On November 19, 2008, we published a post titled:
When The Fundamentals Are Massacred, Global Recession Is Born
Sine then, we received a large number of requests to suggest as to what those fundamentals could be. We give below some of them. If all kinds of organizations and people in general follow them all the times (even in good times), recession can be eliminated, averted and tackled.
- No one should try to exploit the general public in any way.
- No one should try to exploit the customers in any way.
- Prices of lands, buildings, goods and services (particularly education and health care) as well as share (stock) prices should not be artificially inflated. If need be, there should be a non-corrupt state control over the prices of land, houses, essential food stuff, health care and education.
- Buyers should not take loans to buy the things needed by them. They should try to buy what they can afford without taking loans. If at all they wish to take some loans, the loan amount should be absolute minimum which they can return very easily within their income levels.
- Propelling the economy by way of promoting easy and unsubstantiated loans to individuals and corporations by any financial institution or government is never the sound and lasting way of bringing up economy.
- Jacking up the motivation among people and corporations for purchases/demands of goods and services artificially and in un-natural ways will never build up strong permanent economy.
- Profit margins should not be draconically out of proportions.
- Prices of goods should be an outcome of free economy based on sound principles of supply and demand and healthy competition and should not be an outcome of lobbying and cartels (there should be a strict curb on it by the law).
- Corruption of various kinds in corporate- public and private sectors and governments should be eliminated. Corrupt people at all the levels should be severely punished.
- Real competent (competence includes ethics obviously) people should be put at the helm of affairs of various important and vital organizations like government, banks, financial institutions, life and general insurance companies and even in the corporate- industrial and business sectors etc.
- The organizations should be run at the highest effectiveness and efficiency levels all the time.
- All kinds of non-value adding expenses should be controlled; cost management should be at its peak all the time.
- The salaries, perquisites and profit sharing percentages of people particularly, the promoters of companies, CEOs, directors and other top/senior managers of various organizations, politicians, ministers and top/senior bureaucrats should be decided in proportion, based on their likely long term as well as short term contributions and not out of their greed.
- The bonuses/profit sharing, particularly to the top brass of all the organizations of any type and even to the other employees, should not be distributed as cash but can be given in the form of the shares of that organization and there must be some controls over the period (number of years) during which they can not be sold/traded. It will put responsibility on the top brass to look after the health of the companies they run on a longer term basis.
- Rather than removing the people from their jobs in the times of down-trends of the organizations under the notorious garb of downsizing and right sizing, the salaries of the people particularly at the levels where they are paid astronomically high salaries in a lop- sided manner should be curtailed. Thus, people will not be out of employment and this will retain the purchasing power in the system at reasonably stable and good levels so as not to upset the economy and create recession.
There may be some more fundamentals which are not listed here. Readers are requested to add them in the comments column of this write-up.
Read the “inside” stories of the corporate sector at: (Management Anecdotes) http://management-anecdotes.blogspot.com/
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