This I believe,
I believe that analysts, accountants and greed have destroyed the American dream.
I used to believe that if I was not happy with a product, I would simply not buy any more of it and tell others of my disappointment. Since my worldly influence would prevent others namely my parents, siblings and a few close friends from making the same mistake I had made, the company would quickly see the errors of their ways and correct the problem and produce a new and better product, the world would be a better place and everyone would be happy.
What I am talking about is capitalism at it’s deepest roots. Capitalism is one of the corner stones of the United States of America. Capitalism was once based on the ideals of people helping one another, not by price gouging and profiteering. Lets take the example of the farmer and the blacksmith.
The farmer would go to the blacksmith (who was the last real engineer but that is another story) and describe to him the need for a device. The blacksmith would hammer away over fire and brimstone for hours or days trying to fabricate something that would help the farmer. The farmer would try it out and return a few days or weeks later on his next town run with a report or idea for improvement to the device. The two would work together in a symbiotic relationship that would yield a happy customer and gainful employment for the blacksmith.
Now the blacksmith might make a few more of these devices once he and the farmer worked out the bugs to sell locally to others in the area making some more money from the relationship that developed the first one, or it may have been a one shot deal. Whichever the case the bottom line was that the customers were happy and the blacksmith could put dinner on the table. Enter the accountant.
The accountant, a somewhat educated person with vision, could see the efficiency and ease with which the new device worked and wondered why no one else had ever come up with it. The accountant asked the blacksmith how much time and materials does it take to make one of these wonderful devices? I could make three a day if the miner could provide me with 20 pounds of good ore a day said the blacksmith. Ask your friend the miner if he could provide you with 100 pounds a day said the accountant. But I only need 20 pounds a day said the blacksmith. Ah, but think, said the accountant. We could hire more blacksmiths and make 20 of these a day and get rich selling them to everyone. But it would take more than 100 pounds of ore a day said the blacksmith. Not really said the accountant. If we made them thinner here, and used a simpler hinge there they would work the same and besides everyone would not use them that hard and most of them would hold up. Enter Greed.
The blacksmith only wanted to feed his family before, now he wanted to buy a ranch with the profits the accountant was describing to him. The blacksmith was having trouble sleeping because he became obsessed with the thoughts of all the money he would make. Being of modest means, he needed capital to get started. He described his quandary to a couple of investors passing through who agreed to loan him some startup money at a low interest rate if he could show a profit in six months. Enter the Analyst.
The investors hired an analyst to bird dog the blacksmith’s operation and after 6 months the analyst, accountant and the blacksmith sat down and reviewed the books. They were making and selling more of the devices than they had originally planned, almost showing a profit. The analyst said that they had not met expectations yet and was going to advise the investors to raise the interest rate on the loan if they did not show a profit by next month. In order to meet the analysts’ expectations by the next month the blacksmith worked late every night and even weekends so that his fledgling enterprise would show a profit. On the last night of the month the blacksmith, exhausted, fell over dead of a heart attack at the anvil that he once loved but now loathed. The blacksmiths’ wife knew very little about blacksmithing and the children were too young to do anything to save the business.
When the investors heard about the blacksmiths’ demise they took the device to a large scale foundry that easily turned the device into a casting and mass-produced thousands a week but none were as strong or worked as well as the original one produced by the farmer and blacksmith working together.
You see once our country was based on people working together trying to do the right thing and helping one another. Now our whole economy is based on analysts’ expectations and profit margins. If a company misses the analysts’ expectations or profits are off just a few percentage points huge company value swings of millions of dollars occur due to large investors dumping the stock. The little investor whose’ 401k is laden with index and mutual funds takes a hit all because of some analysts’ expectations and accounting reports. Conversely when reports are good or analysts’ expectations are exceeded large investors jump on the opportunity and make a bundle while the 401k folks get a small tic in their return.
Based on government statistics, 80% of us make less than 50% of the money in this country. That means that Twenty percent of the people make more than 50% of the money in this country. That 20% is considered the large investor. All that 80% of us can do is keep working since it is likely that we will realize much smaller gains than the large investors.
Working longer hours and more days just increases our odds of repeating the cycle of the blacksmith and prevents us from doing the really important things. Raising children (who are the future of this country) to have good values, teaching them to help others, not to take advantage of people and not to lie.
For me, It just keeps getting harder and harder to meet my analysts’ expectations, My conscience that is.
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