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
Monday, March 16, 2009
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
Subscribe to:
Posts (Atom)