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Rewarding Mediocrity

Organizations fail as a consequence of decisions taken by the collective intellect of the powers at the board. They are successful because of the same powers that make effective, efficient decisions and manage risk.

As an investor every individual looks at a number of parameters before investing. These rules of investing have over the years been honed and tuned to such a level that the health of an organization can be gleaned from the statistics and information available to the public.

Do any of the organizations that have got funding from the Government eligible as good Investments or Investment Grade? None of them would pass the muster, they are bleeding organizations which should have been asked to die or scale down become more efficient.

Well now that the funding has been secured, what is the guarantee that these funds are to be utilized properly and efficiently. Would the Government end up with another body to oversee governance of these Organizations. Are we ready and prime for bureaucratic red tape? Where would the Government stop when it comes to doling out money for these "super efficient!!! " organizations? Is my organization with 50 people big enough to get Government funding? or is the barber shop down the road eligible for the dole as he is suffering because of the Wall Street Dream Merchants?

A free country should not protect those that are inefficient or fit to die, that how the system works. The resources released by the eventual death of an organization (whatever be the size) is reallocated by a free economy to alternative wants that are more efficient and over time employ more.

To put it more in perspective, it works like this - a 800 billion grant may protect the automotive majors, some banks and an insurance giant, lets say that these organizations employ about 250,000 people. Because of the death of these organizations, these people may move out re-skill themselves and would be back in the market in a year and the same 800 billion would generate more than 250000 jobs and most likely would provide indirect employment to much larger number of people. The use of the funds for bailing out would eventually be less efficiently deployed than by letting then die and the resources getting moved to more efficient uses.

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