As the first full week dealing with the effects of the COVID-19 virus fully set in and we are all (hopefully) practicing social distancing, hunkering down, and trying to adjust to our new existence, I am thinking. I am thinking about how long we will remain in this purgatory. I am thinking about what I can do to be productive. I am thinking about what I can do to stay healthy. I am thinking about what I can do to stay sane and model good behavior for my young adult kids in these difficult times.
As I watch our entire economy come to a screeching halt, my heart breaks for everyone that is on the margins of the economy, living paycheck to paycheck, and struggling to make ends meet. I think of the small business owner and their employees, the health care workers fighting this battle on the front lines, and those who are fighting chronic illness and immune system battles every day.
These circumstances have further elevated my intellectual curiosity about three key areas and how we must face, consider, and evolve the way our country thinks about:
- Healthcare Access
I was having a conversation about healthcare with a doctor friend of mine recently and he was strongly defending the U.S. healthcare system as the most advanced, most innovative and greatest on earth. And I don’t disagree with him. We have advanced technology, world class hospital systems, and remarkably talented individuals engaged in delivery and research. It occurred to me that we as a nation have been talking past each other, however, in the last several years regarding ‘healthcare’ when addressing its shortcomings. I was talking to him about unequal access to healthcare, and he thought I was being critical of healthcare. There is a huge difference between those two conversations and we don’t point it out enough.
Much in the way we can support our troops 100% but be philosophically opposed to a war our government is waging, we can be 100% behind our healthcare system but recognize that the access to that system is vastly different depending on who you are. And that needs to change. Health insurance for most Americans is the vehicle by which we obtain healthcare. If you don’t have it, you don’t get access to our world class system. And far too many in our country cannot afford to pay for the insurance products available to them. If they are self-employed, free-lance, or contract workers, they don’t have access to employer sponsored healthcare. And I can speak from experience as someone who has had to buy on the individual market since 2007, it is expensive, confusing and unsustainable. The ACA helped cover pre-existing conditions, and cover dependent children up to age 26, but it didn’t sufficiently solve the problem of choice or expense. I recently purchased a catastrophic policy that has some small drug and visit copays through UnitedHealth for about $1,400 / month. The policy covers my family 100%, but only once I pay the first $10,000. So I’m responsible for $1,400 x 12, plus any routine care costs, plus $10,000 in an emergency – that is over $26,000!And this policy made more economic sense for me than the least expensive plan on the ACA Exchange.
This COVID-19 emergency is a perfect storm of reality that will force us to confront inequities in our healthcare system, particularly access to that care. Facing a virus like this, everyone’s habits and health affect us all. It isn’t good enough to have the mentality that I’ll take care of myself and everyone else is on their own. We are all in this together, and we must solve this together. The access-to-healthcare path we are on is unsustainable for way too many people, which means it is unsustainable for all of us. And this virus doesn’t care what race, color, religion, party or tax bracket you are in. Actually, that is not entirely true – there is one race that I think should get preferential treatment in how we choose to fix the healthcare access problem in our country… the human race.
Following the financial crisis of 2008, one of the most striking statistics that became widely known was the staggering amount of student debt that exists in America. Through a multi-pronged approach to make college more affordable and accessible, we lowered interest rates, made government loans accessible and made every high school graduate (and their parents) believe that college was the only means to success and that a college degree was indispensable and affordable.
Now, over 20+ years into this grand experiment, 45 million borrowers now have racked up 1.56 trillion in student loan debt. This figure is 2nd only to mortgage debt in our society among consumer debt categories. College tuition keeps rising, demand for trained workers in very specific areas is increasing and public education in K-12 is facing unprecedented funding challenges. Competition for great teachers is fierce yet funding for them is tight.
About a decade ago, I sat in the new McNair Hall on Rice University’s campus during a Rice Alliance event and watched entrepreneur and teacher Jeff Sandefer speak about education. Jeff taught entrepreneurship at University of Texas-Austin and became a nationally recognized entrepreneurship professor by Business Week. He then left to start the Acton School of Business and later, the Acton Academy. His talk made an impression on me because he made me realize that the path we are on in higher education is unsustainable (sound familiar?). But also because he was bold enough to speak of the challenges and then begin an experiment to help show us the way forward.
I feel like that is where we are now. Schools, colleges and universities across the country have closed down. We have all undertaken a massive experiment. Educators, teachers, and administrators are about to embark on something we’ve never tried before as a society – virtual online classrooms and homeschooling for everyone. Preparation is already underway and classes will begin in a matter of days. Certainly, many colleges and some K-12 schools already had this ability before COVID-19, and most likely possess data that can be studied to begin identifying best practices. Living in a region of our country that has been battered by hurricanes and rain events that have flooded homes, businesses, and schools, we have faced challenges like this before but never had to shift to an online solution. We have simply extended the school year or eliminated days off. This experiment could provide answers for communities that suffer from massive natural disruptions. It could also give us some ideas and ways forward to disrupt the path we are on, possibly providing alternatives to unsustainable student loan debt and constant education funding shortfalls.
No one knows how long this experiment will last. It is, however, almost guaranteed that we are going to inject massive amounts of money to resuscitate this economy. That will leave even less to solve the education problems we had before the virus. It sure seems to me like the only way forward is a new one.
The need to rethink this one has been building for over 40 years. There is one statistic that simply blows my mind every time I see it and it perfectly crystallizes why we, as capitalists, must address capitalism. In a study published by the Economic Policy Institute in August 2019, the data shows that from 1978 to 2018, the CEO-to-worker compensation ratio has gone from 30-1 to 278-1. Put another way, during that 40-year span, CEO pay grew from between 942% and 1007%, depending on how stock options are measured. The typical worker in the same firm over that time span saw their pay increase on average by about 12%.
There are many reasons for this disparity – massive technological upheaval, global trade, and changes in boards and incentive structure, among many others . And there are multiple solutions that could be proposed involving politics, tax policy, government intervention, regulation and congressional action, but I don’t want to discuss any political solutions here.
I would prefer for American capitalists to wake up! They must recognize that this path of inequality and disparity is also unsustainable. If it continues, there will be no domestic market for an enormous number of American goods and services because most Americans won’t be able to buy them. There is already a massive stimulus package being discussed to help individuals and small business owners recover from this viral (and economic) pandemic by putting money directly in their hands to spend on essentials. What if a movement enacted by business leaders and managers served as the way forward to reverse the unsustainable trend after the stimulus is gone? What if this movement created healthy, profitable businesses, and evolved American capitalism into take a leading role to solve our nation’s biggest problems?
A new book by Raj Sisodia and Michael Gelb called The Healing Organization outlines the way forward. If you read or are familiar with 2014’s Conscious Capitalism, also written by Sisodia and Whole Foods CEO John Mackey, then you might be familiar with their approach to transforming American business. In the current book, they profile companies like Shake Shack, Hyatt, KIND Healthy Snacks, Eileen Fisher, H-E-B and others to show how companies can heal employees, customers, communities and stakeholders. While the authors lay the intellectual foundation, the cases of real businesses in diverse industries provide the real world case studies to make believers out of us.
Legendary business author and speaker, Tom Peters, writes in his forward for The Healing Organization that ‘shareholder value maximization has been the most devastating idea in modern business history’. Let that sink in. Is there any statement more synonymous with modern capitalism than maximizing shareholder value? And yet we must change or we will be forced to. Raj and Michael show us a way by showing how business can become a healing force for the people that work there, the customers that buy there and the communities that live there.
A business school classmate of mine, Travis Fitts, said that the statement in his office that served as a mantra for his management philosophy was, ‘It’s all about people. It always has been about people, and it always will be about people.’
If we start taking better care of people – their health, their education, and their purpose and pursuit of work in life – then maybe we can solve some of the biggest challenges facing our country.
Maybe the silver lining from this virus that has forced us to distance ourselves from one another, was that it allowed us to realize how dependent we are on one another.
This article was published on Smerconish.com on March 24, 2020. Michael Smerconish broadcasts The Michael Smerconish Program weekdays at 9:00 a.m. ET on SiriusXM’s POTUS Channel (124), and hosts the CNN and CNN International program Smerconish at 9:00 a.m. ET on Saturdays.