Luke Johnson: Time to move on from 9/11

The US mustn't let 9/11 dampen its optimistic spirit any longer; new taxes that would boost our economy; cultivate the underrated art of listening.

by Luke Johnson
Last Updated: 21 Oct 2011

Americans have always believed in their Manifest Destiny, the inevitability of their bright, ever-expanding future. For a century they have enjoyed the highest living standards on earth, thanks to an outstanding aptitude for capitalism. I have always admired their sense of optimism, their brimming taste for adventure. But, in recent times, the United States appears to have lost its collective confidence. In turn, this anxiety is inhibiting its animal spirits, its desire to invest and innovate - the very engines which create jobs and wealth, and produce material progress. The Great Recession has compounded this feeling of gloom.

A July Time/Aspen poll shows just how pessimistic Americans are. For example, 68% of respondents believe that the last decade has been one of decline for the US. Over half think their children will be the first generation to be worse off than their parents.

Although the weak economy, high unemployment and a terrible housing market are all factors, what has overridingly fed this depression is 9/11 - and their reaction to that tragic event.

The War on Terror, Homeland Security and similar government initiatives have fuelled a profound, transcontinental sense of paranoia. Political warmongers have squandered as much as $4trn (according to Brown University) on pointless wars in Iraq and Afghanistan, rather than spending on infrastructure and maintaining a balanced budget. Instead of focusing on rising industrial competitors in Asia, the elite have obsessed about Islamic extremism.

After a decade, America needs to get the 9/11 attacks into proportion and, as a nation, move on. It should revert to what it does best: inventing and growing. If a society's energies are engaged in fighting an almost existential enemy, then it cannot concentrate on domestic issues that matter, such as education and manufacturing. I worry about the US not simply because I love the place, but because Britain's prospects tend to rise or fall with it. I miss the positive, can-do sense of renewal which usually surges a couple of years after an American downturn. For entrepreneurs, venture capitalists and technologists, the US has always been the great inspiration. Somehow or other, America must get its mojo back.

Policy makers have few tools with which to actually manage the economy: tax is a major one.

I have long believed that a National Insurance holiday would stimulate hiring, thus cutting unemployment, thereby reducing welfare rolls. But the budget deficit means the government cannot shrink net tax receipts, for fear of bond vigilantes who would sell sterling debt.

Yet taxing jobs is a bad idea - it burdens entrepreneurs, and encourages them to automate or simply stay small. So, as a substitute tax, I think an Offshore Property Levy makes sense. This would be an annual charge - say 1% of the assessed capital value of a property - charged to any ultimate freehold property owners based in a tax haven.

I suggest this because I am astonished at how many commercial and indeed residential properties in London are owned by companies located in places such as Liechtenstein or the British Virgin Islands. The owners do this to avoid tax: there can be no other reason.

Frankly, we can afford to forgo the purchase of London property by companies based in shady tax havens. This low-risk investment creates no jobs and anyway there will be onshore buyers if the tax avoiders want to dump their assets. Its introduction might depress property prices slightly - but who cares? That makes such bricks and mortar more affordable for domestic buyers.

A second property tax which could replace a chunk of National Insurance would be a Planning Windfall Tax. When property owners receive valuable planning permissions, they make an instant profit without true investment or effort. Such planning wins do not create jobs or contribute to progress like new products. Moreover, construction can often have damaging effects on neighbours. So I would favour a tax of say 25% of the upside - payable if the owner wants the planning permission. This might make some property development much less lucrative - but the market would adjust.

A national, predictable tax would replace the almost arbitrary Section 106 Planning Obligations extracted by local councils currently when major planning consents are given.

Such direct linkage might reinforce the point that job creation should be supported and that the rentier class of landlords simply holds the economy back by siphoning investment away from industry. So it makes sense to tax their activities more and relieve some pressure on those who actually employ people.

One of the better CEOs of my acquaintance explained his core management philosophy: he simply leaves his office door open, and encourages managers to come in and unburden their worries to him at any time. His key technique is just to listen thoughtfully and support his subordinates. He found this was a better way to motivate than dispensing orders or praise.

I suspect listening is an underrated skill in the business world. Many of the best salespeople and networkers say less but learn more, ask intelligent questions, and pay attention to the answers. Too often alpha male conversations are a series of boastful monologues, a contest of oneupmanship among egotists.

An fictional example of the power of good listening is Jerzy Kosinski's fable Being There, made into a film with Peter Sellers. Chance, the simple-minded gardener, listens and copies so well that he rises to become president, despite having no qualifications or experience.

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