Macro Economics
Business Following Government's Myopic Lead?

Related Links
Discussion Boards

By Calabogie
November 6, 2009

Posts selected for this feature rarely stand alone. They are usually a part of an ongoing thread, and are out of context when presented here. The material should be read in that light. How are these posts selected? Click here to find out and nominate a post yourself!

I'm not sure I've ever posted here but this seemed to be the appropriate place for this.

This morning I attended a meeting that seemed to crystallize all that is wrong with the economy in not just the US but most modern countries as well. Here is a brief synopsis:

We have created a system to track projects. This system assigns priorities to everything and when a new project is started, the first thing that is done is to determine the priority and how it may affect the other projects currently on the list. Most organizations have this type of system but these people are a bit late to the party. The system that has been developed is very good and allows for just about every contingency and it has a cost-basis factored in for each project. That is compared to the budget and it is determined if the project is viable and/or will be viable in the future.

Immediately after the meeting about that system, another meeting was held to discuss the status of current projects. The new system was presented and used to present each project, what it's status is, how much it was projected to cost and how much it currently costs, and what the priority is of each of them. I was impressed with the presentation and said so.

The customer/boss said, "Good system and I'm glad you've developed it for us, but what about xyz project? I didn't see it listed."

The Project Manager said, "Sir, that project was over budget and we don't have the money to continue it. Even if we took 50% of the other projects off the table we still couldn't finish it."

To which the customer/boss replied: "Listen, the people we work for want that project and they are going to get it! We're a customer service organization and we're going to provide just that. Now get that project on the list and give me updates every week."

After much more discussion and questions concerning how it will be paid for and what projects will be delayed/discontinued in order to fund it, the same basic statement was repeated.

Now, the project in question is not essential to the operation. It isn't going to be essential to the operation and there's a very good chance that it will be outdated by the end of 2010, at which point we will have to do this all over again. One of the people in my group said, "Well, we're not the ones paying for it so I guess we just keep doing it until we run out of money. I guess we can ask for more at that time."

This seems to me to be the attitude in most modern countries. People want something and/or their leaders say they are going to get it without a thought as to what might suffer. No thought is given to sticking to the budget and anyone who argues the point is summarily silenced, and sometimes transferred or fired. Unrealistic expectations allow projects to go so far over budget that there is no practical way to pay for them, but the people who want them refuse to give them up. They then cost 10 times what they were projected to cost.

This has little to do with politics and everything to do with the, "I got mine, you worry about yours" attitude IMHO. Whenever I have brought up running a government like a business and staying within a budget, the first thing I usually hear is, "A government isn't like a business." Why not? I'd really like to understand that thinking but every explanation I've heard seems to be a justification for things people want.

Can anyone explain it? Why can't we the people simply say to our government, "Cut everything you can cut, no matter how small, and increase income in every way you can." I know raising taxes is political suicide but everyone seems to want to cut something. Why not at least start a real discussion about what to cut? Why keep saying, "It's only a few million. Compared to xyz program it's chicken feed." Cut it anyway!

A person might switch to grocery store brand to save money. It doesn't save much, but it certainly adds up. Do the same for government programs.

Sorry for the rant and I know I'm venting but since that meeting this morning I've been thinking about how much business mirrors government today. In years past, companies would never have done some of the stupid things that major companies are doing today. I think they're just following governments lead.