COLLABORATIVE LEADERSHIP

Collaborative Leadership and Economic Progress

Moving from Financial Crisis to Democratic Prosperity

Economic prosperity in a democratic system is based upon free enterprise and keeping a level playing field for all businesses. And, this process is consumer-driven with a healthy economy depending greatly on consumer spending and consumer confidence in banks, companies and products or services throughout the marketplace. When greed, the domination or control of markets, and the high risk buying and selling by investors for their own selfish interests take over without proper oversight or collaborative leadership, our economy suffers and may even collapse for a while under the weight of economic turmoil caused by selfish interests and a lack of proper regulation in the marketplace. Collaborative Leadership can make the difference between an economy that fails to the point of government intervention, buy-outs and socialistic control of financial institutions and a prosperous economy built upon democratic free enterprise and appropriate oversight and regulation to keep a fair and level marketplace for all. The following is an example of how a new U.S. President took charge of a failing economy as a Collaborative Leader and rebuilt it based upon democratic free enterprise in a consumer-driven economic environment (See True Free Enterprise).

For eight years the economic policies of the previous U.S. Administration were built upon a concept of unbridled competition, deregulation and allowing greed and selfish interests to dominate without the transparency necessary in a democratic and free marketplace. The results of these misguided policies were rampant abuses by businesses and investors in those markets that were most profitable with the least regulation. High risk mortgage loans for years were being packaged and sold as securities to groups of investors. These loans that were based upon flexible interest, high risk and no down payments became hot items on Wall Street until the prices of homes began to plummet under the weight of increasing foreclosures from these high risk loans. Now major securities companies and even some banks were in deep financial crisis and bankruptcy or buy-out soon became their only option. With the danger increasing by the day that the market would collapse and Wall Street might crumble with investors losing everything, government was ready to intervene. How would our leaders handle this difficult situation? Would they reward the businesses and speculators by buying out their companies and paying off their investors? Or, would they come up with a plan to rebuild the economy based upon democratic free enterprise and the stability found in the empowerment of the consumer and regulation in a fair market?

The new U.S. President was prepared for the challenge. He began his presidency with the knowledge that the economy was failing and immediate action would be necessary to help stimulate economic development, consumer confidence and the banking industry that had been devastated by bad lending practices and market instability. After talking with key members of Congress and leaders in the banking industry, he worked closely with his team of economic advisors to develop an Economic Stimulus Plan that would boost the economy from the bottom up. His plan was built upon the concept of free enterprise being supported best by a consumer-driven economy instead of just the high risk buying and selling on Wall Street. He also understood the importance of building confidence in the market and among the consumer population. So, he presented his plan immediately to the American public. In his speech and subsequent conversations with the American people he emphasized the importance of savings and wise investing in banks, good businesses and homes instead of the high risk ventures on Wall Street and the securities market. He also encouraged spending but wisely with those businesses that produced quality products and services. And, finally he proposed, along with greater regulation and financial oversight, wise lending practices on the part of banks and mortgage lenders with fixed rates instead of the risky flexible rate mortgages.

He then presented to Congress an eight point Consumer Economic Stimulus Plan that would give a substantial boost to consumer spending and restore confidence in lending among banks with an immediate influx of consumer deposits. His Collaborative Leadership skills combined with an intelligent and wise approach to economic recovery began to inspire the nation and won him bi-partisan support in Congress for his Economic Stimulus Plan that gave ten thousand dollars to every American Household. Meeting several times with top Congressional leaders he laid out the main principles of his plan and what he hoped to accomplish to restore the economy and build confidence in the market. With the American people supporting the Plan in all the national polls, Congress overwhelmingly passed the legislation for the President’s Consumer Economic Stimulus Plan that included new regulations for the investment and mortgage industries as well as a plan for the refinancing of mortgage loans so more Americans could keep their homes.* The primary benefits of the plan will accomplish the following:

It will enable homeowners to begin to repay and refinance their mortgage loans.
It will stimulate a more stable economy with deposits and investments in banks instead of the high risk Wall Street firms.
It will create more jobs as banks will begin to grow again and consumer spending will increase in every market.
Consumers including the elderly and every American Household will be able to pay for at least some of their health care benefits.
Banks will be able to start lending again much sooner with this Economic Stimulus Plan.
The overall economy will begin to move from a debtor economy to a more stable asset economy with more confident buying and investing.
It will help to stimulate small businesses with immediate funds for the owners which make up eighty percent of businesses in the marketplace.
It will have much the same affect on the economy as FDRs Works Progress Administration by empowering the consumer but with a much more immediate impact on the mortgage crisis.

The President also emphasized that this Economic Consumer Stimulus Plan of Ten Thousand Dollars per Household is for every American Household including the elderly and the handicapped who pay little or no tax and the homeless as long as they have an address. He pointed out that no individual or group should be excluded because of the lack of income.

Through the President’s Leadership, the nation’s economy was beginning to move again within a year but with a new emphasis on building assets instead of debt and providing quality products and services instead of just shifting finances and living off the high risk buying and selling of others. Confident consumers were now buying and investing again but with more prudence and wisdom in an increasingly stable marketplace. His Collaborative Leadership showed the way and the American people responded by building a new economy and a better nation.

*Footnote: Congress amended the President’s Consumer Stimulus Legislation which changed the amount given to single person households to five thousand dollars. This change helped to ease the impact on the government budget. Also, instead of adding unnecessary earmarks to the bill, Congress included an impact statement and guidelines for growing the economy by stimulating productivity, jobs and consumer confidence and by encouraging market stability through prudent investing and savings instead of the high risk investment on Wall Street. The President immediately signed the bill as amended.

Note: The above example is based on the books, The Price of Freedom and Collaborative Leadership and Global Transformation by Timothy Stagich, Ph.D.

Discussion Questions

1. What collaborative leadership strategies did the President use in developing and communicating his Consumer Economic Stimulus Plan?

2. Why do you think he was successful in his team approach to working through a Stimulus Plan and in facilitating the support from Congress and the American People?

3. What aspects of the President’s Economic Stimulus Plan are essential for good economics and maintaining a healthy democratic free enterprise system? Why?

4. Discuss the difference between a consumer-driven concept of the economy and the idea of trickle down economics. Which approach is necessary to maintain a free and democratic marketplace? Why do you think so?

5. How did the President inspire the following of the American People? What aspects of his Collaborative Leadership approach and his Economic Stimulus Plan inspire hope for better business practice, greater consumer confidence and a better world?

6. How did the greed on Wall Street contribute to the Economic Crisis? And, what can be done about it? Can the greed of Wall Street be controlled by regulation?

7. What are the key elements of good and ethical business practice and how can every consumer contribute to a better economy and a better world?