A REAL MICHIGAN HERO(INE)

                I’m starting to hear from folks who want me to oppose budget cuts. They earnestly tell me that state benefits are needed and I should consider “raising revenue” to pay for them. One lady activist told me that the people who depended on government benefits were “Michigan’s real heroes.”

 

                I would like to introduce you all to a woman I know.  I’ll call her “Kathy.”

 

She Started A Little Business...

 

                Kathy has started a little business, which makes her an entrepreneur. It’s a service, and she’s hired three people. BANG! Kathy has created three jobs! Three people now have jobs that didn’t exist before. One is a single mom with a child. Another is facing foreclosure. The third needs the money to make ends meet. All three now are employed and their financial situation is better because of Kathy.

 

                For those three women to have jobs, Kathy has to do something every two weeks: she has to make payroll. Let me emphasize that: MAKE PAYROLL. Making payroll comes first.  You can put off banks, you can deal with suppliers, but making payroll is ironbound. Fail to make payroll and you’re out of business and your employees are out of work and out of income. Get it? Got it? Good.

 

Making Payroll

 

                MAKING PAYROLL is the slavemaster of all entrepreneurs and business people. The businessperson has to make payroll every two weeks, rain or shine, good times or bad.  The employees eat before you do. You pay your employees before there’s a dime for you. The boss is the boss because she’s the one who makes payroll. Beg, borrow, max out your credit card, you make payroll or you die. The jobs go away and the people who depend on you are out on the street. Get it? Got it? Good.

 

                But Kathy’s little business isn’t a charity operation. It has to make money to keep going.  She has to convince other people to voluntarily pay her money for her service. A government can take wealth from people without their consent or compensation via taxes. The businessperson must deal with people by free and voluntary consent, and when they agree to so freely exchange their wealth for her service, they become what we call customers.

 

The Customer Doesn't Care.

 

                The customer doesn’t care about Kathy or her employees. Customer wants value received for his money, and can just as easily freely decide to take his wealth and go somewhere else. So Kathy has to get up every day and figure out how to provide that value, and increase it. Kathy can’t just “raise revenue” to cover her costs by raising her prices as she pleases. When someone else decides to offer the same service, Kathy has to figure out how to compete by offering unique value at a competitive price. And then she has to MAKE PAYROLL.

 

                Kathy’s service requires “inputs,” which is a fancy term for the stuff she needs to provide the service. Her suppliers sell her the stuff. Recently a supplier raised a price unilaterally and without notice. She figured out how to pay the extra charge—because she can’t just “raise revenue” by fiat, like a government can. She absorbed the cost, and then she MADE PAYROLL. And two weeks later, she MADE PAYROLL again. And two weeks from now she’ll MAKE PAYROLL again. And so on.

 

So Who's the Real Hero?

 

                So who’s a real Michigan hero? Kathy is…a heroine, to be exact. We all agree that what Michigan needs is jobs, right? Well, Kathy has created three--count ‘em, three--jobs. Every two weeks she protects those jobs by MAKING PAYROLL. Every job in Michigan exists because someone moves heaven and earth every two weeks to MAKE PAYROLL no matter how bad the economy.

 

                Now government jobs and government benefits come from raising revenue. The only place governments can raise revenue and get income is by: 1) taxing it. 2) borrowing it or 3) if you’re the Feds, printing money. Michigan can’t print money so we either tax it or borrow it. We’re near our borrowing limit, so the only way left is taxes. Where do taxes come from? From Kathy.

 

So to the Nice Lady Activist, I Say...

 

                So to the nice lady activist, I have to reluctantly say that I’m not going to raise taxes on Kathy. She’s doing her part already by MAKING PAYROLL. If times get better, maybe more people will have more extra wealth and they can afford her service. Then she can BANG! create another job, and hire Employee Number 4. We need to encourage more heroes and heroines like Kathy, or at least not to hurt them.  Without them, you have no jobs and the people have no money. Michigan’s real heroes are the folks who struggle every day through thick and thin to satisfy their customers, and MAKE PAYROLL. Get it? Got it? Good. 

 

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