Live From the DMI Co-Op: Optimism Breeds a Flourishing Economy; Weinberger
Emotions play a major role in the state of the American economy, and business leaders with a positive outlook will fair much better in the long term, Caspar Weinberger, the chairman of Forbes magazine, told a group yesterday at Direct Media’s Client Summit and Co-op.
He said the normal reaction to a down cycle is to cut expenses, marketing budgets, staff, advertising– that may well lead to a profit but also to reductions in service and capabilities. In reality, slowdown spending should be stimulated during an economic slowdown to spur positive feelings that lead people to make investments, start new businesses and keep the economy moving. “Optimism is a factor in of itself that can mitigate economic problems,” he said.
Weinberger, who described himself as “very optimistic” said the economy is on a slow path but will start picking up within a year.
He also said that stock market swings are a “terrible indicator of the economy.”
“We do pay too much attention to the daily movement of stocks in the market which in turn influences us in ways that are not really justified,” Weinberger said. “By constantly emphasizing negatives, it will get to the point where people will suspend investments and pull back. When the market goes down there is no real justification, no reason to cut back on future expansion plans.”
On the topic of the beleaguered U.S. Postal Service, Weinberger said he favors privatization based on the idea that private organizations with profit centers and suitable requirements for the rights of employees would have a better result than if left to the government.
Under privatization, UPS, Federal Express and other mail carriers would be “attacked and competed” with by other groups building their businesses. He said that with true privatization organizations would attract customers by lowering prices and offering better service. “You’d have a better result than if you left it to the government,” he said. “We now have to live with what we have unless somebody comes along that can build enough support to privatize.”
Weinberger said the rules of the 1970 postal reform act were a compromise to former President Richard Nixon’s election goal of privatization. He said a long-fought debate was predictably heavily opposed and so a compromise was struck. “The compromise turned out to be worse than the original proposal,” he said. “That’s what happens when you’re eager to get results, you accept almost any kind of agreement. We didn’t think it was good then, but we didn’t know how bad it would become.”
As for the exchange and sharing of personal information, under fire from the government as witnessed by the Gramm-Leach-Bliley Act and the Driver’s Privacy Protection Act, Weinberger said, “I am opposed to the restraint of the free flow of factual data and ideas. The freer the flow of information, the better the world will be. Anything that restrains that is something that I would disapprove of.
