Perhaps trying to run a country more like a successful business sounds like an appealing prospect.\u00a0 Well you are off on the wrong track already.\u00a0 I tricked you by inserting the word “successful” in there.\u00a0 It all depends on what the meaning of success is.<\/p>\n
Perhaps in your utopian world, a successful business makes a product or sells a service that people want and need.\u00a0 It finds out how to sell the product or service at a low enough price that the customers are willing to pay it and yet at a high enough price for the business to make a profit and fund its growth.\u00a0 The business keeps its debt within bounds so that it can continue in business for a long time and it can weather the ups and downs of its markets and the economy.\u00a0 It also pays a dividend to its shareholders, and it pays its managers and other employees well.\u00a0 It even manages to pay its fair share of taxes.<\/p>\n
Wouldn’t it be great to live in a country run that way?\u00a0 Maybe it would, but there is another way to define a successful business.\u00a0 This can be called the Reagan\/Bush\/Bush\/Romney plan.<\/p>\n
In the RBBR plan, you form a Vulture Capital firm.\u00a0 It finds well run companies that are fiscally sound, but are currently undervalued by the stock market.\u00a0 Of course this works just as well finding companies that are not so well run, but the stock market undervalues them even taking into account their poor management.\u00a0 (In a non-RBBR world, this would be sort of like buying a fixer-upper house that costs less than its intrinsic value to you.\u00a0 In the RBBR world, this is like buying a building whose copper plumbing is worth more than the cost of the building to you even if the plumber is still owed money for those pipes.)<\/p>\n
Companies usually have liabilities and assets that are of roughly the same magnitude in size.\u00a0 This means that their net worth, whether positive or negative, is much smaller than the size of their assets alone.\u00a0 In other words, some, or all, or more than all of their assets are offset by liabilities.<\/p>\n
In the RBBR plan, you turn all the companies assets into cash and pay them out to the RBBR owners and or managers.\u00a0 Never mind that there are creditors and employees that have prior claims on these assets.\u00a0 What they can’t get their hands on will never hurt you as owner\/manager.\u00a0 The RBBRers get stinking rich and the rest are left to ask, “What happened to my life savings and income?”\u00a0 By the RBBR definition, the RBBRers have run a successful company.\u00a0 Just look at how rich they are.\u00a0 Isn’t that the very definition of success?<\/p>\n
When they have piled up enough money so that they and their descendants can live in the lap of luxury for generations, they philanthropically turn\u00a0 from their business success to turn their attention to politics and running a country according to this prescription.\u00a0 Maybe they can do for the country what they have done for their business.<\/p>\n
They may find the following politico\/economic situation from which to rescue us. The previous administration has left the country with nearly balanced liability payments and income.\u00a0 The income comes from taxes and also from payments into pension benefit and health care benefit plans.\u00a0 Let’s call these Social Security and Medicare.\u00a0 On the payments and debt side, there is the cost of providing infrastructure such as roads, bridges, education, police, and fire protection that any ongoing business, er government, needs to pay for.\u00a0 Then there are the payments to the people who are now ready to collect on their Social Security and Medicare benefits that they paid for.<\/p>\n
However, these clever RBBR politicians, who learned their business from Harvard Business School (what snobs), see all those assets going to waste, when they could be used to weigh down their own pockets.\u00a0 So they convince the people that they (and supposedly you) know how to spend these assets better than the government does.\u00a0 Who cares if other people have prior claims to these assets.\u00a0 If they can strip them from the government and pay them out mostly to themselves with a few crumbs to you, what are the people with the prior claims going to do?\u00a0 Are they going to go to the police (called the SEC, the Justice Department, and other regulatory agencies)?\u00a0 Even if those agencies are now run by honest politicians when the voters wake up that their bank has been robbed, what are these agencies going to do?\u00a0 The money is already gone.<\/p>\n
The job creators (called robbers in any normal use of the language) are too big to fail even if you could claw some of their ill gotten gains back.\u00a0 Better to take your lumps, call it a lesson you won’t soon forget (well at least not for 50 years), and try to repair the damage these people did using whatever resources they may have left you.\u00a0 Asking the RBBRers to contribute anything to help would just be unfair.<\/p>\n