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« 2009 and Beyond | Main | What can boiling water teach us about management? »

The Massachusetts senate race and beer wholesaling


The Massachusetts senate race and beer wholesaling… what, if any impact?  For anyone not paying attention, there was a significant special election in Massachusetts last Tuesday to fill the US senate seat which was held by Teddy Kennedy for almost half a century.  To general amazement, the Republican candidate, Scott Brown won… in perhaps the most liberal state in the country… in a state where only about 12% of the electorate are registered Republicans… the freaking district which continues to elect Barney Frank went for the Republican!  No matter which way your political beliefs lean, this was an incredible result.  A brief summary of my political beliefs and biases follows at the end of this post… in case you wondered ;-)


I’ll leave it for others to analyze what this means to big picture politics… for us, let’s concentrate on what it may mean to the beer distribution industry.  First, since distributor values seem to be on everyone’s mind… at least those who talk to me… I think this is a strong positive to support values.  Warning… shameless sales pitch coming… and yes, if you are considering a sale or acquisition, give me a call. 


Why do I think this is generally good for our industry, and therefore values?  One word… fear.


If a no-new-taxes and no nationalized health care conservative Republican candidate can win in Massachusetts, no politician of any stripe is safe as of today… and that’s a good thing for every person in this country.  A certain amount of fear is a good thing in all politicians… it tends to focus their minds and hopefully keeps their words AND their actions in better alignment.


In addition, last week saw the Supreme Court strike a blow for free speech and tore down decades of limiting the free speech of corporations… they rightly ruled the First Amendment does not allow the government to silence its critics… read the governments arguments… that they have the right to ban books, movies, web material – freaking scary.  But now your company can freely join in the debate… your state associations can now freely join in the debate… NBWA can now freely join in the debate.  You can actually now criticize a politician and not be threatened with a federal felony—punishable by five years in prison—for using corporate funds to criticize a candidate for federal office within thirty days of a primary election or sixty days of a November general election… amazingly that was law of the land before this landmark ruling.


Since pretty much every politician or wannabe is vulnerable, a tremendous opportunity presents itself in the 2010 and 2012 elections.  The Massachusetts result is most likely a serious break on the crazed spending of the past years… it was bad under Bush and the Republicans (a shocking failure of living up to their supposed beliefs), and under Obama and the Democrats it has started out as spending on steroids… in less than 20 months the Obama administration will have racked up as much debt as all 8 years of the Bush administration… and the Bush admin was freaking terrible! 


Right now for every $1.00 the federal government spends, they borrow $0.43 of that!!!!  You don’t have to be an economic wizard to understand that can’t go on forever… even if you do have the ability to print your own money.  And the populace is beginning to understand that raising taxes isn’t the solution… it’s not that taxes are too low, it is that spending is too high.  All those upcoming tax increases from the expiring tax cuts just got a lot less certain.  Good for this industry… and all industries.


These are the reasons I believe this is overall good for beer wholesales and good for values.  Blindly raising taxes just got harder… for Republicans and Democrats.  Government intrusion into every aspect of our lives just got harder… but don’t fool yourself… those who want to do so still lurk in both political parties.  The pressure to cut spending just got bigger.  There are still plenty of problems out there and the desire to do foolish things hasn’t magically disappeared… but the headwinds have shifted significantly.  The fear is now thick… let’s make certain it stays that way.  This is good for this industry.


As an industry let’s not let this perhaps once in a life-time opportunity pass us by.  As an industry let’s not let this chance be squandered by ignoring our convictions and beliefs and behaving as a belief-free special interest… something in the past I have occasionally beat up NBWA for.  That’s what Bush and the Republicans did… we can strongly support and defend this industry without becoming just one more special interest whore.  The beliefs of smaller, less intrusive government… individual freedom and responsibility… these beliefs fit hand-in-glove with our industry.


In the next 2 – 4 years we can take steps which will reverberate for generations.  NOW is the time to step to the plate… personally and professionally.  Have you ever thought about running for office?  NOW is the time to do it.  Get active and support candidates who share these beliefs… not just some schmuck who says they are a friend of beer wholesalers simply because you’re the one in the room with them right now… not some schmuck who only supports us because they think it is in their best interest to do so… for now.  IF the candidates share these basic beliefs, I can guarantee you they will support beer wholesalers. 


Now is the time to get your company and your state association focused… again not focused on being the most effective whore in town… but rather focused on supporting those who share these basic beliefs… their support for this industry will naturally follow.  We don’t need to care if they have a D or R after their names… what do they believe and will they vote to support these beliefs?  We don’t sell canned peas and a regulated industry like ours is in no way a contradiction to economic and individual freedom.


Make our voices heard… not just on beer… but on the much more important areas of freedom and limited government… to say nothing of sane fiscal and monetary policy.  The future of beer wholesaling just got a whole lot brighter – which is good for sellers,  good for buyers, good for employees, good for suppliers, and even good for good looking, sharp-dressed consultants ;-)  


Now let’s grab the future by the throat to make certain the future we want to happen is the one that actually comes about.

End of post on this subject but if you’re bored, here is a summary of the biases I freely admit…


A local radio talk show host has a saying when he begins a discussion… he likes to note where people sit before hearing where they stand… in other words before the debate begins, what beliefs (and therefore biases) do you bring to the table?  With that in mind, let me explain where I sit… quite simply I believe each and every one of our lives is an incredible gift… a gift of profound and almost unimaginable proportions.  A universe which exploded from nothingness about 13.7 billion years ago, today ends up with each and every one of us.  An unbroken string… a raging river of reality which ends up with us.  Amazing.


I freely admit I don’t have the eloquence to have my writing adequately capture this reality.  Some consider our individual lives a gift from God, others simply a gift from evolution (I believe the former), but regardless they are ours and no one else’s.  The most profound of all private property is that of our selves.  Our lives are our own.


It seems to me that if one truly accepts this reality, then one has to accept that governed within a broad set of laws which protect everyone, individuals should pretty much be able to live their lives as they see fit.  This thus leads to a conviction of individual freedom… freedom as expressed in an economic system is market-based… freedom as expressed in a political system is constitutional republic/democratic.  Many before me have expressed these ideas better… Friedrich Hayek for one.  His “Road to Serfdom” is a must read.  As he notes repeatedly, someone has to decide… the only question is who.  All evidence points to the fact that things work best for everyone when individuals decide for themselves, rather than having some group of elites deciding for everyone else.


There is a direct correlation between freedom and prosperity which is indisputable.   


In addition to this belief system, I have also been running and re-organizing business for my adult life.  As you analyze and build systems you see the results of effective designs and ineffective designs… stable systems and unstable systems.  And this again points one in the direction of individual freedom.  These non-profit organizations we call government simply aren’t designed to accomplish some of the tasks… the question often is SHOULD government attempt to do this or that, when rather it should be the more fundamental CAN government do it.  In most cases the answer is it can’t with any efficiency or effectiveness.  The system of the federal (or state or local) government is simply not designed to run things like an economy (or a health care system or a car company or almost anything else).  This point isn’t from any political viewpoint, it is simple business analysis.  It is not designed to do so… and it can’t do so in any remotely effective manner… that’s just the way it is.


Raw statistics clearly prove this point.  To make a case for federalism think of the federal government in a trivia contest against the 50 states.  The federal government will  NEVER win the trivia contest.  In fact it won’t even be a contest… it is a statistically certainty.


To make the math easy, let’s assume all participants are basically coin-flippers… 50% of the time they are right, 50% of the time they are wrong.  What are the odds of the federal government beating the states team? 


The odds of the federal government being correct on any single question is .5 or 50%.  The odds of the 50 state team being correct on any single question is 1 minus .5 to the 50th, or 99.9999999999999%!!!  I think most people would take these odds ;-)  Assuming the states and the federal government have similar skills and abilities, there simply is no way for the federal government to win the contest.


That makes a strong case for state’s rights and federalism but if one takes it to the next step… an individual state competing against thousands and thousands of individuals… again there is simply no statistical way for the state to outperform the sum of the individuals. 


It is a structural, organizational reality that government will basically NEVER outperform the private sector.  It is the nature of the beast.  It is a design certainty which no amount of effort will overcome.  This is simply the reality of these non-profits.  A few against hundreds and hundreds will never win.  The hundreds and hundreds have far more information, are much quicker in responding to the results of their actions, and are generally quite driven by the profit (i.e. survival) motive.  The non-profit’s employees (that’s the government) would require god-like abilities to overcome these realities. 


This is not a political bias based on anyone’s views, it is a statistical certainty.  This is not a Republican or Democrat issue. It is the nature of these non-profit organizations. They are not designed to, nor can they accomplish these goals.


It is truly amazing that we still are having these discussions in 2010.  If these non-profit organizations we call government could create wealth… would there be any poor countries?  If these non-profit organizations we call government could create jobs… would there be any unemployed?  It is time to put these childish notions behind us.  Just as new-born kittens take a few days to open their eyes, it is time for us to collectively open our eyes to these realities… whether we like them or not.  I do not exaggerate when I state that the future of the country and indeed, the future of the world depend on it.  That’s where I sit and where I stand.














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