This morning I read two very interesting articles, one dealing with Europe and the other discussing our failed super committee. In the Economist the article asked the question if the end was near for the Euro? “Even as the euro zone hurtles towards a crash, most people are assuming that, in the end, European leaders will do whatever it takes to save the single currency.” The articles recognizes the devastating consequences to the world economy if the euro collapses.
The name of the second article, from Business Week, is “Superbad.” It describes how Washington has failed again, but it may turn out ok. In fact, Tyler Cowen, a professor of Economics at George Mason University stated, “If congress would do nothing now, we would be O.K. What we need is some gridlock.” His reasoning involves mandatory cuts that will automatically engage. However, with the current level of spending our government is projected to spend about $44 trillion over the next decade. Let’s compare that to possible revenue levels over the next 10 years by hypothesizing on the level of taxes. Let’s say for argument sake that the federal government takes in $3 Trillion tax revenue each year for ten years. This is an income of $30 trillion. With total spending of $44 trillion, it doesn’t take a rocket scientist to see this is bad management. There is no indication that we can pay off the $14 trillion worth debt any time soon, and then we will add another $14 trillion of additional debt. Not too smart.
When will be learn? When will we stop living beyond our means and balance our budget? We can use the airline industry as an example of what to do, and what not to do. Currently, large airlines are hemorrhaging cash. Domestic airlines have lost $54 billion from 2000 to 2009. However, there is one airline that continually makes money, Southwest Airlines (SWA). SWA has enjoyed 38 years of profitability.
What makes SWA great? According to Jim Collins, “Southwest Airlines, for example, demanded of itself a profit every year. . .” They expected to run their business well. “Southwest had the discipline to hold back in the good times. . .” SWA had the business acumen to realize good years are followed by lean ones, one must prepare. And SWA ran their business well. It’s model included on time arrival and departure, controlling of costs, and incredible customer service.
Maybe our government could learn from the airline industry. It must get spending under control. If not we will continue our decline. However, there are more reasons for SWA greatness than just cost control.
Some would say that we are past our glory days. Symbolically we are now old men sitting at a bar in Philadelphia reflecting on what once was. Some feel we have lost what we once had, that edge and swagger. “As we’ve become more powerful, its not a stretch to say that it has changed how we operate,” according to Gregory Rodriguez. I agree with his point that we need to reclaim the innovative spirit we once had. We need to get back to work, and renew our drive.
SWA has the drive and swagger to compete. Our country needs to return to swagger so we can compete. We need leaders who can help us regroup, and get that swagger back.
And that is my thought for today!