First off, thank you to those who prayed for Selena and me as we ventured to Sierra Leone in August. We had an amazing trip, and probably the best training workshops we’ve done yet. Please let me share a few stories:
Pastors to Learn Community Development
Selena and I were delighted to visit the Every Nation College of Administration and Theology (ENCAT) while we were in Sierra Leone. The college trains almost 100 pastors in church-planting methods each session, with an additional three campuses graduating double that amount. One of the training needs these pastors highlighted is community development methods and practices. In this part of the world, the church MUST address community issues - they really have no choice given the depth of human need. I have heard pastors there say, “It is hard for a man to see Jesus while his belly is growling.” However, there is a considerable lack of training and education in this area. Selena and I plan on returning in early 2010 to train both the ENCAT professors and the pastors currently enrolled in the CDLS curriculum on basic community development methods and practices.
The BEST leadership workshops yet
While preparing our leadership curriculum for the fourth part in our six-part series, we decided to restructure the training so that the participants would learn more in group sessions and less through didactic methods. While this may sound simple, coordinating the participation of more than 15 groups was a challenge but it was well worth the facilitation! Feedback from participants showed that this was the best workshop series yet. One participant said, “I will not like to miss any other similar seminar that this group will come up with because it is really educative and empowering. I did not spend my three days with you in vain.”
On top of great stories, we have the personal side of our trip. Selena celebrated her birthday in true Sierra Leonean style, complete with a surprise party, “rich” cake and many friends. We were overwhelmed as each came forward with a gift. She now has traditional clothes to teach in next time she comes - and there will be a next time for sure as the Dean of ENCAT and others are already planning for her to teach community development methods.
Overall, we had a phenomenal trip and are both planning for a return trip in early 2010. I will focus on the large-group leadership and business management seminars as well as on continuing our conversation with business leaders regarding their needs. Selena will most likely be completely occupied training the pastors and ENCAT students in community development topics. If you are interested in going with us, let me know! There is always room for those with a passion to help lift people up.
Tuesday, October 13, 2009
Sunday, July 5, 2009
Turning Lemons into Lemonade
I think most of humanity knew of my travel schedule in July - packed with two separate African trips in six weeks. I had put off meetings, turned over responsibilities, prepared my family, and made arrangements. So imagine my utter shock as I step up to the South African airways ticket counter and find they won't let me on the plane. "What?" I say. "You don't have enough blank pages in your passport, you cannot board the plane," they said again, repeating as if it shouldn't have been a shock to me. "Please step aside to be reticketed back home, next!" And with efficiency, I stepped aside.
So, life had handed me some lemons - or what I thought were lemons. What was I going to do now? I am stuck in Atlanta, my family is all in Gatlinburg, and I had things to do in Cape Town. A well-placed call to the US State Department soon found my options dwindling. No appointments at ANY regional facility until July 6 in New Orleans- too late to get it all done in Cape Town and what would I do until then? I had no choice - stay in the US, get extra pages by mail and pray for wisdom on how to get our work done anyway.
So, thus began my full-day quest for ways to make lemonade out of the lemons I was holding. Here is what I learned:
1. Sugar.
You need to add sugar to make lemonade. I decided that the sugar in this situation would be my attitude. Humbly accept that I was the one in the wrong (I should've listened to Steve last year as he sent HIS passport in for more pages). Get over yourself and treat everyone else you see like this is exactly what you wanted to be doing. That was a real tester as it took the Atlanta Hartsfield airport 16 hours to return my bags to me - even though they were probably right under my feet. Maintaining a good attitude simply made the whole experience a little less painful, maybe even enjoyable?
2. Think outside the box.
How could we get the same thing accomplished in a different manner? First off, the plane time would have been used to read a book about Participatory Learning. So, find a corner of floor and start reading (I finished it before my bags came). Second, Selena and I were going to reformat the CDLS curriculum to a more participatory format. Could we do this via online meeting services? I think we can. We'll give a report after this week about how that went. Now, I am starting to think maybe I didn't really NEED to go to Cape Town to get this done in the first place.
3. Look for opportunities to be an unexpected blessing.
Having no other better options (or car for that matter), I rented a car and went to Gatlinburg. The kids were there with their cousins, grandparents and Steve. But they are a handful, believe me. One day after being with them all, I realized that God had not only helped me to turn lemons into lemonade but had given me a free gift along the way: unexpected time with my kids.
I know this is not the easiest road to walk. Without the grace of God, I think I would have just been a normal irate traveler whose plans had gotten upset. I saw plenty of them in Atlanta and the baggage personnel certainly didn't expect any different from me. But I figure if I am going to be made to go through a process, having a great attitude makes it a little easier for me and everyone I come into contact with. It helped that I met some cool people working there - a woman from Togo, a man who went to Fisk (Nashville) and worked as a government contractor in biomedical engineering, among others.
So, thanks for praying for my trip to Cape Town. It turned out awesome, but not exactly as expected! But, I am well aware that the prayers of many helped me to walk in the grace of God through an unpleasant situation. And those same prayers will hopefully help Selena and I to accomplish everything that we need to get done this week - in a different way than we expected.
Find ILDI on the web!
www.intleader.org
So, life had handed me some lemons - or what I thought were lemons. What was I going to do now? I am stuck in Atlanta, my family is all in Gatlinburg, and I had things to do in Cape Town. A well-placed call to the US State Department soon found my options dwindling. No appointments at ANY regional facility until July 6 in New Orleans- too late to get it all done in Cape Town and what would I do until then? I had no choice - stay in the US, get extra pages by mail and pray for wisdom on how to get our work done anyway.
So, thus began my full-day quest for ways to make lemonade out of the lemons I was holding. Here is what I learned:
1. Sugar.
You need to add sugar to make lemonade. I decided that the sugar in this situation would be my attitude. Humbly accept that I was the one in the wrong (I should've listened to Steve last year as he sent HIS passport in for more pages). Get over yourself and treat everyone else you see like this is exactly what you wanted to be doing. That was a real tester as it took the Atlanta Hartsfield airport 16 hours to return my bags to me - even though they were probably right under my feet. Maintaining a good attitude simply made the whole experience a little less painful, maybe even enjoyable?
2. Think outside the box.
How could we get the same thing accomplished in a different manner? First off, the plane time would have been used to read a book about Participatory Learning. So, find a corner of floor and start reading (I finished it before my bags came). Second, Selena and I were going to reformat the CDLS curriculum to a more participatory format. Could we do this via online meeting services? I think we can. We'll give a report after this week about how that went. Now, I am starting to think maybe I didn't really NEED to go to Cape Town to get this done in the first place.
3. Look for opportunities to be an unexpected blessing.
Having no other better options (or car for that matter), I rented a car and went to Gatlinburg. The kids were there with their cousins, grandparents and Steve. But they are a handful, believe me. One day after being with them all, I realized that God had not only helped me to turn lemons into lemonade but had given me a free gift along the way: unexpected time with my kids.
I know this is not the easiest road to walk. Without the grace of God, I think I would have just been a normal irate traveler whose plans had gotten upset. I saw plenty of them in Atlanta and the baggage personnel certainly didn't expect any different from me. But I figure if I am going to be made to go through a process, having a great attitude makes it a little easier for me and everyone I come into contact with. It helped that I met some cool people working there - a woman from Togo, a man who went to Fisk (Nashville) and worked as a government contractor in biomedical engineering, among others.
So, thanks for praying for my trip to Cape Town. It turned out awesome, but not exactly as expected! But, I am well aware that the prayers of many helped me to walk in the grace of God through an unpleasant situation. And those same prayers will hopefully help Selena and I to accomplish everything that we need to get done this week - in a different way than we expected.
Find ILDI on the web!
www.intleader.org
Thursday, June 4, 2009
The Importance of a BHAG to Teamwork
It was Sunday morning this week and I entered the kids' playroom in our house. My heart sank - it looked like a hurricane had hit. There was not a single bin that had not been emptied, legos everywhere, balls, small doll clothes, you name it. And I really wanted to get a quick workout in on Exercise TV, my new craze. So I did what any self-respecting mother would do: yelled for the kids to come in and help clean up. The littlest one, Katie Rose, put away doll clothes, Ruth put away all the big-kid toys and Zach took on the legos and balls. Steve and I handled bigger things. In no time flat (under 5 minutes), we had the place cleaned up. That is the beauty of teamwork: you can accomplish more and more quickly than if you did it alone. I've cleaned that playroom more times than I can count and it usually takes at least 20 minutes. But not this time.
The basic premise of teamwork is that we need each other in order to accomplish great things. I know the American spirit is a can-do, rugged individualist and that has its role sometimes. But I would argue that we really need to utilize teams of collaborating and qualified individuals, each doing the right role at the right time, in order to accomplish more than we could alone. In their book Built to Last, Collins and Porras tell us about the BHAG, Big Hairy Audacious Goal. I love this quote that prefaces the BHAG chapter and have used it many times:
"Of all the things I've done, the most vital is coordinating the talents of those who work for us and pointing them toward a certain goal." - Walter Elias Disney (the Disney founder)
If you want to do good thing, go alone. If you want to do great things, far beyond your imagination, assemble a team of gifted people and let them work together. And a BHAG is a great stimulus to do something together, because it provides a defined target for the team's aim. Without a big goal, teams will simply become bureaucratic turf-protecting committees at best and sites for infighting and power struggles at their very worst. A team must know the target and have a reasonable likelihood of either accomplishing it or failing miserably in order to stimulate their best input. This is true in for-profit or non-profit work.
Questions for thought and contemplation:
What teams are you a part of that need a really big, hairy audacious goal?
How can you go about providing peer-level leadership to see the team both develop and accomplish the target?
What impact would this have if you applied this concept to your family, to your community work, to your vocation?
Find ILDI on the web!
www.intleader.org
The basic premise of teamwork is that we need each other in order to accomplish great things. I know the American spirit is a can-do, rugged individualist and that has its role sometimes. But I would argue that we really need to utilize teams of collaborating and qualified individuals, each doing the right role at the right time, in order to accomplish more than we could alone. In their book Built to Last, Collins and Porras tell us about the BHAG, Big Hairy Audacious Goal. I love this quote that prefaces the BHAG chapter and have used it many times:
"Of all the things I've done, the most vital is coordinating the talents of those who work for us and pointing them toward a certain goal." - Walter Elias Disney (the Disney founder)
If you want to do good thing, go alone. If you want to do great things, far beyond your imagination, assemble a team of gifted people and let them work together. And a BHAG is a great stimulus to do something together, because it provides a defined target for the team's aim. Without a big goal, teams will simply become bureaucratic turf-protecting committees at best and sites for infighting and power struggles at their very worst. A team must know the target and have a reasonable likelihood of either accomplishing it or failing miserably in order to stimulate their best input. This is true in for-profit or non-profit work.
Questions for thought and contemplation:
What teams are you a part of that need a really big, hairy audacious goal?
How can you go about providing peer-level leadership to see the team both develop and accomplish the target?
What impact would this have if you applied this concept to your family, to your community work, to your vocation?
Find ILDI on the web!
www.intleader.org
Wednesday, April 29, 2009
Book Review: Hot, Flat and Crowded by Thomas Friedman
Now, I know what everyone is thinking - has Dr. Cristy become a global warming fanatic? The answer is not exactly, but I do think two things: (1) we need to reduce our reliance on middle-east petrol and (2) we can and should act more responsibly when it comes to how we treat the planet - and this would be easier if we had some economic incentives to do so. I've been all over the world and just seeing the piles of trash and human defecation along the roads alone would be enough to fuel #2. Then, you see the abysmal state of human rights and democratic institutions in most of the oil-producing nations of the world and it is easy to see why I think #1.
Thomas Friedman is no doubt a global-warming believer. I can amiably disagree with him on that point, and yet agree with him on several of the central theses of his book, which may be better described as a tome - it took me almost three weeks to read it.
Mr. Friedman makes an eloquent argument for a Green Revolution by appealing to the democratic capitalist in us - to not fund what he calls "petro-dictatorships" and ensure that America doesn't get beat by China in the next big industrial revolution: green technology. And he has a valid point. The Americans are way behind in this race already due to scattered tax and regulatory policies - and we are definitely in danger of losing the innovation race when it comes to finding the next great energy source that is cheap, readily available, clean and inexhaustible. In America we don't really need some government-funded Manhattan project. He argues that what we need is the right regulatory and tax-incentive environment that would encourage thousands of garage-innovators to do what America has always done best - creatively invent and hone a technology that will work and bring profits to those who are its champions.
The one point that he made that I think is completely valid and actually applies to our work in ILDI is this: creating larger middle classes through development is good, but the problem is that we are creating middle classes around the world that want the energy-guzzling American middle class lifestyle. The issue is not really about depriving our own middle class of lifestyle, but maybe incentivizing industry to develop an alternative energy system that is cheaper than our existing one. This would help us to make the change-over to the new technology (economic decisions are much easier to sell than environmental ones) and give us a competitive advantage in two ways - lower costs for us in relationship to the energy-guzzling competition and also drive purchases from us of this new technology. Economic growth is good, right?
So, how do I apply what I've learned to my life? Well, I wouldn't run out and start a solar panel business in South Africa just yet - but maybe we should be exploring ways to bring power to non-electrified rural western africa that are not dependent on the current energy grid and use clean technology. For instance, maybe a water purification system that uses solar power and generates internet connectivity on the side is a viable business model after all? It satisfies the demand for clean water, power and connectivity while bypassing the costly infrastructure investments of coal-fired energy and reducing the environmental impact of the humans needing the technology. If we wait for the "dirty fuel" energy grid to get there, we will be waiting decades. Africa leaped over land-lines, adopting cell phones, so there is precedent for this type of thing.
What most encouraged me about reading this book was to begin to think win-win with regard to the environment. I am not on-board with global warming, but I am way into green solutions that create a win for the people using them. And I am challenged to see how I can be part of this movement / green industrial revolution even in my small area of influence. Read this book and be challenged in your thinking too. Who knows, maybe you'll be one of those guys in your garage that we'll talk about in 20 years because you are filthy rich from a green technology application. Stranger things have happened.
www.intleader.org
Monday, March 16, 2009
Becoming a better leader, no matter who you lead
I couldn't let March "Readers are Leaders" month go by without reviewing a leadership book. And for those who know me well, I'm sure you are not surprised on my choice of a John Maxwell book, the 360 degree leader. I love this book because it takes leadership from something only the people at the top of ladder do to something that we can all do -and should do, even homeschooling moms and people in business for themselves. You are leaders too.
Maxwell sets out ways that you can be an influencer of those above you, those at your level, and those whom you lead. He calls this "leading up", "leading across" and "leading down." I will set out a few tips for each level, to entice you into reading more!
Leading Up: Make Yourself Valuable and Become a Go-To player
The best way to gain influence with those who are YOUR leaders is to help them succeed. This means going beyond the requirements, serving them selflessly, and respecting their time. A few questions: Are you always prepared when you take your leader's time? Do you volunteer to solve problems that are not in "your department"? Do you ever seek to lighten your leader's load? We can all grow in this, as everyone of us, no matter how high up, has someone over them. Even the CEO has a Board to report to.
Leading Across: Becoming a team player and not a competitor
The best way to gain influence among your peers is to work as a great team player. When we realize that we are all on the same team, the rest becomes easier. If we vow to work together, competing agendas become less important and the better question is how we can advance the ball down the field together. This is not easy, but when you operate as a team player, you gain the respect and backing of your peers. A few questions: Are office politics more important than office accomplishments? How many people at work do you know by name - and know what their outside interests are, if they are married, if they have children? Do I ever pretend that I'm perfect at work or do I acknowledge my own shortcomings? We all have peers at work or in volunteering. These people can be your worst enemy or your greatest asset - your choice.
Leading Down: See Each Person as a "10" and add value to them daily
If people sense they gain more by being under your leadership, this builds loyalty and improves their performance. Everyone wants to be on the winning team where they are value. This takes good teamwork, positive communication strategies, and solid implementation of a good plan. If you set the tone by valuing every individual's input and adding value to make them better at their job, you will create an effective, loyal team that WANTS to achieve great things together. Questions: Do I ever pit one worker against another? Is each person on my team in the place of their greatest strength? Have I properly given a vision and a plan for forward movement to my team? Do I care about each person aside from what they give at work?
Now, there is SO MUCH more to each level of leadership, but this is just a teaser! So many people in the middle of an organization go to their jobs not even realizing that they are uniquely positioned leaders who have the opportunity to be greater leaders if they develop their leadership skills. These skills don't just happen, they are cultivated. And we know that without a plan to cultivate something, it will never happen - like the farmer who wants to grow corn but never buys the seed to plant.
So, what seeds of leadership are you planting in your life? May I submit that this book is a great place to start for those wanting to grow a harvest in this area.
Find ILDI on the web!
www.intleader.org
Maxwell sets out ways that you can be an influencer of those above you, those at your level, and those whom you lead. He calls this "leading up", "leading across" and "leading down." I will set out a few tips for each level, to entice you into reading more!
Leading Up: Make Yourself Valuable and Become a Go-To player
The best way to gain influence with those who are YOUR leaders is to help them succeed. This means going beyond the requirements, serving them selflessly, and respecting their time. A few questions: Are you always prepared when you take your leader's time? Do you volunteer to solve problems that are not in "your department"? Do you ever seek to lighten your leader's load? We can all grow in this, as everyone of us, no matter how high up, has someone over them. Even the CEO has a Board to report to.
Leading Across: Becoming a team player and not a competitor
The best way to gain influence among your peers is to work as a great team player. When we realize that we are all on the same team, the rest becomes easier. If we vow to work together, competing agendas become less important and the better question is how we can advance the ball down the field together. This is not easy, but when you operate as a team player, you gain the respect and backing of your peers. A few questions: Are office politics more important than office accomplishments? How many people at work do you know by name - and know what their outside interests are, if they are married, if they have children? Do I ever pretend that I'm perfect at work or do I acknowledge my own shortcomings? We all have peers at work or in volunteering. These people can be your worst enemy or your greatest asset - your choice.
Leading Down: See Each Person as a "10" and add value to them daily
If people sense they gain more by being under your leadership, this builds loyalty and improves their performance. Everyone wants to be on the winning team where they are value. This takes good teamwork, positive communication strategies, and solid implementation of a good plan. If you set the tone by valuing every individual's input and adding value to make them better at their job, you will create an effective, loyal team that WANTS to achieve great things together. Questions: Do I ever pit one worker against another? Is each person on my team in the place of their greatest strength? Have I properly given a vision and a plan for forward movement to my team? Do I care about each person aside from what they give at work?
Now, there is SO MUCH more to each level of leadership, but this is just a teaser! So many people in the middle of an organization go to their jobs not even realizing that they are uniquely positioned leaders who have the opportunity to be greater leaders if they develop their leadership skills. These skills don't just happen, they are cultivated. And we know that without a plan to cultivate something, it will never happen - like the farmer who wants to grow corn but never buys the seed to plant.
So, what seeds of leadership are you planting in your life? May I submit that this book is a great place to start for those wanting to grow a harvest in this area.
Find ILDI on the web!
www.intleader.org
Sunday, March 8, 2009
The Way Forward - Freedom from Debt
The more I learn about the Great Depression (see last week's book review) and the more I read current economic thinking, the more convinced I am that reducing our debt burden - individually and as a society - is the only way to long-term prosperity, growth and opportunity. This leads me quite naturally to one of my favorite thinkers / writers in the US today - Dave Ramsey - and his Financial Peace Revisited.
But first, a quick look at some stats:
debt in America today = 190% of GDP (the measure of all goods and services produced in our nation yearly);
debt in America at the start of the Great Depression = 164% of GDP
average home price decline 1929-1933 = 24%;
now = 5% (2006-2008) average
The Economist says, "Debt burdens are high today mostly because so much was borrowed in the recent past." - Debt burdens were high in the depression due to deflation and shrinking output, not because they went on a borrowing binge like us. This is a major difference and tells us that we can do something about our debt burdens, more than in the Great Depression.
So, how does Dave say to get rid of debt? Simple - spend less than you earn, systematically, over a long term period, applying your residual income to debt reduction.
The first half of Financial Peace Revisited is spent convincing us of the need to limit our lifestyle and that we have a problem, called "Stuffitis", a very technical medical term that discusses our addiction to stuff. This is often the first step in making any change in our lives - whether it is losing weight, stopping smoking, or getting help with an addiction like stuffitis. We must first recognize that we have a problem. And Dave is great at getting us to realize that, Houston, WE HAVE A PROBLEM.
The one thing that Dave teaches in the second half of the book that I want to highlight is his concept of Baby Steps. If the only idea you come away with today is this one, then great. Getting out of debt, like losing weight, is a process. It can't happen overnight - it needs daily discipline - and it demands a lifestyle change. This is very comforting for people like me who are very goal-oriented. If I apply myself to this task well, in the end, I will win.
"Baby Steps" begins with the idea of building up a small emergency fund, then using the "debt snowball" (a very simple process with a fancy name) to pay off all debt but the mortgage, then building up some savings and retirement planning / college savings - then finally tackling the mortgage debt. The final Baby Step is planning how you are going to use all that extra cash you've been applying toward debt payments and investments to pay cash for things like your next car, the real estate steal, variable annuities and other fancy investment options that only rich people have access to. BECAUSE BY THEN, YOU'LL BE RICH.
I am a planner by nature, so this process was fascinating when I first heard it. Then, I realized the genius in its simplicity. Anyone could follow it and could be the old lady a friend of mine talks about who drove up in a beat up car and plunks down thousands of dollars to help his school build a new facility. She was an astonishingly wealthy person with the lifestyle of a lower middle class person. There is no shortcut to becoming wealthy - the way is filled with hard work, financial discipline, a limited lifestyle and sustained focus on one end goal.
If you are left wanting more, get the book (link above) or check out a Financial Peace University near you. My church has one starting up soon, March 19th to be exact. Get on the Baby Step plan and let's march our way to freedom from debt and those rich bankers who build all the tall buildings downtown. There's a reason why they are rich and we are not. Proverbs says, "the borrower is a servant to the lender."
Find ILDI on the web!
www.intleader.org
But first, a quick look at some stats:
debt in America today = 190% of GDP (the measure of all goods and services produced in our nation yearly);
debt in America at the start of the Great Depression = 164% of GDP
average home price decline 1929-1933 = 24%;
now = 5% (2006-2008) average
The Economist says, "Debt burdens are high today mostly because so much was borrowed in the recent past." - Debt burdens were high in the depression due to deflation and shrinking output, not because they went on a borrowing binge like us. This is a major difference and tells us that we can do something about our debt burdens, more than in the Great Depression.
So, how does Dave say to get rid of debt? Simple - spend less than you earn, systematically, over a long term period, applying your residual income to debt reduction.
The first half of Financial Peace Revisited is spent convincing us of the need to limit our lifestyle and that we have a problem, called "Stuffitis", a very technical medical term that discusses our addiction to stuff. This is often the first step in making any change in our lives - whether it is losing weight, stopping smoking, or getting help with an addiction like stuffitis. We must first recognize that we have a problem. And Dave is great at getting us to realize that, Houston, WE HAVE A PROBLEM.
The one thing that Dave teaches in the second half of the book that I want to highlight is his concept of Baby Steps. If the only idea you come away with today is this one, then great. Getting out of debt, like losing weight, is a process. It can't happen overnight - it needs daily discipline - and it demands a lifestyle change. This is very comforting for people like me who are very goal-oriented. If I apply myself to this task well, in the end, I will win.
"Baby Steps" begins with the idea of building up a small emergency fund, then using the "debt snowball" (a very simple process with a fancy name) to pay off all debt but the mortgage, then building up some savings and retirement planning / college savings - then finally tackling the mortgage debt. The final Baby Step is planning how you are going to use all that extra cash you've been applying toward debt payments and investments to pay cash for things like your next car, the real estate steal, variable annuities and other fancy investment options that only rich people have access to. BECAUSE BY THEN, YOU'LL BE RICH.
I am a planner by nature, so this process was fascinating when I first heard it. Then, I realized the genius in its simplicity. Anyone could follow it and could be the old lady a friend of mine talks about who drove up in a beat up car and plunks down thousands of dollars to help his school build a new facility. She was an astonishingly wealthy person with the lifestyle of a lower middle class person. There is no shortcut to becoming wealthy - the way is filled with hard work, financial discipline, a limited lifestyle and sustained focus on one end goal.
If you are left wanting more, get the book (link above) or check out a Financial Peace University near you. My church has one starting up soon, March 19th to be exact. Get on the Baby Step plan and let's march our way to freedom from debt and those rich bankers who build all the tall buildings downtown. There's a reason why they are rich and we are not. Proverbs says, "the borrower is a servant to the lender."
Find ILDI on the web!
www.intleader.org
Wednesday, March 4, 2009
The Forgotten Man - a book review
Amity Schlaes' book The Forgotten Man: a new history of the Great Depression was a timely read, considering all the recent references we've heard to this time and the policies of FDR. So, in reading this I set out to ask and answer a few questions that I felt were the most pertinent to our time today and to my understanding of the economic situation back then. This book read more like a biography as Ms. Schlaes gives us the backdrop for the time through the people. It is a wonderfully entertaining and very informative read!
Question #1: Why did the Great Depression occur?
Answer: Normal economic cycles. "Back then", a depression was not a big deal. Macroeconomic swings were often wild and violent. This was at least the sixth depression in America's history - and not even the worst one. The Great Depression did not occur because of the 1929 stock market crash, the "godlessness" of the 1920s or unfettered capitalism. Those all were incidental or at worst, a symptom. The real problem was deflation. And it was a problem that went undiagnosed and certainly untreated for almost ten years.
Question #2: If deflation caused the depression, then what made it "great"?
Deflation should have just caused a mild economic swing. So, why did it spark a long and deep depression, in which unemployment never fell below 10% until WWII? The answer lies in the activities of politicians. Everyone was trying out their philosophies to see if they might work. We didn't have the sophisticated money management system back then that we do now. We didn't have any way of reliably and quickly measuring macroeconomic indicators like unemployment, GDP or capital purchases. These had to be tallied from a variety of sources and took years to know. In essence, this meant that politicians and their advisors were flying blind in a mountainous region, with no radar. Hoover and Roosevelt were very similar in a few ways - one was their willingness to experiment with macroeconomic interventions. A story is told of FDR setting the gold exchange rate on a daily basis by dreaming up a number.
Question #3: So, if political interventions were haphazard, why couldn't business lead the recovery on its own?
Business could not, because it was never permitted. During the Great Depression, Hoover and FDR created several governmental agencies meant to prop up the economy. They sounded smart, but they really destroyed capital initiative. Capital stayed out of the market and waited. These included the NRA (attacked small businesses with regulations), WPA (make-work, not real work), TVA (destroyed the privately held utilities), Smoot Hawley Protectionism (probably the worst offender as it destroyed exports), and the Revenue Act (raised estate, gift and capital gains taxes).
Question #4: If the stock market crash didn't cause the depression, then why didn't that index bounce back quickly?
Two reasons: deflation, which burst the balloon of the stock values of many index companies; and secondly, uncertainty created by governmental interventions and changes in policy. One of FDR's management techniques was to pit opposing voices on his cabinet against each other and see who would win. This is an interesting management technique, but one that the markets didn't enjoy. The market's fluctuations were wild, for that time, and this had the effect of keeping capital at home, under the mattress.
Question #5: Why couldn't America's trading partners help bail us out - wasn't Europe a stronger economy at that time?
Europe had just been through WWI and Germany, the largest economy, was mandated to pay back huge war reparations to France and England. FDR cancelled those, but not before they crashed Germany's economy and led to hyperinflation. Like any smart government, the German government tried to pay off the debt by printing money, leading to hyperinflation. So, Europe was already in a mess. The situation was made worse by the protectionist tariffs of Smoot Hawley. Whatever exports we had to Europe vanished with that law - therefore no bailing us out by buying cheaper goods. And there was no precedent for international loans (IMF, World Bank both were formed afterward) at that time. Protectionism always turns around and bites you worse than you thought.
Question #6: How did the Depression really end?
We were all taught that the New Deal "tided the US over" until WWII. Is this true? No, the New Deal's policies actually led to what we call the "depression within the depression" of 1937-8. If the government had done nothing (fiscal interventions) and left capital alone, the country might have recovered much sooner, even without effective monetary interventions. But we'll never know that.
The Great Depression ended simply because of three reasons: (1) FDR finally wisened up and started reversing some of the more idiotic programs that were keeping capital under mattresses; (2) the economic cycle began swinging the other way all on its own (with the fat trimmed out, the US was now lean and mean and ready to produce); and (3) the world stopped paying attention to the economy and focused on something else.
The biggest driver of any economy is something called "confidence" - this is a trust that if you purchase something or invest in something you will get something in return. Confidence came back into the US because we as a nation started focusing on something other than ourselves. People want confidence to occur, as it brings them personal stability, so it is something that WILL come back as long as governments don't mess it up with their programs.
To bring this into today - Former President Clinton recently admonished President Obama to begin "talking up the economy." He is right - this is the confidence thing. The more we hear negatives, the more we believe it. Every one of us wants the economy to recover, we want our friends to find jobs, we want our stocks to do better. Confidence is what has brought the stock market from the Depression averages of 100-200 points to what was yesterday a "low" of 6700. That is between 35 and 67 times the depression-era level. All because of the engine of confidence in our economy, producing people who start businesses that create wealth for everyone.
I hope you are enjoying your reading - put a comment up about mine and lets learn from each other!
Find ILDI on the web!
www.intleader.org
Question #1: Why did the Great Depression occur?
Answer: Normal economic cycles. "Back then", a depression was not a big deal. Macroeconomic swings were often wild and violent. This was at least the sixth depression in America's history - and not even the worst one. The Great Depression did not occur because of the 1929 stock market crash, the "godlessness" of the 1920s or unfettered capitalism. Those all were incidental or at worst, a symptom. The real problem was deflation. And it was a problem that went undiagnosed and certainly untreated for almost ten years.
Question #2: If deflation caused the depression, then what made it "great"?
Deflation should have just caused a mild economic swing. So, why did it spark a long and deep depression, in which unemployment never fell below 10% until WWII? The answer lies in the activities of politicians. Everyone was trying out their philosophies to see if they might work. We didn't have the sophisticated money management system back then that we do now. We didn't have any way of reliably and quickly measuring macroeconomic indicators like unemployment, GDP or capital purchases. These had to be tallied from a variety of sources and took years to know. In essence, this meant that politicians and their advisors were flying blind in a mountainous region, with no radar. Hoover and Roosevelt were very similar in a few ways - one was their willingness to experiment with macroeconomic interventions. A story is told of FDR setting the gold exchange rate on a daily basis by dreaming up a number.
Question #3: So, if political interventions were haphazard, why couldn't business lead the recovery on its own?
Business could not, because it was never permitted. During the Great Depression, Hoover and FDR created several governmental agencies meant to prop up the economy. They sounded smart, but they really destroyed capital initiative. Capital stayed out of the market and waited. These included the NRA (attacked small businesses with regulations), WPA (make-work, not real work), TVA (destroyed the privately held utilities), Smoot Hawley Protectionism (probably the worst offender as it destroyed exports), and the Revenue Act (raised estate, gift and capital gains taxes).
Question #4: If the stock market crash didn't cause the depression, then why didn't that index bounce back quickly?
Two reasons: deflation, which burst the balloon of the stock values of many index companies; and secondly, uncertainty created by governmental interventions and changes in policy. One of FDR's management techniques was to pit opposing voices on his cabinet against each other and see who would win. This is an interesting management technique, but one that the markets didn't enjoy. The market's fluctuations were wild, for that time, and this had the effect of keeping capital at home, under the mattress.
Question #5: Why couldn't America's trading partners help bail us out - wasn't Europe a stronger economy at that time?
Europe had just been through WWI and Germany, the largest economy, was mandated to pay back huge war reparations to France and England. FDR cancelled those, but not before they crashed Germany's economy and led to hyperinflation. Like any smart government, the German government tried to pay off the debt by printing money, leading to hyperinflation. So, Europe was already in a mess. The situation was made worse by the protectionist tariffs of Smoot Hawley. Whatever exports we had to Europe vanished with that law - therefore no bailing us out by buying cheaper goods. And there was no precedent for international loans (IMF, World Bank both were formed afterward) at that time. Protectionism always turns around and bites you worse than you thought.
Question #6: How did the Depression really end?
We were all taught that the New Deal "tided the US over" until WWII. Is this true? No, the New Deal's policies actually led to what we call the "depression within the depression" of 1937-8. If the government had done nothing (fiscal interventions) and left capital alone, the country might have recovered much sooner, even without effective monetary interventions. But we'll never know that.
The Great Depression ended simply because of three reasons: (1) FDR finally wisened up and started reversing some of the more idiotic programs that were keeping capital under mattresses; (2) the economic cycle began swinging the other way all on its own (with the fat trimmed out, the US was now lean and mean and ready to produce); and (3) the world stopped paying attention to the economy and focused on something else.
The biggest driver of any economy is something called "confidence" - this is a trust that if you purchase something or invest in something you will get something in return. Confidence came back into the US because we as a nation started focusing on something other than ourselves. People want confidence to occur, as it brings them personal stability, so it is something that WILL come back as long as governments don't mess it up with their programs.
To bring this into today - Former President Clinton recently admonished President Obama to begin "talking up the economy." He is right - this is the confidence thing. The more we hear negatives, the more we believe it. Every one of us wants the economy to recover, we want our friends to find jobs, we want our stocks to do better. Confidence is what has brought the stock market from the Depression averages of 100-200 points to what was yesterday a "low" of 6700. That is between 35 and 67 times the depression-era level. All because of the engine of confidence in our economy, producing people who start businesses that create wealth for everyone.
I hope you are enjoying your reading - put a comment up about mine and lets learn from each other!
Find ILDI on the web!
www.intleader.org
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