Unintended Consequences

Ask yourself this question – “Why is it that with money available at 3 or 4% interest are no businesses interested in borrowing money?”.    Why are there no opportunities obvious where a business could borrow money at 4% and be fairly certain they can pay the money back and make a profit?   Answer that and you understand how systemic this problem is and why government is the cause of most of it (or least enabling it).

This list will anger many of you, but you’ve got to realize the truth.  Here is a partial list of problems making a profit in business today:

• Irrational fear of Pollution – your factory must make no pollution.   If you want to make steel or build cars or make paper or smelt copper, you may not pollute.  You must operate in a closed system that captures all pollutants (now to include CO2) and treat all waste.   If you take water from a river, you must make it even cleaner than it was before you put it back into the river.   The rest of the world is not constrained by this rule, especially China and India – so factories go where the costs are less.   Some pollution or no jobs – choose one.
• Expectation of perfection – if you make 10 million widgets and one parent thinks a widget would be a good toy for an 14 month old in their crib and the child dies, everything you worked for goes down the tubes when Oprah show watchers award the family a $100 million lottery prize
• Predatory M&A practices – if you do actually “make it”, a M&A firm will come along and use your own money to take over your company and steal your company and put you out on the street
• High taxation rates – if you do succeed in making a profitable widget factory and avoid being taken over, your “partner” wants their 34% of your profit, and then again take another 40% of what you take out of the business as profit – assuming you are even allowed to do that.
• Work force with excessive self esteem – we’ve built a country with the expectation that almost everyone should go to college and become a professional, which means Americans are “too good” to work in factories ripping the guts out of chickens as they whiz by on the conveyor belt.   Your masters degree in Art Appreciation entitles you to a job at Starbucks making lattes so you can live in your 3000 square foot home with a 78 inch plasma TV.
• Media and government persecution – with very few exceptions, if you did win at the American Dream, the American media and government will make it their cause to find some reason to anger the left wing goon squads to load up on buses and camp out on your front lawn (think AIG)
• Uncertainty of future energy supplies – if your business uses any significant amount of energy – between the environmentalists who want to return society to a pre-industrial revolution state and the Democrats who seem hell bent on blocking every possible avenue to developing real long term viable energy sources, about all you can be sure of is that in the future energy will be harder to obtain, less reliable and cost much more.   That makes it hard to plan for the future
• Hiring practices – between the EEOC and labor unions, choosing your employees based on people’s skills and willingness to work is something you do at high risk.    When people quit or deliberately hurt themselves to collect insurance, that’s just a “cost of doing business”
• Uncertain regulatory and legal climate – the government and the courts seemed to have unbounded energy to change the rules of the game in the middle and then retroactively “punishing” you.   You can’t make long term plans if you know the rules will constantly be changing on the political whims of the people in Washington
• Unsustainability of Federal Government Social Welfare Spendingg – everyone sees the coming train crash with Social Security and Medicare and its cost as the Baby Boomer are retiring.   The only thing you can be pretty sure of is that “the rich” are going to be expected to pay for the solution.   Even George Bush piled on adding on the Part D prescription drug program, which will just vastly increase government spending and dig the hole much deeper.  Add in the threat of government mandated health care insurance, and you would have to be crazy to start a business in this country

If you don’t solve most of that list, we will never get out of this slump.