Government Has No Business Being in Business

Sat, 04 Jul 2009 by EnableSoft

By Richard Milam

As I ponder this 4th of July and what it means to me and to our country, I reminisce about starting my business and why and what our current government philosophy and actions mean for all of us.  I think my story and beliefs are much like many in America…

Hanging up the phone and thinking, “what am I doing” as the acid began to build in my stomach, the call was encouraging but no deal was emanant. I was pitching my new software company and its' product called “Foxtrot” that enables non-technical staff to move, merge, manage and maintain data without programming to a banker with whom I had done business in the past.

My wife had resigned as a teacher to be at home with our two year old daughter. We had a big mortgage payment on a house we had bought when the baby was born and I had just started the new enterprise. There were some things in our favor; there were great relationships with bankers all over the country, my good friend who was an architect was giving me office space and I had hired a capable programmer that worked with me previously. Still, my income had gone from six figures to near zero and I was thinking, “am I crazy”, what if this doesn't launch. I was going deeper in the hole every week with payroll and personal financial obligations and because marriages do not usually survive bankruptcy, I was literally risking everything.
Being a pragmatist, I thought well, if this fails at least we can get a vacation before I have to go to work for someone else again. Renting a Lincoln Town Car, I loaded up my family and headed for the mountains of North Carolina. I arranged sales presentations with banks in North Carolina, Illinois and Kentucky and organized our trip to line up with the scheduled visits. The prospective clients to whom I made calls seemed genuinely glad to entertain acquiring licenses to Foxtrot data software as it did fill an unmet need in their operations.

Except for one incident where I tested our marriage by failing to make a hotel reservation in the Raleigh Durham area (there were no rooms available anywhere and we had to stay in a truck stop 20 miles south), it was a successful trip. We returned a happy family and had five new orders for Foxtrot!

That was fifteen years ago. As we continue to work diligently and maintain our focus, today over one third of the largest banks are using Foxtrot database management software and other major industries including healthcare are adopting it as well. Like “Google” is a verb, “Foxtrot” is a verb where it is used.  Our clients talk about “Foxtrotting” things; for example, to close and reorder a credit card that has been compromised (a process that the heretofore was entirely manual). Businesses using Foxtrot are able to be more efficient and proactive and their employees are often able to spend a weekend or holiday with their family when previously a data emergency would have caused an all hands on deck situation with everyone working on their time off.

I share the story of perseverance and success to make a point on the eve of the July 4th holiday. My story dramatically illustrates what it takes to conceive, develop, build and market something that adds value which is what drives the free marketplace. The United States government for reasons of crisis and agenda is getting increasingly more involved in businesses. The results of this will be devastating and long term.

As a prime example of the high degree of misunderstanding or perhaps arrogance that politicians in Washington have with regard to private enterprise and free market economies, the new energy bill (house bill 219-212) has billions of dollars in tax breaks and incentives for alternative energy and energy efficiency development. What this means is that government is trying to incent new alternative energy solutions into existence. This will not work. The reason that inventors and entrepreneurs invest and take risks is that there is a clear opportunity for profit or wealth creation and that they believe they can one, conceive and build something of value and two, that there is a marketplace that will buy it. If there were a market for alternative energy (and there may very well be) and if it were a cost effective and workable solution there would be investors and entrepreneurs already making it happen. We have seen some movement towards and acceptance of hybrid automobiles lately as a result of higher fuel costs (note that this did not happen because of government requirements on fuel efficiency or incentives).  Creation of new energy alternatives is not going to happen because the government is holding out fists full of dollars.

That brings me to the next egregious and terrifying business mistake on the part of our government, the takeover of General Motors. My father worked for a General Motors dealer for over forty years but I believe that the government has no business interfering in the free markets even when a giant is going to fail. The aftermath of their failure, and I believed they deserved to fail because of poor leadership, although bad, would not be as bad as the consequences of the government takeover we are going to endure.

When the entrepreneurial spirit is strong and taking risks is not punished by onerous taxation, America is a resilient country. Small, lean and efficient car makers would have quickly filled the void, employing many of the auto workers and funding the GM suppliers. GM itself after shedding the unions and the unaffordable healthcare obligations attached to them, by going through chapter 11 bankruptcy may have come back stronger in a few years.  As it is, our tax dollars will be pouring into GM to continue to fund the retirement and healthcare entitlements of the unions. GM will slide into mediocrity because that is what happens when there are no consequences for not competing well and succeeding. This is sickening to the entrepreneur who plays by the rules and has risked everything to make a company successful. All one needs to do is to look at the businesses that the government has run for years.  The US Post office is awash in red ink while the senior executives live in palatial homes. Amtrak, the government run railroad is broke and running on government subsidies.

One could view the GM takeover as a move of compassion to rescue the workers and their unions and I wish this were so even though I don't agree with the strategy.  Unfortunately, it is a move towards government control of the economy and a way for the congress and the administration to buy votes and ensure their continued reign. Although I am a registered Republican, I'm not favoring one political party over the other. With a few notable exceptions, Republicans are equally guilty of pandering for votes, filling spending bills with pork (funding for pet projects that their constituency want) including bridges to nowhere, tattoo removal and tunnels for turtles and putting their political self interests above the good of the nation. Republican president George Bush added to this government grab for power when his administration in his own words, “abandon(ed) free market principles to save the free market system” and stepped in to save AIG while allowing Lehman Brothers to fail.

The housing and mortgage markets collapsed due to government controlled mortgage houses Fannie Mae and Freddie Mac encouraging and buying mortgages that were no good because congressmen Barney Frank and Chris Dodd purported that everyone “deserved” to have a house (even when they can't afford it).

My point is that government does not produce a thing. Its' role is solely to protect us from enemies both foreign and domestic, to provide for the safety and security of the public and to facilitate a jurisprudence structure through which citizens can resolve disputes. Most of the leaders in government have not run even so much as a candy store and have never had to make a payroll. So why are they now in charge of some of the largest businesses in our country?  It makes no sense and it will not work.  Subsequent administrations, assuming our weakened financial markets and suffocating debt (the interest alone is now $26 billion per month) do not invite an enemy to cause our demise, will have a huge task in reversing and cleaning up this mess. 
It's up to us as citizens, who the politicians should be reporting to because they work for us, to tell our elected officials to get out of the marketplace and let it operate freely to determine who wins and who looses. We should be calling, writing and assembling to let them know that if they continue on this borderline treasonous path, they will not serve another term.  We need to have government get out of the free market's way and let the creative forces that gave us computers, cars, air conditioning, airplanes and yes, Foxtrot scraping software work.

Happy 4th of July and God Bless America.