A Matter of Accountability

With the exception of a few additions, this is a transcript of my podcast today on the Energion.com Podcast.

Around a year ago I started to re-evaluate my business.  I have been in business now for over 10 years, but the business has never run as I felt it should.  My wife and I sat down to discuss the way our business should go.  As we started, we both agreed that everything should be on the table, including the possibility of closing the business.  Every activity of our lives, her work, our business and our non-business activities would be on the table.

Why?  For a simple reason.  If you think you have a problem you need to put everything to the test.  If you exempt part of your activities from examination, it’s quite likely you’ll find that your problem is going to be there.  In fact, if you think about it long enough, you may come to realize that the reason you want to exclude one thing from consideration is that deep down you know it’s part of the problem and you don’t want to lose it.

So we examined everything, and amongst the changes we made we eliminated a non-profit organization I had helped found and had nurtured for years.  I didn’t want to give up on that organization.  It wasn’t part of the financial picture in any case–it was all volunteer.  But two facts stood out.  1)  It was taking up a lot of my time and 2) It was not accomplishing its mission.  So it went.  With me stepping aside, that organization died, and I suspect it will not be missed.  That’s hard to admit, but it’s a fact!

Now what does this have to do with accountability?  We conduct such re-examinations of our lives because we are pushed into it by circumstances.  We don’t do it because it’s fun.  In business, we do it because things haven’t been going well as they were, and we know we need to change.

We even have a way to do this kind of thing in business when one is truly forced to.  It’s called bankruptcy.  In bankruptcy, a business is forced to reevaluate everything, with a judge looking on to make sure everything is done properly.  Bad decisions can be undone.  It’s a painful process, but it works.  Creditors know of the possibility when they loan money, and they have the opportunity to work the probability of business failure into their calculations.  Bankruptcy is painful enough that one is motivated not to go there, but at the same time it can minimize the damage done along the way.

We are currently seeing outrage run through the country over $165 million in bonuses being paid out to employees of AIG, all after the federal government has bailed them out to the tune of billions.  Rick Santelli, who made himself famous with a rant about the mortgage bailout has spoken on this one too, and seems to think the major problem is the numbers.  We’re outraged about 165 million when billions and trillions are being wasted elsewhere.

I think he misses the point.  I think the outraged multitude, from the President on down miss the point.  We may be outraged, but we have no right to be surprised at AIG’s behavior.

When AIG and other companies were in deep trouble, we, the people, speaking through our representatives, decided they needed to be bailed out.  Don’t bother telling me you didn’t agree.  I didn’t either, but in the end, we the people sent many of the same people back to congress right after they did it.  They did it right before an election.  If we didn’t like it, we could have voted them out.

Without telling these companies that they had to reform or change their practices, we just started handing them money in order to keep everything afloat, or so we were told.  Then when some of them spent money on odd things, we started to complain.  But we honestly had and have no right to do so.

Why?  Because we rewarded them for the same behavior.  They did stupid things and their businesses were failing.  So we gave them more cash.

Consider your children and their allowances.   If you give them a certain amount of money for the week,  you tell them they should be careful how they spend it, so they still have a little bit at the end of the week.  If one child spends his money on the first day, and then wants some more on the second day, what do you do?  Well, if you’re a good parent, you let the child learn a lesson.  On the other hand, if you give him another allowance on the second day, you have no right to be surprised if he spends it all and then asks for more.  And more, and more.

The outrageous thing is that the government has given these companies large amounts of money with little to no accountability.  It has given this money to companies that were not performing well and were not behaving in ways we would regard as responsible.  It left the people who had gotten into that trouble in charge, for the most part.

A capitalist economy has a penalty for their type of behavior.  It’s called business failure.  One of the ways out of business failure is bankruptcy, which is an unpleasant business, but exacts consequences for the bad behavior.  One of those consequences is that the executives of the company who failed to do their job get examined.  At a minimum they will get a judge who will appoint someone to look over their shoulders.  They are very likely to lose their jobs.

The outrage is not in the amounts of money involved.  The outrageous thing is that people are being rewarded for behaving badly.  They are not being held accountable.  The amount is not the issue, though large amounts being used in unaccountable ways is more dangerous than small ones.

This is why I have opposed the bailouts starting with the financial system and including the auto industry.  There is a process in place for failed businesses, and it should be used.  If there is a need to protect the financial system, there might be modifications for special cases, but those modifications need to be aimed at preserving depositors, owners of vehicles, and the general system, and not at preserving the companies.

Would this mean hardship?  Absolutely.  But if we keep rewarding failure, we will inevitably arrive at that time of hardship, and the more we play around before we do what we need to do, the harder things will be when the crash time comes.

I’m told that on an earthquake fault, as plates move in different directions at different paces, pressure builds up.  If you have lots of small earthquakes, it relieves pressure.  The longer you wait, the more pressure, and the bigger the quake.  I don’t know enough geology to confirm precisely how all that works, but in a business I can tell you that it does work.  The longer you wait before you deal with basic problems, the worse things get, and the nastier the consequences will be.

This is why I’m less concerned (note that I didn’t say unconcerned) with the stimulus bill.  It’s the one thing the government can do to stimulate the economy that isn’t a reward for bad behavior is to accelerate projects that make good economic sense in the first place.  Unfortunately, not all projects are all that good, but at least they are not simply direct handouts given to people whose behavior needs modification, not encouragement.

I do enough devotional thoughts that I can’t help bringing this around to our spiritual lives as well.  No matter what the problem, the longer you keep doing the same thing, the harder it will be to change course.  Accountability is important–so important that you ought to seek it out if someone else doesn’t provide it.

I can only urge the government, through my representatives, to hold people accountable, and to be accountable.  In my own life, however, I can simply choose to be accountable, and to be honest with myself and others.

Many people think that the Christian belief in the afterlife is about the comfort of believing that loved ones are in heaven.  But Biblically and historically, there was no such absolute assurance.  In the 21st century, we like to think only about the nice aspects of the next life.

The afterlife is very much about accountability.  As Paul says in Romans 14:12 – “Every one of us will give account of himself to God.”

So many things are … a matter of accountability.