Saturday, October 4, 2008

If Harper was running a corporation, he would have been fired

After some delay, I've finally begun the process of importing the notes from my old blog into this one, in reverse chronological order. Given limits on how many I can do in a day, I will be somewhat limited in my new posts for a while here. However, I will comment on what my colleague Danielle Takacs wrote today and try to put it more bluntly:

Suppose you were the Chief Executive Officer of a $200 billion per year corporation that was running a loss for years and on the verge of bankruptcy. You finally got fed and fired the Chief Financial Officer responsible for all those losses.

You then put in a new CFO who had previously had a record of irresponsible spending but said they had had a change of heart and intended for a change on running the business like a business. They did: They cut out the fat and eventually got a rate of return of about 6% per year every year for about 10 years straight, even during rough times. And they actually made a point of working with suppliers and made sure the suppliers worked with each other to ensure efficiency.

For various reasons, that CFO then left the field. You then brought in someone even more radical than the team responsible for the years of losses, whose first act was to cut off some key reliable revenue sources and reduced that return to next to zero. They refuse to sit down with the many suppliers that ensure the long term sustainability of the company. More important, they operated in secret so you couldn't verify if their numbers were even plausible; if you questioned them they accused you of disloyalty to the company; and finally came up with the whopper, "Our fundamentals are strong. And if you're thinking about new ideas to generate revenues, forget it -- it'll destroy the company."

What would you do? Damn right: You'd fire the guy who brought you back to the brink and get someone who knew how to balance a sheet.

That's the choice in this election: A Conservative government who has spent beyond its means and cut taxes to make sure there is eventually a deficit on purpose and pretends the provincial and territorial premiers don't even exist or a Liberal team who offers a fresh approach to organizing our economy in a prudent manner and will actually reach out to the premiers. If Harper was running a Fortune 500 company like he has Canada, he would have been fired long ago. The only difference is that he would have walked away with a $200 million golden parachute courtesy of the company's employees and shareholders.

If Harper wants the election to be about who can run an economy, he's proven he can't when times are good, let alone when times are bad. At least the Liberals managed to balance the budget even after 9/11 -- and those months were quite uncertain, for those who remember.

So what gives Harper the gall to say that he has a steady hand in unsteady times? The facts are plain -- he can't be bothered to sit down with the banks, the financial superintendents, or even the premiers; and he lashes out at Dion for wanting to do so. Why even have these regulators? Why even have provinces?

The auto companies made their own steel decades ago but stopped when they realized it was less expensive to rely on outside suppliers. Even the best CEOs today regularly bring outside advisors, including those with contrarian opinions, to shape their planning. Harper thinks he has the wisdom of Plato, the common sense of Socrates and the strength of Atlas. None of the other four leaders are that conceited.

Taking responsibility sometimes means asking for help. Harper, seemingly, only wants to take advice from those who agree with him. That's no way to run a company and it sure isn't a way to run an entire country. This election is basically a review of his job application for CFO, and by the simplest of measures he should be fired.

But that's just my opinion, I suppose.

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3 comments:

Anonymous said...

What a silly comparison! A government is not a corporation.

A government realizes surpluses; not profits. These surpluses represent the collection of too much taxes; a balanced budget is the goal.

A corporation generates revenue by incurring expenses. A government collects revenue in order to make expenditures.

Is Stephane Dion helping you with these fundamental economics?

JC Kelan

BlastFurnace said...

Actually, I have held these views long before most Canadians heard of Stéphane Dion -- or even Paul Martin Jr for that matter.

Government should of course serve the people and do things in the public interest, but there's no reason why we the people can't demand value for money. And surpluses should go first and foremost to paying off accumulated DEBT so that interest charges are lowered. It is from those reduced interest charges, that lower taxes can be produced.

Of COURSE government, at all levels, should be run like a business. Maybe I haven't made myself clear enough before in my entries, so I'll state it again: I may be a social liberal on most issues, but I'm also a fiscal conservative.

I don't want to go back to the days when we were paying 33 cents on every dollar just to cover the interest on debt. We're down to about 18 or so but that's still too high -- that's money that could be going towards social programs and / or back into our pockets.

Anonymous said...

Nobody wants to go back to those days of huge deficits and debt spiralling out of control.

Clearly, you should be supportive of the Conservatives for reducing the federal debt by about $36 billion so far. We will likely see another $3 billion shaved off this fiscal year.

This would not happen under Liberal governments and programs. Martin was set to ramp up expenditures signficantly - eating away at the surpluses by increased spending rather than tax decreases. He lost his focus on the debt repayment ... his balanced approach.

Dion has a platform that includes $12 billion over 4 years of revenues derived from program savings. $3 billion per year! Governments have had a huge difficulty saving $1 billion per year from these processes. Heck, cut $45 million from a cultural program and you get all kinds of grief!

JC Kelan