Over the course of the past several weeks I've been mentioning some of the horrendous mistakes made by the current administration, as well as some of the inane things done by Congress to boot. And a parallel to things seen in my professional life dawned on me for the first time this morning, which frankly surprised me, because it's so fundamental I should have noticed it a long time ago.
I've spent most of my business life leasing and financing equipment to businesses of all types. That endeavor involves creating solutions and alternatives generally far more sophisticated than simply lending, such as bank loans, and since significant amounts of funds are usually involved, customer's financial worth is always a major consideration. And, beyond that, accurately assessing the involved risk includes determining how a prospective customer's assets were actually attained.
Makeup of prospect's assets ordinarily derives from combinations of investment and, most importantly, profits attained from successful operation of a business over time. Positive performance tends to increase credibility and demonstrates substance. On the other hand, there are enterprises that may have significant capital, however, if the funds derive significantly from investment, or perhaps some type or other of loan, ability to sustain hasn't yet been proven, greatly increasing a lender's risk.
Now, while the factors listed above may seem quite fundamental, there's another aspect to worthiness that's equally important, but I think far more subtle. Because lender's risks can significantly multiply dependent upon where invested capital comes from. And to that extent, here's the difference.
Established, profitable enterprises are ordinarily comprised of management's that not only may have invested capital but also tend to develop a sense of belonging and pride that bonds them to their businesses in very personal ways. Consequently those lending to them are additionally "insured" by those traits because those types of borrowers usually do whatever they can to protect their enterprise.
On the other hand, though, businesses running on outside investment and loans are dramatically different because although management may have very strong desires to succeed, it's still not the same as having real "skin in the game" which tends to lessen the impact of failure. And, it's certainly easier for people to recover from losing other folks money than it is to part with their own.
And there we have it, since I finally realized that almost all politicians carelessly make those countless stupid decisions simply because they're all playing with other folks money and lives. And while a failed business enterprise may cost an entrepreneurial type significantly, an out of office politico loses practically nothing except some income from the lost job. Therefore, with no real risk and almost nothing at stake regardless of how inane and senseless the legislation, the typical clown in power walks away Scott free from failure without a backward glance.
Now, while the forgoing hopefully illustrates the problem, I frankly don't know at the moment what the solution is. Because in the commercial world that I'm familiar with people who make stupid decisions quickly lose their businesses, jobs and perhaps their future hopes. And maybe, that's the difference between productive people and politicians, since total incompetents in office can get by simply slinging total BS and not ever having to prove anything at all.
That's it for today folks.
Adios
No comments:
Post a Comment