Sunday, November 29, 2009

Basic Business Facts missing in Government

It appears to me that the basic business facts are just getting blown by in the current spending trend of our Government. The belief that the income can increase for the foreseeable future through the use of taxation is not only a flawed theory but one that is destined to destroy not only our economy but the country as a whole. In business school we are taught that the purpose of your ongoing concern is to service the profits of the shareholders. If meeting the basic premise of that rule begins to be one where the profits can no longer be serviced then the Ongoing Concern must be terminated. A classic case in point is recently I read an article in the Orlando Sentinel about a company that has had to close down because Charlie Crist (Florida Governor) accepted TARP money which required the company to pay unemployment on part time workers. It was cheaper for the company to close the doors then to continue to operate. Who does this affect? The ongoing concern employed workers who purchased things, paid taxes, supported their families... Now they are out of work and that cash flow is gone. The ongoing concern paid taxes, provided a valuable service, and provided profit for the shareholder(s)... no more.

So, what was once several credits on the balance sheet for the government is now not a zero dollar amount, but a debit because they are paying unemployment to those workers, perhaps welfare. This is basic accounting. The problem is that nobody in our most learned government is taking into account Organizational Behavior and the will of the people. This is an example of a small local company. What if you are a large Multinational? If it becomes cheaper to incorporate in China do you not think they will do that? Then they are no longer subject to the rules set by Washington. How does that help the American worker? Why do you think that many large organizations are incorporated in Delaware?

Basic human nature and the will to survive will lead the way... eventually... I just hope it is not too late.



Beth said...

No incentives, no accountability, these are other problems when the government thinks it can run programs like a business. And there are so many in Washington who have never run a business or anything (especially Obama) and so it is no wonder they are failing their attempts to do so now. They are out of touch, big time!

BB-Idaho said...

"In business school we are taught that the purpose of your ongoing concern is to service the profits of the shareholders." Yep, us ancients saw how that created a major problem ..tis how
productivity gains accumulated to
the very top and contributed to the royal mess gov't is attempting to fix. If they don't, it will implode.

Beth said...

The government is causing the implosion my dear BB, not trying to fix it! If progressive ideas are so dandy, how come they never actually work when out into practice?

Ordinary Guy said...


You link to an article called "Wall Street Run Amok". No where in my article did I say that the Business world was perfect. One HUGE flaw in the thinking of most businesses today is the Quarterly Earning numbers at the expense of the long term view of the company. This must be changed... and is changing... the problem is the large number of MBA's that are looking to advance their own careers as fast as possible without thinking about the ramifications 2 - 5 years down the line. This is a loophole that is beginning to close because of the market correction occurring now.

The problem with your thinking, and those who continue to look toward the government for solutions is the need for a safety blanket and the desire to have someone else take care of everything. That is not the base premise that the USA was founded on... as a mater of fact it was the exact opposite. Rugged individualism, the desire to help oneself, the need to be free are the base principles of this country. That freedom comes with a price... You have to take care of yourself. I am not willing to give up my freedom so that I MIGHT have health care (yes, might... check Social Security and Medicare... both on the brink of bankruptcy) and to give up more of my paycheck.

You seem more than willing. I encourage you to check out China, Russia, France, England, Sweden or any other country where freedom is curtailed in the name of public good. But please leave our 200+ year successful system of government alone.

BB-Idaho said...

If you like your paycheck, you might prefer the low income tax places: Czech Republic, Bulgaria,
S. Korea, Russia, Romania, Syria,
UAE, etc. It is discouraging, but
we seem to be slipping by any criteria ..and I was shocked to see that Norway, Sweden
Denmark and Finland are more willing to 'Fight For My Country'
than we Americans. If "their freedoms are curtailed" ya fooled me. As for business, I saw the good years, I watched the trends
away from mfg, the growth of MBA
thinking, the buyouts..and gosh I'm glad I've been retired for seven years!
Since I make more than most still hard at work, I can't complain, and surely I will leave our 200+ year system of government alone.
(didn't enlist in '64 for the fun of it, after all) Just attempting to navigate between Rand's 'Gault' and Jonothan Swift's 'A Modest Proposal'

Oklahoma City Divorce Attorney said...

Clueless. They are absolutely clueless.