Obama Could Use 'A Larger Dose of Realism': Wayne Huizenga
The arranged marriage between Uncle Sam and its unwilling bride, the private sector, has never been more dysfunctional since the start of the financial crisis.
Both want to divorce but both fail to recognize that they need each other to grow and become better. Yes, you read that right. What has failed in this relationship is that both "partners" have forgotten their roles.
We have heard for months from the private sector that the government needs to "incentivize" business and on the flip side we've heard from the government about the "big bad banks" and that the "wealthy" need to pay more of their share. The chastising on both sides is getting them no where.
Government has to realize that the private sector is not evil. Our great nation was and still is built on capitalism (I hope). More government and regulation is not necessarily the answer. Its the quality of regulation that makes all the difference.
One of my contacts who has spoken so eloquently on the roles and relationship between government and the private sector is Wayne Huizenga.
An inspiration to many, Wayne built his empire through hard work and now he is building another generation of go-getter's with his school of business.
Wayne has his pulse on everythig from politics to M&A (We touched on all of them).
I started my conversation with Wayne and asked him about this major disconnect between Wall Street and the Administration and what needs to be done to fix it.
WH: Answers to today’s economic crisis are going to come from those people who best understand the market and what drives it.
Those people aren’t legislators and policy makers; they’re the people who are out there every day making products, providing services, reaching out to consumers, building factories, hiring workers, putting their own money on the line . . . What government needs to do is listen a lot more closely to what they’re saying and doing, and take the lead from them.
LL: You said in my book's forward that "Government should pay a partner to enterprise, helping promote an environment of rewards to innovation, diligence and creativity."
Seems like the government while is saying they are trying to do this, their actions tell otherwise. How would you grade the Administration on this?
WH: I wouldn’t grade them too highly, but that’s not because of anything malicious. I think they genuinely are trying to do what they think needs to be done to right the ship. But the problem is that they’re coming to the challenge with a mindset that’s fundamentally different than what it should be.
They need to be thinking more like business people and entrepreneurs than like legislators, but that’s an awful tall order. You’re asking for leopards to change their spots, and that’s not likely to happen . . .
LL: What would you like to see the government do to create an environment that would incentivize businesses to hire?
WH: You incentivize people to do anything in two ways: One, you reward them for the activity you want them to do, and two, you take away penalties that prevent them from doing what you want them to do.
When it comes to hiring, what that means is that we need to examine what we can do to reward businesses for growth — giving them tax credits and other forms of financial support, for example.
At the same time, we need to eliminate those things that will put the lid on hiring activity, doing away with mandated programs that require spending beyond what businesses can afford to bring on new people.
LL: The uncertainty facing businesses today is holding back job creation and moving many taking the risks towards M&A. What is your M&A outlook?
WH: I think we’re on the cusp of one of the largest M&A booms we’ll see in our lifetimes. It’s not just that the job situation is promoting more activity, it’s the fact that so many companies are simply undervalued right now.
Investors are risk takers, and a lot of them are going to be taking the risk that we’re towards the bottom of a cycle.
Smart purchases made today will reward them significantly when things finally improve. And if they don’t improve, well, they’re not going to be much worse off than if they had done nothing to begin with.
LL: Do you think entrepreneurs today can grow their businesses like you did with Blockbuster and AutoNation?
WH: Absolutely. Economic adversity is one of the great drivers of innovation. It puts people in the position to take risks, to challenge themselves and to think creatively. Plus, it weeds out the bad ideas and rewards the good ones.
LL: I speak with a lot of billionaires and highly successful individuals who tell me they don't understand why they check Social Security checks.
With the SS system in shambles, maybe the government should look at that?
Social Security is one of those things that’s going to have to be looked at seriously in the very near future. It’s inevitable.
The problem is that it’s such a political hot button that anyone with the integrity and foresight to try and do it now is essentially committing political suicide. That’s a recipe for economic disaster, but there may not be any way to avoid it.
LL: Do you think the Bush Tax Cuts should be extended for "the wealthy.”
WH: I don’t particularly like the way the question is framed. I think the tax cuts should be extended for everybody. Singling out only those towards the higher end of the income ladder is really just trying to appeal to people’s less rational side.
LL: Do you think its fair for the President to say $250,000 and above is "wealthy". Just like real estate, depending on where you live, the price of things differ greatly.
Two-hundred and fifty thousand is a lot of money for say families in the Mid-West and down South but for areas like Los Angeles, San Francisco and New York City, $250,000 may not go as far.
Do you think sometimes the Administration fails to recognize the United States is a comprised of a multitude of economies?
WH: I don’t want to be disingenuous — there really isn’t anywhere in the country where you can’t be very comfortable making $250,000 a year. At the same time, in today’s economy and in many markets, that doesn’t make you wealthy, at least not in the way that most people think of it. A larger dose of realism is something that the administration could certainly use.
LL: What kind of impact do you see on consumer spending if those tax cuts eliminated?
WH: It’s not the spending that I’m initially so concerned over. It’s the investment in personnel, in plants, in ideas that I’m most concerned about. Spending will follow — unless you kill that initiative, in which case, you’re putting in place a recipe for a full-scale economic shutdown.
LL: What is your biggest fear right now when it comes to the economy?
WH: What I’m afraid we’ll see here is what we saw in Japan after their massive economic boom in the 80s ran out of steam — a slowdown that doesn’t just last for a couple of years or for a cycle, but one that seems to linger indefinitely.
Only, I also see it coupled with increased unemployment, which really makes for an intractable situation. Ultimately, I could see a crippled economy that simply doesn’t have the resources to improve itself. That’s my biggest fear.
LL: When do you expect things to turn around?
WH: I’m not sure when I expect them to turn around, but let me tell you this: If they don’t turn around within 48 months, I don’t know if they’ll turn around at all.
LL: On the flip side, do you see any areas of strength?
WH: Yes. Innovation is one.
There are very clever, motivated people doing all sorts of amazing things with new technologies, particular related to energy. I think that — if government doesn’t get in the way of our own creativity — we could find ourselves in the middle of something like a new industrial revolution, but one that uses new resources and new ideas.
LL: Let's talk the true unemployment number. How much higher to you think it will go?
I don’t see it reaching depression levels, but I wouldn’t be surprised to see another 3 to 5 points added before all things are said and done.
LL: You have over 5000 students enrolled in the H. Wayne Huizenga School of Business and Entrepreneurship at NSU. Its a tough employment climate right now. What do you hear from those students who are getting ready to graduate?
WH: They’re excited. Sure, there’s a degree of nervousness — there always is when people go out into the job market for themselves.
But these are people who are incredibly confident in their own abilities, and who’ve been trained to compete. They’re looking forward to the challenge.
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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."