In August 2009, Jossey-Bass released my new, now bestselling book Love Leadership: The New Way to Lead in a Fear-Based World , which spoke to a crisis of “virtues and values” amongst leaders at every level, all around the world, and the need for “a new way.” In December 2009, I wrote a piece entitled “Reset,” which made the case that what we are going through now is not a recession but a reset. I have subsequently written here in the Huffington Post that we have “Lost Our Story Line.” Today, I speak again on reset, but in a new series of pieces again inspired from my work at the organization I founded, Operation HOPE, and Love Leadership, which seeks to frame out and set forth a vision of “where we need to go from here.” Remember, I said we need a “reset,” and not a “reboot.” This means we have to become experts in what we are for, and not just what we are against. The problem today is jobs, or the lack thereof. It is the President’s most pressing political problem. It is the economy’s 100 lb anchor, both here at home and around the world, holding back a return to real prosperity. It is the thing (or the lack thereof) that could really derail our beautiful social experiment called “America in the 21st century,” and even spark social unrest, if not addressed. It is the key, the whole key, and nothing but the key, so help me — and we are not doing enough. What’s Not Going to Work Yes, we need a jobs initiative spurred by government, but not one sustained by government. And yes, we need a jobs training program, and infrastructure revitalization initiatives that put Americans back to work and bring America back to life, but none of these government efforts (from a jobs perspective) are the long-term answer. I was in a high-level meeting in Washington, D.C. over the holidays and administration officials asked the assembled group “What do you recommend? What do you want?” I felt like I was the man from Mars with my contributed comments (and this is just fine). More than half of the room, filled with minority advocates for civil rights and social justice (all doing good and honorable work that I respect), said essentially, “A second $700 billion stimulus to create government jobs for the poor.” Not going to happen. Should not happen . Let’s leave aside the fact that the first $700 billion went to fill gaps in state budgets, as the federal government can print money and states cannot, or this massive injection of necessary resources helped to push our overall federal budget deficit over $1 trillion dollars, or the largest deficit, as a percentage of GDP since World War II. Unless we all want President Obama to be written off as “not serious,” we need to get the thought of the federal government printing another $700 billion out of minds. To quote President Obama himself recently, “We all need to learn to live within our means.” That means the federal government too. What’s Not Working, Part I We have to figure out what we are for, and not simply what we are against. Simply blaming free enterprise and capitalism is not the answer either. It wasn’t even the problem. Yes, I said it. Greed was the problem. A horrible culture of “What do I get, and when do I get it” virtues and values were the problem. Bad capitalism was the problem. A short-term, fear-based focus on “what do I get,” versus “what do I have to give,” was the problem. Even more interesting, many if not most of the most egregious financial predators are now out of business totally. ⢠The folks who ran Countrywide into the ground, gone. The old Countrywide, gone. ⢠The folks who pushed some of Wall Street’s best firms into completely unreasonable, eye-popping leverage levels, gone, along with the firms they ran. ⢠The folks who ran AIG into the ground, gone. ⢠The folks at Wachovia who purchased World Savings with its horrible portfolio of wildly adjustable, “pick-a-pay” subprime loans, gone, along with the old companies too. ⢠The arrogant folks at Ameriquest Mortgage in Orange County, California, whom I met several years ago and was mortified by at the time — by the breathlessness of their self-denial and rationalizations — are all gone. ⢠Gone along with Ameriquest is approximately 95% of every other predatory mortgage company in America that preyed on people who either were financially illiterate and wanted that home too badly, or financially illiterate and wanted too much home, or financially illiterate and wanted to simply get rich quick by flipping a home. So fine, let’s have a War Crimes Tribunal for the worst and absolutely the most obvious idiots that got us into this mess (I love what the CEO of Deutsche Bank said in Davos last month: “Rarely have the actions of so few, damaged so many.”), and then let’s get on with it. Not only did US Bank, as an example, not create this mess, but I know personally that senior management actually slammed on the breaks with respect to each and every one of their adjustable rate mortgages, offering each and every one of these clients a fixed rate mortgage in exchange. Now, of course, even my fiend Stevie Wonder can see that we need US Bank and every other major lender in America to begin lending again, an soon, and in so doing to find a reasonable, rational and measured balance between credit availability, innovation, flexibility, minimally acceptable credit scores and loan underwriting criteria in this newly reset world, but Hitler or the Gestapo they are not . America will need its banking sector, credit unions and its mainstream financial service providers fully engaged and at the table of solutions going forward, if we are going to have a prosperity agenda again. We have never had an economic recovery in American history without having the responsible banking sector there, helping to lead the way. So yes, let’s regulate them along other sectors of the broader financial services sector, as I am convinced that capitalism without bumpers or parameters is precisely what leads to a culture of greed, but let’s not throw the baby out with the bath water. And while we are at it, let’s make sure we pin the tail on the right donkey, so to speak. The newly proposed Consumer Federal Regulatory Protection Agency should spend an equal amount of time going after previously unregulated sectors of the financial space — from mortgage companies to mortgage brokers, to payday loan lenders, check cashers, rent to own stores, title lenders, and multiple other predatory lending practices — as it does easy to find and regulated banks and financial giants. As I said in an article for the Economist in late 2008, “It was easier to be a mortgage broker in the crisis than a pimp on a street corner in Detroit, because at least the pimp needs references.” It is entirely possible that, when the dust settles, lightly licensed mortgage brokers and their cousins in the lightly licensed, non-bank mortgage space, were the only folks to make and keep any real money in this crisis. Let me be clear — I am not an advocate for banks, but as they are FDIC insured and federal government-regulated, at least I can find them and hold them accountable when they screw up – which is precisely why we see them hauled before Congress on such a regular basis. Finally, the newly proposed federal consumer protection agency should likewise make real financial literacy its equal partner to sustainable change in our culture and economy, and not merely a new “program” or sub-group within the proposed agency. If we don’t take this seriously, we are merely re-arranging the deck chairs on the Titanic. It will happen again. Post-global economic crisis, and in an economy (the U.S.) that is 70% driven by the consumer, financial literacy is nothing short of the new civil rights issue, and the first of many silver rights empowerment tools. If you don’t understand the language of money today, and you don’t have a bank account today, you are nothing but an economic slave. Or as my personal hero, civil rights icon Ambassador Andrew Young, senior aide to the late Dr. King and global spokesman for Operation HOPE, once told me, “Dr. King and I helped to integrate the lunch counter, but we never integrated the money.” He went on to say that “to live in a system of free enterprise, and not to understand it, or how it works for me, in my life, is the very definition of slavery.” I agree 100%. We have got to make free enterprise and capitalism finally relevant to the poor. We have got to make free enterprise and capitalism finally work for the poor (and the middle class too). We have got to differentiate good capitalism from bad capitalism, and stop making capitalism itself our enemy. Growing up in South Central Los Angeles and Compton, California, I can say with certainty that the only real problem with capitalism was I did not have any, and free enterprise, I didn’t understand it. It was “what I didn’t know, that I didn’t know” that was killing me. I decided to change that, myself. My secret weapon — parents. What’s Not Working, Part II America Supersized. ⢠We want homes, but not small starter ones, like our parents and grandparents once had. We wanted ones that looked like the mansions we believe we deserve, so in the mortgage crisis many, many, many of my middle class friends bought too much high-end house, and today they are part of the growing national subprime mortgage crisis statistic. ⢠We want jobs, and we immediately look, almost with a sense of entitlement, to large companies from Intel to Microsoft to Ford to CNN, without first considering that large companies started off as small ones. Most of America’s job growth comes from small businesses in their first few years of operation. ⢠Our young people graduate from college looking for careers that start with titles like vice president, and director of this, or managing director of that. If the starting salary was not six figures with an expense account and people to report to them, they felt like a failure. ⢠Our economy is still the largest in the world, at approximately $14 trillion (still large enough to place the largest economies of the world within our economy and still have room), but we fail to understand and appreciate that 70% of our economy is actually driven by you and me, buying coffee at the corner market, paying our utilities, car note, day care and mortgage. Furthermore, we have all failed to understand and appreciate that the heart of our great nation is innovation, enterprise, small business, entrepreneurship and the power of great ideas made real. From CNN, to CBS, to Apple and Wal-Mart, to Google Earth — it all started with the power of an idea. Operation HOPE, too. What’s Not Working, Part III Our jobs plan needs, well, help. Short version — this is not a recession; it’s a reset, and corporate jobs are not going to save us, in part because they are not coming back anytime soon. Companies that lay off 10 may rehire 2-4, in time, but fear, uncertainty and an uneasy sense that “something is just not right” with the broader economy, means that CEOs leverage their own legitimate and illegitimate fears, to drive productivity through efficiencies — over productivity through people. Governments are not going to save us either. If you haven’t noticed, local, state and even our federal governments are broke. Imagine your charge card, current but over limit, and your ability to make the minimum payment on the interest charges alone is how you measure success over the short term. And so going forward, governments cannot afford to simply “float” a generation out of work, and corporations are not hiring, so what is an anxious generation, with 1 out of 5 men out of work, to do? Become entrepreneurs , that’s what. What We Need Next What we need next is what we had in the first place in America ; a generation of innovation, entrepreneurs, small business owners and self-employment projects. As we begin National Entrepreneurship Week (NEW) next week throughout the U.S., and I travel to speak at Howard University’s School of Business, Institute for Leadership, Entrepreneurship and Innovation in Washington, D.C., I will start a theme which I plan on significantly amplifying for the enter course of 2010 — we need to get out storyline back. We need to nurture, spur, and spark a generation of entrepreneurship and innovation in America, starting with our young people with too much time and energy on their hands. We need to repurpose capitalism and free enterprise as something that adds value wherever it is deployed, and leaves communities and people better than when they found them. We need to return to our greatest national strength, which is the power of our ideas. For 100 years, our strength was acting on the power of these great ideas, reaping the benefits of becoming wealthy (defined as not limited to financial gains), sometimes rich, sometimes powerful, and then returning to society a legacy defined by how we gave back. Today most of us just want to make some money, and don’t much care how we do it. We need to get our storyline back. What We Can Do Now Whether or not we can get our generation “reset” or not is an open question, but what we can do is to make sure that our children’s generation never faces these same challenges, ever again. Or better still, prepare them so that they can face these and other challenges without compromising their virtues and values. Here is what we should do: 1. Ask Congress and the Obama administration to require financial literacy education for every child from K through college. 2. Ask Congress and the Obama administration to empower every child with a starter bank account at birth, instilling in them at an early age a sense of being a stakeholder in the American experience, but at no time outside of the financial main. 3. Make sure that every child receives a “Course in Dignity,” so that they know the difference between being broke and being poor, and that they know that their real wealth is actually inside of them. As my mother taught me, “Being broke is an economic condition, but being poor is a disabling frame of mind, and a depressed condition of our spirit, and we must vow to never, ever be poor again.” 4. Encourage every American to donate one hour a month, 12 months out of the year, or 12 hours a year, to go into a school classroom, church, mosque, Boys and Girls Club, non-profit or wherever we find children, and to teach them a course in dignity, the language of money, entrepreneurship and small business. At the very least, that young man on the third row, and the young girl on the fifth row, is going to look at you after 30 minutes or so and realize, “wow, I can be you.” And that is when the magic begins. 5. Use the power of the U.S. presidency to “make smart sexy again,” by sparking and inspiring a generation of young people to dream again. To break the back of the crippling high-school dropout rate (between 30-70%) by actually making education relevant to a child’s future. To help a young person understand, as I said to myself when I was 9 years old in Compton, California, listening to a banker with a suit on, for the first time, unpack the mystery of money in my classroom — “how to get rich legally.” That’s financial literacy, free enterprise and capitalism, ownership, opportunity, and entrepreneurship.
