No one ever cut their way to prosperity. Remember “Chainsaw Al” at Sunbeam? Destroyed the company. I’ve seen others. That’s one reason I find the current budget debate in Washington so disheartening. There has been almost no discussion about the necessity for investment–especially in infrastructure in all the current national budget debates even though the country sorely needs infrastructure upgrades to support growing businesses.
In an article in the Wall Street Journal, a number of CEOs called on the government to reduce regulations on their activities (no shock there), but also called for government investment in infrastructure.
It is the same in business. Is your company simply cutting costs? Are they cutting costs to eliminate waste, or are they cutting cost simply to try to find profitability? There are two paths to profitability in the short term. One is to increase sales; the other is to reduce cost. For the long term, only the first one works
I’d love to see more talk about intelligent investing in growth as we try to expand this recovery (and, yes, we are still in a recovery). I favor the people who go out an d make things happen.
Gary, Thank you for your blog post. Your points certainly carry a lot of merit. However, I would like to better understand what infrastructure the government needs to invest in to support growing businesses (besides providing an encouraging environment to operate in)?
It seems like the $1 trillion spent on the stimulus plan was directed mainly toward infrastructure and did not have any major impact on employment numbers or economic growth.
From an automation perspective, today we are seeing companies invest in technology upgrades, plant expansions and other projects to provide additional capacities and efficiencies for growth going forward.
I agree there are certainly areas of responsibility the government carries around infrastructure that we all can take advantage of personally and in business. The reason for the discussion of cuts in Federal spending is not in the context of cutting money out of tax revenue surpluses but in the context of owing $1.5 Trillion in additional debt every year. Our debt is almost equivalent to our GDP ($14T vs. $15T). If it continues to increase at this rate, we will be spending so much to service the debt that the government will have little money left to service the essential programs and services much less infrastructure and growth spending.
The solution needs to incorporate restructuring of current programs to make them more efficient as well as cuts to non-essential spending so that we can get back to a balanced budget and be positioned for better flexibility and stability going forward (or sustainability). We don't want to get into a situation like Greece or Italy where they have backed themselves into a corner with no good way out.
Yes, Kerry, there is a discussion in the context of debt–sort of. But no one wants to tackle the main causes–the Bush tax cuts and the wars we are fighting. Just like VietNam, we are trying to fight a war without raising taxes to pay for it (it was called "guns and butter" back in the day).
Unfortunately, what I see when I read about the debates is how each side can protect the interests of their voters while appearing to do something. I notice that even Tea Party candidates are reluctant to cut things that affect them directly.
Actually, the stimulus package put a lot of people to work. It's just a short-term thing, though. But even there, the emphasis of the discussion was not in terms of investing in our future–better water treatment facilities, improved bridges (before they fall down), modern airports. But just like businesses that borrow to invest, the plan must include eventually paying down the debt.
Or, we could all try living more simply–check out Zen Habits (www.zenhabits.net) for advice. That would certainly be more healthy and might cut healthcare spending if nothing else.