Death spiral: Who’s surprised?
Jan 29, 2013 | 2004 views | 0 0 comments | 24 24 recommendations | email to a friend | print
The business magazine Forbes published in November a list of what investment strategies editor Bill Baldwin called “death spiral” states.

Those would be U.S. states that have more “takers,” people who obtain their livelihood from the government, than “makers,” people who earn a living through legal private employment.

The upshot of the article was that, in Baldwin’s opinion, those 11 states represent poor options for investors. Baldwin discourages making investments in private business operating within those states and buying bonds offered by those states.

Kentucky made the dubious list, along with New Mexico, Mississippi, California, Alabama, Maine, New York, South Carolina, Illinois, Hawaii and Ohio.

Forbes offered the article in the vein of financial advice, the kind anyone might get from any broker or advisor. But it has obvious political overtones and ramifications.

Depending on the leanings, prejudices and preferences of the individual, a number of hairs can be split in debating the issues raised by Forbes.

One that deserves scrutiny, perhaps, is the fact that the formula used by the magazine to determine the numbers of “takers” and “makers” ranked government employees among the “takers,” right along with welfare recipients. It includes those who are “on the dole, or on the payroll,” according to Baldwin.

Maybe that’s not quite fair. Count the many government employees, from various skilled and unskilled blue-collar workers to the likes of President Obama or Gov. Steve Beshear, as “makers” instead of “takers,” and the status of some of those states, perhaps all of them, might be altered.

On the other hand, it’s ingrained in our culture that government tends to overstaff itself. Jokes such as the one that begins with the line, “How many federal government employees does it change to change a light bulb?” illustrate the perception among those of us who are not on a local, municipal, state or federal payroll.

From time to time over the history of this country, the number of people employed to perform government functions has grown to surplus. With the exception of some very small satellite offices, most of which have been or are in the process of being eliminated altogether, I’m not sure if it has ever been downsized to the point of jeopardizing the mission.

That’s a particularly salient point at a time when we are at least three decades into a “lean and mean” mentality in the business world. Business success nowadays is predicated on getting 10 people to do all the things 20 used to do, at the labor cost of five.

At some point, in many corporate boardrooms, that attitude has crossed the border separating necessary policy and mean-spirited stinginess. The employees are suffering, the people who receive the goods and services those employees provide are suffering and, in the long run, the health of the business suffers.

In both the public and private sectors, somewhere between the two extremes is reasonable, rational, affordable, sustainable business. It doesn’t give everybody everything they want, nor even everything every individual legitimately deserves or needs. Bad behavior (abuses and excesses) and bad fortune (unforeseen and unavoidable accidents or developments) strain legitimate, real-world capabilities.

Private enterprise is primarily the responsibility of the owners and the employees. The government is everybody’s problem. The so-called “death spiral” states in particular and government at every level are in dire need of some strong medicine.

It’s going to be extremely difficult to get a prescription for some of that medicine. To this point, it has proven impossible.
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