The focus on profits is poisonous: An educational primer for our politicians -- and voters.
Instant gratification! Keep it simple -- no one will read or listen to more than a few lines. Let's get to the basics, which President Obama has not talked about nor which Mitt Romney wants to talk about.
In reviewing business textbooks, business school promotions and corporate reports it is clear that the purpose of a business is to maximize profits for its shareholders, its owners. Others often philosophize that business has as its primary focus to serve its customers and society. However, in today's world of short focus span and high priority on instant gratification, customers that are hard to get are not pursued and the ones that cost more to satisfy, are dropped.
Drucker once said, "Business management must always, in every decision and action, put economic performance first."
He also states that too much focus on profits in an organization, just as too much oxygen in the human body, can be toxic. And today the focus on profits is poisonous.
How to keep that million dollar bonus
In today's economy, profit maximization is for the benefit of not only the shareholders, but for the highly rewarded executives that run the businesses, many will million dollar bonuses. Wall Street demands quick results, not long-term gains. If you are an executive not doing well for a year or two, you will not have a job. So their primary responsibility is short-term profitability so they and their business look good on Wall Street.
For the average American, that simply means if you are in the way of a business profit, you are going to be eliminated. In the insurance business that means, if your could possibly cost the company money, the incentive is to get rid of you or to find a way to charge you a lot of extra money.
What about business on Main Street?
And what does the focus on profitability mean for America's Main Street businesses? What is America for most of us? Do we all want to work for large international companies with thousands of workers? Or would you prefer to work for smaller companies where you can see your contribution and you are more than just a number in a gigantic machine? The American culture was built on local businesses that share a common interest with the local community.
A small business is a small business
And let's be clear. Stop throwing around the word "small business." When used by the Republicans it can mean companies with revenues in the hundreds of millions to a billion dollars. That is not the small business we are talking about or the small business many Americans work for in pursuit of their American Dream.
From the U.S. Census Report, Statistics of U.S. Businesses, 98.2% of the approximate 6 million companies in the U.S. have less than 100 employees and employ over 35% of the American workers. These companies have average sales of just over $1.3 million. That is a small business.
Companies that employ 100 to 500 workers represent just 1.5% of all companies, employ 14.2% of all workers and have average annual sales of over $40 million.
The remaining 0.3%, or 3 out of 1,000, of all American companies employ 50.4% of all workers and have sales of over $1 billion each year. This concentration of sales, workers and power changes how the American culture will evolve. These small groups of powerful and wealthy companies are now treated with individual rights, so you can expect that they will lobby for politicians and legislation that is in their best interest, not the best interest of society or of individuals.
In which community do you want to live?
There is no longer a community of local shop owners with their children participating and living in the community. Local small businesses need to make a profit, just like the big guys, but what choices do they make versus the decisions made by a distant corporate owner in China or some other remote country. Who cares for you and your family?
You need to make a decision. Who will have your best interest in mind and the best interest of the community? Would it be best to support 100 local small businesses whose owners live and work in your community or have 100 international conglomerates that supplies a few stores where everyone goes to buy everything they need. That one business may report to headquarters in some remote city in the U.S., China or another foreign country where the owners can again maximize, or avoid U.S. taxes on their profits. Who knows where? Who cares? It is all impersonal at the moment. Just find the cheapest product at the cheapest price. As business executives like to say, "It's just business, nothing personal."
Many international giants ship clothing into the U.S. made in shops where the workers are paid a few dollars a day at best. Is that what you want to support? Do you want to work for those wages? If not, then why do you shop there and continue to enable these international gigantic robots to control your life?
We are becoming cogs in a gigantic machine, engineered to control the thoughts and decisions of us all through advertising and promotions, to get our money through our purchases, and then, as we lose our jobs and our small businesses, give up our lives and become unwilling consumers to corporate and foreign interests.
The politicians seem to have forgotten the basic economic principles.
Read this carefully.
Which one do you want? What does the American Dream mean to you? You decide! You vote!