Thursday, March 23, 2006

Trying to be "in control"

I wonder what would happen if we all considered for a minute the cost of trying to control everything. I've commented previously about the high cost of management, and also about some of the unforeseen costs of regulation. Add to that the 40% overall tax rate, 15% cost of regulation and litigation, and the 30-50% or so share that management/HR/Benefits/etc.. take out of the available compensation pot, and what becomes very quickly clear is that the urge to "control" everything is one very expensive habit.

That is, when I consider a dollar's worth of productivity, regulation reduces it to 85 cents or so, management/HR/benefits takes the next 25 to 40 cents of what's left, and then the taxman cometh and removeth the first 16 to 24 cents of that, I'm left with somewhere between 29 cents and 36 cents on the dollar. Maybe if you do really well, you'll get 45 cents on the dollar.

And then, like fools, most of us get into debt and use the first 15% of what's left--4 to 6 cents--to pay the interest. So we're left with somewhere between 25 cents to 39 cents on the dollar of productivity that we could have had.

Ouch. If you want prosperity, try self-control. It's a miracle that the control freaks among us haven't already controlled us right into the poorhouse or starvation.

2 comments:

Chief RZ said...

I'm with you. Got here from SA.
The last graduate course I took was economics. It was almost like a foreign language, but eventually after 6 hour nights of homework, I got it: Deminishing MARGINAL returns! (macro is dead) Keynes is dead.

Bike Bubba said...

Well said, and welcome! Probably the biggest difficulty I had in recovering from Keynesianism was to finally sit down and ask whether its basic assumptions made sense. That completed, I've largely become an Austrian, economically speaking.