In 1966, the finger pointed directly at you from the fierce visage of a red white and blue top hatted bearded Uncle Sam on the recruiting poster. I couldn’t look away in good conscience then and it is no less difficult now. In an article posted on CFO.com titled Walker Makes Plea to CFO’s http://www.cfo.com/article.cfm/12448209/c_12447541 David Walker the former U.S. comptroller general asks CFO’s to help bail the country out of its’ current economic crisis and a $50 trillion deficit. While, as with most of you, I’d be the first in line to offer my services, it won’t happen. The first responsibility of every politician is to get re-elected. Correspondingly as long as we have a system that allows for ‘pork’ trailers in legitimate bills, legislators unwilling to make the unpopular decision and lacking the intestinal fortitude to enforce a balanced budget, I’m not sure there is much we can do as advisors. Because they just won’t listen!
The government bureaucratic system is not predicated on economic motivation from ‘self interest’ and individual benefit and correspondingly can’t be successful as a participant in a capitalistic economy. As Adam Smith, the father of modern economics, summarized in The Wealth of Nations – “I have never known much good done by those who affected to trade for the public good”. If you haven’t read Free to Choose by Milton and Rose Friedman this would be a good time. Here’s a great example found on the internet last week:
Back in 1990, the Government seized the Mustang Ranch brothel in Nevada for tax evasion and, as required by law, tried to run it. They failed and it closed. Now we are trusting the economy of our country to a pack of nit-wits who couldn’t make money running a whore house and selling booze?
The solution doesn’t seem to be particularly difficult to outline, but how do we start the ball rolling?