(Editor's Note: Tom Williams, a retired coffee service operator, believes the American electorate will seek a change in policies that will unleash a new era of prosperity for American business, including vending and refreshment services. Williams founded Coffee Butler Services Inc. in 1967 in Washington, D.C., grew it into one of he nation’s largest OCS companies and sold it to U.S. Office Products Inc. in 1995. Williams has always been an astute observer of government affairs. He wrote the following blog explaining his optimism exclusively for VendingMarketWatch.)
By sometime in 2012 or early 2013, a 10- to 15-year run will begin that just may dwarf all other growth periods in American history. We are now, and have been for a few years, witnessing and living the proverb “It’s always darkest before the dawn.” For those of you who have struggled, sacrificed, streamlined, become more efficient, and survived, hang in there — your reward is coming.
Yes, there are already a few areas in the U.S. where the economy is either not so bad, pretty good, and even a few areas where it’s great. And yes, there will certainly be some “fits and starts” all around the country, but when it finally gets up some steam in a couple of years, it will provide opportunity you will find hard to believe and changes in the American business environment you will find even harder to believe. I’ll enumerate those later in the article. It will be just like the “perfect storm” that has shaken the American economy so badly for five or six years now. But then, a combination of events and changes will come together to work very positively for business — possibly for as long as a generation.
An advantage of having lived 74 years without Alzheimer’s (yet), you have experienced and seen a lot of things that when taken altogether, can logically point to some reasonable conclusions. Two reasons the above could be concluded are either a simple reversal of a business cycle or a redirection of the swing of the political pendulum.
Another reason, and I love this one, is Winston Churchill’s observation that “Americans can always be counted on to get it right — after they have exhausted all other possibilities.” The main problem is that we have been exhausting the wrong possibilities for such a long time. But very soon now we will really get it right.
We started down this road in earnest right after President John F. Kennedy was assassinated. Like most adults living at the time, I remember exactly where I was when I heard the news. Then Lyndon Johnson took over as president. Having spent four years at The Rice Institute (now Rice University) in Houston, Texas and another two years working in and from a Texas base, I was fairly familiar with Johnson’s history as a senator, senate majority leader, and even some of his rise to prominence in Texas. I even remember when his long-time chief of staff Bobby Baker was caught in an Ocean City, Md. condominium building bribe scandal and had to resign. Johnson was considered one of the most effective senate majority leaders of all times by occupants of both sides of the aisle and Baker was given a lot of credit for his deft handling of Johnson’s legislative objectives.
Most important though, I also remember the whirlwind activity resulting in bills he got credit for getting through Congress in his “first hundred days” as president — a record by most accounts. Partially due to his experience in moving legislation in Congress, but he also benefited from “sympathy” votes and the shock resulting from Kennedy’s assassination.
After a short respite during World War II, the country had resumed moving “left” again with more regulations and government control, but at a somewhat modest pace prior to Johnson’s ascendancy. Then his new laws, referred to as The Great Society, provided a surge in government involvement and control that was unequaled since Roosevelt’s “New Deal.”
Later, from my perch just across the Potomac River from Washington, D.C. beginning in 1967,the year I started Coffee Butler Service, I was in a position to observe Johnson and every president after that, both Republican and Democrat. When living “inside the beltway,” as it’s referred to today, you get a steady dose every day of what’s actually and what’s rumored to be going on in government, both visibly and behind the scenes.
All the presidents, both Republican and Democrat, and all the congressional delegations from that period forward provided impetus to the leftward movement of growing government —whether willingly or not, and even whether knowingly or not. Reagan, who was/is considered to have been a conservative, and his congresses contributed to it also, although perhaps to a lesser degree than the others.
Then from 2007 through 2010 with Democrats controlling both houses of Congress and the presidency for two of those years, all previous records were surpassed both in legislation and the accompanying costs. One astounding example is in government regulations, which have increased by 24 percent since Barack Obama became president. That situation is just one of many contributing to the “perfect storm” referred to earlier.
What’s happening now is that American citizens’ reactions and the backlash that’s been building for many years portend that the pendulum will not only swing back — which has already started— but that it will be given a huge push when the administration changes in 2012. (I will not take the space to list all the current situations, political indicators, etc., that support that assertion, but will be happy to email a narrative on the subject to anyone interested enough to email me a request.) That statement is certainly subject to debate, but even if Democrats retain the officein 2012, “the die is cast” and the policies will change, even if more slowly.
More important to relate here are the many situations that will change that will benefit economic growth in this country. The bottom line is that America’s capital, both human and financial, will be reallocated. That allocation in most areas and for most decisions will be judged from the perspective of contributory to economic growth or not.
Most policies that have proven to be either ineffective or counterproductive for GDP growth will be eliminated or at least downgraded. The overriding criteria for most changes will be the effect on job creation and growth in the private sector.
Instead of the “new normal” of 9 to 10 percent unemployment that’s been suggested, the resulting average will be under 6 percent for the foreseeable future. And that 6 percent will be on a much larger total and growing of “jobs available,” which have decreased by nearly 10 million since 2006. A new beginning for America will reshape it to be more like the America that grew to be the greatest country in the history of the world in less than 200 years. And yes, optimism will replace uncertainty, further greasing the skids to growth.
As you read the list of changes that will be taking place you may think I’m smoking something. You need to understand I am not suggesting they will all occur at once and maybe not every single one of them will take place. However, for the good results cited above to happen, all of them will not need to. Enough of them will happen, though, to result in a tremendous boon to employment which means a dramatic increase in people at work and away from home — our industry’s customers. And enough of them will also take place that your operating costs will be reduced.
1) Government spending will be reduced at every level of government from federal down to the smallest municipality. “Sunset” budgeting will be implemented in the federal budgeting process instead of the current built-in increases which result in a “cut” only meaning a reduction in the built-in increase.
2) Private sector labor unions will be mostly eliminated or at least “defanged.” Right to work states’ advantages in attracting business will result in more states voting for right to work. Legislation may pass in Congress that would bring right to work rules to all states, effectively eliminating private sector unions' ability to raise money for other than their legitimate administrative and organizing activities.
3) Regulators’ powers will be reduced in all government agencies, from federal down to the smallest municipality. In addition to providing openings for more business friendly projects, most projects will be able to become “shovel ready” faster.
4) Liability insurance costs will be reduced substantially in every business activity as tort reform will be passed in most states. Additionally some aspects of “loser pays” will be passed by the most business friendly and health care sensitive states. Texas created a model that will be copied by many others. With one of the largest health care centers in the U.S. located in Houston, Texas, the legislation was prompted by the exodus of physicians due to the costs of their insurance and dealing with frivolous lawsuits. Proving the value of tort reform, they have returned in exceptional numbers since 2003 when the first part was passed.
5) Manufacturing will grow in the U. S. again as a reduction of related costs resulting from many of the changes mentioned before and in the following will occur.
6) The creation of "enterprise zones" in poor neighborhoods will result in additional manufacturing opportunities and better training for inner-city youth.
7) Education of American children will improve as more control, decisions, and oversight will be returned to states and local parent-teacher organizations by the federal government. More and more problem areas will utilize charter schools and programs like those implemented in New Orleans, La. following hurricane Katrina. In every area of the country, decisions made in these types of environments will focus more on benefiting children’s educations rather than on the many other agendas that have been taking precedence.
8) The “light-speed” advances in, and in the application of communications technology will disburse information to every teenager and adult in this country and to most others in the rest of the world. This will result in much more exposure to a diversity of ideas and will further result in almost every American and many more outside of the U.S. having an opportunity to be better educated and thereby, more discerning in their choices.
9) Real tax reform will take place (believe it or not) resulting in reductions in costs of both human and financial capital. As part of it, the lowering of corporate taxes will contribute dramatically to the growth of business — both large and small — to jobs, and to manufacturing in the U.S.
10) Obstacles to investment will be reduced, partially as a result of tax reform and partially due to the reduction of regulations, which will help to promote more growth in the private sector.
11) Energy prices will be reduced or at least maintained at or near the current levels even as economies throughout the world grow. The environmental, “green”, and global warming lobbies will be downgraded in both their funding and influence, and cheaper carbon-based fuels will be promoted, developed, improved, and vigorously pursued in the U.S. as well as the rest of the world. Nuclear energy will also become more acceptable, further contributing to stable energy prices.
12) Most vending and coffee service operations fall into the “small business” category as generally viewed by governments from tax and regulation perspectives. Many of the changes cited above will include additional considerations for small businesses below certain numbers of employees. One specific example will be in the regulations area. Therefore, in addition to those cited above, many other changes specifically targeting small businesses will further enhance the opportunities for most of our industry’s operators.
The biggest potential obstacle that could delay this turnaround lies in Europe. Unfortunately, Churchill’s left-handed complement about the U.S. finally getting it right, has not always applied to the Europeans. Their policies and their failure to enforce the rules when certain countries violate specific rules involving debt when they formed the European Union are now coming to a head. Their dalliance in dealing effectively with the situation and creating more debt instruments to solve their debt crises could precipitate a financial crisis like the one in 2008 — not only in Europe but in the U.S. also.
Although repairing that situation would be costly and would delay prosperity in this country, it would probably increase the intensity and depth of the changes cited above taking place. It would also portend that they would last even longer.
The ugly demonstrations in Greece, for example, will look like a church picnic compared to what Americans will be exposed to if another financial crisis occurs.
Hard lessons will be learned, understood better, and retained longer. Certainly, we in the U.S. hope that doesn’t happen, but if so, we are in better shape to handle it than any other country.