I often think about the tech industry and how I *never* hear stories of them needing a bailout. I recently read that Apple has so much cash on hand, and lean operations, that the company could last for more than a year without moving. Literally, just sit and drink coffee and they’re good for 12 months, all 100,000 employees.
I think this goes back to 2000, when the DotCom Crash happened. No tech company was bailed out back then. No stimulus was given. The tech industry was largely left on its own. People were wiped out! Businesses lost everything! The bad managers took a risk and learned from it or disappeared.
They were forced to find new leaders and recreate. That is the difference between them and many of the corporations who are on the verge of being bailed out for a second time. Between 2008 and now, irregardless of why, what we’ve found is that once again, many companies took out credit card bills not even a 17-year old could accomplish with an unlimited AmEx card. At a certain point, pandemic or not, it’s just reckless.
Watching companies fail is not fun. It’s sad. Failure, however, is an essential component to progress. It’s what weeds out bad actors or bad decision makers. It’s also what opens doors for those who actually survived. If you failed, move aside, and if you succeeded, you move up.
Risk and reward is what all great achievements are founded on. Someone, somewhere, risked their time, money, and effort to succeed or potentially fail. What I’ve come to realize, however, is that we have a generation of leaders who are no longer interested in what you’ve risked or how you’ve failed, but, instead how you can get bailed out. The leaders of today have paid themselves 300x, 400x, and I’m not joking, sometimes 1000x their average worker salary all while keeping no cash on their company’s balance sheet for a rainy day. Meaning, what we’ve done is bailout a group of leaders two different times for the exact same reason: no cash, huge debt, and enormous leverage. At a certain point, someone has to make a stance: you can’t have both, free market salaries and constant bailouts. You must pick one.
Before you jump on me for sounding insensitive to a global slowdown due to a little virus we will never see with the naked eye, let me direct your attention to why I believe we are in this position again: we keep bailing the same people out, and by keeping them in power, we enable the same bad habits to go on. That’s what this post is really about, getting rid of bad leadership, bad banks, and bad corporations no matter the reason. No one is allowed to take risk without any downside. In 2008, we messed with this almighty equation and it’s never truly gone away. We removed risk for a small group of people and we gave it to everyone else. It’s why we still have no real wage growth for everyday Americans and massive, absurd, megalomaniac wealth at the very top. You can’t kill Risk and Reward without consequences.
A gray haired historian with round spectacles picks up his head and says: “Why yes my good sir, America was never founded or meant to be a place where a small number of people get to take risk and have no downside. Actually, it was built on quite the opposite. Free to succeed and free to fail.”
Today, I am all for bailing out the small businesses, the underdogs, the very thing America was founded on. They got burned in 2008 at the expense of big banks and they can’t get burned again. Someone recently calculated that if we do $6 trillion in stimulus, we could actually send $45,000 to each household. That’s where the bailout should go. We should send no more money into the black hole that is soulless corporations where companies are run so poorly the CEO has more cash in his personal bank account than on the company’s balance sheet. I have no friends and no family members who would ever run their household the same way our current generation of leaders run their companies.
I like failure. I have been through it and I have learned to grow from it. I know of no great people who have never failed. The best people, the absolute leaders who you want to be friends with, have failed horribly, learned from that, and made their way out better than before. Redemption is beautiful.
Before I conclude my lovely rant, I would like to point out that a *RECORD* number of CEOs quit, miraculously, right before this all started in January and February. They knew, and they ran, but of course they lined their pockets first. Their only downside today is finding out their favorite restaurant is out of wagyu steak. They need no excuses. No one needs to defend them any longer. These people have raided America for enough money and until it stops, the bailouts will go on at the expense of everyone else, and the future will continue to be socialism for the top and free markets for everyone else.
Thanks for reading.