Busted, Part One

A while back I asked how come people do not start companies. Inertia and fear were the two main reasons. Inertia comes with a satisfactory situation. Fear has to do with loss. Things have been changing the last year or so, and perhaps will get worse. People may lose their inertia due to their positions becoming unsatisfactory. People may find they’ve lost their jobs anyway, and fear unemployment more than self-employment. In any event, all economic activity starts with dissatisfaction. Your economic activity starts with your dissatisfaction.


I think a small contribution I can make is to address “how to be busted.“ Busted is that temporary place where you cannot cover your financial obligations, a threat to your lifestyle, something any entrepreneur fears. Although the prospect of such a situation may seem dreadful, as one who has been there, let me tell you it is no big deal. In fact it should just be a temporary pause as you take instruction on how the real world works. The fact that you are busted is rather proof you are naive or inexperienced. Sorting it out is the corrective you need before you move onward and upward. You will be busted in the measure you need to learn and grow.

This is addressed to those who will be starting their own companies, and fear failure or are trapped in inertia. But for reasons that will become clear later, I want to take a moment to condemn people on welfare.

Busted is a setback in your life’s work, temporary, and something you fix. Welfare is a lifestyle as well, something one chooses rationally, and weighing the options, accepts it and has no interest in changing it. The attitude is wanting something-for-nothing, and the result is a downward spiral ending in disaster.

Now the classic example of this “something-for-nothing” are the managers of large corporations who ally with the government to protect their businesses, live off of subsidies paid for by workers and empire, and earn their money with cost-plus government contracts or otherwise subsidized or protected in the marketplace. The face of welfare in the United States is the white male CEO, and the corporations they captain. The manufacturers, the bankers, the agribusiness, the military.

Of course there is also the welfare directed at the 17 year old black woman with 2 children, and she too has chosen something for nothing, and suffers for her greed. But the money directed at such people is negligible compared to what is paid to what General Eisenhower called the military-industrial complex, and its educational version, and other such combinations. You might also take into consideration the putative 12 million illegal aliens, but with the taxes they pay, the work they contribute, and social security they will never collect, their impact in welfare transfer payments is probably negligible. But if you add up all of these welfare transfer payments to the poverty queens on the welfare plantations, the illegal aliens, and all such small time indolent, the money is nothing, a mere rounding error, compared to the money and resources and exemptions directed at big business.

And the differences are not just in size but in kind. Yes, Frito Lay and Coca Cola grew with the welfare state, selling subsidized corn and fat and sodium turned into chips that proved popular with the indolent, and contributing to the obesity of USA poor. But the cost difference between good food and bad is not much. The poor would still eat, even if not on welfare. But the corporations trade in things we would otherwise never consume, such as an option arm loan, or the incalculably bad choice to invade Iraq. We may have 3 generations on food stamps, but one candidate promises five generations of war in Iraq. The transportation system in USA is a disaster, and our medicine is brutal. The distortions in the market and consequential malinvestment is incalculable.

The problem with welfare of any sort is it disconnects a human from other humans, it turns the recipient from a contributor to a parasite. We are inclined to assist the halt and the lame and the simple as a matter of course, the charitable impulse will always be with us. But only a government program would transfer wealth and savings from the productive to the able-bodied indolent.

Of course you may say a CEO who pulls down $5 million a year, and has $90 million in stock options,.such as Kerry Killinger at WAMU, is hardly indolent. The welfare mom with 2 kids does not miss a meal, has all the medical care she has time to consume, is denied no entertainments, and pulls her pants on one leg at a time, just like Kerry Killinger. The lifestyle is indolent. Neither is living a productive life, providing a value in the marketplace, and thus living the life their God-given talents would suggest.

But Kerry Killinger is building a 30 million dollar home in Palm Desert, and the welfare mom lives on the tenth floor of a Chicago Housing Authority unit. Again, both have broken with their respective spouses, and chosen to leave their children without an intact family. Both have dubious reputations for their life choices, both are consumed in time and energy with keeping what they’ve got, and hopefully getting more. Even if you disagree with me so far, you can agree the lives of both would be dramatically different without the welfare component.

It may seem tendentious to compare a captain of industry to a welfare mom, but what is the difference between the two? Each has chosen to accept a system in which other peoples wealth is transferred to them. Each makes applications to the government, one for the food stamps, another for a bank charter. Neither would continue without government support. Indeed, presently, what banker is not applying to the government for taxpayer-funded relief?

We may accept that both are in a certain time at a certain place, one the wrong and the other right; the one being a college-educated white male and the other being a school drop-out black female. The one can have a banking charter, the other cannot.

And here is the essential similarity: neither would have what they have without government intervention. Both subscribe to programs.

Without those programs, WAMU would not have gotten huge, Killinger would have done something else, without the leverage to exploit government policy. I understand his reason for leaving his wife was her inability to function in the rarified air of major bank CEO milieu. Without the leverage to enlarge WAMU, he may have stayed a small town banker, without having to dump his wife. He would have known each of his customers. he would be careful with other people’s money.

The welfare gal also has made a bad choice. If she was not offered other peoples’ money, perhaps she would have started a business, and enjoyed the instruction, the education, one necessarily gains from the experience of building ones own business, of serving others rather than being served.

But here is another difference: there are laws that encourage the rich to grow and expand. The laws encourage rich 30 year old whites males to start a bank. At the same time, there are laws to keep poor black women from starting a business braiding hair. The CEO grasps at what is not his, the welfare mom is stymied in her ambitions. The difference is huge.

There is an objective good that results from self-employment, that cannot be had working in the command and control market. The essential harm in welfare is the recipient is not responding to customers, is not using his talents to serve others, to do good while doing well. All welfare recipients deny us the good of their natural contributions, preferring instead to live off of other peoples’ money. Given our time and place in history, we have a contribution to make, and it is our work and our lifestyle.

Even we self-employed are effected by the malinvestment that has permeated every fiber of the lives we live. The difference is given our circumstances, we bring the portion with which we happen to be blest to bear on the situation we find ourselves. And do good while doing well.

Inflation is monetary event, that is printing too much money. The result is the problem of rising prices. The correction is to quit printing too much money.

Welfare is a morality event, that is being greedy. The result is the problem of being busted, failing to contribute, or some combination thereof.. The correction is to quit being greedy. We who find ourselves busted for the same reason, fully intend to change.

With these definitions and premises, I’ll lay out How To Be Busted, and how to get back on track. Perhaps then you will be more encouraged to provide the benefit that only you can offer at this time and place in history.

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