Where is it written that a business may not fail? Of course they fail! For a huge variety of reasons, businesses fail every day.
Jubilee Gems, American Indian Jewelry, Cochise Trading Company, and Blue Highway Tours were all at one time, viable businesses. They all happened, in their time, to be my pride and joy. Each was hopelessly under capitalized and challenged to produce too much cash generation for a fully successful operation. In each circumstance, the proprietor “lived over the store.” A credit line was not a problem because there wasn’t any. We paid cash. Every available hour of the waking day was devoted to the business.
Cochise turned out to be the stellar performer and lasted for six years. Four different cities had this brand at one time or another. We specialized in retail sale of knives, guns, martial arts equipment and American Indian Jewelry. We were even able to “franchise” a location. As I look back, I am amazed that we were able to persevere as long as we did.
We took our turn at bat and played our hearts out for the American Dream. To continue the analogy, we struck out in about the seventh inning. The game was called because of poverty and I got a “regular” job. My son kept it open for another year and then sold it.
We knew the odds going in of having a successful enterprise. Our goal was never to generate enormous wealth but rather to serve the communities where we were located. My biggest regret would have been not to have tried.
Our tale is not rare. Many millions in the course of the history of our nation have taken their individual dream, pursued it, and fallen on their face. Others have sought the brass ring and managed to snare it. I applaud their success and admire what I know they went through to achieve it. It is an integral part of our fabulous nation. Every man has the opportunity to try—and sometimes fail! If he has integrity, he will continue to strive and seek success of whatever variety to provide for those he loves.
We could never complain that the government inhibited our success. We were not pestered by armies of bureaucrats carrying clipboards. When we built a store, whether in Louisiana, Texas, Illinois or Colorado, no one came by to be sure we were “up to code.” Even the BATF left us pretty much alone and on the rare occasions they came around were respectful, courteous, and businesslike. After a year and a half, in our first store, the local tax guy came around and suggested we might want to at least take a stab at being tax “compliant.” It appeared they all wanted us to succeed. Of course, that was nearly thirty years ago.
A family member opened a small business about four years ago and had an entirely different experience. Even at the miniscule level he started he was constantly besieged by regulations, inspectors, bureaucrats, licensing, shopping center covenants, tax men, and others at every conceivable level. His rent was exponentially higher and the demands for reportage constituted one of his major activities. He slugged it out for nearly two years before he capitulated to the system—just to sell a few ice cream cones.
Were we both still in business, would we now be justified to ask for a piece of that $700,000,000,000.00 pie that is being sliced up by our Treasury Secretary? The eagerness of mis-managed businesses to share in that bonanza is absolutely shameless. Their talent for taking short cuts and building businesses on bad practice is unmatched. They deserve to go in the tank.
In the case of the banking services, I find it inconceivable that firms with armies of actuaries and accountants could not recognize the folly of offering loans at low rates to people without the credentials, down payments, and wherewithal normally required for mortgage contracts. I place the responsibility on the boards and CEO’s and CAO’s who allowed these faulty practices to prevail. A basic principal of retailing involves figuring the markdown on every piece of inventory in advance of ever ordering it. One plans for the worst possible result. Skillful marketing, display and promotion sometimes provide a better outcome and that is the stuff of bonuses and perks. You don’t pay on numbers; you pay on results.
The automobile manufacturers have been betting on the “come” so long they now have a product which contains an unrealistic cost factor of administrative and labor cost which has no relationship to the actual costs of doing business. Inflated pension plans, unrealistic concessions to the United Auto Workers, health care for employees and families from the cradle to the grave, virtually unlimited holidays (paid of course,) all of which go well past the capacity of any employee to adequately justify. Even a shut down of a production line does not end the employees pay schedule—he is just temporarily furloughed.
Since everyone else is piling on, the individual states (not all) are seeking relief from fiscal irresponsibility. California, the largest spendthrift in the nation is asking for billions in relief. All of this in the face of increased spending within the state in reckless disregard of the realities of budgets.
The most often heard excuse for this raid on the public treasury is that these entities are “too big” to be allowed to fail. Balderdash! They are instead, “too big” to be allowed to continue to exist. The drain which they present on the economy today will only grow by leaps and bounds if they are allowed to continue to expand their foolishness. By rescuing them from their failed procedures the government then endorses their actions and makes an untenable promise to extend the same options to entities universally.
The example is then set to those who operate in a fiscally responsible manner to reasonably ask; “why should I/we strive to follow the rules if our competition is allowed to malinger and fail?” This applies to financial institutions, industries and states and municipalities alike. We offer positive reinforcement for failure? This is twisting Skinnerian psychology into an insidious pretzel. Try training a dog with this type of approach. You will wind up with soiled carpet, a noisy pet and a fellow creature that doesn’t care if you live or die. Why should he?
It has frequently been offered that the definition of insanity is repeating the same failed procedures over and over while anticipating a different result. If the triggers which precipitate the failures of these institutions continue is there truly any reason to predict any improvement regardless of the size of the “bailout?”
I think of a few well known institutions and people from the past: Arthur Andersen, Mark Twain, Woolco, Walt Disney, Donald Trump, Montgomery Ward, Hughes West, Henry John Heinz, Henry Ford, P.T. Barnham, Matthew Brady, Delta & Northwest, Polaroid, Milton Hershey, Worldcom and Enron. Each of these found themselves in bankruptcy. Some recovered and some didn’t. None of them had any appreciable affect on the national treasury as a result of their fiscal failures. When you think of the subsequent success of Trump, Hershey, Disney, Heinz and Henry Ford you might conclude that maybe it was for the best.
I find the mere suggestion of a bailout disgusting, fiscally irresponsible and unfair to every American taxpayer. Obviously, Jim Inhofe of Oklahoma feels the same way. He is urging the passage of a Senate bill (SB3683) which would freeze any further additional payments and require a vote for future funding. All payments so far are publicly unrecorded and their amounts and destinations remain undetermined. A quick note to your elected representative at this point would go far in helping to shape his votes on the matter. You may disagree. Either way, let your voice be heard.
In His abiding love,