Short-Term Thinking, Long-Term Damage

In the business world, there’s an unfortunately popular sales technique known as “pulling forward.” You’re having a slow quarter, and there’s pressure to improve it, so instead of trying to get new sales, you go after the orders you already have in hand for next quarter, and contact them again: “Hey, what would it take to get you to move up next quarter’s order to this month instead? Three percent off? … Five?... Six?... Done!” You hang up the phone happy, now that you’ve made your numbers for this quarter.

It wasn’t a new sale; this stirring success is utterly phantom… but this quarter’s numbers are now good; we’ve met The Street’s expectations, so we’re happy. Until next quarter, that is, when we have to work even harder, because we now have even more ground to make up, having poached a sale that was already in the bag… not to mention how we need to work even harder on margin to make a profit on those, since we gave away the store last quarter with that utterly unnecessary six percent additional discount.

Not for nothing is this technique also nicknamed “Robbing Peter to Pay Paul.” The pressure for short-term numbers causes the seller to give up profit margin, almost always at a greater bottom line cost than the perceived benefit of an earlier sale. The momentary snapshot may be impressive, but it’s illusory; the real result of this process is a net reduction in the profitability that this sale could have, and indeed should have, provided for the company. All to satisfy some number-cruncher on Wall Street.

Of all the techniques in all the businesses in America, why on earth did Washington, D.C. have to adopt this one?

O's latest economic proposals are a combination of pulling forward, as noted, combined with "bait and switch." The bait and switch department includes any tax inducements paid for by closing off loopholes (i.e., raising taxes somewhere else in the code).

Charles Krauthammer commented on this fact earlier this week, when he noted that "loopholes" were previous tax benefits which have lost their political punch as credits. So they are being withdrawn to make way for newly publicized credits. That is bait and switch. Sadly, as long as Obama's policies increase the load of government through inefficient or downright perverse legislation and regulation, such as Obamacare, or the looming EPA regulation of hazardous CO2, EVERY thing he proposes will be some combination of "pulling forward" or bait and switch.

By taking the Federal government's share of direct spending from around 20% to closer to 27%, and imposing a host of additional costly mandates, he has created structural impediments which make the economy less efficient. Any of the other things he does as patchwork don't affect the central problem.

“Of all the techniques in all the businesses in America, why on earth did Washington, D.C. have to adopt this one?”

That is an interesting question. Two possible answers:

1. barama still has no idea of how business, economies, and money work.

2. he and his fellow travelers and cloward-pivenites are part of an effort to deliberately wreck our economy.

Both of them seem pretty far-fetched, but I can’t think of any other good reasons that don’t verge into outright fantasy.

Quite right, Pearls and SuzyQue...

This administration does nothing but harm; we cannot trust their intentions anymore than we can trust their promises.

And since it is impossible for them to be so stupid as to misunderstand the economy this badly, that leaves only one remaining possibility: the damage has to be purposeful.

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