Wednesday, 29 April 2009

"To All My Valued Employees..."

Over the pond in America we recently witnessed a remarkable event - the Tea Parties.

Unlike demonstrations on the left, which are heavily organised by professional agitators, these were spontaneous expressions of people's anger at the impoverishment of the nation in general and the next generation in particular by the Obama administration.

Here in Australia, in 2007, our government inherited the most benign economic conditions probably throughout the history of worldwide elections - strong growth, a Future Fund with tens of billions of dollars and ZERO government debt.

How many developed economies had ZERO government debt? The last government had paid of the $100 billion they inherited when they took office in 1996.

The Europeans would give their right arms if they could achieve that outcome rather than be paying billions in interest payments.

Only 18 months later and the Labor government has decided it's OK to run up $200 BILLION in government debt. They've tried stimulating the economy and failed miserably. Economic forecasters are now talking about 8.5% unemployment next year, upping their prediction by 1%. Parenthetically, how many mainstream economists have made even one prediction that has been right in the last 12 months? About none. They all undershoot. Even that supposed bastion of world economic wisdom, the IMF, has been massively downgrading its forecasts as the downturn - conspicuously unpredicted by them - continues.

So we are stuffed. Completely. Which is why Kevin Rudd will go down as the worst PM we've ever had. Who would have thought that someone could take that title from Gough Whitlam?

One employer here in Australia has written to his employees expressing his frustration. It will resonate with every right thinking person regardless of where they live or work:
To All My Valued Employees,

There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges. However, the good news is this: The economy doesn't pose a threat to your job. What does threaten your job, however, is the changing political landscape in this country.

However, let me tell you some little tidbits of fact which might help you decide what is in your best interests.

First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a back story. This back story is often neglected and overshadowed by what you see and hear. Sure, you see me park my Subaru Outback outside. You've seen my big home at last year's Christmas party. I'm sure all these flashy icons of luxury conjure up some idealised thoughts about my life.

However, what you don't see is the back story.

I started this company 28 years ago. At that time, I lived in a 2 bedroom flat for 3 years. My entire living area was converted into an office so I could put forth 100% effort into building a company, which by the way, would eventually employ you.

My diet consisted of baked beans, stew and soup because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a wonky transmission. I didn't have time to go out with women. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business -- hard work, discipline, and sacrifice.

Meanwhile, my friends got jobs. They worked 40 hours a week and made a modest $50,000 a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer clothes.

Instead of hitting the David Jones for the latest hot fashion item, I was trolling through the discount store extracting any clothing item that didn't look like it was birthed in the 70's. My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, my money, and my life into a business with a vision that eventually, some day, I too, will be able to afford these luxuries my friends supposedly had.

So, while you physically arrive at the office at 9am, mentally check in at about noon, and then leave at 5pm, I don't. There is no "off" button for me. When you leave the office, you are done and you have a weekend all to yourself. I unfortunately do not have the freedom. I eat, and breathe this company every minute of the day. There is no rest. There is no weekend.

There is no happy hour. Every day this business is attached to my hip like a 1 year old special-needs child. You, of course, only see the fruits of that garden -- the nice house, the Subaru, the vacations... you never realise the back story and the sacrifices I've made.

Now, the economy is falling apart and I, the guy that made all the right decisions and saved his money, have to bail-out all the people who didn't.
The people that overspent their pay suddenly feel entitled to the same luxuries that I earned and sacrificed a decade of my life for.

Yes, business ownership has its benefits but the price I've paid is steep and not without wounds.

Unfortunately, the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why:

I am being taxed to death and the government thinks I don't pay enough.
I have state taxes. Federal taxes. Property taxes. Sales and use taxes.
Payroll taxes. Workers compensation. Unemployment taxes. Taxes on taxes.
I have to hire a accountant to manage all these taxes and then guess what?
I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time. On Oct 15th, I wrote a cheque to the Australian tax Office for $288,000 for quarterly taxes. You know what my "stimulus" cheque was? Zero. Zip. Zilch.

The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home pregnant with her fourth child waiting for her next welfare cheque?

Obviously, government feels the latter is the economic stimulus of this country.

The fact is, if I deducted (Read: Stole) 50% of your pay you'd quit and you wouldn't work here. I mean, why should you? That's nuts. Who wants to get rewarded only 50% of their hard work? Well, I agree which is why your job is in jeopardy.

Here is what many of you don't understand .... to stimulate the economy you need to stimulate what runs the economy. Had the government suddenly mandated to me that I didn't need to pay taxes, guess what? Instead of depositing that $288,000 into the Canberra black-hole, I would have spent it, hired more employees, and generated substantial economic growth.

My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it now.

When you have a comatose man on the verge of death, you don't defibrillate and shock his thumb thinking that will bring him back to life, do you? Or, do you defibrillate his heart? Business is at the heart of Australia and always has been. To restart it, you must stimulate it, not kill it. But the power brokers in Canberra believe the poor of Australia are the essential drivers of the Australian economic engine. Nothing could be further from the truth and this is the type of change you can keep.

So where am I going with all this? It's quite simple.

If any new taxes are levied on me, or my company, my reaction will be swift and simple. I fire you. I fire your co-workers. You can then plead with the government to pay for your mortgage, your 4WD and your child's future. Frankly, it isn't my problem any more.

Then, I will close this company down, move to another country, and retire. You see, I'm done. I'm done with a country that penalises the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship.

So, if you lose your job, it won't be at the hands of the economy; it will be at the hands of a politicians that swept through this country changed its financial landscape forever. If that happens, you can find me sitting on a beach, retired, and with no employees to worry about....
I started my own business when I was in my early 20s. For over a year I took $100/week in pay, as did my partners. We hired people, quickly growing to double figures. There is no off button when you work for yourself. As he says, you're always on. How are you going to get the next deal? Are you able to make payments you've committed to? Can you actually supply what you've sold. These are issues for all businesses, as cash flow is king and it doesn't matter how well you're doing on paper it's always a trick to manage your debtors ledger tightly.

Kevin Rudd and his pack of ignorant leftists do not understand what makes an economy tick.

It's the entrepreneurship of people like me who built a company from nothing, ran it for a decade and a half and then sold it in order to move on. We created jobs that didn't exist, and would never have existed had we not opened that business. We got no government hand outs, no free kicks and no pat on the back for what we did.

Government debt destroys jobs.

Capiche? Understand? Comprehende?

Government debt destroys jobs.

No wonder the author of that letter is so peeved.

PS - apologies for lack of posts recently but I have been spending all of my time researching another topic and haven't had a chance to blog.

(Nothing Follows)


blogstrop said...

Yes, Jack. Been there, done that.

Anonymous said...

The partial solution is for businesses to fire the Labor voters first. Then they can see what the award system and all this other fuddy-duddy 1900s-era antediluveanisms can do for them.

Fingers crossed for 11% unemployment. The critical point is 11% headline unemployment, because unemployment peaked at 10.9% (as I recall; I might be wrong) in late 1992. So 11% would be the highest level of unemployment since the Depression or so.

Anonymous said...

Terrific post, Jack. I have had my own business since 1989, and a great number of people in many countries have earned a living as a result.

However, I too, am at the point where it is hardly worth the cost for the marginal return.

If I could fire Our Savior, the Great Oafish Lord Obama, I surely would and spare my employees the pain. But since they mostly voted for him (youth being their excuse), it might be best for them to learn how to connect the dots.

That was an interesting letter since mine is a very similar story.



Myrddin Seren said...


Pretty sure that letter doing the rounds started in the USA, and may even be apocryphal; but that doesn't diminish the value of the sentiment.

The question being - does a threatened strike by capitalism and entrepreneurship really resonate with the Anglosphere Powers-That-Be political class and their cheer squads in the bureaucracy, academy and the media ?

You are looking at a group of people who are by-and-large utterly unconvinced at best or diametrically opposed to the market economy at worst.

I fear that in numerous quarters the response could just as easily be 'bring it on - saves us the trouble of dismantling capitalism'.

Very worried by it all.


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