11 Problems You Can Solve in 2009: Part VI – Mentoring

In rough economic times, the apparition of class-based angst puts a damper on bling. It’s one thing to show off your wealth when upward mobility is running strong; it’s another to do so when tens of thousands are losing their jobs and sliding into poverty.

That gives us a unique cultural situation. People with money spend less of it during hard times (that’s how they hold on to wealth) and are hesitant to do anything that looks like they’re rubbing it in that they’re wealthy. That’s an entrepreneurial opportunity.

No. 6: Mentoring

Problem: Flashy excess and exclusivity is seen as bad (as well as too expensive)
Asset: Worthy mentees

The word on the street is that membership at Lancaster’s Hamilton Club, which costs a few thousand dollars a year, is tanking. Downtown’s upscale art galleries are complaining that they have lots of viewers but few buyers. Private golf club memberships continue their slow decline.

A more open entrepreneurial spirit that would have been more up Madison's alley.

In so many words, expensive exclusivity is out, and open mentoring is in. The fewer people there are at the Hamilton Club when you go there, the less worthwhile it will be. What was once “exclusive” will appear instead to be dying.

So where are wealthy people supposed to get their kicks? They get it by patronizing young and exciting artists, by mentoring up-and-coming visionaries, and by founding places where fresh ideas come to life.

If you’re an entrepreneur, the challenge in 2009 will not be to get past the velvet rope to hobnob with an exclusive crowd. The challenge instead will be to find the people leaving those scenes and to engage them in your work.

When times are tough, no one wants to rest on their laurels. Seek out the elites who could and pique their interest in your projects. Learn from them, give them a real stake in things, and satisfy their need to be involved in something new and exciting.

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Read Part I – Construction
Read Part II – Journalism
Read Part III – Continuing Ed
Read Part IV – Lending
Read Part V – Telecommuting

11 Problems You Can Solve in 2009: Part I – Construction

The current recession will undoubtedly continue into 2009, perhaps bottoming out before summer and then resuming slow growth in the second half of the year.

Central Pennsylvania in general, and Lancaster in particular, will be rife with problems. But, there will also be surprising stability that many other areas of the country lacks. Part of that stability is the result of having valued our various assets conservatively—sometimes flat-out undervaluing them.

To the victor goes the spoils: Figure out how to turn these pairs of problems and assets into opportunities in 2009, and prepare for a very prosperous new year.

This is the first post in a series of eleven. Here’s the first pair; the other ten will follow soon.

No. 1: Construction

Problem: Construction is expected to grind to a halt.
Assets: Lots of skilled workers and lots of tools and equipment.

Photo by Flickr user robertpogorzelski

Financing for new construction projects has dried up, and few people are ready to take the risk of initiating those projects. Unfortunately, that is going to lead to a lot of skilled workers without work. There will also be a lot of tools and equipment sitting unused.

One obvious opportunity involves investments in public infrastructure.   To get a slice of the money President-elect Obama is promising, we’ll need to show that we have shovel-ready projects where the plans and approvals are in place and people can be quickly put to work doing the actual building. Locally, the Lancaster Chamber of Commerce & Industry [disclosure: yes, that’s my employer] is already working to coordinate the efforts of state and federal legislators and other officials and back them with broad local support.

Aside from getting ahold of federal money to put construction workers and equipment to work, what opportunities do you see in this convergence of problem with assets?

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Read Part II – Journalism

Card Check may be good for Central PA

“When it gets rough out there, a lot of business leaders get out of the car and say, ‘We’re OK with minor reform,'” Rahm Emanuel, Obama’s appointed chief of staff, recently told The Wall Street Journal’s CEO Council. “I’m challenging you today, we’re going to have to do big, serious things.”

I agree with Emanuel. Looking at the economy as it stands (and is forecasted to play out), it’s hard not to.

The problem is that on the whole, senior managers of established businesses do not like big, serious changes. Stability and predictability is almost invariably in their best interest. When they do get behind big, serious changes, it is often because the change will lead to more stability and predictability.

I would like to suggest two things for the consideration of my fellow Lancaster County citizens:

  1. Our county’s economy does indeed need some major changes, and
  2. Allowing unions to form through a “card check” system may be a good such change.

Yes, Lancaster is doing better than many other areas of the country. Forbes named the county one of the ten best places to weather out the recession, and then Kiplinger’s said our city is one of the nation’s  “six real estate safe havens.”

For a long time, a remarkably low unemployment rate in the county has, to an extent, offset concerns that median household income is just as remarkably low. A lot of people aren’t working for much, but hey, at least they’re working. That has now changed. Even our unemployment numbers are beginning to rot: in October unemployment shot up to 4.7% in the county, meaning we have 12,800 people actively but unsuccessfully looking for work. That’s more than the entire population of Elizabethtown.

We need to change directions. This state of affairs cannot continue. Unions may not the the idea change agents, but at least they are change agents. Unions of middle-class workers have given us enhanced social security, medicare, and a minimum wage. Unions make sure workers can take care of themselves and their families, and that the people who produce gains in productivity receive the rewards of productivity. Importantly, middle- and working-class union members spend their income.

Unions are not that big of a deal

We all too often make a goblin out of unionization. Right now no more than twelve percent of American workers are in unions (those workers include Lancaster County educators, and local employees of Armstrong, Kellogg, car shops, construction companies, manufacturing plants, and service firms).  That twelve percent is down from a historic high of thirty-three percent. Not exactly a cause for alarm today.

What’s more, the number of unionized workers sits at twelve percent today in significant part due to illegal practices by employers. In 1969, there were one thousand infractions of the laws protecting the formation of unions. In 2005, that number was more than thirty thousand.

Ben Eisler makes a big deal of this on his blog at The New Republic. He suggests that one solution is to increase the penalties for these crimes and ramp up enforcement, which is currently lax. But, he says, the cheaper solution is the so-called card check.

The idea is this: Right now workers have to tell their company’s senior managers if they are going to try to form a union. It’s like having to announce, “Hey! We’ve been trying to work with you to get a fair shake here, and you’re not giving it to us or listening to our input on how our company can do better. We’re going to try to start a union! You’d better get moving if you want to stop us!” Under the card-check system being worked on in the U.S. Senate,  employees can sign a legal document (a “card”) to indicate that they want to form a union. If a majority of employees sign it, the union is considered a legal entity that the employer has to work with.

Imagine it like this: If we’re in a company of one thousand employees, there may easily be six hundred or more of us who think that our bosses are mismanaging things. Their leadership skills are wanting, they don’t listen to input from those of us on the ground, and they don’t share profits in a fair way. We all want to address it with the directors, but we don’t have any ability to insist on even two of us meeting with them at the same time. They can say, “Sure, we want to hear from you, but we want to meet with you six-on-one. And if we don’t like what you have to say, we reserve the right to let you go.”

There is a lot of baggage that goes along with unionization today, but at their hear the only thing that unions inherently do is allow for employees to have a collective voice in discussions with upper management.  Employees today fin it nearly impossible to form new unions. (Employees at Wal-Mart know first-hand the most agreesive anti-unions efforts found inside any company.) There are a number of decent ideas of how to remedy this situation, but allowing employees to band together into an official group by signing a petition is the least expensive and most efficient.

Best of all, it is middle- and working-class people who, increasinlgy, have the least to lose when the economy is already bad. That means we are willing to take risks and push our companies to take risks. I think we ought to consider giving those change agents just a little bit of assistance, for the sake of our economy.

Will It Float?: Me

Yesterday Tom Friedman of the New York Times wrote that in this credit crunch that is hurting the economy, no one is an island:

Well, you say, “I don’t own any stocks — let those greedy monsters on Wall Street suffer.” You may not own any stocks, but your pension fund owned some Lehman Brothers commercial paper and your regional bank held subprime mortgage bonds, which is why you were able refinance your house two years ago. And your local airport was insured by A.I.G., and your local municipality sold municipal bonds on Wall Street to finance your street’s new sewer system, and your local car company depended on the credit markets to finance your auto loan — and now that the credit market has dried up, Wachovia bank went bust and your neighbor lost her secretarial job there.

Five-Dollar Pig by Flickr user EricGjerde

Let’s take a look:

  • Pension fund? Ha! Yeah, right. We have about $450 in a 401(k) at this point.
  • Refinance our house? Nope. We’ve been smart, and have consciously chosen to rent for the past four years. It continues to be a good decision.
  • Local airport? Our local airport stopped offering public flights more than a year ago. Also, I haven’t flown since the summer of 1999—it’s too cumbersome and expensive, and rail and carpooling has worked beautifully for me.
  • New sewer system? I wish. This town’s infrastructure is crumbling. Besides, why can’t a municipality save up for a major expense, like we private citizens do for our own purchases?
  • Auto loan? Nope. I’m still driving my trusty 1994 Geo Prizm. Until I can pay cash for a newer used car, I’m not intending to buy one.
  • Neighbor lost her job? Again, my neighbors are doing OK. Not great, but they have never been doing great. We do alright for ourselves, but the whole disparity of wealth thing has been biting us in the butt for a long time.

I don’t have much of a vendetta against Wall Street. I do, however, think our entire economic system has gotten off-kilter and is ultimately unsustainable. I have never benefited from our current economic situation, compared to how others have benefited. Where I am today, I have basically nothing to lose. In fact, with our student debt far outweighing our assets, I have less than nothing to lose.

So from where I stand, with none of Mr. Friedman’s arguments applying to me, I have to ask, Why prop up an unsound and unsafe structure? Why shouldn’t we allow it to implode and rebuild itself? I have full confidence that our economy will rebuild itself. I believe that the free market works, as long as basic protections for stockholders, consumers, and workers are in place, and as long as antitrust is actively weeded out.

Is it not possible that what is happening is the market saying that the financial sector has grown too bloated and that we have collectively taken on too much debt? If that is the case, we don’t need a bailout, we need the financial sector to shrink along with our collective debt. That will be painful. I’m sure I will be affected by that economic pain, but it is not as if everything is currently fine and dandy for me economically. But isn’t it possible that such pain is an unfortunate fact of life that is necessary for a more sustainable economic future?