Bailing is Failing.
Uncle Sam’s phone is ringing off the hook these days with friends and relatives desperate to be bailed out.
It used to be the only time I heard about someone being bailed out it was a crazy cousin that refused to grow up, getting in trouble with the law again.
Today, those seeking bailouts have gone blue chip: AIG, banks galore, and now GM with Ford soon to follow. As billions flow into these megacorporations with bloated budgets, overly compensated executives, bad assets, nearsighted investments, scarred pasts and uncertain futures, the politicians and moguls wring their hands, exhorting there’s no other choice. They say if these giants are allowed to face the consequences of their actions, millions more will pay the price. Sounds like financial fearmongering to me.
It seems like we’re paying the price anyway. Except by bailing out one failed corporation after another, we are also extending a failed policy of zero accountability in our nation. When a distant cousin needs to get bailed out, he will usually have to stand for trial. He may have to do some hard time or community service. And he’ll definitely have to hang his head lower than usual at the next family reunion. But what about these corporate behemoths roving the halls of Washington with their hands outstretched before heading back to their limos and private jets? What will their comeuppance be and when will it be served? And if we keep bailing them out, what message are we sending to all businesses and entrepreneurs? That it’s okay to not prepare for the future and suddenly find yourself with endless square miles of parking lots littered with new cars no one wants to buy or drive? That it’s all right to create complicated financial instruments nobody understands and get rich gambling on them only to walk away scot-free when your luck sours? I’m sorry, but bailing these folks out is as risky as putting good money down on springing that wily cousin out in hopes he’ll suddenly have an epiphany, reform and become a Boy Scout.
Risk is a concept everyone should focus on as we hear the growing chorus of desperation. As an entrepreneur, I’ve grown a thriving multimillion-dollar company over 13 years. But the banks have always seen me and my company as too risky to lend money too. Maybe it was the late payments on my Harvard student loans, the lack of sufficient collateral, or the unpredictability of my industry. Faced with a lack of options, I did what all successful entrepreneurs figure out how to do: survived without the safety net of endless lines of credit, creating a business lean and profitable enough to weather challenging times and finance its own growth. Novel concepts for highly compensated Fortune 500 executives with their sky-high bonuses tagged to short-term performance goals and their golden parachutes rigged for when the plane crashes over the long haul. Frankly, as a taxpayer it’s my turn to tell the banks and giants, they’re simply not a good risk.
In real life, a bailout is a short-term solution that hinges on accountability and risk. If the suspect is too risky, he’s held without bail. In the end, the alleged criminal must face the judge and jury. The bail money is returned to the bondsman minus a fee. And the suspect is either found guilty and convicted or acquitted. But the problem with the scenario our country is facing is we’re only talking about bailouts, not long-term solutions, and accountability has taken a recess. What if AIG is guilty of doing bad business? What if GM deserves to go broke because it didn’t evolve? What if banks shouldn’t lend money they don’t have? Accountability has long been lacking in our nation, from our politics to our economy. This November America sent a message that brought accountability to the failed policies of the Republican administration. Now it’s time to send a strong message to Corporate America too. Face the consequences of your actions. Join the rest of us – entrepreneurs, homeowners with piling mortgage and credit cards bills, plummeting credit scores and faster falling credit limits – in feeling the pressure of having to figure a way out of your mess back to productivity, competitiveness and profitability.
It’s time to stop bailing, roll up our sleeves, and do what we do best when we’re hungry, lean and have our backs against the wall: innovate, achieve, progress. Do or die. Create a new tomorrow free from the burdens of dinosaurs and charlatans but rather driven by visionary, forward-thinking businesspeople willing to not only take risks but also be accountable for both the rewards and setbacks that come with the territory.
I say we start using a corporate Caller ID mechanism for this bailout hysteria and filter these leeches out just like we do those crazy cousins. Need a bailout again? Sorry, not home, I’m out working for a living because there’s no one waiting to catch me when I fall.
