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How Apple Would Recognize Employees Needing To Be Unemployed.

It is no wonder to me how bad of shape the country is in, when I see the type of article I came across yesterday.  The mystery then becomes how deep and how wide is God’s grace that we function at all as a nation, rather than a population of slaves to a wiser and stronger people.

Though I loathe giving this article a link, the drivel deserves to be exposed.  My title is a play on his, with me happily imagining the author as an employee of Apple, handicapped with his current logical and business prowess.

http://www.marketwatch.com/story/how-apple-would-solve-the-debt-crisis-2011-08-02?link=kiosk

After my despair that such an article could be written, I was at least enheartened by the many comments that explained the obvious misplaced analogy – customers of a business spend by choice, and the company is governed by competition in the marketplace.  The statists were not swayed.

Maybe exposing the incoherence of the argument, within the context of the author (let’s treat the government as a business), will help put this to rest.  Let’s take a look:

Before we can even get to the article, we see that the author’s train of thought derailed at the station.  The subtitle “If U.S. were run as a business, it wouldn’t cut spending” fails a sanity test.  It is exactly IF the US were run as a business, whether Apple, or any company that has successfully recovered from an annual loss at 50% of revenue, that it would immediately cut spending.  God knows that we wish the US was run more like a business.

I have been IN corporate America, not “covering” it (see author), for more than two decades, and maybe the author needs the grounding of such a vantage point.  I’ll give the author latitude on his classification of companies (originally growing or shrinking, later [successful?] or defeated), but must of course disagree with his fanciful classification of USA Incorporated (hereafter USAI) as officially toggling from the former to the latter with the passage of the debt deal.  In reality, the debt deal was an insignificant event in the tragic course of USAI.  Using another tragedy to illustrate my point - if the USAI was the  Titanic, in response to the positive identification of the iceberg, our fearless captain(s) asked the engine room to throw 1% less coal into the boilers.  If our nautical cruise control is now set, our only hope is to knock the captain(s) unconscious, take over the ship  (2012), and hope that we still have room to stop and/or turn it.

But hey, “the difference between a growing business like Apple Inc. and a shrinking one such as Eastman Kodak has less to do with spending and revenue and [sic] than with psychology.”  I guess we just needed psychologists to fix Enron or Cabletron.  When I think of running a business with psychology, I think of GM’s “Heartbeat of America”.  How did that work out for GM, versus a focus on spending and revenue?  They went bankrupt.  Oh, wait, my mistake, we decided to short-circuit the natural action-consequence loop, and now GM is the Government!?!?!  GM got absorbed by the only entity less qualified to run GM than itself.  Now it can be both mismanaged AND have financials coated with fairy dust.

Later in the same paragraph we hear that growing companies go through tough times, adapt, and strike when times are right.  Amen, brother.  I’ve lived through this more than once.  Let me describe these tough times:

  • Costs are cut to deal with the current revenue realities.
  • Personnel costs are cut to be a balanced percentage of spending (it makes no sense to continue to pay existing salaries if there is no money to spend on the non-headcount expenses (prototypes, NRE payments, advertising, manufacturing, etc). ( This might be 10% or more of personnel, depending on how well run the business has been over the years.)
  • Personnel are often asked to share some pain in the hopes of leaving the company healthier (fewer projects cancelled, etc) after the tough times pass.  10% pay cut.  Working weekends.  Forced, unpaid time off.  CEO taking salary of $1.  Raises non-existent for years at a time.
  • If there is a golden goose it will be the last thing cut.  Other, possibly worthy, projects are shelved or cancelled to ensure the health of the goose.

It is precisely because Government (especially Federal) never goes through these tough times and is never asked to square the books that it remains on the “uncompetitive” path.  If Apple and our USAI were human patients, given a diagnosis of 90% blockage in major coronary arteries: Mr. Apple would make immediate and substantial corrections to lifestyle (the author himself noted “overhaul” in Apple’s 1997 course-correction).  Mr. USAI decided to eat 5.9 cheeseburgers daily instead of 6 and to smoke one cigarette less than his typical 3-packs-a-day.

Don’t get me wrong.  Not all companies will do the right things.  And this is precisely why a free market and competition will be needed.  The unhealthy companies must suffer consequences (up to and including death), and be overtaken by the strong ones.

The author’s incoherence (arguing that the debt deal is a step in the wrong direction in spite of his own prescriptions for Apple: “eliminating spending that’s not working”, “overhaul[ing] the company”, “spending on ideas that worked”, “killing projects that didn’t”) applies a completely different solution to USAI than he does to Apple.  To further round out the list of business remedies to tough finances, we could add “returning focus to core businesses” (Cisco), “discontinuing non-strategic or unprofitable businesses” (IBM), “getting costs in line” (HP), etc.

So how would business fix the Government?

  • Focus on core businesses.  For the Federal Government, I like the list of those that we get from that little guidebook we call the “Constitution”, but friends can disagree.  How about for now we split our differences and shut down half of the ones that aren’t in the Constitution.
  • Discontinue unprofitable or non-strategic companies.  Well, this is really double-jeopardy for statists, as it will knock out many of the businesses that survived our friendly-pruning above.
  • Spending on ideas that worked.  Hmm.  What worked seemed to include equality of opportunity, free enterprise, light taxation, controlled immigration, stable business climate, …
  • Killing projects that didn’t [work].  So how much poverty has the war on poverty eliminated?  How much better educated are our students since the Feds have graced education with their presence?

Oh, and let’s close with one other fix: Differentiate.  No sense in making our product (America) look just like other products (Europe).  I shouldn’t have to tell this point to someone singing Apple’s praises.  I will just guarantee you that Steve Jobs believes in an exceptional, differentiated Apple.  As I believe in an exceptional, differentiated, USAI.

May God bless us with the principled and strong leadership and intestinal fortitude necessary to correct our course.

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