Wisconsin, Economics and Capitalism

The election looms as I write. As you read, it will be past. In the turmoil of these last months I have started many blog posts but completed none. In the environment of intense rhetoric and emotion, it has been hard to express thoughts with clear meaning and the sincere intention of illumination. This week before the election, I estimate that Wisconsin has had 6 visits from the Presidential candidates and their wives and at least as many visits from the Vice Presidential campaigns. They love Wisconsin this week, but they apparently find our voting behavior difficult to understand and influence. Wisconsin is literally the epicenter of the national election and Northeastern Wisconsin is the fulcrum of the state. In Madison and Milwaukee voting behavior is largely predictable, so visits in those areas are about driving turnout. I have it on good authority that the rest of the state is a real puzzle for campaigns trying to understand why we vote the way we do. This region voted heavily for Obama in 2008 and even more heavily for Walker in the recent recall. Campaign strategists find us frustrating because when they push our buttons, we don’t respond predictably. I will offer some thoughts on why this is so.

I do not offer myself as a typical voter, but as one who is in the business of trying to understand what is happening across a broad cross section of the communities within the area. While social and foreign policy issues matter to voters here, clearly this election was driven by economic themes. The clash of economic ideologies turned on President Obama’s phrase, “you didn’t build that” and the reaction to it. Many assumed the President directed his comments to a hypothetical small business owner. Since my entire career has been spent working with people who start, run and own businesses in this area, these words were of particular interest to me. I don’t really know what he meant and I am not sure he really did either, but I know the reaction this triggered.

Like most small businesses, I have felt a rising sense of suspicion and hostility toward what we do. There is a sense in which the President simply seems to think that the purpose of our work is to employee people, provide health care benefits and to pay taxes. Every business crisis gives rise to a new round of regulation which is directed at preventing those of us who didn’t do awful things from ever doing them again. It is very cumbersome, expensive and more than a little insulting to spend time proving you don’t do what you don’t do. As I think of the hundreds of business owners I have known, they come in all shapes and sizes. I have seen some real dirtballs, but most are bright, dedicated and generous people. Nearly all of them know the grip of midnight fears real and imagined. Most have experienced spectacular failures on the road to success. Most of them care very deeply about their customers and their employees. They don’t think of themselves as the mythical self-made men of Ayn Rand novels. They know that they are surrounded by a web of relationships between suppliers, customers and employees upon whom they are very dependent. Most of them are respected and appreciated by the people they work with. They also know the sense of envy and resentment held by some around them.

As the years advance all entrepreneurs grapple with whether they should sell the business or facilitate a transition to new owner/managers. Succession planning doesn’t come easily to founders. Selling a business for maximum dollars usually involves delivering one’s legacy into the hands of financial investors such as Bain Capital. There is nothing intrinsically wrong with private equity ownership, but their investment models place pressure on the web of relationships that founded and nurtured the company. Founders generally see money as the result, but not the purpose of what they do. Private Equity (PE) firms see money as the purpose and the result. People become a means toward this end. Spreadsheets don’t create value, people do. As their careers wind down, I try pretty hard to help owners frame up the reality of their exit decisions. The choice is usually between the high dollar sale to an owner who will “harvest” the good will the founder sowed or the messier route of taking more risk for less money with an owner/manager who might preserve and enhance what has been built.


Neither of the economic ideologies on offer in this election sit well with people in this part of the state. Obama is every inch the government centered ideologue. He took the crisis he inherited as a pretext for massive central government management of economic life. He literally seems to believe that every manifestation of human malfeasance and misery justifies governmental action. When leftists of this type speak of “community”, they mean “government” and usually the federal government. They seem to offer governmental solutions as a remedy for the fall of man. This offer is made to people who generally hold that God has an alternative remedy for our misery. The results of the June recall election were neither a rejection of local public employees, nor of the need for governmental action. The results were a definitive rejection of the notion that our problems must be addressed by smarter, more compassionate people in faraway places. The local reaction to the pictures in our state capital during those 15 months is very evident in the way we voted three times culminating in the June, 2012 recall election.

Mitt Romney is the Private Equity guy that local companies sell to when the founder hasn’t built local succession. We understand what the alleged primacy of capital means for the relationships between people. Business goes from the art of relationship building, to the bloodless discipline of financial spreadsheets. Capital has a right to a return, but its claims are not superior to the claims of employees, customers, and communities. I am far from Marxist, but I have come to respect his critique of capitalism. As capital asserts its primacy, it will consume itself leaving a trail of wreckage in its wake. The remedy of governmental tyranny is even worse. People are not a means toward the ends of markets or governments.

Romney carried the local area despite himself. He is every inch the economic man. Most didn’t vote for him, but voted against the arrogance of central planners who offered us their superior intellect and compassion. This was not a vote for capitalism. It was a vote for localism. People desire and expect a robust safety net that is responsibly administered. We had Badger Care before Obamacare was invented.

To Obama’s challenge that “you didn’t build that”, the answer is your government didn’t build that either. The right seized on the phrase as chance for entrepreneurs to claim, “I did make that”. The wiser voices reject both visions. Governments must deal with certain problems, but they are terrible at efficiency and compassion. Most business owners know they are not self-made. They were born into families and communities and they are surrounded by people upon whom they depend. Many are smart enough to know that all ownership passes and they act accordingly.

It is not fun to be an election target. I am tired of the advertisements, the road blocks and the airplanes descending for the rallies. I long for the obscurity we enjoy when the voting is done. We have a lot of work to do and there is no one better equipped to do it than we are.

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