Any problem that money will solve is not a very big problem. – A wise saying from my sister.

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I don’t know if you have noticed it or not but money has had a really bad year. Conventional wisdom has been that money could buy almost anything we want or need. Yet just when we seem to have become convinced of that as a society, it lets us down. Now who would have thought that in the midst of all the other bad news that money would fall apart on us?

My most recent example is from the fount of all societal learning – sports. The Texas Rangers won the American League pennant this year with a payroll of $55 million over the New York Yankees who as usual led the league in payroll costs at $206 million. The San Francisco Giants, the eventual World Series winner, with a $98 million payroll won the National League pennant over the Philadelphia Phillies who had the fourth largest payroll in baseball at $142 million. In pro football, the Dallas Cowboys who have the largest payroll in the NFL and the most expensive new stadium ever, won one game in the first two months of the season. Now in the long run, the larger payroll teams seem to usually perform better, but lately when it comes to pro sports, money seems to have taken a sabbatical.

Politics is another arena where money just doesn’t seem to buy what it used to. The amount of money spent in the recent mid-term elections is off the charts. The Center for Responsive Politics estimates nearly $4 billion was spent on mid-term elections in 2010 compared to $2.8 billion in 2006. At this writing it is estimated Democrats have outspent the Republicans slightly but lost a significant number of seats in the House and Senate. In a number of races, outlandish spending did not appear to translate into more votes. For example, in California, Meg Whitman, the former CEO of eBay, was estimated to spend more than $ 160 million in the governor’s race, outspending the winner Jerry Brown six to one. In a number of races expenditures looked more like an out-of-control arms race than prudent spending.

In 2010 education has been the focus of much discussion including a popular documentary movie “Waiting for Superman.” While spending (in 2006-2007 dollars) per student has doubled since 1970 according to the U.S. Department of Education the graduation rates nationally fell to 68.8 percent in 2007 according to a 2010 analysis titled “Diplomas Count 2010.” In 17 of the top 50 urban areas around the country graduation rates are below 50 percent and in urban Detroit less than 25 percent are graduating on time even though spending is approximately 20 percent above the national average. By most metrics U.S. math and science test scores put us in the lower range compared to other advanced societies. While there are many factors other than schools that impact performance, the spending rate on education, has grown dramatically while results plummet.

Perhaps there is no example that stands out more than government spending. The $787 billion stimulus package was designed to hold unemployment at eight percent or lower. While there is much debate on whether unemployment might have been worse without it, the country is reeling from a much higher rate than expected. When compared to how other countries such as Germany spent their money, it appears they have gotten more job creation out of their priority for incenting companies to keep people employed versus our approach of spending incremental dollars paying for unemployment. Once again, our money has failed to buy the employment level we targeted.

There are many other examples. A number of businesses are rethinking their advertising spend, especially given direct-mail response rates and traditional media continue to disappoint. In general, the strength of brands is declining in the face of large marketing expenditures. And, idle cash sits like a slug on many company balance sheets.

The bottom line is that as necessary as money can be to sports, politics, education, employment, and business, lately money has disappointed. It is hard to ignore the fact that in spite of these failures, we keep throwing more money at so many different challenges. We would expect that incremental dollars resulting in marginal impact would stem the tide. If stimulus dollars don’t employ, educational dollars don’t educate, political dollars don’t elect and sports dollars don’t win, why do they continue to flow like water?

As a capitalist society have we forgotten what we always knew – that money is the result, not the source of gain? How did we come to rely so heavily on money as the force that moves the needle?

The obvious truth is old news. Energy, excitement, great ideas, committed teams, dedication to flawless execution – those are today’s productive assets. Carl Schramm who heads up a top entrepreneurial think tank says that the single most important contributor to a nation’s economic growth is the number of startups that grow to a billion dollars within 20 years. He says we need to spawn at least 75 of those organizations per year to feed our country’s economy. Capital will be needed but it is not the most powerful or value-creating resource.

Not only is money disappointing but it is also taking our eye of the real prize. As long we are primarily focused on the role of money and capital we will continue to be distracted from the incredible importance of purpose and passion that operate outside money’s line of sight. In my earlier life as a co-founder and CEO of a rapidly growing company, we were often at our best when limited financial resources forced us to innovate and motivate with resources other than money.

Human capital unleashed is what we most need and money won’t buy that. To paraphrase my sister: Any victory that money can buy is probably fleeting or empty.

(Column appeared originally in ABA Bank Marketing magazine – December 2010)

By ROBERT E. HALL

Not to be reproduced without written permission. All rights reserved. © Copyright Robert E. Hall 2010