Pete’s Blog #1
Lead, Follow, or Fail highlights uncomfortable truths about imbalances
that America’s political and other leaders rarely (if ever) talk about
Lead, Follow, or Fail, though global in coverage with insights for readers everywhere, is especially pertinent to Americans at election time as it provides information political/other leaders rarely talk about. With promises often verging on festive macroeconomic populism, in democracies politicians typically focus on short-term issues to gain election/re-election. Steps requiring belt tightening or challenging adjustment rarely see the light of day. Evidence of this in the 2024 US Presidential election includes a smorgasbord of tax cuts promised to a wide range of constituencies to earn votes. Electoral communications have not revealed that the country has been fiscally mismanaged for decades, regardless of who was in power.
Rather than confronting uncomfortable truths about American imbalances needing attention, ‘party on’ best captures the elective gestalt.
Democracies, after all, better deliver benefits/assistance than they do impose cuts/discipline.
Lead, Follow, or Fail was written to offer fact-based, unbiased, data rich information on the challenges America faces and must fix, mostly so that younger Americans do not inherit a country unable to meet its financial and social obligations. That a better economically balanced, healthier, cleaner, less consumptive America must be sought and is within reach is emphasized. These adjustments are essential so that a stable and prosperous country continues to work alongside others to ensure that the 21st century is the global century when the excluded half of the now over 8 billion on our fragile planet join the human struggle for productivity.
America as a positive force abroad will not prevail unless America at home is rebalanced and fixed!
Lead, Follow, or Fail records how America perfected industrialization and showed the way into the innovation-led growth of the post-industrial world and explains where an imperfect but still exceptional America currently fits in the overall world order. Failure to address the country’s imbalances means coming generations will inherit a severely diminished country, unable to operate at the inspirational level it did over the 20th century. The country’s global role will change to the detriment of both its citizens and the world.
Challenges/imbalances America must address include:
Fiscal Imbalance: In no presidential debates over the past three elections has the burgeoning national debt even been mentioned. Lead, Follow, or Fail compares America’s fiscal misbehavior under Democratic and Republican administrations with fiscally well-managed Germany and Norway. America receives a D for fiscal management, which might soon drop to an F. And while candidates seeking election do not admit Americans pay too little in taxes, the book reports Americans pay far lower taxes than most in the developed world, even below the world average. With the 9th highest national debt to GDP at 130 percent and an aging population with insufficient savings for retirement, taxes must increase to ensure Medicare/Medicaid and Social Security remain solvent. In addition, interest payments alone will add considerably to the fiscal burden over the coming years.
America is fiscally out of balance and its federal fiscal management has been poor, regardless of the party in power! Taxes must increase to provide the resources needed for the federal government to meet its obligations. Entitlements too may be cut so governmental ends meet. Lead, Follow, or Fail explains how this could be done politically.
Health Imbalance: A second challenge is America’s growing healthcare costs, now over 18 percent of GDP, compared to 5 percent in the 1960s. With the National Institutes of Health/CDC reporting in 2020 that almost 74 percent of American adults were overweight and nearly 43 percent obese (compared to 13 percent in 1962), eating less and exercising more is now fundamental to the country’s overall economic competitiveness. Bankruptcy through healthcare as unhealthy Americans grow old is a distinct possibility.
Americans are unhealthy and physically out of balance, and this can be slowly ameliorated by widely infusing good eating, wellness, and physical activity across the country and national culture. Like the war on drugs, a war on unhealthy living must be waged. To incentivize better behavior as smoking was treated, higher healthcare charges could be assessed on those with BMIs above certain thresholds.
Environmental Imbalance: Climate-change deniers, mostly Republican in orientation, have meant that for the past two decades America’s response to climate change/global warming has been tardy. Lead, Follow, or Fail puts denialist notions to rest by noting that fossil fuel use over the past two centuries is the largest market failure in history. Markets fail when the costs of producing/consuming a good are left to those who neither produced nor consumed that good. Essentially, the costs of climate change/global warming have been left for future generations to cover, and global meltdown, the book’s third economic scenario, describes the consequences if insufficient steps to reduce carbon in our atmosphere are taken. America’s climate denialism also means the country is behind in the race for cleaner energy. Regrettably, the devastating floods and hurricanes in the Southeast and Gulf Coast and the historic forest fires across the Southwest indicate climate change/global warming effects are now coming home to roost across the continent. America, with others, is beginning to pay for its climate intransigence. Build, build, and even build again, at considerable cost, is tragically now part of life across the country.
America is out of balance environmentally, which if unabated will prove disastrous for the generations to come, if not indefinitely! Considerable public and private investment are now required to repair the enduring damage from repetitive adverse weather events. Insurance costs will continue to rise to cover the enduring destruction, regardless of additional actions taken to mitigate climate risk. Yet despite the fact that the climate destruction train has left the station, America can act more forcefully and purposefully to counter the crisis and derail the train.
Consumption Imbalance: In mid-2024, 68 percent of American GDP was devoted to personal consumption expenditure (PCE), and Lead, Follow, or Fail describes the period after WW II as an age of golden conspicuous consumption enjoyed by the first mover into industrial and post-industrial production. But financed by public and private borrowing, America has reached an unsustainable consumption level, met partially by bills to be paid for tomorrow. In the early 2000s private borrowing against illusory home equity permitted Americans to increase their consumption, and federal intervention to rescue the American/global financial system after the housing bubble collapse and to stabilize the economy after the COVID-19 economic disruption continued to finance the country’s borrowed prosperity. Compelling is American PCE remained 64 percent or less of GDP from 1953 to 1993 and from the mid-1990s grew to over 71 percent by 2001, a dramatic increase in a very short time. A reduction back to pre-1993 levels will free resources to rebalance the economy, and the good news is most Americans could decrease PCE by 20 percent without noticing much effect.
American consumption is out of balance and has been sustained by a borrowed prosperity. An overextended federal government combined with rising debt, healthcare, and infrastructure costs means American PCE must drop! But Lead, Follow, or Fail argues this adjustment will be less difficult than expected. As Americans consume so much more than most, a decline in personal consumption will not be too damaging. For example, Americans will certainly be better off consuming less food, and the country will continue should houses be 20 percent smaller (around the size they were in 2000) with smaller more efficient cars in the garage. The vehicle size reduction following the 1970s oil shock is testimony to such a move. Should energy costs rise owing to oil subsidy withdrawal, Americans, like their European counterparts, will adjust and use energy more carefully. Free or cheap goods are typically overconsumed.
Fiscal, physical, environmental, and consumptive imbalances face America, but Lead, Follow, or Fail covers others. Rising inequality has long been an American malaise, and a 2021 CEO-to-worker compensation ratio of 389 times in the 350 largest American firms is part of the wider inequality story. In 1965 the ratio was 20.4. That American CEO pay exceeds average worker pay on the shop floor by almost 400 times is unsupportable. Moreover, reallocating say 20 percent of CEO pay to lower paid workers would be a non-inflationary permanent economic stimulus that would benefit many consumers. In addition, reducing CEO pay to even 200 times average worker pay would still leave American CEO pay far above that of European and Japanese executives.
Lead, Follow, or Fail also highlights population imbalance as a challenge many may face. India, for example, may not reach its full economic potential because too many Indians introduce headwinds that hinder the takeoff needed to drive the country’s economic growth. Conversely, with its One Child Policy producing a fast-declining population, China may find it has too few people to sustain its economic growth, and Japan, Germany, Italy, and South Korea also may face potentially damaging population declines. While calling for bipartisan agreement to secure the American border, Lead, Follow, or Fail notes immigration provides a way to avoid the debilitating population decline others may face. A nation of immigrants, America’s ability to attract and absorb immigrants has been a source of competitive advantage from the country’s founding. This capacity must remain. Lead, Follow, or Fail points out the low, medium, and high population estimates the US Census Bureau expects the country will face. Immigration is central to these forecasts, and the book explores the implications of these estimates for the country and its citizens.
Education is a last imbalance the book considers. After surveying the history of primary and secondary school education in America, Lead, Follow, or Fail notes that primary and secondary education is where many Americans first fail. Regrettably, after six generations of effort, education is still a work in progress in the country. But low Program for International Student Assessment (PISA) scores correlate with poverty in many countries, America included, indicating failure in education may be less due to what occurs in class and more about problems that accompany poverty. Lead, Follow, or Fail considers the implications of this fact for those wishing to fix American education.
As is indicated under the Services tab on the Lead, Follow, or Fail website, I am ready to meet with audiences, in person or online, to share and discuss the important messages the book conveys.