How We Got Into This Mess Of A Recession

I am a fiscally (and socially) liberal entrepreneur from San Francisco with an MBA. That means I believe in socialized medicine AND the right to make money. I've never called myself a Centrist either, though Obama might be just that.

I've tended to blame the current crisis on Republicans because they're in charge and I dislike their social policies anyway. When pressed, I blame George Bush because he blew all the money on the war.

There's more to it, though, and I'm beginning to see both sides. Democrats & republicans both, are responsible for the current economic crisis. Michael Porter discussed the issue in Business Week:

"Republicans keep repeating simplistic free-market thinking, even though the absence of all regulation makes no sense. Self-reliance is preached as if no transitional safety net is needed. Some Republicans even argue passionately that the country should have no strategy [snip] Democrats, meanwhile, keep talking as if they want to penalize investment and economic success. They defend unions obstructing change in areas like education [snip] [and] equivocate on trade in an irreversibly global economy. They seem to think social progress can be achieved only at the expense of business."
Our education system really has been starved by Republican policies, but it wasn't healthy before that because of the know-nothing, tenure entrenched, teacher's unions and school administrations. Those people vote blue every time. Democratic party line insists that forcing businesses to only buy and sell US products will help our economy, ignoring the right and the advantage of doing business globally. These restrictions are a form of trade regulation but regulation has different facets, some of them quite useful, as we look into it.

Business regulation is any legal restriction that limits buying and selling. One form of regulation could be making fireworks illegal because they are dangerous. The idea is that that legally regulating these transactions will serve the interests of customers and improve our society.

Strong regulation has another byproduct, it creates a more competitive business environment, it makes companies comparatively stronger when they become international players. For example, the auto industry in Japan is heavily regulated, and while other forces are also in play, the quality regulations result in competitive advantage against Detroit's Big Three. We drive Hondas because they last longer, and they got that way, in part, because Japanese law requires high quality products.

There are banks in the US that are doing quite well because they voluntarily steered away from poor investments. If there had been a legal standard for all US financial firms, the rest of the World markets would be turning to US firms for support, rather than the other way around.

Supporting free markets and strong regulation, we see, isn't a contradiction at all. The regulation improves quality and competition, global trade creates more choices and competition. Quality - Choice - Competition. These turn out to be good for markets and the people that use them, and if supporting that makes me a Centrist then so be it.

Business Consulting & Coaching

For entrepreneurs ready to take their San Francisco Bay Area business to the next level.