Do you remember using the leverage principle as a child on a see-saw? The farther out you pushed yourself, the more important your weight became. If the kid on the other end was not out as far, and did not weigh more than you, ultimately you could strand the kid high in the air while you ended safely on the ground. The other kid was powerless to do anything except crawl down or jump down and leave you to play by yourself.
This is an example of the tipping point: where one side of a duo becomes so powerful that the other side no longer has a say in the result. Reaching a tipping point in the life of a company or of a country is no longer a fantasy because the distance between the “haves” versus “have-nots” is growing.
Large businesses move closer to the tipping point every time the executive compensation committee increases the pay of the top dogs without consideration of the income needs for the lower level employees. Or cuts corners in pursuit of profit without consideration for the impact on the environment.
Countries are reaching tipping points in the competition between government employees and the taxpayers who fund them. Government workers in Greece have marched in the streets against the efforts of their broke government cutting costs.
In the USA government workers are paid significantly more than their civilian counterparts, a dramatic change from years ago that shows the power of civil service unions. The increasing grab by Washington for control of more segments of the economy adds more government workers who will demand high pay and top quality benefits, all on the backs of cash-strapped taxpayers.
Picture the fat-cat government workers moving farther out on the see-saw and you get the picture. Someday, if government continues to grow and if more and more citizens see their general welfare dependent upon government social programs, we will reach the tipping point.
Companies that reach the tipping point can pay a price in the stock market and their executives can find that they are left to play by themselves. I am not a union supporter, but I do believe in justice and fairness, and businesses that allow themselves to reach a tipping point should be dealt with severely by market forces. Their boards and officers need to get off the see-saw and go to a time out.
Governments that slide out on the see-saw and threaten to reach the tipping point are a risk to more than stockholders. Their bloated civil service ranks threaten the future of a country. In Washington much of the increasing size of the government is being built to produce the growing regulatory apparatus. Congress and the White House believe that their “experts” in charge know better than the folks in the real world. And who is to blame for that attitude? Businesses that have reached their tipping point have driven popular opinion towards the belief that more government is better for all of us.
But we know that is not true. There is a fallacy in over-regulation. Not only does it stifle entrepreneurialism, it adds a clear path for large, predatory businesses to co-opt the regulatory agencies for their own needs. This is exactly what happened in the Gulf Disaster, and is probably happening in other relationships within the Washington regulatory world. We may never discover these until another disaster occurs.
What can small business leaders do about this? First, let your elected representatives at all levels of government know your opinions. Tell them why over-regulation hurts your small business. Tell them the good your small business does in the community. Tell them your mission and vision. Tell them why they need to leave you alone because you understand your market better than they do.
Second, team up with other small businesses. Join an association that truly represents your needs. Be cautious of joining a large association that purports to speak for small business, but in fact has been co-opted by big, greedy businesses looking out only for themselves.
Third, examine your business plan and make sure you see a path to the future that can evade the worst of the regulatory fiats that are sure to come out of Washington in the next few years. It may not be possible to stay clear of everything, but pay attention to the limits such as employees and revenue that are used to define the targets of regulation.
Finally, pay attention to politics. Too few small business owners spend the time necessary to influence elections. That needs to stop because it is the only way you can move your weight a little further out on your end of the see-saw and prevent the big bully on the other end from stranding you in the air.
The tipping point in the USA is not here yet, and with any luck those of us on the upper end of the see-saw today will begin to realize we need to slide farther out now, before it is too late.
