The focus of a business is to make money. Everyone can agree to that. Being a small business owner and an entrepreneur I understand that. It is how we put food on the table and pay our suppliers (who provide us the means to make the product to earn money) and pay our debts. It is a simple concept.
In a product based system, money is made by supply and demand. There is a need for a product..I supply it. It is how pricing works. Where we get out of balance is when there is a disconnect.
Disconnect 1: Losing sight of the people who produce the product. Some large business/corporations have focused so much on the “making a more of a profit” that decisions are made to close a division or move a company to increase profitability in disregard to the human impact. It isn’t personal. The decision makers hold no malice toward the workers. It is just a mathematical formula. They move the business and they make more money. In their minds the hardship it causes the now unemployed worker, their family and the community doesn’t figure in to the equation. It isn’t personal. It is simply the way business is done.
Subset of Disconnect 1: The famous quote “Let Them Eat Cake” referred to a conversation with an anonymous princess prior to the time of the French Revolution. She was told that the people were hungry and couldn’t afford to buy bread. Totally clueless, very much like the business owners mentioned above, she shrugged and suggested that the starving masses eat cake instead. This phrase has taken on more clarity in the last year as I have listened to the dialog around the Occupy Movement and the election candidates.
Disconnect 2: Losing sight of the objective. The TARP bailout was designed to keep banks solvent and to prevent an economic crisis of tragic proportions. It took taxpayer money and shored up the teetering banks. Insufficient rules and regulations were attached to this magnanimous gift. The result is that the banks are solvent and the economy is still teetering.
Let me give you a couple of examples. About six months after the TARP bailout I was talking to my personal banker. The bank wasn’t one of the big guys but was a smaller regional institution. I mentioned TARP and she said that my bank had received TARP funds also. Since I was talking about increasing my business line of credit I asked her about what the bank had done. “Oh,” came the nonchalant response, “We are saving it so we can acquire territory and expand.” WHAT?? My internal system went on the fritz with those words! That wasn’t the intent!!
Ben Bernanke, the head of the Fed has said that the overly stringent lending requirements of banks are hurting the US housing recovery. DUH! And it isn’t just the housing industry! Our trade magazines are full of businesses that have had their lines of credit cut drastically and have had to close their doors after being solvent and active for over 50 years. It is across all industries and when small businesses close their doors the whole community is impacted as other businesses (the freight company, the grocery store where they shopped etc) lose their dollars.
As far as the housing industry being impacted? Foreclosures are skyrocketing..and no it is not just because these are dead-beat people who shouldn’t have been given a mortgage to begin with. For example I have been in conversation to get a refi. When I asked I was told,”If you can pay $200,000 down we would consider it.” WHAT! “It isn’t personal! It’s a formula.” Well I have news for you. As a homeowner..It is VERY personal! Disconnect!
Connect: People have asked about the world I created in my series. Well..one of the things I built in was that the people knew who made the goods they bought and who provided the services they needed. It was their neighbors. They had names and faces. They had families and personalities. They were valued. Cuts down on the disconnect.