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A Modest Proposal: Let’s Adopt a More Constructive View of Business

Sigma Investment Counselors

December 31, 2012

While there is considerable disagreement as to how to address debt, taxes, spending and all of the other components of the “fiscal cliff”, there is a significant consensus supporting the idea that a growing economy would make finding solutions easier. There also seems to be general agreement that unemployment is a real problem. In other words, we need more jobs, particularly private sector jobs.

Employers are businesses, small, medium and big. An expansion of economic activity would increase employment opportunities, firm up wages, and provide more government revenues.

Why don’t we stop all the negativity and start viewing businesses, large and small, as “employers” and recognize that business activity is part of the solution, not part of the problem. This is not intended to suggest that business should be given a pass on good citizenship. Our society benefits from the rule of law and all of us need to play by the rules. This requires constructive regulation and responsible behavior.

Broadly speaking, a successful business consists of employees who create products and/or services, customers who buy the output and investors who finance the enterprise. These three factions have competing objectives. A business needs to generate a profit, as investors require a return, customers want quality and competitive prices and employees expect to be fairly compensated for their contribution. Keeping these three factions reasonably happy is the job of management. Perhaps, “getting out of the way” would be an appropriate activity for government.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA

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