When solving big, complicated problems, it’s important to do it right - else take the the chance of making more, bigger problems.
The best place to learn about problem solving is in a U.S. Manufacturing plant. I worked in Manufacturing for nearly 30 years and I can tell you first hand that if you aren’t effective in problem solving, particularly in identifying root cause, as a Manufacturer, your business will not survive. For Manufacturing, effective problem solving is ‘Do or Die’.
U.S. Manufacturers are under tremendous pressure to compete against the rest of the world to stay in business. Labor and other input costs in the US are much higher than ther parts of the world, hence productivity and quality need to constantly be improved. Challenges such as increasing production or improving product are encountered daily and they are dealt with quickly and thoroughly.
Data is gathered and tools such as Fishbone diagrams, The 5 Why’s, PDCA cycles and brainstorming sessions are employed to discover the root cause of the problem and then identify ways to fix it.
On a societal scale, much less thought goes in to uncovering the root cause of a problem. Data is ignored or distorted. Opinions and feelings take center stage versus comprehensive study. Most people look to blame others and avoid looking objectively at the problem which they themselves may be contributing to. A number of human biases come into play and the resulting solutions are often ineffective and in many cases dangerous.
Scapegoating - the act of unfairly blaming an individual or group for problems or negative events, often to deflect responsibility from the actual perpetrator, is a common human ‘problem solving’ tool.
Scapegoating at an individual level is commonplace: a coach gets fired for a team’s poor performance; a sales manager gets fired for declining sales; a political leader is exiled for his particular point of view. But more interesting and impactful is the scapegoating that goes on at the group-on-group level - where races, religions, and even genders are blamed for problems.
From Simply Psychology:
… scapegoating can have a group-on-group form. This is of particular interest to sociologists and can happen when one group blames another for problems that the group collectively experiences. Often, these issues are economic or political in nature and manifest along the lines of race, ethnicity, religion, or national origin. For example, the members of one party may blame another for a financial crisis such as the Great Recession (Hammer, 2007).
Perhaps the most blatant and tragic example of scapegoating in modern history is the Holocaust. Adolf Hitler notoriously scapegoated Jews for the suffering of the Germans after World War I.
lynchings against black Americans rose dramatically in correspondence to reduced economic prospects for white Americans, such as during the Great Depression. White Americans perceived their black counterparts as a greater threat to increasingly scarce jobs and opportunities and, as a result, were lethally punished.
In his book Wayward Puritans, Kai T. Erikson (1966) demonstrated that the Puritans in New England began persecuting Native Americans as a response to the plight and social disorganization of the original settlers.
Blame as a Natural Response to Hardship
Durkheim believed that when a piacular event — any misfortune that causes feelings of disquiet and fear — occurs, both the individual and society are threatened with disintegration, and they resort to a specific set of rituals called piacular rites to regain the stability and sense of integration that they had lost. These rites involve the processes of blame, sacrifice, and scapegoating.
So blaming and scapegoating is a natural response to hardship. But does it make sense? Is it just?
Not generally. When people go down the road of scapegoat theory, they typically turn their brains off. Stupidity rules the day. Once societal forces take over, it doesn’t matter how intelligent someone in the group is, they instantly turn their intelligent brains off.
The Terrifying Story of Stupidity:
The Big Problem to Solve
Our economy is on the ropes. Don’t let anyone tell you different.
I cover this in depth in The Next Great Financial Crisis:
American Household Debt and Government debt have skyrocketed since the GFC in 2008. Since the pandemic, prices have skyrocketed.
Generations X, Y, and Z are finding themselves in the throes of insurmountable debt, including home mortgages, student loans, auto loans, and credit cards. The result is rising delinquencies:
Home prices have remained elevated since the pandemic while monthly mortgage payments have nearly doubled due to interest rates.
People are feeling pinched financially. Costs are rising faster than their paychecks.
Generational Scapegoating: The Latest Blame Game
“Boomers stole our wealth”.
This is the latest twist on blaming parents for all that goes wrong in life and hating others that are doing better than yourself.
Baby Boomers: Easy Targets
The basis for this scapegoating is that a subgroup of retired Boomers is doing well even though the economy isn’t.
They own their own home with no mortgage.
They are retired and living on Social Security, pensions and investments.
Their healthcare is free with Medicare.
They own the most stocks.
They take the most vacations.
So as the economy struggles and the government and Consumers are running up record debt, many retired Americans are doing well, with most of them being Baby Boomers.
The hardship others are feeling with the economy combined with the fact that some Baby Boomers are actually benefiting from this economy, particularly borrowing and money printing, has provided the perfect environment for scapegoating.
The other thing that makes Boomers easy targets is that they are old now. Scapegoating typically occurs when one group is more powerful than another. Boomers, once the most powerful and influential group on the planet, are now old and feeble - maybe.
Are Boomers to blame for what’s going wrong with our Economy?
If you follow the money, it’s apparent who is benefiting from this system - and it’s mostly Rich Baby Boomers.
But the scapegoating that is going on blames Boomers for rigging the system so they benefit at the expense of everyone else, particularly their children.
Boomers make up less than 20% of the population today. We are outnumbered by both Millennials and Gen Zers. As we are a Democratic Republic, even if Boomers rigged the system when they had more numbers, it’s hard to make the case that they are in control now.
Population distribution in the United States in 2024, by generation
Almost half of all Boomers are living paycheck to paycheck.
With nearly half of Boomers being broke and the total population of Boomers being less than 20% - and declining at the rate of about 7000 people per day - I don’t think there is a case to be made that the system is rigged by Boomers.
True, many Boomers have benefited from the economy - but the only way they could have rigged it is if all the other generations stood by and did nothing. In that case, are Boomers solely to blame?
Generational Scapegoating is Stupid
Boomers, who represent around 20% of the population, have a little over half the wealth in this country.
Wealth Distribution by Generation - Q3 2024
So who should have all the wealth? Should it be equally distributed among all the generations?
But if Boomers have been around longer, around 20 years longer than Gen X on average, shouldn’t they have at least double the wealth, particularly considering that they now have to live off of that wealth in retirement? Many Boomers are no longer working. Shouldn’t they have resources they can live off?
Boomers are dying at the rate of about 7000 per day. All of their wealth is being transferred to younger generations. It is estimated in 20 years, $84T will be transferred and then Gen X will be the most hated generation in the country.
Based on a straight line, that means about $4T/year is being transferred to younger generations every year. In about 10 years Gen X will overtake Boomers as the richest Generation.
Generational wealth is a problem that fixes itself.
The Real Root Cause of Wealth Disparity
Scapegoating is for stupid people.
Someone that was thinking clearly could discover quickly what the issue is and who are responsible.
Let’s use the ‘5 Whys Method’ of problem solving to figure this out:
Why#1: Why is there such wealth disparity in this country with most of it being concentrated in the oldest quintile?
Ans: Asset inflation. In an inflationary environment, those that owned their assets the longest will have the most gain.
Why #2: Why is there asset inflation?
Ans: Because after the GFC, the Federal Reserve printed trillions of dollars and the US Government borrowed trillions to ‘grow’ the economy.
Why #3: Why did the Fed and US government do that?
Ans: Because they initially did not want a financial crisis (that they created), but then they were trying to avoid Recessions which are a common occurance in a healthy economy.
Why #4: Once the crisis was averted, why did they not stop with the cheap and free money?
Ans: Because they discovered they could get away with cheap rates and borrowing with little to no impact on inflation. Then Covid hit and they doubled down on printing and borrowing. This let the inflation genie out of the bottle and asset prices skyrocketed
So were Boomers responsible for stealing wealth?
No. Cheap money from the Federal Reserve and Free Money from the government were the causes. These inflated asset prices and benefited EVERYONE, but because Boomers owned more assets (stocks and real estate) they disproportionately benefited.
Many of the Federal Reserve members and the members of the US government are Boomers, but this doesn’t put the generation as a whole on the hook. We are a Democratic Republic. Everyone has responsibility to fix what ails us. The truth is that all generations with assets benefit from high inflation. Because Boomers owned more assets longer, they ended up with more.
Fixing the Problem - My List
The solution has been right under our nose for decades.
The Libertarian Party was founded when Nixon took us off the gold standard. Libertarians stand for:
smaller government and balanced budgets (no debt)
sound money policy, with the market (not the Federal Reserve) setting interest rates.
The principles to avoid what ails us today was right in front of us. All we had to do was adopt them
Instead, we decided to give the government and the Federal Reserve control.
To fix this, we need to:
Stop out of control government spending. We need to cap government increases in debt to 3%.
Let a serious Recession happen. It will be tough, but it will correct imbalances.
Keep interest rates above the neutral rate to keep inflation in check.
Address the unfunded liabilities ahead of us (Social Security, Medicare, Medicaid, State Government Pensions.)
Seriously cut our involvement in foreign wars.
Pull the government out of the Student Loan business. We need to lower the cost of education by offering more accredited online degree programs.
Let people discharge student loans in bankruptcy.
Fix Healthcare in the US. Why is it the most expensive in the world yet we are one of the sickest populations?
Fix immigration. We need to import talent to offset our demographics.
Each of the above solutions have a lot of pain attached to them. The solutions are relatively simple, but difficult and if we continue to choose to extend and pretend, our only option will be inflation - a lot of it.
And Boomers will get richer. And then their wealth will be transferred to Gen X, and then to MIllennials, etc.
But it’s not just the Boomers’ fault. We all let this happen.