The Debate

by Don Harkey

A portion of our population believes that the American Health Care system is fundamentally flawed to the point that it requires major reconstruction. A portion of our population believes that government-option Health Care Reform will be a major step toward the socialization of America and will lead to a reduction in the basic Liberties we enjoy as Americans.

It is a debate that is not unlike one person arguing that the Colts are the best NFL team and another person arguing that football is stupid. They can debate well into the night, but they won't reach a resolution because they aren't arguing over the same thing.

I was lamenting the Health Care reform passed by the House yesterday with a good friend of mine. I brought up the impact of such a reform on businesses and used WalMart as an example. According to one website, WalMart employees 1.4MM employees in the US, about half of which get health insurance. The legislation passed by the house will require WalMart to provide insurance for those 700,000 employees. If they can get a plan for $400 per month (average) per employee (which would be a great deal), they will end up paying over $3 Billion per year extra. WalMart profits are around $13 Billion per year.

Suffice it to say that WalMart will have some thinking to do... let's see... how do we compensate for this huge new load on our business... Raise prices? Open fewer stores? Close down existing stores? Layoff employees?

Now here is one of the many "debates" we can have as country. Is WalMart "evil"? My friend would probably say "yes", although he might soften the language. They regularly hire people below the poverty line, fail to provide health insurance for 1/2 of their workers and they push the envelope in getting people to work as much as possible without qualifying for benefits.

On the other hand, WalMart has improved the efficiency of the distribution system throughout the country to the point that it's prices are very low. WalMart provides great value to its customers, which is reflected in the fact that 80% of the U.S. population will enter a WalMart at least once this year. WalMart is largest corporate employer in the world (McDonald's is 2nd in the US with about 1/4 as many employees). Roughly 1% of the U.S. workforce works for WalMart.

Conclusion #1: First and foremost, WalMart is not a person, it is an organization. Just like any large organization, it operates within its system and pays little attention to individual people or their needs. This is the nature of large organizations. It is successful because it provides great value and lots of people work their because they are willing to hire people. Personifying a company is naive. It does what it does, and if Health Care Reform passes, we should wonder what it will do...

Conclusion #2: The U.S. Government is finally standing up to big business and the big insurance companies, right? Remember that WalMart employs about 1.4MM people. The U.S. government (local, state, and federal) employs 20MM people

...and it is about to employ even more.

The point here is simple... the WalMart's of the world must operate under the principle of economics. If they stop providing good value then they will shrink in size as has happened countless times in the past (1950 - 2 largest companies were General Motors and A&P). If employees can find better opportunities, they will go elsewhere which will lead to an overall decline in their quality, which will lead to their decline. It happens.

The U.S. Government (or any government) does not follow the rules of the market. As people vote themselves more and more programs and benefits, they are increasingly unlikely to release these benefits as they become more and more dependent. The problem is that the government must perform within the economy and they find that they must consume more and more resources until they can no longer provide the benefits they have promised. This has also happened countless times in the past (Soviet Union, England).

Don't forget who the "big guys" really are!

Fumble!

by Don Harkey

I love college football, so when I get to use college football in an example, I get excited... even when it is a painful example.

This weekend, my alma mater, the University of Nebraska played the Iowa State Cyclones in Lincoln. Iowa State had lost their previous 15 Big 12 away games and hadn't beaten Nebraska in Lincoln since 1977. Their starting QB and starting RB were both out with injuries sustained during the week. Nebraska came in after a painful home loss to Texas Tech the week before, but still feeling optimistic about the season.

Only 16 seconds into the game, Nebraska fumbled the ball and Iowa State recovered. The Blackshirts held, but Iowa State kicked a field goal (after gaining 4 yards on the drive... yes, that's 4 yards and 3 points). The day only got worse as Nebraska managed to move the ball for the most part, but kept turning the ball over. Iowa State played gutsy football scoring their only touchdown after a fake punt and a bomb to the endzone.

The final stats were some of the most unusual I have ever seen in football (at any level). At the end of the game, Nebraska had 8 turnovers and Iowa State had none. The final score was Iowa State 9, Nebraska 7 (remarkable in itself that it was that close). Perhaps even more remarkable was that Nebraska had 4 turnovers inside the "red zone" (less than 20 yards from the endzone) and 3 turnovers less than 5 yards from the endzone! Nebraska has a great field goal kicker, so if they had the opportunity to kick those field goals, they would have won 19 to 9.

What causes this "outlier"? The NCAA record for turnovers is 13 by Georgia in 1951. 8 is a new school record for Nebraska and the -8 turnover margin is unbelievable. Only 23 teams (out of 119) in 2008 had a worse turnover margin for the entire season!

If I could explain this outlier, I would fly to Lincoln and help Coach Pelini make the proper adjustments (or comfort him with the information that the planets were just aligned wrong on Saturday). The point I want to make here is that we can often learn a lot from these types of strange situations as they often point to something significant. It is tempting to chalk this one up to bad luck, but the number is so staggeringly "off" that it is probably not a wise decision.

When something really strange happens, your process might be trying to tell you something...

Game on

by Don Harkey

This week, I attended my weekly Rotary meeting (I am a proud new member of the Rotary Club of Springfield - Southeast) and watched Dr. David Mitchell (Assistant Professor of Economics at Missouri State University) give a presentation on the economy. The news was bleak to say the least.

I won't give you all of the details, but the message was that the current recession is bad, and Missouri's economic growth has been slower than than the nation's growth since well before the recession started. He talked about how the U.S. is losing manufacturing jobs and how he doesn't expect them to return. If the unemployment is currently at its peak, he predicts that it will be May of 2014 before we return to pre-recession unemployment numbers. The percentage of people who have been unemployed for more than 6 months is at a historic high. We've been hurt as a country and it will take us a long time to recover. Worse even is that there appears to be something fundamentally wrong with the economy in Missouri (the 3rd slowest growing economy in the U.S. behind Michigan and Indiana).

Dr. Mitchell was concise and clear in his presentation. He presented the data and backed up his conclusions. He wasn't presenting a "doomsday" scenario... it was more like a scientific evaluation of where we are. When he was done, he asked if there were any questions. The room, full of business leaders, responded with nervous laughter.

If you are a business leader, you must think optimistically while also confronting the brutal facts. The year is 2009 and unemployment is high (yet businesses still complain about not being able to find "good, qualified people"). The reality is that businesses that do not provide good value will not survive. The good news is that the demand for value is as high as ever. There are still plenty of people out there who are finding ways to provide that value, and they are the ones who will emerge from these difficult times stronger than ever.

It hasn't been easy, but that only makes us better. The indicators show that the problem is real, but history shows us that American's find a way to make things better. These times purge waste and redefine our economy. Its painful, but healthy. Know what you are good at, find the value you can provide, and find better ways to provide that value.

Game on.

Stealth Servant

This morning in Springfield, a person sleepily pulls through the drive-thru at a local fast food restaurant to purchase a cup of coffee. As she goes to pay, the person at the window informs her that her coffee has already been paid for by an anonymous person.

So begins the "Stealth Servant" movement in Springfield (note: I did not start this...). Check out the Stealth Servant blog at http://www.stealthservant.blogspot.com/ and find ways to make someone's day!

We ALL Cheat

by Don Harkey

We ALL cheat!

This is not an excuse or even an endorsement, but it might be the first step to recovery. Have you even been able to admit this to yourself?

I believe that everyone has cheated at some point. I can remember a take home test that a teacher gave. The test was VERY difficult and would take a single person a VERY long time to work on. The teacher clearly knew that students would work on it together and therefore compensated by making the test more difficult. The effect is that it made it difficult NOT to cheat on the test... and cheat we did. Cheat I did.

That's hard to say, isn't it? "I cheated". We tend to follow up that rare statement with the word "but" pointing to a justification that might be very legitimate. Often times we cheat because it is the easier of 2 paths. Either the way we are supposed to do it is so hard that we find another way, or the shortcut is very short. We have ALL been through this.

The point I want to make is that it is still wrong. I am not passing judgment on those who take the short cut, but I am encouraging you to allow yourself to realize what you have done. I would also point out the "short-cut" is easier to take every time you choose to take it.

I don't always make the right decisions, but I try to be aware of those moments and ask myself "what type of person do I want to be?". If I am driving home from the store and realize that they forgot to ring up the bottle of soda, I try to catch myself in the moment. It is very easy to bypass it quickly saying, "well, they screwed up". After all, the football game is already in the 3rd quarter and if I turn around, I will likely miss the whole game. The store was crazy busy and the employees won't care if you pay for that stupid soda. They probably would give it to you anyway.

When I find myself in the midst of that type of logic, I try to ask myself the question, "what type of person do I want to be?". Do I want to know myself as the type of person who turns around, returns to the store, waits in line, deals with an unhappy employee who clearly thinks I should have just taken the soda, misses the game, and gets home late for dinner all because the checkout person made a mistake?

When I am truly self-aware in those moments, the answer is "yes". Remember to take advantage of the times in your life that make you extraordinary.