The 120% Solution

Reprinted with permission from Jason's email list

Many intelligent people I've been speaking with believe that the economic crisis facing our country today is our biggest challenge since America's inception. Intelligent folks can argue the relative risks we faced when confronted with the Civil War, Great Depression, Vietnam, two World Wars and the New Millennium Economic Crisis (what I'm calling what we're going through today), but there is no debating that the current situation is dire.

Extremely dire.

Huge companies are closing or imploding and layoffs are skyrocketing; debt levels and savings are hitting new highs and lows, respectively. It's so bad that even the most intelligent economic minds in the world can't explain what is happening, and almost everything our government does seems ineffective. We're deep into uncharted waters and we don't have a navigator.

Oh yeah, it's going to get worse.

I've been thinking a lot of what got us into this mess and how we might be able to get out of it. What follows are my extremely basic thoughts on what has caused the problem and what the solution might be. These ideas are simple, but problems and solutions typically are. Truth be told, knowing what went wrong and how to fix it is the easy part -- it's implementing the solution that's hard.

There is no silver bullet and my hope here is not to convince you I have one. Instead, my hope is that this missive starts a discussion amongst considered people about how we move our country forward.

The 20% Problem
----------

When I first learned of Google's 20% time, hours reserved for engineers to pursue technology projects they find personally rewarding, I thought to myself: "Gosh, that's brilliantly self-indulgent." Google's 20% time has served as a way for the company to recruit and inspire some of the greatest minds in our industry.

It has served them well. Who wouldn't want to work for a company that essentially says "do what ever you want every Friday!" However, using 20% of your resources to pursue random projects is highly inefficient. While it it might work well for a company like Google, with absurd margins and free cash flow, it's a fairly crazy strategy for any normal company -- or country -- to employ.*

Well, our entire country has been taking 20% time for at least the past five years. It's time for us, just as The Mighty Google did recently according to the Wall Street Journal, to reconsider.

We've overspent, taken expensive vacations, built absurd homes (in both scale and quantity), run our savings into the ground and skyrocketed our debt to record levels. Our addiction to consumption and our sense of entitlement have killed us. Sure, many of us have lived conservatively, working hard without debt. But, on average, we've:

1. Spent well over 20% more than we should have on the price of homes.
2. Built homes that are well over 20% larger than they need to be.
3. Purchased 20% more consumer electronics than we needed. (In my case, 300%).
4. Extended home ownership rates 20% beyond where they should be (to the mid-to-high risk credit folks).
5. Gotten 20% fatter than we should be.

The orgy of overspending is over and it's time to move on.

Who's to blame for all this?

Was it the greedy Wall Street Bankers who engineered this huge mess? Yes.

Was it the mid-level mortgage broker pushing high-risk mortgages on clients who should have never had a mortgage to begin with? Yes.

Was it the over-reaching consumer who got in over her head and didn't research and question the mortgage she was signing? Yes.

Was it the government that didn't regulate all the bad actors in this tragedy? Yes.

There's plenty of blame to go around, but we've got to get past the blame stage and into the solution phase. (Holding the folks responsible who behaved criminally, of course. I predict there will be
many white-collar perp walks on CNBC next year, just as there were in 2002.)

* Note: I'm not saying Google's is to blame for any of this, or that 20% time was a bad idea for them. Their 20% time is simply what lead me to thinking about what's wrong with our country. I think Google's a brilliant company, filled with brilliant people who have done brilliant things. That being said, they do need to get more focused -- and they clearly are.

The 120% Solution
----------

If we're going to have any chance of bringing America back to greatness, we're all going to have to work 20% more than we have been.

I'm suggesting that, until America takes care of its debt, untangles the housing mess and gets unemployment under control, we all commit to working six days a week. Yep, move the standard 35-40 hour work week right up to 48 hours.

For me and my team, this is a non-issue, since we only hire folks who are looking to absolutely kill it, love what they do and don't consider it a job. Of course, positions at a startup company, where stock options make for a great reward if we hit a home run, have certain advantages over normal day jobs. In the technology industry, a 48 hour work week would be, for most, a vacation.

It was our collective sloth, consumption and sense of entitlement that got us into this mess, and the only thing that will get us out of will be lots of hard work.

If you've got a good job, you should bust your butt to make your company as successful and profitable as possible. That way, salaries can increase, jobs can be created and your products and services become so world class, the phrase "Made in America" will come to mean something other than "not worth buying."

If you're working at a government job, you should be putting in extra hours to reduce government spending. Come in this weekend and make the government more efficient. (Yes, I just told a government worker to come in on Saturday.)

If you've got credit card debt, pay it down if you can.

If you've got a mortgage, pay it off if you can.

If you work in the service industry, try to work 20% faster and come up with ideas to make your team more efficient. (Side note: I was in Japan recently and was amazed at the personal productivity of each
individual when compared to the U.S. workers.)

If you're a rich person looking to take a couple of years off, don't. Instead, start a company that creates an amazingly innovative product that the world -- not just the United States -- needs. Set the goal of
trying to employ 100 Americans.

Seriously, the affluent folks in this country should start businesses now. Drag your ass out of bed and try to make this country great again. It's this country that made you affluent. Yeah, you're rich and you don't need to work, we know. Who cares? Your country needs you right now! Sell your second or third home and start a company!

If you're affluent and you can't start a company then angel invest in a bunch of smart, hard working folks at the very least.

If you're a college student thinking of getting trashed this weekend, or taking a year off, don't. Instead, take an extra class or two, do an internship at a company or get a graduate degree in engineering.

If you're in high school, go work at your parents office or start an online business. (You would be surprised at how many high school students email me every week to share with me their online businesses that make $2-3k a month.)

If you're a lazy and bitter worker who has been screwed by the system, swallow your pride and stop trying to stick it to everyone. Double down and take pride in your work effort, even if your boss is a
complete jerk.

If you're the complete jerk of a boss, check yourself and realize that the folks working for you need the job, and that if everyone doesn't get their act together, we're all going to be out of work. (This is directed specifically at the dysfunctional automakers and airlines, which seem to spend more effort fighting their customers and each other than they do taking on their global competitors!)

Everyone must step up, and we've got to do it now. I've been traveling around the world the past two years, and I can tell you that the work ethic, attitude and productivity of American workers -- white and blue collar -- is half of what I've seen in countries like Japan, China, and Korea.

We're not going to get our asses kicked. We're in the process of getting our asses kicked!

Good debt vs. Bad debt
----------

One quick point of clarification around debt: While I am advocating everyone pay down-and, in fact, stop-the debt associated with unnecessary consumption, I'm very much in favor of investment in new companies, ideas and eduction. If we're going to take on any more debt, it should into things that pay back at least two dollars for every one dollar invested.

Investment in new technology, technical training, new companies, energy independence, mass transit, high-speed trains, cheap broadband and education are critical in getting us out of this mess.

I'm not against debt; I'm against debt that is wasted. Let's invest in our future.

In summary
----------

What made America great was our ability to innovate and create world-class products, ideas and services that people around the globe fell in love with and wanted for themselves.

From health care to human rights, from democracy to dishwashers, from windshield wipers to the World Wide Web, from search engines to soda pop, we've accomplished so much by dreaming and rolling up our sleeves.

We need to put down the remote, cut our credit cards in half and start new companies with new ideas. Our entrepreneurial spirit and hard work will get us out of this mess. All we need to do is release them.

Comments

[southernsepia]

You spent more on frills than you should have.
I am struggling to maintain a home and two kids.

You took extravagant vacations.
I haven't had a vacation in 3 years ( and that consisted of 5 days)

It is the CEO and the upper middle classes that have lived this lifestyle.

The rest of us are falling behind because wages have been stagnant for the last generation and the cost of housing and education has skyrocketed.

Perhaps the solution is that corporations figure out how to pay a living wage and reduce CEO pay and perks. You're smart people I'm sure you can think of something.

[Overd0g]

The solution to what? A business exists to make money for it's owners. Employees sign contracts to get a salary. If you don't like your "wage", see if anyone else values your labor more. If not, get new skills. It's called "freedom".

[southernsepia]

Right.

Keep that thought in mind when no one can afford your company's goods or services and you lose your job.

[bkbigfish]

No one else will say it, so I will: Raise taxes on the poor who don't pay any personal income tax. Since they take the most out of the system, I don't see why they shouldn't contribute. Make them pay, oh, let's say 20 bucks a year for people who earn at least 8000 dollars but less than 12,000. This way, they actually have a vested interest in higher vs. lower taxes. Actually, let's go one further: If you don't pay any income tax, you don't get to vote. This way, we are spared all the idiots like the ones out here in CA who, despite a budget that is billions in the whole, voted in an absurd high speed rail line to San Francisco that NOBODY will ride. "Hey, you know what is an awesome idea? Building something that will cost hundreds of billions of dollars, that costs twice as much as flying and takes three times as long! We'll be rich!"

[winchestereast]

the poor actually take less out of the system than the already wealthy on corporate welfare - fact - what with tax increment financing and eminent domain, there are many billionaires getting tax subsidies, for projects that do not create jobs or wealth for the rest of us , - add the no bid contracts for cheney's pals at halliburton et al, plus the business contacts of the retired military commentators on network news who made billions in iraq related ventures, - well, you get the picture - the poor are just tossed out by the right to divert ya'll from the real enormous schemes that fly under the radar and scoop up tax dollars by the gazillions - may be little more complicated than sneering at the 'other people' who get food stamps, medicaid, but it ads up to way more dollars-

[babylonandon]

A - flippin - men. Stop giving handouts to able-bodied losers.

Instead the 40% of the population that doesn't pay income taxes gets these stimulus package payouts, earned income credits, in some cases AFDC, and a whole host of other stuff they never pay for. Of course they'll vote for whomever will promise to give them more money ... who could blame them.

You want to "redistribute wealth"? Don't increase taxes on income.

Heap huge property taxes on large estates 10% of their value every year, expensive cars at 50% with a 10% (of purchase price) license plate fee per year, personal luxury aircraft at 100%, expensive vacations at 100%, any money sent to banks or money hideouts outside of the US at 100%. Tax expensive liquors over $100 a bottle at 50%, rich spas at 50%, RV's worth over $500,000 at 25% with the same 10% license fee. Eliminate every last loophole or tax dodge for anyone with personal residential or vacation property worth over $5,000,000.

Tax their wealthy toys, homes, lifestyles with no escapes. Make Paris Hilton pay a 100% tax on her body gauze dresses. Mandate a $100,000 salary plus retirement and medical insurance for every housekeeper, gardener, masseuse, concubine, pool boy, or other staff they have on call and tax accordingly. If its not a business producing income for employees and products for the market - tax the crap out of it.

[Overd0g]

The more you tax them, the more they will raise their salary to compensate. That's what I would do.

[ThePeacemakers]

Just because someone doesn't file at the end of year or have to pay because of low salary does not mean they don't pay taxes.
If you're getting a check, taxes are being taken out by the government. No matter how much it comes to at the end of the year. Not to mention sales tax when they purchase things.
So stop with this "poor people" don't pay taxes bull....

If you cut me a $200 dollar check today...some taxes would be taken out.

[MGhamma]

So, where are the jobs going to come from to allow all of us to work 20 % more?

[Overd0g]

I haven't found a business yet that will turn down free labor.

[Mildmannered]

We need to focus on rebuilding our manufacturing base in the United States.

[KillTheMessenger]

Then you should start by educating your children. Working harder at Walmart won't do a thing for that manufacturing base. Neither will startups that usually fail and if they don't are, at most, marginal successes for the founders and the VCs.

[Mildmannered]

I agree that we need to improve our education system, not only to produce more engineers but also more technicians, such as machine operators. If we need a new product manufactured, we should first try to figure out how to manufacture it here instead of racing to China to get it manufactured.

[Overd0g]

Why?

[TakeSake]

What's your job? Maybe it will get outsourced or rightsized. Perhaps you are self-employed. What happens when you lose your customers?

[laocoon]

The real solution to the real problem we face in the immediate future is to keep each of us from suffering irreparable damage from disease that cant be treated, hunger that goes unmet and a sudden loss of a lifes savings or our shelter. We must recognize that this the essential purpose of government and serve that purpose directly. the philosophy that got us here is that the good of the people will happen if we have government only serve a collective concept like the "free market" That simply has resulted in the top having more and more leverage to squeeze more and more from everyone else. Why not give the bottom 20%, 20% more of everything and see if the economy would not start booming as a result.

[Rule Of Law]

Many of the responses so far have been of the the "What? Me? I'm not changin' my life style! Ferrgedaboutit!"

And to them I want to say--Hows that been working for you so far?

This mess came from the top down, but if these guys don't wise up and stop thinking about that new truck or boat--or keep ignoring that the deal has been changed yet one more time, they will be chewed up and spit out by the very guys They Think should do the changing!

On the other hand, I understand the "self Protection" tenor of this blog. We all need to go the extra mile right now if we expect to survive intact--and I think this could get very ugly before it's over. But I have my own resistance to further enriching and thereby saving the asses of the same old Master Race Management bozos that created this mess, by workin' harder for the man.

I want to see "the man" gone! I want new management, real innovation and problem solving, not band aids made of my dollar bills and sweat. I want more protections--not less--for working class people, especially if we're being asked to save this country yet again.

I've made changes to cover my own behind. I suggest everyone else do the same. But at some point sacrifices will need to be made. Let's just make sure that EVERYONE--most especially the white collar wealthy--make these sacrifices together.

[ProfessorDuh]

So tax them.

[Rule Of Law]

Prof--before or after we fire their incompetent butts? :)

[Stellabella13]

You're kidding right? I've been working 2 jobs for 6+ years now (because I'm a state government worker). Wages for American workers have been stagnant for years and the disparity between CEO pay and average worker pay the largest ever--this is one of the reasons why we are in this mess to begin with.

[WhatsThis]

Nope. Not gonna do it. I already work 45 hours each week anyway.

First with all of us working 1/5 more hours unemployment will rise not fall. Worker productivity has been on the rise for the better part of the last 20 years. And yet, pay levels have not. Instead we should all work 32 hours a week for the same pay thereby increasing the demand for workers and stimulating the ecomony. Our corporate masters will have to come across with more money for their hired help. They were the ones benefiting from the growth over the last eight years and have the cash reserves to do it now.

[laocoon]

I agree. Every time you turn around the free market advocates advocate that the workers work more. this is all about squeezing more and more out for less and less.

[COPerez]

B.S.

The stats already say that Americans work more hours and take less vacation (even when they accrue it) that the rest of the Western world.

And really, who wants to work like the Japanese? In at 6:00 am and not home until 9:00 pm? Yeah, that'll get you in the hospital in about a month or two.

[ProudMormon]

I think we need a new 20% solution for government spending.

Dems have touted their support of "PAYGO" rules. But the reality is that PAYGO represents more of the same. The status quo.

Instead of PAYGO, we should have PAYGO PLUS.

The numbers between one project being increased and another being reduced are never going to jibe perfectly. So why not say you have to cut all the new spending PLUS some amount? It could be 5%, 10%, 20%, whatever. At least it would be progress. And it's doable.

[rustyaustin]

Great idea, instead of convincing the rest of the world to live up to our standards, let's live down to theirs. Although I think this is meant to be tongue in cheek.

[DMHopper]

Hello Peter, what's happening? Um... I'm gonna need you to go ahead and come in tomorrow, so if you could be here around... 9... that would be great. M'kay?

Oh, oh, and I almost forgot... um... I'm also gonna need you to go ahead and come in on Sunday too, 'kay? We, uh, lost some people this week, and uh... we need to sort of play catch-up. Thanks.

[noamjunior]

I agree somewhat with this analysis - but really it only applies to the top 20 %

[Helmsey]

Yeah I totally agree, this just seems like a good plan to bail out the top 20% of American, and I see unforseen consequences. Okay, we up the working week to 48 hours standard for everyone, what about the single parent that can not commit that kind of time, or for that matter any family right now trying to raise young children? It wouldn't work for them. Also with the increase in hours could lead to companies hiring less, and end up adding to already rising unemployment. The only thing I can think of that your plan accomplishes right away is to save the bottom line of companies. While that may eventually turn the economy around, it would only be of immediate help to those at the top. I think that the people already at the top are not going to be hurting nearly as much as those of us living pay check to pay check now. The solutions we need to be coming up with should include immediate results for those not at the top.

[Caddisfly]

I worked 6 days a week in the food service industry, averaging more than 55 hours a week for 30 years. It's not the American worker that has brought this house of cards down on our collective heads sir. After years of being told we can "have it all" by the spin masters and shylocks we now come to the realization that it's all an illusion. The American worker has been the most productive force in the economy for years, and is still out preforming expectations(witness the latest produtivity numbers just released, though down, were not as low as projected.) We've let our leaders truly "screw the pooch" here. Now we get to pay the bill as our hours are cut to help keep things afloat for a little longer. This is the huge statistic not being reported in the unemployment numbers being released, the under-employed who are scheduled less hours per week as businesses try to remain competitive. We American workers will all tighten our belts, and learn to get by with less, it's what we've done though our history. I would just like to see a little parity in sharing the load by the wealthiest 1% who now pay no taxes.

[Telemachus]

And every time a time-clock rings, a fairy gets its wings.

Energy (money) has been diverted out of the American economic system by a host of parasites, starting with the CEO whose individual take rivals the amount his company "saved" from thousands of layoffs (think Home Depot) and running through war profiteers (think Dick Cheney's cronies at Halliburton, who alone account for a good chunk of the $10 billion a month that's being siphoned off to Iraq); financial "wizards" who deal among themselves in creatively obscure & worthless paper bought with other people's pension money, taking commissions each time (think Bear Stearns, Lehman, AIG); and health insurance companies who maintain a vast bureaucracy at the expense of doctors, patients, employers (think GM) and the millions of people who can't work 6 days a week or even ONE because they're SICK.

It's fine to tell the oarsmen to row harder, but the boat won't move until you pull up the anchor.

[OrganOfThought]

Yea, I kept wondering while I read this article if the whole think is satire. Its a joke right? Come to find out this guy is serious. Wow! With this people like this giving us advice, who needs the CEO's of GM and Ford?

[quiviran]

And it won't go anywhere worth being without an intelligent helmsman.