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Small Business Think Tank [This Network is not currently active and cannot accept new posts] | | Topics
Commonsense Approach To The EconomyViews: 220
Feb 03, 2009 8:41 pm re: re: re: re: re: Commonsense Approach To The Economy
abbeboulah There is an understandable temptation to look for big, even radical solutions. Such a big move is what we see is the big bailout approach -- all the questions notwithstanding. This is dangerous because it further destabilizes everything -- and leads to everybody running to the through whether they 'need' it or not. The wholesale call for firing the whole management team of companies that are asking for bailout is another -- very understandable -- big sledgehammer solution, cause by the big bailout itself as much as any mistakes the company may have been guilty of. Seriously: if there is 'free money' to be had somewhere, wouldn't any management that did NOT try to ask for soem of it probably be considered rather negligent by its stockholders and employees -- especially the ones that are going to lose their jobs? Which bring me to another counterproductive sledgehammer solution: the big layoffs. Yes, I know that 'cutting costs' is the responsible and necessary thing to do, and some consider low-paid workforce lazy bums in the first place that deserve to be fired. But then calling for tax cuts -- those taxes that are needed to pay those folks' unemployment support -- at the same time, that's just not looking around the next corner. I repeat my suggestion that I made earlier somewhere: Instead of all the haggling about budget cuts, that will hurt some while leaving others untouched, whether in governments or business, why not simply declare that as a starting point, all budget items will be allocated a percentage of the actual tax revenue (for government) or profit (for business) that WILL actually be realized during the next budget period, and leave it to all departments to make their own predictions and allocations, while encouraging them to not just lay people off, but just reduce everybody's salaries or sub-budget allocations, look for other ways to reduce costs, and spend any achieved savings as 'bonuses' to those who actually helped achieve them. The salary reduction will no doubt prompt some to leave on their own account -- but only after having found another job. This reduces the disruptive effect of those 'big bold' ax-wielding heroics (that always seem to spare the ax-wielder) and allows for a much more flexible adaptation of all the system parts.

In other words, maybe smaller, more flexible measures would be more useful for many aspects of our problems.

By the same token, the radical conversion of the whole system -- especially with measures that haven't been tried before -- might do more damage than good. Here to, the introduction of 'new rules' often would be better if applied to small subsystems on the periphery of existing big structures, allowing for experimentation and fine-tuning until everybody is comfortable that they will work better for the overall system as well.

The 'more socialism, less capitalism' recommendations -- as well as the opposite claims -- "it wasn't capitalism that failed, but the (socialist) regulations that forced e.g. banks to write those toxic loans that weren't covered by the borrowr's ability to pay" both are not addressing what I consider an essential underlying problems -- the inbuilt assumptions about growth and profit, and the temptations of power that exist in both kinds of systems.

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