Has America lost its confidence? Are we in a losing streak? If so, can we turn it around?
I take my lead from Rosabeth Moss Kanter’s book, "Confidence." Kanter is a Harvard professor who has studied long-term winning and losing streaks in business and sports. She is to the point and practical. I have taken her observation to their logical larger conclusion that America has a losing streak.
Kanter says that "confidence is a sweet spot between arrogance and despair. Overconfidence leads people to overshoot, to overbuild, to become unnaturally exuberant or delusionally optimistic and to assume they are invulnerable. That is what induces people to become complacent, leaders to neglect fundamental disciplines, investors to turn into gamblers. But under-confidence is just as bad, and perhaps worse. It leads people to underinvest, to under innovate and to assume that everything is stacked against them, so there is no point in trying."
Certainly this is where America stands now.
Retail spending stopped late in September, not just for large purchases, but for modest ones. I have a friend who owns three dry cleaner stores. He tells me that October – usually his best month – was down dramatically. My barber, Tom, said that his business in mid-October was cut by 70 percent. Usually I need to wait 35 minutes for a haircut. When I saw him in mid-October at 11 a.m., I was his third customer for the day.
My point is that Americans have pulled back. We feel rudderless. Recently the Obama appointments – all experienced and competent – have triggered a Wall Street rally, in part because it fills a void of a leaderless country and economy. But our problems are deeper.
For example, we are into the "blame game." My friend Congressmen Jim Sensenbrenner believes that the subprime crisis was caused because the poor were "given" mortgages. Support for the auto industry is equated with helping the unions. Others want to punish the "evil-doers" who were responsible for the failure of our banking system.
The "blame game" turns winners into losers, in part because the attitude is revenge, not problem solving. Indeed when we let our ideology shape the facts, like Mr. Sensenbrenner, we cannot solve our problems. For my part, I want the economy to recover. I seek financial health more than punishment.
As professor Kanter says, "If losses mount, pressure goes up – or the perception of pressure. Stress makes it easier to panic. Panic makes it easier to lose. Losing increases neglect. Signs of failure cause people to dislike or avoid one another, hide information, and disclaim responsibility – key elements in denial."
As to the reason behind the sudden stopping of shopping, it is fear and anxiety. "People can become paralyzed by anxiety – the learned helplessness."
Warren Buffet likes to say that "It’s only when the tide goes out that you know who has been swimming naked." So, we look at the Chrysler, GM & Ford executives who flew down to Washington to beg for money in their Lear jets and think silently that "these guys are out of touch." We see Treasury Secretary Henry Paulson and the now irrelevant Federal Reserve Chairman Ben Bernacke fumble with their plans to shore up the system. They are merely throwing mud against the wall to see what sticks!
These folks are easy targets. But attacking them does not help us solve our problems.
"Of all the pathologies that accumulate in a losing streak, one of the most damaging to individuals, and eventually to the places they work and live, is passivity and learned helplessness. When people become resigned to their fate, nothing ever changes."
So, have we lost faith in our financial system, our economy, our government and ourselves? Perhaps! But we Americans are an optimistic people. We see adversity as opportunity. We shine when adversity hits us. We get up when we stumble.
Kanter suggests that we get "people to engage in positive ways"” and to "find reasons to identify with everyone’s fate." I’d second that suggestion.
Business and government needs to again "walk the factory floors." They need to understand their customers and get useful feedback from their employees. Some winners do that now. I made a suggestion to Costco and received a call from their CEO, who questioned me about one of their stores. He picked up on a problem about checkout lines and corrected it. On the other hand, I wrote Bernacke just after he was appointed in 2006. I was predicting the subprime crisis and made specific suggestions on reducing its impact. I was answered by a P.R. flack who had not read my comments. I responded to her, asking her to pass on my letter to Bernacke. This was not done. He and others remain isolated from the problems we are having.
What can we as citizens do? First, be positive. Do something positive, even if it is a small gesture. For example, I bring up the newspapers for the office and make the coffee when I come in early. This starts me off positively for the day. Volunteer to help those less fortunate.
Try to look at the glass half full, not half empty. Will lowered gas prices stimulate the economy by putting more money in people’s pockets? Some conservative estimates say that most American will "save" $1,250 a year. Are there opportunities in the bond and stock markets? Is government helping to stabilize financial institutions and will that lead to the freeing up of loans? Will layoffs mean that businesses will be more efficient? Are the Obama appointments men and women who are competent and experienced?
You get the idea. Emblazon as your motto, "Don’t address blame – solve the problem."
Do what you can do yourself to have people look at the world in a less defensive manner and remind others that we have the power to change direction, through our own efforts, through elections and with a plan. What was it that Horace said? "Many shall be restored that now are fallen and many shall fall that are now in honor"
Bob Chernow is a local businessman and a futurist.
