Cuts

Years ago (almost 30, now) I was a business administration major in college. In one of my classes we played with a computerized business model, where we competed to become the most profitable. I saw there something I thought an absurdity that has over the years turned out… no, let me do it this way.

One way to get bigger short-term profits in the game was to cut workers; either reducing their wages, or completely fire them. For that little period of time there’s a HUGE boost in profits as inventory sales don’t cycle back to labor. It’s pretty obvious, of course, that the step AFTER that is closed doors and zero profit (well, other than by sales of capital).

Or so you would think. But there were classmates who took the illusion created by short-term gains. Oh, nobody cut all the way, but “we’re overstaffed” was a common statement. Oddly (yeah, that’s sarcasm) they couldn’t understand why over time those of us who DIDN’T cut were bigger and generating more profits; even when our profit margins were smaller.

There are a host of cliches about this lesson from all the ages. A favorite for me in this case is: Don’t bind the mouth of your kine as they thresh the grain. I discovered a lot of people don’t understand that at all. Kine in this case is cattle, and they’re dragging a threshing mill across the harvested grain. Grain is food – GOOD food – and they will eat it as they walk. The admonishment is basically “Let them eat all they want while they work.”

Surprise – if you let them eat into the short-term profits you get more out of them. You get more because they’re content. You get more because they’re physically able to work harder for longer.

We’ve become a nation that as a whole binds the mouths of our kine. Every penny is released grudgingly, only when forced. And then employers complain that employees are not loyal and cut corners and, well, you get the idea.

They always seem amazed at the success of companies like Costco and Ben and Jerry’s, which insist that their workers should be taken care of above the minimum.

We’ve become a nation that as a whole binds the mouths of our kine. We eat our seed corn and bind the mouths, refusing to make major investments in education and infrastructure and anything else that doesn’t give immediate benefit “to me”. Fighting every penny of tax because it’s going to some “undeserving sod”. There’s actually some underlying cause here – most of those fighting for their pennies are doing so because their mouths have been bound.

Sooner or later one of three things happen when you bind the mouths of your kine – when you cut and cut and cut to the bone while YOU keep all the fat and lean. First, you go out of business. Other businesses (and nations) surpass you because their kine do better. Second, your kine go mad. They know what they need (in your eyes want), they know where it is, and they insist on getting it. Since “where it is” is in YOUR hands and on YOUR table, you get trampled. Yes, at the national level it’s called a revolution. Third, you realize these are the only two outcomes – though you may put it off for a while – and unbind the mouths.

And yet the constant word is “cuts”. When will they learn that what’s being cut is, in the long run, their own throats?

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s