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2011-11-17 11:32:49

I have been waiting for this

A: Last month, I wrote about the demonstrations and the rallies that are appearing throughout the country, the demonstrators themselves call the, “Anti-Capitalist Movement.” They also call themselves, “The 99 percenters,” They label their protests, “Occupy Wall Street,” “Occupy Oakland,” “Occupy this,” and “Occupy that.” If you did not read my article, you can go to our new website, www.theqandatimes.com.There, under the Greater Wichita Area, you can download the entire November ’11 Issue and read it for yourself. My article begins on the front page. Or, you can read the same article by going to the “Writers” link, finding my name and clicking on the article from November ‘11. You will have to read it before the below letter and my answer to the same makes much sense. Within a couple of days after the November ’11 issue was out, I received lots of nice letters, e-mails, phone calls and comments. They all ranged from the positive to the very positive like, “Wow, what an article!” In the mix, I also received the letter below. First, I want to say, this person wrote what was in his heart…and he wrote it well. This should not ever be viewed as a bad deal. And although many today in receipt of such a letter would go off the “deep end” and begin knocking him/her because they have an opposing view to theirs, I want to be among the first to do things differently than they have been done for past several years. This guy is not a left wing “loon.” He is not a rebel rouser. He is not hateful. He has an opinion that differs with mine. That’s it…nothing more. An honest debate about a difference of opinions on issues is what America has needed for the last dozen years. In another recent, article series that I wrote covering 8 months from March ’11 through October ’11 (also on our site) titled, “Our borrowed existence,” I stated at the onset how I thought it may have been Don Rickles who started all of this hate, when he failed to make it as a traditional comedian back in the 40s, and began his career of insult comedy. While he may have been the one that let it be known someone could get away with this type of speech and personal insults, I am now convinced that no event in America’s history did more to polarize the political situation in our country than the “hanging chad” incident that occurred in Florida in the 2000 Presidential Election. In my opinion…ever since this incident…hate has filled the air of every single political discussion there has been. I don’t mean dislike…I mean hate…in every sense of the word. I cannot recall any political discussion in the time since that did not have some element of hate or a personal accusation of some kind. Can you? This isn’t just sad and bad…this is a “cancer” that has spread throughout our country…and unless fixed…it will be the biggest single cause of America’s demise…for it prevents anything from getting accomplished. And we have so many things to accomplish…so quickly. So, when I received this, “from the heart,” well-written letter…I promise you…I was not going to demonize him, or call him a racist, or an idiot, or a “loon.” Instead, I wanted to present his views, then my rebuttal, in a way that all readers could make a decision as to the points they favored and the ones they didn’t. Wouldn’t it be great to go back to this way of handling differences? Isn’t this the way it had been in America since our beginning? But that’s not what is happening now is it? As soon as someone takes a position, they are called a “nut,” a racist, a “loon,” or suffer some other personal attack. From a political standpoint, it is the most sickening thing I witness today. His letter… Charlie I had to write after reading your Anti-capitalist article. I really liked your description of how a business starts the taxes that get paid, etc. Having been a lifelong entrepreneur with my wife, your article hits very close to home. We have started and sold several businesses over the past 25 years and are currently growing our newest business. I think you miss the whole 99% movement and the reasoning for it. It is by no means anti-capitalist as you try to label it. I think it is much more where did capitalism go wrong? When did owning and operating a business become solely about making money at any cost. I have always lamented companies that will pay someone minimum wage to perform the work and hire someone at the top to make thousands of dollars an hour. What happened to the great entrepreneurs? The ones who understand that owning and operating a business is helping society as a whole. Yes one starts and runs a business in hopes of making a profit. But a good business owner rewards their employees by sharing when a business is doing well, by paying as much as possible to each and every worker while still maintaining a safe profit margin. A good business owner does not get too greedy and keep every penny they can while paying as little as possible to their employees simply because they can. A good business owner understands that you must contribute to society and community as a whole in order to keep society from falling apart. Because when that happens businesses and society lose. Take your story as a case study of John and Mary and let me try to demonstrate what the protesters are protesting. John and Mary started their bakery. They are having success selling their pies to local area restaurants. They have found that they can hire people to do the work for $7 an hour and no benefits so that is what they do. They discover by doing this they can pay themselves $25 an hour for work and still show a profit of $250,000 dollars a year on the original investment of $100,000. Very nice return! Other businesses follow their lead and start paying people less in an effort to make more profits. Then the strangest thing happens. Several of the restaurants in the area close due to not enough customers or as we call it a downturn in the economy. This forces them as well as some other businesses that have followed their model to have to lay off employees. Strangest thing happens...even more restaurants in the area as well as other types of businesses begin to lose customer base and are forced to close or lay off employees. Of course with each layoff and closing the market continues to shrink because the people who are the customer base no longer have any money to spend. In worst case scenario the bakery is eventually forced to close also. Now John and Mary are still fine because for the past 10 years the business was doing well they were making $250,000 a year profit plus their salaries of $25 and hour each and have become comfortably wealthy. Now let’s look at the exact same example with what I call a good business owner. Dave and Sally started the same bakery in a different community. They however decided to share the success with the people that work for them. Instead of $7 dollars and hour they paid $10 and hour to start. Granted they themselves were only working for $18 an hour instead of $25 that John and Mary were making. Also at the end of the year they only had a $100,000 profit as compared to $250,000. Out of that $100,000 profit they gave $25,000 of it to their employees. Other business in the community began to follow this same business model. Several new businesses began to open in the area because the average worker there had a little disposable income. Since the average person had some extra money the restaurant business was booming allowing Dave and Sally to expand and hire even more workers. Now 10 years down the road Dave and Sally are still doing well. The business has grown beyond their biggest dreams. Their community is thriving and a nice place to live. A hotbed of entrepreneurial activity because their workers along with others had been able to set aside enough money to start their own businesses and follow the great example of Dave and Sally. Somehow I do not think of Dave and Sally as anti-capitalist. I think of them as the 99%, people who understand it is not all about profit. Benjamin Franklin said it well, “A business that makes nothing but money is not a good business at all.” If you come by my business (name of his business), you will see his quote on our wall reminding us every day that using capitalism to run a society works great until too much greed causes it to fall apart. Thanks for taking time to read my take on what I think the 99 percenters are all about and that is why it took hold worldwide and not just here. They are anti greed not anti-capitalist. Staying at the Hotel Old Town brought this to light for me. When looking at old pictures of business in the hotel you see employees posing proudly along with the top staff or owners. When you see pictures of modern businesses you will most often see them depicted by pictures of the CEO or owner. Seeing this just helped to confirm my belief in what has led us to where we are to today. Too much of the money is in the hands of too few leads to a poor economy. It always has and always will. I think you would be a fun person to meet sometime. Thanks, M G, Wichita My response… Thank you M G, my good friend, for your letter. I can appreciate your points. Please allow me to make some counterpoints for your consideration. 1. You state that I was trying to label this the “Anti-Capitalist Movement.” Sir, the people involved “hung the shingle” on these movements themselves. I only repeated it and the other terms they have used, to identify who they were. And it took them 3 weeks to come up with this label. No one, none of them, or even the mainstream media knew what to call or label them initially. 2. With all due respects, may I ask you to re-read my article. Never did I say being in business is all about making money at any cost. If that were true, then why not start a chain of businesses that rob convenience stores? Peter Drucker, the late industrialist, summed it up best for me. “The only reason to be in business is to create a customer profitably.” If you are creating customers, you are providing for the future of your business. You are providing for the future and security of your employees. You are going to be able to expand…and create more jobs. If there is any other motive you have in operating a business other than to create customers profitably, you’re either in a hobby or you are on your way out of business. While I am publisher of this paper and have been in media as an owner, manager and operator for more than 40 years, the talent of marketing for and consulting with businesses is the talent and skill I feel God has blessed me with more than anything else. I can tell you from the hundreds of businesses I have worked with across this country, I cannot name one that has continued past its “angel” money, “venture capital” money, or the startup loan from the bank…that is still in business, if they had a different motive than that of creating customers profitably as their primary objective. 3. You ask rhetorically, “What happened to the great entrepreneurs?” My good friend, are you talking about people like Benjamin Franklin? Thomas Edison? Henry Ford? John D. Rockefeller? Frank and Dan Carney? Frank Barton and Tom Devlin? The Koch brothers? These are people who spotted opportunities and trends, and “holes in a market,” then used their own money, or other peoples’ money, or institutional money to concentrate their force, narrow their front and pursue to provide a product or service to satisfy the need they identified. Their motives were not to be “paying as much as possible to each and every worker while still maintaining a safe profit margin.” They, like any astute businessperson, know what the average rate for labor is in their area for using the skill sets that are required. They have to be able to attract good employees. They do so with higher wages, more benefits, better working conditions, etc., than the competition; but paying them as much as possible while still maintaining a safe profit margin was and is never at the top of their plan for any of them. Fran Jabara, well known and respected throughout the Midwest, has taught entrepreneurism for decades. Perhaps we should ask him. Since he does what he does for a living…he must know more than us…or at least, I’ve always felt that people who do something for a living know more on the subject than people who do not. Every marketer and business consultant I have ever known or listened to professes that a new, for-profit business have the same protocol. They first find the “hole” in the market. They then decide whether or not they can fill that “hole” with a product or service that enough consumers want, that no one else provides…and/or whether they can fill that “hole” with a product or service enough consumers want, that others may seemingly provide, but not at their low of a price. It is always that qualitative and/or qualitative marketing edge that spells success for any business. Once they get this part figured out, they prepare a business plan. They use the plan to justify spending their own money, their own credit line, that of stockholders, investors, or “angel” or “venture capital” money to underwrite the capitalized and operational expenses that will be required. Once operations begin, they must live up to that business plan through controlling expenses and maximizing income. I have never seen, assisted or consulted a for-profit business plan that is based upon how much society is bettered. Each is always based upon the likelihood of producing a profit given a well thought out given set of projected sales and expenses relative to filling the “hole” in the market they identified. 4. My good friend, you make quite a few generalizations as you make your points, such as, “A good business owner does not get too greedy and keep every penny they can while paying as little as possible to their employees simply because they can. A good business owner understands that you must contribute to society and community as a whole in order to keep society from falling apart, because when that happens businesses and society lose.” Respectfully, in most cases sir, generalizations cause credibility to go “south.” I know business owners who do as you say, but they are no longer business owners. They are former business owners. The good business owner does all that he/she can to first “stay in the game” if things are bad, until better market and economic conditions prevail, or all that he/she can do to perpetuate and propagate his/her business in better times. I am sorry, but I respectfully disagree with you that their primary thought should be the betterment of society. It has to be survival first, then growth second. 5. Sir, all business owners are not greedy. All bankers are not greedy. All people on Wall Street are not greedy. Greed is one of the seven deadly sins. We both know it’s out there and has been for as long as man has existed, but protesters are throwing everyone into the same “pot.” I would think that protesting makes sense when the protesters are protesting one issue that an entire entity or group has taken the opposite position. Like when a company fails to meet the union’s demand, the employees strike and protest the company’s position. To hold demonstrations for a few however, that are “out of bounds,” is like a teacher taking it out on the whole class of twenty students for three of them who failed to do their homework. My opinion sir is that the protest loses its credibility when it is spread across an entire segment, when that entire segment is not guilty. 6. I don’t know where you got that John and Mary were paying themselves $25 per hour. I have examined what I wrote a dozen times. They each took a monthly salary of $2,500 per month. They each, like most owners, put in many more than 40 hours per week, but they each take a salary instead of an hourly wage. Most business owners I have consulted know that there are 2,080 hours in a year of regular time on a 40 hour work week (52 weeks x 40). $2,500 per month works out to $30,000 per year. $30,000 divided by 2,080 hours is $14.42 per hour. And while we’re on the math side of things my good friend, one of the caveats I included was that there were Federal Withholding Taxes paid by J & M of $3,500 for each of 6 employees. As a business owner, I’m sure you know, this amount of withholding would be the current tax law’s 15% rate. $3,500 divided by .15 would be a gross income of $23,333.00 per year, or $11.22 per hour for 2,080 hours per year. $11.22 per hour is not minimum wage. Further, being an owner or co-owner of several businesses, I don’t see it being “out of bounds” for owners to make $14.42 per hour and the employees making $11.22 per hour. Frankly, I would very much like to be making more than my employees in any business that I own and operate. I do not. I have always had employees making more than I…even though I put in as much as 60% more hours each week than any of them! But…as you know…that is the way it is for business owners. 7. I echo the above paragraph as a counterpoint to your quote on Benjamin Franklin. I do agree sir, that too much of anything is not good. But you are referring to greed. The above paragraph and the counters to your points surely are not greedy, are they sir? In summary, I agree with you that it is “out of bounds” for some CEOs to make millions in bonuses, stock options, salaries and perks that work out to thousands of dollars per hour while those on the front line make wages in the one or two digits per hour. Each should be rewarded in accordance with what he/she brings to the table. The more responsibility, the more accountability, the more likely one is to get terminated if he/she cannot do or does not do the job. As much as you may not like to hear it sir, top level management and administration is based upon supply and demand. There are a whole lot more people who can run a punch press than can be a CEO of a large company. This is not unkind or untruthful. This is a fact. Since there is a limited number of people who can qualify for the position, these people are more in demand. This makes their compensation package go up. In the recent past, company boards have had to increase the ante to pay these people even when they don’t perform. In my opinion sir, this is wrong and it should be illegal. Further, any board member of a company that votes for something like this or something that is hidden that works like this, should be removed from that seat…again my opinion. I have two “first cousins” to my line of thinking that bear mentioning. The first is why Capital Gains Tax rates are only 15% and Federal Income Tax rates are as high as 35%. Let me tell you. Ordinary income is guaranteed…meaning an hourly wage or a monthly salary is going to come to the recipient irrespective to the earnings of the company. Now if there are not enough company earnings, it may stop due to a layoff or the company shutting down, but all hourly and salary wages are guaranteed as long as the job holder has the job. There is nothing guaranteed about a business becoming or continuing to be successful. 33% of all business fail within two years. Over half fail within 4 years. Most often, someone else’s money is used as it fails. An investor, most often, will break even and get his money back, or “win” only 30% of the time when investing in a business. If he/she is a prudent investor, he/she will set a stop loss so they don’t go so far in the hole that it will take five “wins” from other investments to cover their loss on one. Thus why the business plan and adherence to the same is so important. The lower 15% Capital Gains Tax allows for investment miscues. Taking 15% of the “net” Capital Gains (wins minus loses) is proper. Throughout my life I have invested in everything from “Cowballs” (a baseball cap with a cowboy hat brim) and “Tater Maters,” (a cross between a potato and a tomato), to new types of media and solar cells made outside of a vacuum (when the process first happened back in the 70s). Most years there has been no positive “net,” meaning I am far below the “30% win” number. I took the risk on all of these investments. My employees’ compensation was guaranteed for as long as we were in business. Whether these and the other millions of private and commercial investments turn out to be successful or not, they need to be appreciated, rewarded and not stifled. I would hate to see what our country would look like without them…and the jobs they have created. The next “first cousin” is one in line with your comments…that of professional athletes. I do not believe there is anyone God ever created worth the money that is being paid to many of them. The life that God gave to them is priceless, but the materialistic value placed on their abilities has to be capped. Someday the fans will see the light, that the sponsor, team or the owner isn’t paying them anything…but rather they…the fans…are paying these salaries. They are paying them in the prices that they pay for the products and services they buy that are being advertised on TV during the event. They are paying them for the admission they pay to the event…the hot dogs and the beer they buy…and the apparel’s licensing fees they buy that go back to the league that are distributed among the teams. The same goes for compensation packages well above and beyond the talent supply and demand factors. At some point consumers will figure out these companies and boards aren’t paying any of it. The burden of paying for it is on the purchasers of their products and services. Maybe this should be the only motive of the “occupy” movements talked about earlier. It would sure make more sense than having one that is unlabeled and unfocused, seeded with violence, hate and destruction of property. M G, my good friend, I hope I have countered with some points that make sense for you to consider. Perhaps my original article, your letter and my rebuttal are here not so much so as to convince each other, but rather…as a way to allow the readers to make up their own minds. If they too could rid themselves of generalities in their charges and accusations, and remove personal attacks on each other as they discuss and have an honest debate of the issues, maybe we could get back to what this country was founded upon. If you answer my counterpoints in this article, I will publish them…God willing. Thank you my friend.