“The more the merrier…NOT !”

During my forty some odd years in business there have been at least three situations where I have been in a meeting or in some form of litigation and suddenly realized that it was me paying for everyone in the room. Not one person other than me was creating any revenue to pay for the reason we were gathered together at that point in time. I was not happy with the feeling. I felt as if I was surrounded by vultures.

This morning driving to my office I noticed a couple of things that put me in the same frame of mind as I have just described. I’m passing a school zone, with teachers, bus drivers; school crossing guards all going about their business. I pass a couple of police cars looking for speeders in the school zone. A block or so down the street are some postal trucks loading up some mail boxes. There is a fire department along with a hazardous material team as well as some EMT workers. As I turn the corner, I see a couple of guys holding flags as I maneuver around some road repair. All of this is going on within a five or six block area where there are restaurants, shops and offices that have been closed and are out of business. I begin to wonder how many times this scenario repeats itself across our country at this very moment. How many city, state and federal employees are in each and every square mile of this place we call the United States of America.

Now, don’t get me wrong, I’m not saying that these workers aren’t needed, because they are in a civilized society. We need teachers, police officers, fire men and women and other such but I have just one question. Who will pay for these people if all of the businesses fail and stop producing? I was in Washington State last week, and the papers were bemoaning the fact that 60% of the state budget is used to pay salaries for state workers.

In the news today is an article about the state of Illinois borrowing money to fund their pensions: “In early January, while everyone was busy watching the nasty campaign commercials, the State of Illinois pulled an end-run on the budget process. On Jan. 7 the state sold $3.5 billion of "pension obligation notes." In simple English, the state borrowed money to finance the state's contribution to its five retirement systems. These five-year debt securities carry an interest rate of 3.84 percent, tax free to bondholders. It's a much higher yield than you could get in the bank because of the risk involved.”

The president made a statement on Friday that “the congress will have to pay for what it spends, just like everyone else.” He calls it the PAYGO or ‘pay as you go’ plan. Now sit back and think about this for a moment. “CONGRESS WILL HAVE TO PAY FOR WHAT IT SPENDS….” Perhaps I’m thick, but pay with what? Where in God’s name does the Congress get any money to pay for anything? How can we keep borrowing money in order for Peter to pay Paul? Unless businesses grow and produce more revenue which creates more taxes nothing is going to happen. Increasing the size of the government at any level will not improve the economy. Improving the efficiency of the government or of private enterprises makes more sense than just running the government printing presses twenty four hours a day. What is so hard to understand about this concept?

I may not have been an economics major in college but I do think there are only two ways to make money. Charge more or reduce your costs. Charging more is not the answer as the competition sets your ability to set your prices. Reducing your costs and becoming more efficient and productive is the answer to a profitable enterprise.

Oh, I did forget another way to make money. Become a government then you can charge (raise taxes) all you want with no competition and not worry about being efficient. However that plan of action will only sustain itself for a certain period of time and then those who produce cease their production and those living off the fat of the land will starve. The clock is ticking.
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