Timothy R. Clark: Who really makes the cheese? It's not the government
Utah is a good cheese-making state. By cheese-making, I mean the creation of economic value. Our state government fosters private-sector cheese-makers with a business-friendly environment, reasonable tax burden, balanced budget and overall fiscal responsibility. We're not a rich state, but we're not hostile to cheese-making, as evidenced by our seasonally adjusted unemployment rate of 5. 8 percent — the 10th lowest rate in the nation. Utah knows who really makes the cheese, and it's not the government.
But not everyone knows that, which brings to mind the French in recent days. Last week, they denied Nicolas Sarkozy a second term as the country's president. He was no stand-out leader. But his socialist replacement, Francois Hollande, managed to sell 51 percent of the voting public on the impossible cheese-making dream. He hardly has a mandate, yet he's convinced enough people to believe the French government can somehow make enough cheese to pull France out of its debt and doldrums.
Buckle up. It's going to get worse as the new leader takes the nation on a fantastic journey to the left. He rails against naked capitalism and has promised to restore France's economy. How? Spending his way out of it. For starters, he wants to increase taxes on the rich to 75 percent and add 60,000 new civil servants to the government payroll. So, tax the cheese-makers more and add non-cheese-makers to the payroll. Every nation needs bureaucrats, but they don't make cheese. They eat cheese.
I'm afraid the U.S. federal government is also in profound denial about who really makes the cheese. It's a painful lesson to learn, but governments are not good cheese-makers. At best, they may do a reasonable job of regulating cheese and redistributing cheese. But they are terrible at making cheese.
We get so confused we sometimes think that redistributing cheese is the same thing as making it. So when the economy is in a slump, our politicians want to move the cheese around to stimulate the production of more cheese. Remember, the "cash for clunkers" program. What was that? Move the cheese around and pray it produces more cheese. Seriously?
In business, we say wishing is not a strategy. But that's what many politicians and voters with unbounded faith in government do. We can't seem to help ourselves from falling under the spell of politicians with government-based solutions for cheese-making, or at least fixing the mysterious cheese-making machine.
I grant you that governments should regulate and redistribute some of the cheese, but it should be a light and reasonable burden. I try to teach my kids to learn life's sweet lessons through experience and its bitter ones through observation. When it comes to cheese-making, you would think we could learn our lesson through observation. Consider the cheese-making history of three nations.
Cheese-maker #1: Cuba
Fidel Castro came to power in 1959 as the leader of his own glorious communist revolution. He needed some kind of "ism" to lend credibility to a totalitarian regime that in turn, took responsibility for all cheese-making. I guess it didn't go so well. Check that. It's been an unmitigated disaster. He was a very poor cheese-maker. The CIA World Fact Book lists Cuba's per capital GDP at $9,900. That's not very glorious cheese-making, is it?
Cheese-maker #2: Venezuela
Hugo Chavez is another leader that has led his government into more cheese-making and redistribution. Per capital GDP is $12,000, but 18 percent of that is oil. Outside of oil, the nation's cheese-making is dormant. A lesson we have learned from Venezuela and other oil-rich nations is that oil covers a lot of cheese-making sins. In Venezuela's case in particular, without oil, per capita GDP would be the same as Cuba's. In fact, all of the OPEC nations are poor cheese-makers. Without oil, they would be desperately poor, with the possible exception of Indonesia.
Cheese-maker #3: North Korea
North Korea's government has officially been in the cheese-making business since 1953, when an armistice brought an end to the Korean War. After all that work, the government produces a measly $1,800 in per capita GDP. South Korea understands cheese-making much better and now boasts a per capita GDP of $32,000, 18 times its northern neighbor. I hope the new leader, Kim Jong-un, will bless the nation by getting out of the cheese-making business.
These three examples are a far cry from our domestic cheese-making situation. But that's not the point. The point is they illustrate who really makes the cheese.
Timothy R. Clark is the founder of TRClark LLC, a management consulting and leadership development organization. He is a former two-time CEO and earned a doctorate from Oxford University. Email: firstname.lastname@example.org.
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