The Santa Claus Syndrome: Where Things Come From

Anvils for Drowning Men

This week our new President issued a memorandum to the EPA director to consider giving California and some other states a waiver under the Clean Air Act so that they can impose their own, more stringent, emission standards on new cars sold in their states.  Sounds pretty innocent so far.  But these states seem to want to up the ante quite a bit. 

As an accountant, I started thinking of costs.  If they knew how to do all this and had the technology ready, they probably would have already done it.  Some efficiency improvements would certainly be a benefit but this must be measured by what is actually possible.  They could just quit making the larger cars people like to buy and offer only their smallest models.  But they don’t make much on them and if they have to increase the price of the small cars to pay for new technology, this deal will sink them.

Of course WE could just quit buying big cars and only buy the little ones they already make but apparently that isn’t what we want either.

Putting a burden to develop new technology on companies that are already broke risks disaster for the industry, like throwing anvils to drowning men.  With this burden hanging over them, raising funds in capital or credit markets will be impossible so the government will be hooked into continuing to loan them money.  No commercial lender is going to consider giving them credit while they have a vision of the car companies gurgling to the bottom, lashed to the EPA anvil. There was already a government program to fund some of this technology development but it will need expanding, by a lot.

These are the same drowning men we just gave billions to so they can stay in business until the economy perks up.  Of course these are also the same drowning men who arrived in Washington on private jets, hat in hand, to ask for help. So we, the taxpayers, are invested either as creditors or stockholders.  So we need to think responsibly.  Forcing burdens on others that they have to pay is a lot more fun than a situation where we end up with the bill.

Toyota will probably be able to survive the new regulations so we won’t be completely without cars.  But our new president needs to look a little further down the road before the final version of this ruling comes out.  All of these benefits have to come from somewhere.

 

 

Wronger of Wrongs

Two wrongs don’t make a right but this time they did make a presidential contest.  If qualifications were required, Obama and McCain would not have been on the menu.  The crucial qualification both lacked was executive experience.  In fact, this would apply to the VP candidates as well as H. Clinton.  If I were hiring for a CEO job like this and received resumes from this group, I would have sent all five back with a note to them to get a job running something a little smaller than the largest organization in the world for ten years or so and then resubmit with their results.

You are probably thinking, “Bush had plenty of executive experience and he didn’t work out so well.”  Executive experience should be a MINIMUM qualification, not the only one. 

There are two crucial elements in the executive experience issue.  One:  THEY learn from experience.  What happens when they make a decision and it doesn’t work out?  What to do then?  And Two:  WE get to look at how they did all this.  No rational recruiter would hire someone for a top executive job who had no track record as an executive.  No trainees at the top!!

When your career is mostly legislative, you can go around saying you voted against things before you voted for them.  This is a lot different from being responsible for results and for having to balance a budget. You can just keep voting to spend more and not care where it comes from.

Now that Obama is naming the leaders of his financial rescue plan, there is applause all around about the fact that he has picked highly experienced, knowledgeable and respectable candidates.  We should have done the same for the presidency.

What I was hoping for in the primaries was that the Republicans would nominate Romney and the Democrats would nominate Bill Richardson.  Both have track records of competence and accomplishment.  Then we could sort out the politics.

Now that Obama has won, we have to see whether he will find some economic wizard to help him figure things out.  As we know, he doesn’t have any particular skill in this area.  Although McCain admitted that economics was pretty much of a mystery to him, I don’t think Obama is much farther ahead. 

So out of the two wrong answers we picked the one who was a bit more wrong.  All we can do now is hope for the best and keep sending him cards and letters pointing him in the right direction.  So when we get another chance at this in four years, let’s remember where to start looking.

 

Where's Santa?

Santa Claus Syndrome:  The idea that there is a fat guy in a red suit somewhere who should be paying our bills.  (There isn’t.)  Others may use a different definition but this is mine

Much of what will appear in this blog is based on my book “The Santa Claus Syndrome:  Where Things Come From.”  Of course the answer is that things don’t come from a fat guy in a red suit.  I am currently shopping for a publisher for the book.

 

One thing CPA’s do is remind people that two plus two is four even when others think that it should be five or six or even ten.  You have to start out with clear thinking if you are going to come up with a rational conclusion and that’s what CPA’s specialize in: clear thinking.