Bad news threatens Public Enterprises [1]
Wednesday, April 13, 2011 - 06:33. Updated on Monday, September 9, 2013 - 18:40.
Editor,
I read Honorable Edwards's speech (Keynote Speech . . . 10 March, 2011) to the Public Enterprises Directors while traveling to Arizona last month. The speech illustrated the differences between the interests of government and the interests of business enterprises in a free market economy.
His harsh words for the directors were simply, that Government is asking: "Show us the money!"
However, Hon. Edwards concentrated on the negatives to show government's disappointment with the directors' performances: (a) Eight of 13 privatized entities "operated at a loss," on the profit & loss statements; (b) accountability is poor and unacceptable, and may be considered "fraudulent" and unscrupulous, on complying with the Public Enterprises Act; (c) and the directors are fat cats who are not worth being paid their fat salaries.
Investments Expecting 10% Profit?
Why didn't we hear about the good news of the other five profit-makers in the program? Their benchmark achievements should be heralded as the standards to be profitable in a "hardship" economy. Relative to the national and global deflated economies, the five profit-makers should have been the "newsworthy" leaders, not the losers who operated in red ink.
Hon. Edwards mistakenly called government's investments in these Public Enterprises "assets" of a shareholder. Furthermore, he confused the directors by equating their "expertise and specialization" to the non-profit performance of "community service." In other words, government used to give it away for nothing, but now the directors are expected to turn a 10% profit performing the same tasks.
Government Knows Business?
What are government's qualifications to run a business profitably, anyway? It seems to me government is better at collecting taxes, which it did not produce, than at creating wealth. What are Hon. Edwards's profitable formulas for the great leap from 0.3% to 10% profit?
The best Government can do is facilitate the business environment conducive to growing business activities: (a) less regulations, and more business incentives to encourage competition; (b) less taxes to encourage businesses to grow, and hire more workers who buy more goods and services, and who will pay more taxes; (c) and create the financial tools and instruments (money supply, banking system, legal system, etc.) to make business transactions user friendlier.
Hon. Edwards may learn in his new post that businesses are more productive when offered good economic news, and opportunities to grow. When threatened with bad news, businesses will mitigate the risks, and downsize to avoid losses.
Sione Akemeihakau Mokofisi, MBA
samokofisi [at] email [dot] phoenix [dot] edu ( samokofisi [at] email [dot] phoenix [dot] edu)