US, the book intallment 4, We Don't Need Them, They Need US

This is a chapter in the book:

US

Everything is Done By US

We Can Make it For US

by Tom Cantlon

The list of links to chapters can be found at:

http://tomcantlon.com/us_on_rsn

We Don't Need Them, They Need US

Really? We don't need them? Really? They need US? Yep, really. They need US in six keys ways that are covered here.

We tend to think our economy is dependent on our having the big players. We've been conned into thinking that, but that is exactly backwards.

Most of the talk about the economy looks at it from the top down. It's all about "job creators", and when taxes are cut, they're cut for the top on the theory that will lead to investment and more jobs and be good for people. Back in the 1980s this was referred to as "trickle down". Eventually, use of that term faded both because it was constantly shown that it didn't work and because it was too obviously just a ploy, an excuse for the top to treat themselves ever better and try to get you to believe that it's for your benefit. That term might not be used much anymore, yet still when we hear the daily news and hear some segment about corporations and hear them referred to as "job creators" we tend to think, yes, thank goodness they're creating jobs. Our heads are still locked into thinking about the economy in those top-down, "thank goodness we have the top to create our jobs for us", ways. It's the same trickle-down theory but without using that term, and it's locked inside our very own heads. Let's look at six key aspects of the economy and see if it's true that the economy works from the top down.

Six Ways That the Economy is All About US

Wealth

Wealth is the first way. How is wealth created? One is by someone pulling together a business. It takes mountains of cash to start up a big operation, it takes shiploads of raw material if you are going to make much of anything, and it takes some kind of assembly operation. But all of that would be nothing, the mountains of cash would be worth no more than mountains of paper, the raw materials nothing more than that, just raw, the assembly operation idle, until you get the labor of the employees into the picture. Wealth is created as a partnership between someone who pulls those things together and the employees, the laborers, the strength of the people who actually take those raw materials and turn them into something worthwhile. Without those people doing that, the idea of the business is just an idea. It's that partnership with US that makes wealth.

In fact, stating that "someone pulls these things together" overstates it. If it's anything larger than just a few people, if some new corporation, or some new venture of some company, is going to start something like a manufacturing plant and make a lot of money off of it, it's going to be a big operation to "pull these things together", just to get the factory ready, much less running. In fact, it's going to be a big operation just to plan whether it can be done profitably, to investigate financing options, to consider plant designs, to scout locations. It's going to take secretaries and administrators and assembly line designers and engineers and purchasing agents and all sorts of people who actually carry out the vision of the one with the idea. It's all of them who have to know how to do their part and do it well, or the idea never comes together. So that person with an idea and that large team of people to carry it out, "pull these things together", and even then they just have a factory ready, but not running until it's filled with employees.

Sometimes you visit someone's home and you say, "This is a nice home" and they say, "Thank you. We built it". Generally, they don't really mean they built it. They mean they contracted it. They mean they had an idea. They either had the money or the credit-worthiness to get a loan, and they bought the land and hired a contractor, maybe found an architect, and a home was built, but not by them. It was built by laborers, by skilled people, by a contractor, by carpenters who've who spent many years doing carpentry and know what kind of wood is good for various places. They know what kind of insulation and weathering is going to be needed in this environment. They've seen over the years other carpenters and contractors cut corners and they've seen what happens with those houses over time. They know what's good and they are skilled. They have the necessary knowledge and they work hard. They go out there early in the morning when it's cold and disregard the cold and just dig in and start turning a pile of boards into a house. It is the laborers who create that. The resulting house is now valuable. That's how wealth is created. It's either created by one of US who brings a bunch more of US together to make the whole thing happen, or it can be a collaboration with some big corporation or rich entrepreneur, but which then needs a lot of US to make it happen, and the whole process is heavily dependent on US.

Entrepreneurs

That brings us into the second item, entrepreneurs, the people who start their own businesses. They can be tiny one-person businesses or big ventures that are simply new. This is a mixed point where the big players sometime have an important role, but it's also true that they're not required.

Sometimes experienced big-business people start new companies or new product lines within their company, or someone who has a lot of their own wealth does it. That's good. It's one of the ways that the things that people need and want get made. Other times the big companies miss what people want and it's a small start-up that meets the need, such as tiny little Apple Computer, when it was first starting, being the classic example. That's also one of the ways big companies become big. Many of the biggest companies today that seem to offer such wonderful products actually bought those products from small start-up companies. It's a common pattern among big tech companies that they offer products in some particular field, say, operating systems like Microsoft Windows or social media platforms or business software, but they miss at providing all of the features their users want. So some little startup company creates an add-on product or a similar or parallel product, and it starts to grow, enough to prove that it's a valuable product line. Then the big company, wanting to keep as much control of the field as possible and keep as much of the profit in its field as possible, buys up the start-up and incorporates the new product into their big company. Or the other way they do it is to create their own version of the product or service and drive the little innovator out of business.

In each of those situations it's a small entrepreneur who should get the credit. Where the product ends up owned by a big company, it's another case of how these big companies that offer seemingly magical products once again owe what they do to small developers. They owe it to some of US.

Even when some brilliant new business venture or product line comes entirely from some big player or big existing company, is it just some brilliant CEO or executive who does that? The leaders might have some wonderful creative input in some cases, and that's great. In other cases, they might only know that they need something. For instance that the company is already selling all it can of some product and it needs to come up with new related products, or that the company needs a new marketing approach, or that the company or the entrepreneur has a lot of money to invest and they would like to find some good business venture to put it into. Do the leaders figure out the details for themselves? Or do they have their people dig into it for them? They call in the marketing staff to brainstorm some new marketing approaches. They canvas the engineers to see what related innovations they might have as possibilities. Or they look outside the company to see what related innovations independent inventors have already patented and are offering for sale. Or if they're looking for some entirely new business to start, they can again turn to advisers to scour the market trends and help them find what business looks like the best to go into.

You know in the movie The Wizard of Oz, when the characters finally get to see the wizard, and they see an image of his floating head surrounded by smoke and lights and scary noise? The wizard had a role to play, but it wasn't magic. It was smoke machines and light displays and booming sound systems that made him seem magical. Did he invent the smoke machine? Or build it himself? Not likely. It's all the hard work and cleverness of many munchkins behind the scenes.

In articles in business newspapers and news sites, it's not unusual to find corporate leaders complaining that any new taxes or new regulations will cut into their profit margin, and that in turn will make it just not worth expanding business or starting new ventures. Of course, partly they're just trying to push scare stories to discourage legislators from adding any taxes or regulations, but they also truly mean it could cut into profits and make them wonder whether they want to bother doing more, and that in turn might mean fewer jobs created. But what is considered worth doing by any given investor is a relative notion. Many of the biggest industries and the most successful companies have become accustomed to high rates of profit. If they think that high rate might get a little lower, down to a more middling rate of profit, they might just find it not worth doing, take their huge personal wealth, and go home and just sit on their money and place it in some safe stock market investments. But what might not seem worthwhile to them might seem great to some of the hungrier, smaller-scale entrepreneurs in the field who are eager for a chance to grow into the field in any gap where the big players leave an opening. Whatever the field, if the big players don't want to play, there's almost certainly someone smaller eager to fill that need.

Sometimes the big corporation develops a new line, or the rich, experienced entrepreneur does. That's one way business supplies what people need, but clearly it's not the only way. It's not the required way. As far as starting or expanding business, the big players are a welcome part of the picture but not required. Sometimes they have important roles to play, then sometimes it's really more the people working for them who have the innovations. And sometimes when the big players miss what's needed or just don't play, it's the smaller innovators who fill the need. We are not dependent on them, and when the big ways of doing things don't do it, the required ingredient comes back to what it always comes back to, US.

Next

The rest of We Don't Need Them, They Need US, other facets of the economy where that's true, supply, demand, and capital, yes even capital. And beyond the "we don't need them" part, it really is true that, "they need US".