.

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). Reprints of his book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders (2010) has sold out three times. 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 http://www.futurescorp.com).

The Wheel Turns

The American culture is weary, its landscape littered with battered campaign signs, bumper stickers and assorted banners. Associated election costs were staggering, as were the depths to which both parties sunk in deceitful ads, elusive debate rhetoric and campaign speeches filled with outright lies and misrepresentations. For most of us, the end could not come fast enough. Thank heaven this event is over and we can get back to work.

I won’t comment on candidates or parties but I am deeply concerned about the election process and its aftermath. For now, let’s just say that the process of electing a president has become onerous, manipulative, and stupidly expensive. I wonder how many citizens even understand what is at stake during these tragicomedies that threaten to obfuscate the challenges before this nation? Regardless of all the folly and expense, the wheel continues to turn and we had better prepare for a bumpy 2013.

The ‘fiscal cliff’ is the nom de jour, generating enormous media attention, as both parties joust for position and desperately try to avoid blame or responsibility…for anything. Taking stock of the best available data and assuming no huge natural disasters (which may be a reckless assumption), 2013 should generate annual GDP growth of around 2% with the possibility of inching toward 2.5% by 1/1/14. Of course, automatic spending cuts dialed into current legislation, if enacted, equal around 5% of GDP, so could deeply wound any recovery. If this calamity is to be avoided Congress must act by mid- December. Even if it does so, and most of the deductions remain in place, several other reductions related to unemployment assistance, government programs and the loss of earmarked projects will dampen GDP growth. Tax reform and spending formulas must be simultaneously addressed if the private sector is to regain even a modicum of trust in the federal government’s ability to manage its affairs. Of course, I didn’t mention entitlements, which are the primary culprits.

Globally, Europe continues to struggle both economically and with cultures that cannot grasp the twin concepts of austerity and bankrupt governments. Riots fomented by those experiencing reduced pensions, longer workdays, and fewer perks are spreading, signaling entrenched societies that ignore decades of decadence, largesse and myopic governance. As noted previously, the plot always turns and, if reasonable, pragmatic people do not emerge to manage Italy, Greece, Spain and France things could quickly turn ugly.

So, with the Middle East in shambles, Europe struggling, China and India slowing, and South American countries sparring, care must be taken to seek strategic positions that will enable the U.S. to reform within a troubled, warming and conflicted global community.

Several indicators point to emerging domestic forces that could encourage steady growth. With around $2 trillion sitting idle in American businesses, there is ample cash to invest in inventories, equipment, facilities and jobs. Reluctance to put those resources in play is tied directly to trust in the federal government. More accurately, it is tied not to government programs, but to Congress, which is earning the lowest marks in American history. Will it do what is necessary to cut spending, retain sensible regulations, and introduce wise tax policies that are forged on a dual platform of practicality and vision? Housing prices are beginning to rise, new construction rose throughout 2012, domestic debt is lower than in decades and savings has increased across the middle class. Consumers are beginning to regain a level of guarded confidence, returning to markets and stores for essentials and more. But will this last? The next 3 to 6 months will tell.

In December, I’ll share predictions for 2013. But know ahead of time that they are neither rosy nor deeply pessimistic. Climate change and violent, high-damage storms seem to be growing to endemic proportions, costing billions without recourse other than thoughtful preparation or relocation. Growing economic inequality will become more of an issue bringing new opportunities for protest and conflict. With proper structure and explanation, taxes can be raised through various mechanisms that allow users to willingly pay a disproportionate share. The Affordable Care Act will be addressed and modifications will begin to forge it into something both palatable and worthwhile. State and local government will become more important and will continue evolving toward service consolidation and centralization, as public administrators accept the role of government as community builder.

The coming year will continue a process of change that will accelerate into 2014 and 2015. America is transforming. Industry is experiencing a resurgence; on-shoring is accelerating; consumers remain active; and people are beginning to find comfort in smaller, more affordable homes, lower debt, and reborn neighborhoods.  Where is your community in this continuum? Is it leading, following or ignoring the signs?

JFL Pic Blue Shirt-Yellow TieWith 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). Edition two of his book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, will be released in spring 2013. 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 http://www.futurescorp.com).

TORTOISE VS. HARE

Similar to a family that has slowly spent itself into deep credit card debt the U.S. is now facing realities associated with reducing debt while maintaining an enduring vision of prosperity, opportunity, security and relevance. As with so many families and businesses that have built untenable debt, this country must retrench, retool and reconsider partisan practices and philosophies that have reaped a multidimensional bounty of a muted economy, eroding infrastructure, marginal schools, constant military deployment, and foolish gridlock.

Since 2008, the world’s brightest and most practical economists have unconditionally stated that full recovery from the Great Recession would take the better part of a decade. Further, that a government-induced fiscal stimulus was prudent and required to avert a global depression, and that a carefully crafted balance among government intervention, private investment, entrepreneurial spirit, and long-term vision is essential. So far, too many people have lost sight of the fact that recovery is a slow, deliberate slog and not a sprint back to the good old days.

There is a transcendent geometry at play here. First, this is a global challenge. Second, unwise, errant politicians in the U.S. and other countries have spent more time jousting than addressing their national problems. Third, astounding levels of global competition continue to counter previous options the U.S. had enjoyed for a century.

As Fareed Zakaria noted in The Post American World,(W.W. Norton & Company, 2008) it is not about the decline of this country so much as it is the rise of the rest of the world and other countries’ desire to ascend to what we have enjoyed for so long. It is difficult to sell our products to China when it wants to develop its own consumer markets for its business community. Fourth, U.S. debt rose enormously from 2000-2008, fueled by a period of lax regulation, reduced taxes, and high levels of unfunded spending. Levels of growth enjoyed during the 1990s may have been unsustainable but, rather than carefully managing finances and saving for a predictable contraction cycle, virtually nothing was done.

Vision requires an understanding of cycles. Whether cultural, social, environmental, or economic, all things tend to move in cyclic patterns. Myopic decisions involving fiscal, regulatory, security, education, environmental, or domestic policy have led to a deep financial hole. Unfortunately, extraction is not dependent on any one factor; it will take vision, balance, patience, commitment, collaboration and the seemingly misplaced ability to set aside petty affiliations and congressional competition.

Perhaps most important will be the recognition that recovery and the re-ordering of national perspectives will take time. There is a major transformation afoot that requires perseverance, trust, cooperation and a step-by-step plan that is deliberately and carefully executed. It is not a crap shoot; it cannot be an ‘every man for himself’ proposition; and it cannot be founded on misplaced expectations that, if the right leader is elected and a few policies are amended, jobs will return, prosperity will bloom and everything will be fine. It won’t happen. It is almost 2013; times have changed; the world has evolved and there are just too many factors that weigh against rapid recovery.

Decline can be arrested through visionary policies that create synergies among competing forces. Spending for national defense must be balanced with investment in America’s infrastructure, educational system, and applied science. Policies must integrate a long-term vision for and acceptance of immigration as a major economic engine – but only if properly conceived. Policies must also balance the need for regulations that guide and protect with those that energize and encourage. And, certainly, citizens must demand accountable decision makers who embrace the long view and discard motives grounded in ideology, affiliation, avarice and petty competition.

Is there hope for these things? I believe so. But citizens must first embrace a long-term perspective and recognize that slow and steady will win this race. With other countries struggling and failing to maintain their GDP trajectories, we will begin to see decline in various aspects of international competition. This will provide a platform for new enterprise opportunities and refresh America’s allure for the world’s best and brightest who remain motivated to choose these shores to invest, build business and contribute to society. The game is beginning to change. Will we be ready?

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 http://www.futurescorp.com).

The Great Contraction

Perhaps a more appropriate title for this commentary would be “The Great Contradiction.” Expectations and comparisons to historic norms continue to generate demands that cannot possibly be met. Blaming government, Wall Street, the EU, China and global warming has become underpinning for virtually every talk show and faux news report.  Fanned by political rhetoric, various factions point to elected and business leaders as primary causative factors of economic and social discord, when neither seems to have the vision nor power to implement remedies. Not to say there are no remedies; they are abundant, driven by reality and some are even plausible. The problem? There is a larger game afoot.

Noted often in this Blog, the U.S. and all European countries are in a major systemic correction. After years of growth, over-extension, competition, graft, and greed, a natural re-alignment is underway. In some ways, why it is occurring matters little. Certainly, academics and politicians want to know, either for intellectual enlightenment or as ammunition for political gain, but, as with global warming, all that truly matters is the short- and long-term impact. The Romney/ Obama road show is just getting underway and will accentuate the polarity between expectations and reality. Along the way, I guarantee that the message of ‘confronting reality’ will be obfuscated by finger pointing, senseless data, and visions founded on quixotic views of what should be.

While I remain optimistic about the long-term future, this decade will be characterized by precarious economics, slow re-engagement, timid investors and lagging job growth. Especially in America, where there is a consistently weird demand for low unemployment and rapid return to economic vitality, this will take time.

The Economic Recovery Act provided over $830 billion in funds meant to incite growth. The federal government assisted the banking and elements of the automotive communities, and spread money around willy-nilly to other sectors through grants, contracts and loans. Even as recently as this morning on Meet the Press, Diane Swonk, Chief Economist for Mesirow Financial, noted that TARP funds did indeed save the economy and remarked that most economists agree that it was a prudent strategy.  Los Angeles Times reporter Jim Puzzanghera wrote a fine article (May 3) in which he cited a Fitch Ratings study that concluded that, without the stimulus the U.S. would have been mired in depression and the severity of decline would have been much worse. The article also cited studies by the Congressional Budget Office and economists Mark Zandi and Alan Blinder, both of which concluded that the stimulus had positive economic impact.  What is left unsaid in every study is that there are inherent issues in the U.S. workforce and the overall economy that will continue to hamper recovery.

In a world of rapid prototyping, global competition, and technological advancement, U.S. workforce readiness is seriously inadequate. As markets and products have evolved, driven by product and delivery technology, workers seem more interested in the European model of ‘retire early and just hang out with a great pension.’ Far too many people are either not interested in or incapable of keeping pace with escalating knowledge and skill requirements. Instead, they demand to be treated ‘fairly’ based on historic contributions and expectations that may be no longer viable. While many Baby Boomers have worked diligently for decades and have contributed to this country’s economic progress, that alone cannot be a platform for future policy.

In addition, too few young people have the work ethic, technical skills and initiative to provide positive gain for employers. As Baby Boomers begin to retire, regardless of their enormous contributions or demand for fair treatment in retirement, they have limited options when considering succession. Therefore, a stalemate exists: Boomers want to check out, private and public employers need bright, capable replacements and the public wants growth, vitality, opportunity, efficiency, low taxes, security, great infrastructure, and abundant jobs. Talk about a ‘can’t get there from here’ scenario!

Another corollary is that economic stimulus and Federal Reserve policies drove down interest rates, which kept the economy alive but reduced investor gains, which in turn created a less optimistic investment climate as people and institutions holding money adopted a wait and see mentality. Within two years, this compounded into a bunker mentality, which endures today. So, these converging variables have created an environment that cannot possibly generate desired levels of growth until bad debt is slowly flushed from financial institutions, Boomers adapt to new, contracted expectations about their retirement, the educational system produces more capable replacements for those who are retiring, young people adapt to reasonable income and spending levels, organizations (private and public) focus more on professional development, and the overall culture calibrates to reality.

My questions pertain to the role of public leaders in this enormous conundrum. Who will speak the truth to our communities? Who will take time to understand the complexities of a recalibrating economy and have the skill to express it to citizens? The U.S. has encountered difficulties many times in the past 200 years. However, they were typically more straightforward. People could grasp causation, significance, and the path forward. While previous challenges were no more personal, this time they are more subtle, more complex and deeply systemic. As always, it is a question of leadership. But it is also about the ability to rally our communities to common interests that are founded on purpose, vision and sensible expectations. This is a critical role of government, its employees and its leaders. Time will tell if they are prepared for the challenge.

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 http://www.futurescorp.com).