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Thinking about the Future

Half of 2013 is in the bag or perhaps in the bank for those who have enjoyed a modicum of prosperity over the first six months. Nonetheless, we are beginning to view the downhill landscape of a year that has meandered in a generally positive direction. Though the DOW is strong, there are far too many variables that would indicate a turn sometime in the near future. While I don’t look with great anticipation toward the prospect of economic or social negatives, the probability of a slippery slope continues to inch upward.

Politics continues to cast a pall over the American landscape, with congressional ratings at historic lows (hovering at a dismal 9%) and gridlock so pervasive that many are giving up any hope for progress during the next three years. This does not bode well for the economy, nor does it create a healthy environment for consumerism, innovation, or risk. The banks are again enjoying record profits while lamenting regulation that they predicted would stifle their and the economy’s ability to recover from the recession. The economy is sluggish but generally healthy and banks are doing quite well, thank you. As an interesting side note, in the Lords of Finance: The Bankers Who Broke the World (2009), author Liaquat Ahamed pointed out that during the previous 100 years, there were just two short periods where banks were able to sustain high profits and bankers were paid exceptionally well. These were during the 1920s and the two decades leading up to 2008. During all other periods, banks were boring, paid only moderately and were dedicated to advising and helping their customers succeed. They did not make money by trading for their own benefit but served clients and facilitated business arrangements between parties needing capital. During those periods Wall Street was known for its steady, prudent, and conservative approach and aversion to anything other than caution.

As noted in my previous Blog, there is evidence that fossil fuels will be available for quite some time, due primarily to oil sands in northern Alberta, America’s massive deposits of shale gas, Brazil’s new offshore discoveries, and new technologies that allow oil recovery in previously abandoned oilfields. However, easy oil is gone. The ‘new oil’ will be more difficult to find and much harder to extract and refine. So, production costs will rise and the price per gallon will probably be as high as if driven by scarcity. At least we’ll be able to motor on for awhile, enjoying a mobile lifestyle while we pay through the nose for that privilege.

Sensibility, Frugality, Austerity

Why do some people who never make a lot of money manage to have nice homes, money in the bank, drive decent cars, go on vacations, get their kids through college, and retire comfortably?  Research tells us that these individuals and families are sensible, don’t overspend, buy what they need, save religiously, and use credit wisely. They make plans and tenaciously follow them with a longer view than most. Do they suffer and sacrifice? Apparently not. For the most part they are not austere, but merely thoughtful people who plan and live within parameters that allow a generally fulfilling life.

America is in a period that has several conflicting variables. A growing population is facing finite or even diminishing water and food supplies due in part to escalating drought. Even with abundant natural resources, such as natural gas, coal, timber, water, and a measure of oil, there are growing doubts about whether supplies will be sufficient to support an acquisitive, wasteful population that is soaring past 320 million and industry that is equally rapacious. Is austerity the answer?  No, because it has proven unsuccessful during economic stress due to the value of active consumers and industry that must continue to invest in its own future. Wise spending, debt reduction, additional savings, and long-term planning are underpinnings of a successful society and economic health. Slow, positive growth that builds a platform for future vitality is better than austere no growth policies that stifle our natural tendency to risk, innovate and achieve.

In Pinched: How the Great Recession Has Narrowed Our Futures and What We Can Do About It (2011), author Don Peck reveals why the economy is much more dynamic than we recognize. It is merely different because it is evolving away from where it has been for fifty years and is assuming different characteristics. After decades of expansion and largess there are signs that major contractions are underway in many sectors. Wages are re-centering to a lower level and housing prices may never regain their formerly inflated ‘value.’ Inflation will continue to inch upward, especially as oil and food prices rise, putting more stress on middle income families and small business. For those adept at belt tightening, this contraction will be tolerable, but for how long? Peck believes that U.S. companies and institutions should invest in more jobs, even if they are for part-time workers or those who job share. He argues that, rather than lay off workers who then join the unemployment rolls and use government resources, we should keep more people working even if at lower hours. This would actually increase the number of jobs and infuse more capital into the economy. 

Peck’s overriding concern is that work sharing has the support of the majority of economists but is not being embraced by industry. It would increase capital, stabilize the economy but not overburden social services. In a stellar article in Foreign Affairs (January/February 2013), Fareed Zakaria pointed out that, in the modern era of the United States, there has been a direct correlation between investment and growth. Yet, for the past 30 years, the government has been reducing its investment in infrastructure at a time when the American Society of Civil Engineers has given the country’s infrastructure a D grade, noting that it would take over $2 trillion just to bring roads, bridges, ports, airports, water and wastewater systems up to acceptable standards. Unfortunately, Congress allocates infrastructure funds based on politics instead of need or broad economic value. The current politically driven system has proliferated and expanded to the point that may now be one of the most debilitating of America’s cultural norms.

Politics has become an unsustainable racket that has transformed America. While many people are comfortable with frugality, they are demoralized by the remorseless pillage of the middle class and deterioration of its economic foundation. The future is coming whether we like it or not. Prosperity during transformational times requires strategic thinking, clarity, good data, and will. The real question is whether we are truly prepared for the challenges ahead and will be able to avoid calamities that currently seem both predictable and probable. There are still good things happening and progress is being made, but will those positives be enough to counter predatory forces driven by avarice rather than a shared long-term vision? It’s hard to say.

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). 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).

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Myopic America

Those concerned souls who perceive the glass as half-empty are often rewarded by seemingly random events that justify their admonitions. When BP’s massive Deepwater Horizon Malcondo well blew out on May 24, 2010, followed by the Fukushima nuclear meltdown just a year later, many predictors of a dire future embraced these events as validation of earlier warnings. The same holds true with those who have amassed enormous amounts of data indicating climate shifts that will alter life on this delicate planet. So far, weather patterns have behaved as predicted and, whether causative factors can be proven, it is clear that serial 200-300 mph tornados are becoming more common, along with drought, violent storms, floods and jet stream relocation.

In the meantime, the DOW has been hovering around 15,000, consumer confidence is generally strong, and the economy is showing signs of renewed vigor, albeit weaker than hoped for in mid-2013. Judging from what I read and by studying social and market behavior, it appears that most choose to ignore negative and challenging forces, even if backed by significant scientific data and historic relevance. As noted in this space over three years ago, those now living in America don’t know truly hard times. Especially when compared to our parents and grandparents who endured the Great Depression and WWII, those of us growing to maturity since 1950 have never known true hardship. Even the poorest Americans have many options provided by non-profit organizations and public social services agencies that moderate the most serious effects of poverty. The American poor, when compared to the poor in Europe, Asia, Middle East or sub-Saharan Africa, have it pretty good.

Perhaps the greatest concerns, when looking just 10 to 20 years ahead, are social, cultural and economic evolutionary patterns that indicate an almost total ignorance of trends and predictable outcomes. In their recent books, Too Much Magic (James Kunstler) and The Efficiency Trap (Steve Hallett) (both on the must read list), the authors lament that far too many middle aged and young people totally disregard historic fact and clear data and instead assume that some magic technical solution will emerge to solve every identified challenge. And, that consumption continues to outpace production and resources are being rapidly depleted. The global population is above 7 billion and remains on track for 9+ billion by 2050. Potable water supplies are rapidly declining due to drought and agriculture must compete for available water to grow crops to feed more people. The hunt for oil has assumed almost comic proportions, with idealistic and laughable assertions that we’ll never run out of oil (Charles Mann in The Atlantic, May 2013), when actual global production has not increased nearly enough to keep pace. As Kunstler notes, there is a real dilemma when young people disregard facts related to resource depletion and equate technology to energy. Technology may help create a path forward, but it cannot replace oil reserves, forests, depleted fisheries, minerals and water.

Of course, throughout history there have been fluctuations that became cycles. Today, some trends lead to predictable events and evolutionary progress while others are difficult to assign any measure of probability. My view parallels that of Tom Friedman, who, along with Michael Mandelbaum, suggested in That Used to be Us (2011) that we first must clearly define the world in realistic terms then decide exactly what we need to do to thrive in it. Second, this country has failed to deal with its biggest challenges-particularly education, debt, deficits, energy and climate change and now must deal with all simultaneously. Unfortunately, they are all huge issues and will take time, resources, and collective will, which seems in short supply when witnessing the political and economic dysfunction in this country.

As a society we are nearsighted and seemingly oblivious to spiraling trends that are leading America away from its traditional path. We have the data, ingenuity, resources, and institutions to regain our will and vision; we have the power to decide what is important and create sensible plans that will chart a new course toward a desired future. The ultimate questions pertain to whether we are too soft, too relaxed, too focused on recreation and too self-absorbed to intervene in our own misadventure. Are we still capable of such an intervention? Or will we continue celebrating the DOW, ignoring the challenges and enjoying our vacation from the truly stark realities of our time?

It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.                      Evolutionary Theory

jfl-pic21With 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).

And Now for the Weather…

This Blog covers a wide range of topics but rarely delves into climate change or anything remotely associated with global warming. However, as I review a wide range of economic, social, cultural, and political literature in between issues, it is amazing how much is now driven by changing weather patterns. In my view, it is not essential that we understand all causative factors and certainly, I am not in a position to assign blame, but I do find it increasingly wise to know what’s going on. Of course, that wouldn’t have helped the folks in Oklahoma this week who have been devastated by serial Category IV and V tornados.

In pursuit of the best possible information, I typically turn to a non-political, unaffiliated ‘think tank’ such as the Earth Policy Institute (EPI), which, in my view, is one of the best at reporting data and leaving interpretation to the reader. Perhaps most important to readers, the EPI has identified eco-economy indicators – twelve trends that are tracked to measure progress in building a sustainable economy. While I won’t share all of those trends in this limited space, some recent information from the EPI’s Janet Larsen is worth noting and considering, especially if you devote time to long-range planning. Again, there is little interpretation here. There is value in knowing what is happening and using that information as a foundation for discussion.

A review of recorded data shows that the world has warmed by 1.4 degrees Fahrenheit (0.8 degrees Celsius) since the Industrial Revolution, with most of the rise in temperature coming since the 1970s. Such rapid warming is unprecedented over at least 20,000 years. The average global temperature in 2012 was 58.2 degrees Fahrenheit. This makes it among the 10 warmest years ever recorded, all of which, according to NASA data dating back to 1880, have occurred in the last 14 years. July 2012 was the hottest month ever in the continental United States, according to the National Climatic Data Center. Overall, 2012 was the hottest year in U.S. history, topping the twentieth-century average by more than 3 degrees.

Records for the winter of 2011-2012 clearly show that snow coverage across the lower 48 states was the third lowest on record, and for many areas, summer-like weather arrived in March. Close to 15,000 new high-temperature records were set. 2012 was the warmest spring in U.S. history, setting the stage for further high temperatures and even more drought, which at one point covered nearly two thirds of the country. Purdue University economist Chris Hurt estimates the cost of the drought could exceed $75 billion. Unfortunately, with drought now predicted for 2013, particularly in the Great Plains, the odds of a second year of harvest shortfalls are increasing.

From a global perspective, 2012 was quite warm in Canada, where last summer was the warmest on record. For Russia it was the second warmest, just behind summer 2010. Crops suffered in both years, contributing to rising food prices. In France, an unusually late and sudden heat wave toward the end of August broke the high-temperature records set during the 2003 heat wave that killed nearly 15,000 people nationwide.

In northeastern Brazil, the first half of 2012 was extraordinarily dry. More than 1,100 towns were affected in the worst drought in 50 years, in drastic contrast to August 2012, which brought extreme rain and flooding to central and northern Argentina, with rainfall in some places double previous records, based on statistics kept since 1875.

Most are growing to understand that drought is only one by-product of climate change. The other catastrophic weather event of 2012 demonstrated the other extreme: Superstorm Sandy, which brought more than a foot of rainfall to parts of the mid-Atlantic region. The data indicate that Sandy’s unusual coastal trajectory was due to changes in atmospheric circulation caused by the loss of sea ice in the rapidly warming Arctic. Close to 100 people died in New York and New Jersey and more than a half-million homes were damaged or destroyed. Blizzards blanketed parts of Appalachia with the most snow ever recorded for a U.S. storm in October.

It is now clear that, as the Arctic’s reflective ice cover shrinks, more heat is absorbed, resulting in a smaller temperature differential between the North Pole and higher latitudes. This can cause the jet stream to slow down, stalling typical weather patterns and leading to prolonged extreme events. Regional warming is also accelerating ice melt in Greenland, which contains enough water to raise global sea level by 23 feet.  In late May 2012, southern Greenland reached 76.6 degrees Fahrenheit. In mid-July, 97 percent of its surface area was melting.

Climate change tends to bring more high temperature records than low ones, but it can also bring extreme cold. In late January to mid-February 2012, parts of central Europe did not get above freezing for 20 days straight, twice as long as the February norm. Then at the close of 2012, a dip in the polar jet stream returned frigid weather to Russia, northern and eastern China, and northern Europe. Just a few months after Russia’s second warmest summer, December temperatures plunged to the lowest level in the records kept since 1938. In Moscow the mercury dropped to –22 degrees Fahrenheit; in eastern Siberia, it was –76.

In 2010-2011, Australia had its wettest two-year period in over a century, which came on the heels of a decade-long epic drought. But 2012 began cool and wet then turned dry and very hot. The heat wave was unusually long and widespread, with high-temperature records set in every state.

 As my friend Everett noted recently, “For those skeptics who refuse to believe that we humans are causing climate change, see the Guardian’s recent (May 15) article referencing the comprehensive study of all of the peer-reviewed scholarly studies of climate change over the past 20 years.  The score:  97.1% conclude that climate change is anthropogenic (human caused); 0.7% said it is not anthropogenic; 2.2% are not sure.  That means that of all serious scientific studies, there are 139 that conclude climate change is anthropogenic for every 1 that does not.  I’ll go with the 139.”  In this case, ‘comprehensive study’ means a review of the work of 29,000 scientists on 11,994 papers…not a sample easily ignored (although many will continue to dispute reality).

Without attributing causation, tracking hard data has allowed scientists to create models that predict that increasing global temperatures will produce heat waves, larger, more frequent and more violent storms, more floods and deeper cooling in some areas. The essential question pertains to how climate will impact economic vitality, cultural stability and geo-political harmony. How will the climate impact agriculture?  Where will displaced populations go? What will the health effects be? How should business, government and citizens prepare? If, as the data indicate, the planet has entered a prolonged period of severe climate change, planning and preparation is more critical than ever and denial is no longer prudent. What is your city and county doing? Is scenario planning being done? If not, why not?

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 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).

A Sharing Thing

The March 9th edition of The Economist dedicated several pages to the new ‘sharing economy,’ citing a variety of positives. This emerging ‘collaborative economy’ allows the public to participate in the practice of ‘collaborative consumption’ which in turn has economic, social and environmental benefits. With Avis, General Motors, Daimler and other multinationals getting into the game, it would appear that broad-based collaboration can also generate significant sums for those with excess assets, or more specifically, with the wherewithal to establish businesses to connect the dots. Maximizing underused personal or corporate assets seems honorable, practical and somewhat strategic, especially in a struggling economy with growing social inequity.

While it seems sensible to embrace the elective sharing of autos, trucks, homes, condos, equipment, sports gear and camping spaces, I wonder if a more progressive view isn’t warranted. There was no mention in this article of public sector assets and the wisdom of sharing the enormously redundant government resources found across America. When reviewing the classic organization structure found in virtually all cities and counties, there are identical services with the same mission, expertise, goals and operational plans. Counties have clerks, treasurers, assessors, HR staffs, and departments for IT, GIS, public safety, parks, economic development, public works and utilities. Cities have very similar IT, GIS, public works, public safety, economic development and HR departments, as well as clerks, treasurers, etc. Both may have recreational facilities, libraries and social services programs. Especially in a difficult economy, even a cursory analysis will raise questions about redundant and enormously expensive operations. And, with the emerging emphasis on shared assets and collaborative consumption, why was government not discussed?

Service consolidation has been debated for many years, but tends to lose momentum once local elected officials begin to understand the loss of power and self-determination that might accompany service and departmental consolidation. Incumbent managers could potentially be in jeopardy, with many senior professionals losing positions deemed unnecessary once services were streamlined. My question is, Why is this so different than business? It has been over 20 years since Ted Gaebler and Dave Osborne wrote Reinventing Government (Penguin Books 1992), the first deep dive into consolidated and entrepreneurial government. This movement failed miserably within ten years, and the reasons why are instructive.

After making a splash on the lecture circuit, Gaebler returned to city management and expressed concerns that too many cultural and institutional barriers existed in most areas of the country. Even though entrepreneurial government and service consolidation made sense, there was not enough ‘pain’ in most communities to force necessary change and the concept of ‘home rule’ and centric governance contributed to myopic boundary protection. While I support the home rule concept and believe in the sanctity of local governance, it appears that merging basic services would save a lot of money without inhibiting local decision making.

My reflection here is generally rhetorical. However, U.S. economic challenges will not magically disappear, even with a stronger economy. At some juncture, a new era of wise public management must approach consolidation and resource sharing to preserve precious resources. After reviewing several studies, it seems that some reformists have spent considerable time demonstrating the value and feasibility of merging services. The city and county of San Francisco are two entities with one such success story. How much public revenue could be saved through sensible merging of parks, public works, transportation, utilities, recreation programs, information technologies, GIS, public safety, vehicle maintenance, etc?  What if it could save billions without any degradation in service delivery?

While there has been a trend toward intergovernmental partnerships, this is not the same as permanent consolidation. Partnering agencies retain their layers of infrastructure and facilities, while collaborating mostly in planning and service delivery. The public may see more effective service delivery; it rarely sees significantly reduced costs. Admittedly, the pain of reduced resources has forced some government entities to drift toward consolidation, but these have been defensive, survival-motivated moves rather than an indication of a new era in public administration.

Change will most likely require legislation and an entirely new vision for public service delivery. The real question is whether such monumental change will ever be driven by wisdom, vision and proactive thinking or by enormous social and economic pain that leaves no other choice. The former motivation would be my choice.

jfl-pic-blue-shirtyellow-tie1.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 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).

Over the Horizon

I have often encouraged readers to ‘get on your tiptoes and look over the horizon.’ The practicality of this advice is grounded in the value of being an early adopter or adapter while also being able to spot emerging issues and challenges. A couple of weeks ago, I stressed the importance of understanding the various transformations that are taking place in America and throughout the global community, but it also contained an implicit warning that prescience requires the courage to explore current and anticipated realities that could very well sink our collective ship. The simple question remains, ‘How many have the will to indentify and face those impending challenges that have the power to alter the very foundation, fabric and course of this Nation?’

Converging Variables

The U.S. faces several enormous challenges. Among the most important are:

a)       After years of being the 800-pound economic gorilla, the U.S. must now face global economic competition at an entirely new level. Every community, business and industry in America must be prepared to compete on a more even, no-holds-barred field…but are we fully prepared and will this occur rapidly enough?

b)       Global communication and shared information / knowledge require aggressive new policies, processes, platforms, and perspectives that utilize rather than deflect and discount how information is driving social and economic evolution. Did anyone notice the recent backlash when the concept of a free national Wi-Fi network was proposed? Yet, other countries have broader and better Wi-Fi than the U.S. system, which was created by private companies that squeeze every dollar out of consumers while providing marginal service.

c)       As a country and people, we spend more than we make and borrow to pay the bills. This is totally unsustainable and has led to enormous deficits-not only due to federal government largess, but due to a culture driven by entitlement, avarice and myopic lifestyles. Deficits are strangling this country, but will we act before it is too late?

d)       The ‘threat’ of rapid climate change and ensuing drought, floods, hurricanes, fires, and other unpredictable mayhem  is no longer ‘possible’ or ‘probable’ but is now an annual phenomenon. Prevention has ceased being the best option…we are now in the costly stage of preparation, mitigation and annual recovery cycles. Who bears the brunt? State and local government.

e)       Energy consumption continues to soar, increasing dependence, depleting reserves, and fueling an economy based on cheap fuel. Over time, this cycle will end. Are we doing enough to prepare for the next energy cycle and is there a plan to evolve? Or, will we ride this pony until the end, then, a day late and many dollars short, finally seek new options?

Other Realities

In addition to these realities, there is a very real horizon relative to loss of institutional memory as Baby Boomers retire after building so much of what currently exists. Do newcomers have the required core competencies to take business and government to the next level? With training and professional development sadly lacking at virtually every level of federal, state, and local government and throughout industry, there are signs that sustainability will become a greater issue within five to ten years.

While savings have increased, the average retiree has less than $50,000 saved for a retirement that may last 20 to 25 years. Social Security will hardly be enough as food, medical, energy, housing and long-term care costs escalate. Are we ignoring a huge segment of society that is wholly unprepared for the next two to three decades? What is the role of government? What about personal responsibility? What will happen to all those people who are without the means to survive as they age? 

Some social scientists and economists report the evolution to a service economy while the data indicate a growing resurgence in on-shore manufacturing. With off-shore labor and transportation costs rising, there is a very real possibility that the U.S. will regain greater prominence as a creator and producer, allowing time for the service economy to mature. What are we doing to understand the dynamics associated with these parallel economic opportunities and is American business properly positioned? Is government creating the ideal economic environment?

The fantasy surrounding oil independence is both remarkable and troubling. While natural gas and coal are plentiful, oil reserves are difficult and expensive to reach and refine; demand is rising and under careful examination the entire industry appears to generate more questions than answers. There are too many conflicting reports of oil quality, extraction costs, environmental damage, and long-term accessibility for me to fully sign on. Some well-credentialed pundits have opined that it is a massive scam to assure citizens that all is well regarding energy. I do not subscribe to the conspiracy theory but am moved to seek truth when I see so many conflicting reports from supposedly reliable sources.

What is the plan for U.S. education, infrastructure, health care, entitlement and military reform? All are teetering on a slippery slope compounded by short-term planning, inconsistent priorities, insufficient funding, archaic reasoning, and decision makers who grasp neither the pace nor the magnitude of the current and predicted global transformation. Leaders have vision; they take the long view and can describe the rational and implementation tactics of desired strategic outcomes. A massive and challenging horizon is approaching at a speed that was unimaginable even fifteen years ago. Big things are happening here and abroad. Are we prepared? Are we going to be? When will we begin, and I mean seriously begin, to get ready?

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 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).

The Art of Transformation

Various trappings of success and progress have so far gilded Q1 of 2013, perhaps signaling an even greater probability for a continuing upward trajectory. It feels good, the numbers are decent, and momentum seems to have escalated past the doldrums experienced during much of last year. It almost seems inappropriate to begin the next sentence with that anxiety-producing and negating word, However…

 A deeper examination and greater reflection reveals signs worth considering. Optimism is often another word for self-delusion and can be the ultimate counterproductive characteristic of a transforming economy and culture. Since the DOW peeked over 14,000 and continues to hover in the high 13s and a newly amended jobs report indicates even more jobs were added over the past three years than originally stated, there is some evidence that an elusive corner has been turned. But, as Lee Corso is apt to rejoin, Not so fast my friend!

 The current transformation is global and all-encompassing. More critically, it will continue for the remainder of this decade as developed and underdeveloped countries experience structural, political, economic and social changes that are inherently difficult and unsettling. It is now clear that the Earth is warming much faster than predicted in 2007. An enormous amount of ice has been lost from glaciers and sea ice throughout the world, temperatures are generally hotter, drought is becoming more prevalent and unpredictable, and violent storms are becoming the norm. Paralleling such evolutionary climatic change, society and business should be revising and recalibrating various elements of agriculture, financial services, water distribution, building codes, emergency planning, service delivery and new product development. Unfortunately, far too little is being done while we foolishly postpone action, incorrectly assuming there will be a magical return to ‘normal.’ Or, as the fiscal cliff debacle indicates, continue diddling with decisions that, were government a business, would be made in one brief meeting.

 Historically, the shift from agriculture to an industrialized society brought enormous new social, cultural and economic opportunities. While neither seamless nor without difficulty, American society made the rural to urban shift during the past century, while inadvertently positioning itself as leader and benefactor of much of the free world. Similarly, we are now experiencing a momentous shift from manufacturing to a service economy, but acceptance and understanding of its value has occurred far too slowly. Why should this concern us?

 During the 1920s, as so brilliantly reported by Timothy Egan in The Worst Hard Time (Mariner Books 2006), there was a perfect storm of climatic shifts, poor agricultural decisions/ policy, an unprepared financial system, a preoccupied federal government, and the convergence of industrialization and urbanism. While the recession triggered in 2007 may not equal the Great Depression in terms of its catastrophic depletion of this country’s will and resources, it revealed corrupt practices, foolish policies and social inequities that contributed to a tipping point that was barely averted by action, grit, and the accumulation of enormous debt. We spent our way clear…but for how long?

 My concern is that few apparently grasp the fact that this country and the entire global community is undergoing a transformation of epic proportions. Virtually nothing is or will be immune from major technical, economic, social, political, climatic or cultural shifts that will change everything we know. Entire regions are in play in Africa, the Middle East, Europe and Asia, cascading toward…something different.

 Transformation requires understanding the forces energizing and motivating implosive or explosive activity, as well as those technical innovations that drive social evolution. As noted here before, it is essential to look past what is occurring or spend too much time wondering why it is occurring and focus on impact. There is a certain art here; the ability to understand what and why, but to also be prescient enough to recognize value, opportunity and emerging options. My best advice remains to read all you can, analyze what is happening and understand how it might impact your community, family and organization.

 Social evolution occurs whether we like, understand, or accept it. The ability to remain clear, knowledgeable, and responsive to emerging challenges has become an essential characteristic of this transforming world. The best part is that old adages continue to apply to every community – go slow, look before you leap, seek first to understand, and know when enough is enough. Good advice as we power through this first quarter and set our sights on a sound, progressive 2013.

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). 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).

New Day, New Year

As this New Year dawns, I have taken additional time to sort through a variety of data that provides some insight regarding what we might expect over the next 12 months. As noted in a prior posting, there are numerous reasons to be both mildly optimistic and somewhat pessimistic. After the ‘fiscal cliff’ was temporarily avoided, the DOW rallied to end the week over 13,400, signaling market optimism and a willingness to assume the best for U.S. industry in the months ahead. Unemployment remains around 7.8 percent, but people may finally be grasping that time and pace are the twin keys to a slow, stable job recovery, and we must accept that reality. Once expectations are calibrated to reality, manic calls for drastic action may mellow a bit as we slowly work out of this mess.

It is interesting to note that there were 137,000 new jobs created on October, 161,000 in November and approximately that many in December. In all, 1.84 million jobs were added during 2012, which is about what was created in 2011. This is not the 2.4 million needed for a fully revitalized economy, but the good news is that jobs are being created across several industries; manufacturing, housing, professional services, health care, architecture, financial services, information services, and retail. While insufficient for a robust recovery, it signals positive direction and steady gain, when much of the world is upside down (Italy, Greece, Spain), stagnant (France, England, Russia, and much of the EU) or slowing (South America, China, India). U.S. industry is positioned to recover, albeit slowly, through more careful planning, better data, an inventive spirit and a broader worldview. Panic and overreaction are never signs of good management and certainly don’t reflect foresight. For the most part, the American private sector has remained grounded while Congress and the White House grappled over fiscal ideology and foolish party politics. If anything, this continues to demonstrate that politics at the national level is deeply flawed, leadership is lacking, and the concept of promoting a singular, potent American vision has been lost. At some point I wonder when citizens will seek serious change.

Readers must understand that job growth has been driven by hiring in the private sector. Those who continue to rave about government growth might find it curious that government has shed millions of jobs over the past few years, losing another 13,000 in the past month alone. Whether this is good or bad remains to be seen, but be aware that many states, cities and counties are operating on paper thin budgets, trying to maintain services demanded by the same citizens who want budgets reduced. In my work with state and local government, I continue to see that, after close to five years, there is no fat left to cut. If anything, more hiring and some service recovery may be wise.

U.S. economic growth will be 2013’s central theme. How it is achieved will depend on geopolitical relationships, global economics, social-cultural transformations and the ability of the U.S. Congress to collaborate. We’ll see higher taxes- generally a slow return to the same levels as the 1990s, when the economy soared. This won’t all happen this year, but be aware that there is no possible way to pay for Medicare and Social Security, along with defense, research, education, social services, and all the other services required in a growing, highly complex society. There are too many converging variables that cannot possibly be funded and maintain the fabric of this society. This year will see more triage to determine program value and where the greatest benefit can accrue to the most people. Aging Baby Boomers will be a greater force in every community, demanding services and accommodations; they have money, expertise, connections, and are used to getting their way. They also remain highly competitive and contributory, making them a resource that may just carry America through this transformative period.

A lot is in play this year. The election is over, the economy is slowly improving, consumers are gaining confidence, and the global community is again looking to the U.S. for guidance and leadership. During the next five years America will encounter enormous challenges but has even more opportunity to achieve greatness than it did at the end of WWII. The question remains, Will we lead? Do we have the courage, foresight, and will to do what’s right for the long-term? The signs are mixed. But what choice do we have?

jfl-pic-blue-shirtyellow-tie1.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 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).