September 23, 2009


Harmony is the balance of life. All things have balance that when perfectly struck allows for the greatest peace and the greatest prosperity.

I think that it can be agreed that today there is a certain harmony that is missing from our nation. Even now our elected leaders seem to be scrambling to recreate a harmony. But where is it? I don't know. I was taught my whole life to put faith in capitalism. Our leaders don't share this belief. They seem to believe that large companies shouldn't be allowed to fail. They seem to think that success is required once you become so large.

The things that I was taught would claim that large companies like GM, Fanny Mae and Freddie Mac should have the right to fail. In failing they create a vacuum that others can fill and take over. Who is to say that someone else couldn't do the job better.

I think about all the factories that GM owns. I know they have a lot of people employed in them. However I am not concerned too much about the jobs because I think they would ultimately be preserved. I think that if GM were allowed to fail, as they inevitably will if they remain on the path they are currently on, their assets could be sold off to smaller companies hoping to fill the void. Companies like Toyota, which already builds its truck lines in GM plants.

Maybe I am oversimplifying. I really don't know because I am not an economist. However, I have some experience with failure. I have already opened and shut 2 businesses in my adult life. Both were more or less failures. In both cases the failures were neither good nor bad. They were just failures.

My first attempt to run my own business was a simple wedding video company. The entire company consisted of just me. I offered full service video taping, editing and DVD production for my clients. In just about 4 years I did about $6000 of business. I took out ads in newsprint and built a website. I worked out a referral deal with a wedding planner. I even did some work as a collaborative company of some really cool people. However in the end I spent $4000 more than I ever earned. Most of that was spent on equipment. Simply put, I failed, at least financially.

My second attempt was a company I formed with my older brother to build homes. Our business plan was developed so that within 5 years we would have something like a small property development company. Unfortunately we started this business right before the housing crisis of 2007. It failed due to no fault of our own. The market just wasn't going the way we thought it was.

In both businesses I learned a lot of things. Though I may have failed to make a ton of cash like I hoped to I did earn some information. I learned that in the video world technology moves very fast. It really moves faster than the business and the market do. I learned that once you have the knowledge you really don't need to own a lot of equipment. In fact I learned that it is more sensible to rent equipment using money budgeted into the project you are working on. This way you can have low overhead and the latest technology. You can give your clients the best mics and best cameras they are willing to pay for in every way.

In the housing market I learned that the only way to make money in homes is to specialize in an area and become very good at that one thing. I also learned that you should always deal with the people that make money because they are the people that have the most information.

Now, I guess the point is that there are lessons to be learned in failure. If those lessons are not learned then it seems to me that the failure is more likely to occur again. With GM I can't help but think that our leaders are doing nothing more than postponing the ultimate demise of GM as it is today. They have done everything they could do in the last few years to avoid failure. To their credit they have revived 2 discontinued cars, gave a lot of employee discounts to people and hyped up the Volt (which I bet will be delayed by the bankruptcy until after other companies beat it to market with something better).

Despite their best efforts GM is still struggling to survive. The market changed and GM didn't keep up. They failed to recognize the trends and paid the price. They overproduced vehicles and paid the price.

There is just one problem with my last couple of statements. GM didn't pay the price for their mistakes. The American people get to pay it for them thanks to our leaders who decided that it would be a good idea for them to use future taxpayer dollars to bail out this company as well as others. No lessons will be learned. All we can hope for is that GM and others will come out swinging and become profitable again to the point where it will pay us back in the long run. That's a pretty big gamble if you ask me.