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A Stitch in Time - Two Rivers


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January 2, 2001All About Tatters; We Hope O'Neill and Tommy

Fortunately, the family noticed that I am getting a bit tattered. They paid attention to repairs this season, putting absolutely the right things in my Christmas stocking. Since my shredded wallet has become an embarrassment to them, they made sure my new billfold, however empty, looks high class. As my brother-in-law Keith used to say, "You are looking very prosperous." I would reply, of course, "Not really." And he would rejoin, "Well, it's the illusion that counts."

I am encouraged by a few of the recent repairs the nation has made, even if it, too, is quite tattered. I can't wait to ride the new high-speed Amtrak trains from Washington to New York to Boston. Or to take a look at Houston's vastly improved public-school system. Or to explore several more aspects of Seattle, which has supplanted California as the cultural focus of the West.

Most encouraging, too, is the team Governor Bush is fielding in foreign policy and defense. We have been amateurs abroad for too long. And it has put the nation in some danger.

But the new administration's choices on the domestic and economic fronts do not look to be so felicitous. For more than ten yeas we have neglected the structural aspects of the economy. Since Reagan and running right through Clinton, we have had Wall Street administrations that have jiggered our finances and then left the rest to the states and to the private sector. At the Federal level we have lacked meaningful policy goals for better than two decades.

While some of the states and parts of business are much healthier, infra-rot runs riot throughout the land. This also includes the non-profit arena, to which Peter Drucker is now devoting attention. It's hard to think of a part of the infrastructure that is in good shape, be it air or ground transportation, education, pensions, health, electric power, or media. Here in the Piedmont of North Carolina we are a flood disaster waiting to happen due to decades of government neglect and rapacious development schemes. The floods and mudslides which ensue will be more devastating than anything seen so far in the Coastal Plain, even during Hurricane Floyd.

Since we find the Bush domestic team to be quite weak, we will pin our hopes on Paul O'Neill, the wunderkind CEO of Alcoa who has turned that behemoth around, and the effusive Tommy Thompson, governor of Wisconsin, who's had an idea or two about welfare and transportation. These two fellows will have to haul a lot of water.

At the end of the Clinton neo-Republican era (a Democratic administration only in name), the question is not whether we will survive the Gore/Bush election tempest in Florida. Can we survive, rather, the dot-com hysteria in which huge economic resources and energy simply were spent on the wrong things? Can we survive a worldwide credit bubble that has put the Financial Fates under the thumb of short-term money managers?

If all this is too much for you, you can pick up a feel-good book out of the Cato Institute called It's Getting Better All the Time: 100 Greatest Trends of the Last 100 Years, which does show that everything is getting more wonderful, Pangloss-style, even as we speak, and it will get better yet if we will only be smart enough to abolish government.

Yet even realists can take heart at the central outcome of the end of the Cold War. Nations at the margin are beginning to flourish and exert more power in world affairs. Look at Ireland, Spain, Singapore, and Australia. They are the surprises of the Millennium from which we must learn. Meanwhile the U.S., Russia, China, et. al. work at being big and powerful, faltering all the while. Well, as Teddy Roosevelt almost said, "How Can We Act Big and Small, How Can We Carry a Big Stick and Walk and Talk Softly?" A little modesty will go a long ways these days.

On the assumption that everything that ever counts is never seen, we will now begin to plug some yardsticks into this letter for you, helping all of us to see things as they are. For instance, last week we put up a note about the Purchasing Managers Index (Agile Companies #74) which would have told you earlier about the current recession which everybody insists is still not happening. The PMI will become more and more important for our economic understanding.  Since business is learning to operate on less and less inventory, we must understand better what buy-guys are up to.


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