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Today's Commentary: 11.14.05
Wanted: A Social Ecologist

Last week, the world lost a powerful advocate of social and management thinking, a theorist whose words helped influence some of the greatest growth among the biggest companies and non-profits. Peter F. Drucker, author of important works such as "The World according to Peter Drucker" and "The Concept of the Corporation" ­ a book that came from a project he was hired to by GM executives to conduct, died at time when his thoughts on the workplace, although more necessary than ever, have fallen out of favor.

Drucker, who chastised GM in the study turned book, suggested a stronger relationship with the company and employee as the best way to achieve higher productivity. No less radical than many of this man's thoughts on social interaction, the idea that the employee was a resource rather than a cost was often met with support from the usual corners of business ­ labor leaders ­ and disdain from the opposite corner.

A one-time student of John Maynard Keynes, Mr. Drucker saw the successful operation of the economy from a different prospective. While Keynes advocated that businesses focus on the commodities, of which one would include the cost of workers, Drucker saw and suggested that involvement of the workforce as a resource - not a cost - in the work environment would thrust the company to new heights. The knowledge these workers would provide about the environment they toiled in, he believed, had the seed of information that management often ignored.

He believed that this resource was worth securing for the long term with guaranteed wages that accompanied agreements of lifetime employment. His decentralized ideas of management, a call to take away some of the everyday decision making of the executive would not only push the company towards higher profitability but would guarantee the worker his job for as long as he wanted it.

Imagine that world if you would for just a minute. Because of your value to the company, your job would have been secure. Innovations and growth would have been organic; competition for skilled employees would have been fierce and employment would have been as close to full as anything we have ever imagined.

It is more what you would not have needed that would been the most noteworthy, even striking. You would not have needed Congress in recent years to take up the agenda of job creation. That tragic approach to creating more jobs while companies were cutting them is part of a wider scope of ingenious tax relief that this country would not have needed.

Tax relief in the form of a job creation titled measure had a hidden agenda buried deep with in its façade of helpfulness. Beneath the surface of this employment goodwill was a corporate gift of tax relief to stimulate the company and allow them to hire more workers.

Allowed to repatriate profits, a fancy word that means bring back oversized, offshore profits, companies have brought back hundreds of billions to our shores, all at tax savings north of 80-85% from the going rate. In all of the wisdom that only a tax cut happy Congress could muster, they added one caveat to the legislation: you can't buy back stock with the money.

However, and this is a huge however, companies could do pretty much what they wanted with it. And they have, wink, wink, not used it to buy back record numbers of shares that have increased shareholder value whilst opening the door for even more layoffs and cost cutting of employee benefits for the remaining workers.

Even as I pen this, Congress is looking to continue the trend of pseudo-beneficial cuts that are designed to do much of the same thing the previous tax cuts did. Problem is, those previous tax cuts did not find their way to the American workforce in any meaningful or tangible way and neither will these. The current round of tax cuts looks to further endanger the economic landscape while buying time for the Congress to shore up its chances at controlling both houses of Congress in 2006.

In a passing gesture to the growing upper crust, the bill includes some relief for the taxpayer whose deductions were endangered by an AMT bill next year. The $70 billion in tax cuts merely put off the alternative minimum tax possibilities for millions of Americans for another year. Could it be part of the re-election promise the GOP will use for its run for Congress next year? "A vote for me is a vote against AMT". Catchy, uh?

The proposed bill offers a further extension on capital gains and dividend tax rates, much of which flew past the average American's wallet the first time around. Only half of America currently owns shares in corporate America. Nonetheless. more breaks for businesses are also included in the bill. It is commonly held sentiment that, if you give business a break, they will hire workers.

The forces acting against the worker seem to redouble with each passing day. The business-centric focus of this administration and the continued support of legislation to supposedly grwo jobs is not working for the employee it was designed to help.

In the face of predicted increases in deficits for the coming year ­ the GOP has struggled mightily with its spending habit and has disagreed publicly on the best way to control the problem. The "drinking their way to sobriety" approach is fracturing an already divided party.

We have a stronger dollar thanks in part to the riotous French citizenry and with more than a passing nod to the rising interest rates here at home. While the average American worker cares little about the strength or the weakness of the Euro, he should. A strong dollar does not translate into more jobs.

On the American economic front, we have been raising interest rates while the EU has not. We have been raising them to help keep inflation in line with growth, both of which seemed poised to go in opposite directions, neither of which would solicit the desired economic outcome that the average Dick and Jane on the factory floor wants to hear.

By refocusing our attention away from the problem of rising deficits, both federal and trade, the situation is supposed to appear less anxious. It is not. When American companies find a new source of revenue such as repatriated porfits, they do not reinvest it in the workforce.

The federal deficit will grow. The trade deficit, even with the Chinese nod to quotas that was signed just before the President visits his greatest economic foreign fear in Beijing this week, will continue to expand. Foreign investment has now shifted from countries to banks and institutions on foreign soil letting Americans who have jobs continue to spend with the same abandon as before while financing their debt and discouraging savings all at the same time.

The rise in interest rates will force many consumers to rethink ­ if they were smart ­ how they will spend their next paycheck this holiday. This will force a slowdown economically and that will ultimately result in a halt to job creation. Faced with higher mortgages in relation to property values, especially in homes built outside of urban zones, will have the net effect of crippling the wealth effect that Greenspan and company dutifully engineered.

Peter Drucker died before he could see the whole of corporate America unravel. He was not a fan of big government. He was not a fan of executive incentives as a way of growing the company either.

His belief in the concept of human dignity in the workplace to offset the economic, political and corporate chaos seem destine to follow him to the grave as capitalism marches on, aided and abetted by a White House and Congress interested in saying one thing while pursuing wholly different concepts.

The world Mr. Drucker imagined would have embraced knowledge, allowed workers to find ways to adapt to new environments, and would have forced private business to do much of the work of the government. Called a social ecologist, the Democrats would be wise to acknowledge his thinking and retrain themselves to focus on the worker as the profit engine of the future, not its ball and chain.

And lastly, kudos for Senator Olympia Snowe (R ­ Maine) for stalling Senator Grassley's attempt to push the $70 billion tax cuts through committee and to the Senate floor for a quick vote before a long recess. Holding the deciding vote, she has insisted on tax breaks for low-income individuals and deadlocked the proposal. Democrats are steadfast against the measure. The House Republicans don't like it either. American workers would like it even less.

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