As distasteful as I find most things political, it seems that I spend more and more time trying to figure out what the federal government is going to do next. It might not ordinarily matter a lot, with the exception of things like wars or political upheaval in foreign lands in which we have an interest.
As distasteful as I find most things political, it seems that I spend more and more time trying to figure out what the federal government is going to do next. It might not ordinarily matter a lot, with the exception of things like wars or political upheaval in foreign lands in which we have an interest. But these days the government is deeply involved in the business world with stakes in major financial institutions and automakers.
Trying to figure out the government’s next move is important because suddenly doing any kind of planning for business hinges on the next move by the folks in Washington. The problem with that is that those of us in business live in the real world. It is clear that the government does not.
Let me explain: In the real world we have to make plans, take risks, and work hard to earn the money we make. When the federal government needs money, it just prints more. That is not particularly good because in the real world we must trade with the same dollars. And as the government prints more it impacts the laws of supply and demand. This apparently only impacts those of us in the real world, whose dollars lose value every time the government cranks up the printing presses.
This does not matter when you do not live in the real world. If you need more money, you just print some up. Or you can cross over into the real world and reach into the pockets of the ones who make plans, take risks, and work real hard to earn money. Almost as good as printing your own money.
It has been interesting lately to see the federal government being noticed by some other folks who live in the real world. Cannot believe I am writing this, but it is what it is: Our federal government is being challenged by the Chinese over its practices of printing money. The Chinese from whom the federal government borrows money. Suddenly the Communist Chinese regime, which apparently lives in the real world, is giving lessons in supply and demand to our federal government.
In the real world when we do not have money or the ability to attract investors or the capacity to reasonably borrow it (with collateral) for our business, we stop spending and start cutting back. We take the steps to put our staff resources in line with the work and income flow. We put off purchases of new equipment and measure any expansion plans very carefully. If you are the federal government you do not have to take such drastic steps. Leaders in the government see their income and the money over which they have charge as an entitlement. After all, they need the money to flow to their constituencies so they can get re-elected.
In the real world we launch major business investments at great personal and corporate risk. In the real world we launch major investments when the resources to finance and support them are firmly in place. The federal government launches major new plans and programs (stimulus packages, cash for clunkers, health care reform, etc. etc.) in the depths of recession at a time when incoming tax revenue is in decline. What the hell, you can print more money if you need it, right?
In the real world if we had a company that delivered the mail that was losing billions each year we would just be out of business. The folks who run the USPS are somewhat stuck with living in the real world while working as part of the federal government. We think we have issues … can you imagine trying to run the postal system? Anyway, the postal system leaders are trying to tell the government that they need to cut back on services and “right size” the USPS to match up with the new world of e-mails, online billing and Internet advertising and catalogs (not to mention the recession). Since they are part of the government they will not go out of business. The federal government will just print them some more money. They have to … they have no money of their own (unless you count that money they are borrowing from the Chinese and others).
Don’t get me wrong. I am not giving up on this country. I have seen way dumber stuff coming out of Washington than some of what is going on right now. But not much. History shows that American voters do not have much taste for regimes that make a mess of the economy. It is too bad that we, as voters, do not do a better job of hiring. And for some insane reason we love incumbents, which makes firing bad hires very difficult. I suppose this is a demonstration of what Albert Einstein described as the definition of insanity: Doing the same thing over and over while expecting different results.