It must have been in 1956, during that first class I had in College Economics 101, that the definition of economics was drilled into my head: It is the management of scarce resources. When something is plentiful, who needs economics? If you can just go out in the morning and pick all the apples you want to eat, you don't need to get involved in the economics of apple growing. Adam and Eve can attest to that, until one of them ate the forbidden fruit.
I went on to MBA degree with plenty of courses in economic, with a specialty area of labor management that provided a rewarding career. But the initial lesson stuck with me. Everybody who runs a household or works for a business sees this economic principle being applied every single day. The take-home pay goes down and we adjust our budgets accordingly. We manage scarce resources. We switch from steak to hamburger; we car-pool or combine trips, we trade in the family car a year or two later, and most of all, we find a way.
So I am appalled at the reaction of the federal government to the sequestration cuts. First, the cut backs were self-initiated, nothing a family or business would actually ever do to themselves on purpose. What kind of idiots shoot themselves in the foot? Second, the cuts amount to about 2-5% of discretionary spending depending on who's numbers you look at. I worked in business were every budget submitted was cut back by 10% at a minimum. We always found a way and never let it affect our mission. We were a major defense contractor.
But we hear the sequestration will cause layoffs in the federal workforce, prisoners being released from confinement due to lack of funds, firemen who won't put out fires and that terrorist will now be able to cross the border. Common!!! Quit the hype.
For the first time, some government departments will face scarce resources. All they have to do is use a zero-based budgeting approach and question each and every expense. As a defense contractor, my company was required to zero-base every budget we turned into the military. I know as I was in finance at the time. If you don't do zero-based budgeting, which much of the government does not do, department budgets get inflated beyond anything that can be imagined as they are padded year after year and the budgets are increased annually with the false assumption that everything in the budget is necessary.
Many experts have concluded they can take out huge chunks of the cost of running our country and not miss a beat in carrying out the mission. Here is one expert on efficiency who promised such cuts:
I worked under the Six Sigma system for a private corporation. There is no reason that a similar discipline cannot be applied to all government employees' productivity. The techniques are available. All they have to do is apply them. I think the taxpayer deserves a government that is run efficiently. I don't think the citizens of this country deserve to be told they won't get the services they paid for because of a 2-5% cut in non-military budget. I would agree, that the military budget cut at about 9% is a bit more severe but many would say there is a lot of fat in that number too. Many civilians have taken huge cuts in their personal finances over the past several years due to the sour economy.
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