Home » Blog » Support Services » Government » Don’t Beg for Bailouts

Don’t Beg for Bailouts

posted in: Government 0

Recessions are part of economic cycles that inevitably follow periods of growth. Though recessions appear frequently, only some of them are severe. Whenever severe recessions occur, weak and leveraged businesses collapse. This causes economic turmoil that ripples through the country and the whole world in these times of globalised commerce. Supply chains collapse and large scale loan defaults are seen. Workers lose their jobs in droves which affects consumption that in turn pulls other industries into the downward spiral. There is pain and suffering all around.

Economic cycles of boom and bust have been well known for more than a hundred years. The havoc caused by the World Wars, the Great Depression and the Great Recession have been well documented. While booms and busts can be anticipated only their magnitude and duration are unpredictable. Hence it stands to reason that business owners and corporate promoters must be ready to face them at short notice. Focusing only on growth irrespective of cost can take a business to the top of the market in good times. But such firms are the first to crash at the smallest hint of a recession.

The good times are ideal to focus on stability and recession proofing our business. Conserving cash and focusing on creating customer loyalty form the first line of defence. Building a competent and committed team of employees adds further protection. Working closely with suppliers and other stakeholders like the local community, national regulators and industry lobbies helps us strengthen our defences further. If required and possible we can insure against unforeseen losses and adversities such as market collapse and other economic disruptions. If we are alert and diligent we will be able to protect our business against all eventualities. When situations warrant we can also liquidate it without extraordinary losses to any of the stakeholders.

When a recession does hit, like the present pandemic, it is our top priority to protect our employees who are our most critical resources. By breaking down the wall between the top managers and employees, any business can prudently share the available resources to ensure that none lose their jobs or face deep pay cuts below living wages. If we had treated our customers well during the good times, they have no reason to walk out now. We are able to conserve our market share which enables us to keep our supply chain humming. This will ensure that we are able to service our limited debts and thus avert forced bankruptcy. If, despite all our efforts we are forced to default on debt or our market collapses beyond redemption, we can allow our company to go under, while ensuring that almost all of our debts are paid off. As we will certainly possess considerable goodwill in the market and have a ready team of employees we can start again afresh.

But in the present times of unbridled greed, the good times are used to bloat the wealth of the shareholders and top managers. When the going gets tough, the businesses go to the governments with begging bowls. They attempt covert blackmail by furloughing and laying off employees even while they pay out dividends in millions and take advantage of stock market dips to allot options at attractive prices to their managers. The bureaucrats and politicians at the helm rarely see through this deception and readily oblige with taxpayers’ money (after all it is not their own money!) in the name of stimulus. No wonder the more they stimulate, the more the stock markets rise!

 

 

Born in the rich culture of South India and educated in English, I have been exposed to two opposing world views enabling me to achieve synergy and realize true harmony. I belong to linguistic community “Saurashtra” who were silk weavers patronised by kings of yore. Our ancestors are said to have migrated from Western part of India to Tamil Nadu in the South several centuries ago. Growing up in the country as India underwent its pangs of Westernisation, I was able to synthesise the self oriented Western perspective with the community oriented native one to arrive at a wholesome concept of self after considerable efforts and experimentation. My forthcoming book “Searching for Self – In Pursuit of Inner Peace” is the culmination of this labour.

hari.krv@gmail.com

Coimbatore, India

 

 

Facebooktwitterredditpinterestlinkedinmail