Constitutional Freedom

During the last six months there has been significant turmoil in Greece as the Government comes to terms with their excessive debt load.  It is arguable that the debt load and government crisis is due in large part to the government unions.  Why does a government work force need a union.  Unions were originally established to help the workers defend themselves against excessive demands and poor working conditions.  Unions were very effective during the industrial revolution and could serve a purpose in developing countries such as China and India.  However, they do not serve a valuable purpose in government.  Unless you think that the government is dangerous and will treat their employees unfairly etc.  The irony is, these people are so dependent upon the government that they don’t know what to do now that their government is broke.

So I have a business and accounting background.  I see the government as a necessary part of a business called general & administrative.  On the financial statements this is a set of expenses that is “below the line”.  As such the G&A generally provides support to the overall business, provides services such as accounting and regulatory compliance, but generally does not generate any revenue.  Think of a company such as Microsoft, trying to sell a business the right to use their marketing department, or accounting department.  It just doesn’t make sense.

Now to continue the metaphor, the income generating portion of the business (in Microsoft’s case, the sale of software and hardware) is like the private companies that generate GDP and pay taxes.  This portion of the business is what “brings home the bacon” so to speak.  It makes it possible for the G&A to even exist.  You couldn’t have an accounting department without the income generating portion of the business.

If the income generating portion of the business begins to struggle to earn income because market conditions change, or capital is unavailable etc, the answer isn’t to hire more accountants and lawyers.  If a business were to report that they are growing because despite a loss in revenue they hired more accountants and therefore economic activity is up, that would be ludicrous.  The answer is to trim the business fat, focus on what drives income, and what the competitive advantage is, and then do it.

So backing out of the metaphor, the current situation in our country cannot be fixed by hiring more government workers.  If so we’ll just end up like Greece, bankrupt with no one to pay the taxes.  We need to trim the fat of G&A, focus on what drives true economic activity, and let businesses prosper.

“He shall from time to time give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient; he may, on extraordinary Occasions, convene both Houses, or either of them, and in Case of Disagreement between them, with Respect to the Time of Adjournment, he may adjourn them to such Time as he shall think proper; he shall receive Ambassadors and other public Ministers; he shall take Care that the Laws be faithfully executed, and shall Commission all the Officers of the United States.”

In the above section it is clear that the President does have the authority per the Constitution to “recommend to their Consideration such Measures..”.  Ultimately this becomes a judgment call as to what the definition of recommend is.  Recent administrations have “recommended” entire bills that they have written or crafted.  It seems that the President should encourage congress to consider serious issues and to seek a solution that best serves the interest of the American people.  Oddly enough it might seem that the current administration took this tack with the Health Care overhaul.  The author feels that while the tack may have been technically appropriate, the failure is more in the conclusion reached than in the recommendation.

Other items in this section seem fairly standard and are practices with which the average American is familiar.  The annual state of the union is something that is analyzed and reviewed, where the President list’s his agenda for a year just after saying that the “state of the nation is ’strong’”.  I find that statement ironic considering the list of items they feel need to be corrected.