The Purpose of Taxes
I recently watched a
fascinating video made by the Director at the Hutchins Centre on Fiscal And Monetary
Policy in the US. In the video, he
describes why the US tax system doesn’t shrink the gap between “rich” and
“poor” as much as some might think.
The central premise seems to be that the tax system should
reduce the gap. In other words, it
should re-distribute income from the wealthier to those less well-off.
Wrong?
Tax came into being as a means for English kings to finance
their various wars. The purpose of tax nowadays
is to fund government expenditure on services that benefit their citizens (e.g. education, medical services, roads, police,
fire fighters, armed forces).
If you use the products or services someone provides, you
should pay for them. I know very few
people (except charity volunteers) who work or sell their products for free.
High taxes don’t necessarily mean higher standards of
living, except in a very few Scandinavian countries. They are not
a means of achieving some kind of socialist Utopia. There are “rich” people in Scandinavia… Scandinavia also benefits from relatively small
populations.
What the video showed me was that, in theory, the “rich”
have a sizeable chunk of income after they’ve paid their taxes left to put back
into the economy by purchasing goods and services that others don’t. This in turn should create demand for the
products and services they buy, in turn creating jobs (and thereby income) for
those who work in those industries, as well as additional tax receipts for the
government from the new taxes they receive.
Some call this the “Trickle-down effect”. So far so good?
Maybe not. The vexing
questions that arise are:
- Do the “rich” indeed spend more of their disposable income
on additional goods, services and investments?
- Is it “fair” that some should have more than others?
- Should those who work hard, take risks and make sacrifices
be rewarded and, if so, to what extent?
- What is the government’s duty to those truly “in need”?
- What is “society’s” duty to those truly “in need”?
- How can we make society a better place for all?
In the words of Abraham Lincoln, “You
cannot strengthen the weak by weakening the strong. You cannot bring about
prosperity by discouraging thrift. You cannot help the wage-earner by pulling
down the wage-payer.” Robbing Peter to
pay Paul doesn’t work (except for Paul).
Peter will simply find a way to safeguard his gains.
The best way is for any government to look to creating
“wealth-earning” capacity, which generates jobs for those able (note I do not
use the word “willing”) to work. This
maximises productivity of citizens as well as their contribution to the country
and increases the country’s wealth.
To ensure this, citizens need the knowledge and skills to
work in industries that produce something
that others want and at a price they
are prepared to pay. In the 1970s, Britain
saw its car industry decimated by continuous strikes and the advent of reliable,
cheaper, foreign alternatives. It now
has a reputation as a higher-value manufacturing centre.
Taxes and prices need to remain under control. There’s no point in people earning if they have
to give it all back to the government or can’t afford even basic goods. One should be better off in work than on
social security. This implies that
government spending also needs to be kept under control, and that it can
collect taxes. The last is one of the
main causes of the current Greek deficit and some of the UK’s problems (many of
which arise from its Byzantine tax regulations).
There will always be a “richer” class of citizen, some of
whom may actually deserve it because
of their hard work, the risks they undertake, or other good reasons. There will always be “Haves” and “Have Nots”
in any society (especially those run on a Communist philosophy). To
simply think that tax can be used to redress this problem is to over simplify
the issue.
I have spent more than half my life
delivering change in different world markets from the most developed to
“emerging” economies. With more than 20 years in international financial
services around the world running different
operations and lending businesses, I started my own Consultancy to offer
solutions for improving performance, productivity and risk management. I work with individuals, small businesses,
charities, quoted companies and academic institutions across the world. An
international speaker, trainer, author and fund-raiser, I can be contacted by email
. My website provides a full picture of my portfolio of services. For strategic questions that you should be
asking yourself, follow me at @wkm610.Labels: Leadership, Social, Strategy
Decision-Making And Delegation In Business
Running any kind of
organisation means that you need to make decisions. Some will be “quick and easy”. Others will
require much more thought and assessment of options.
A number of factors contribute to how we make decisions and
what decisions we make, among them:
- Cultural background
- Education
- Past experience
- Pressure of time
- Information available
- Consequences of decision taken
- Company rules
We make decisions every day of our lives - often without
even realising that we’ve made one. This
arises because of previous conditioning that teaches us to react in a
particular way when faced with certain stimuli.
For any organisation to function effectively, you need the
right people taking the right decision at the right level for the right reasons.
Whether the organisation is a family unit, a Small and
Medium-sized Enterprises (SME) or a global company, one often runs the risk
that there will be one dominant decision-maker.
At times, this is no bad thing, particularly when decisions have to be
made quickly to avoid major problems.
The danger is that this one individual dominates decision-making
to the extent that they believe that only their way is the right way (often
happens in SMEs). They may over-rule others
because they didn’t make the decision
(even though it was a valid one).
For any individual or organisation to survive, they need to
learn to make decisions on their own.
Difficult though it may be, people need to learn to trust others. Quite simply, you can’t expect to be around all the
time.
What are the results of not trusting/delegating:
- Every decision
will come to you
- You will be
overloaded as a result
- You may miss things
as a result
- When you’re not around, nothing
will get done
- You don’t develop
future leaders for the organisation
- You will be resented because people feel you don’t trust them
- Customers will wonder what’s going on…
All contribute to a “toxic” environment where mistrust is
high.
Abraham Maslow’s identified in his Hierarchy of Needs that people need to feel respected and/or esteemed
(“valued” is used by some). If you don’t
let them feel this, how can you expect them to really make an effort?
What could help?
- Start allowing smaller decisions
- Give authority within
limits and let people know when you expect to be consulted
- Don’t over-rule just because you didn’t make the decision -
they may actually be right!
- Review decisions with which you don’t agree in private - ask whether they considered
other options or (in retrospect) what they might have done differently.
The most difficult thing for parents and bosses is “learning
to let go”. It’s the responsibility of
every good leader to develop their team as far as possible. A good team makes its leader look good.
I have spent more than half my life
delivering change in different world markets from the most developed to
“emerging” economies. With more than 20 years in international financial
services around the world running different
operations and lending businesses, I started my own Consultancy to offer
solutions for improving performance, productivity and risk management. I work with individuals, small businesses,
charities, quoted companies and academic institutions across the world. An
international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of
services. For strategic questions that
you should be asking yourself, follow me at @wkm610.Labels: Crisis Management, Leadership, Productivity, Strategy, Teamwork
Why Sales And Operations Don’t See Eye To Eye
I’ve had the good
fortune to work both on the “selling” side as well as the “Customer Service” or
“Operations” side of different organisations.
One organisation even combined the two roles into a “relationship
manager” role, although many of the incumbents usually saw themselves as sales
people first.
Sales is about getting business - preferably new or
increased business. Sales people are
“numbers-oriented”. They literally live
and die by how much they bring in.
Operations is the “delivery” or “Customer Service” end. They’re the ones who have to fulfil whatever
promises the sales force has made on the organisation’s behalf. Unfortunately, I’ve seen plenty of cases (and
heard of even more) where sales people have either knowingly or recklessly
promised the moon, knowing that it’ll be up to someone else to make good on it
whilst they collect their commission.
Sales and operations involve different mentalities and
approaches. Sales people tend to be
charmers and (as one of my bosses put it) not above using flowery language (he
used a more “earthy” word) to persuade customers to buy their product or
service.
Operations people like to see themselves as “grounded in
reality”. Unlike their counterparts in sales,
they know what can and can’t be done,
when it can be delivered and what quality standards it will meet. They’re the ones who have to field the
customer comments and complaints when the product or service doesn't meet the
customer’s expectations (all built up by those uninformed sales people!).
After working in both roles, I’ve realised several things:
- It’s not in my nature to make promises that I can’t keep;
- I’m honest with customers because I believe that if they
trust me, they’ll come back for more;
- I like to know how things work to explain to customers why
things happen the way they do;
- Due to the above, I wouldn’t enjoy a sales role on a
permanent basis.
“Operations” and “Relationship Management” tend to view
customer satisfaction as paramount.
Sales views getting the business in as their raison d’etre.
One of my former employers used to move its executive
trainees around all functions so that they could see how the business fitted
together. This meant that, even if you
ended up as a “pure sales person”, you at least knew what went on to deliver
the ultimate product or service. You
were less likely to make promises on behalf of others, (although it still
happened).
In the end, who loses out from the “disconnect” between
“Sales” and “Customer Service/Operations”?
Answer: first the customer, and second the organisation. The customer loses because they may not have
bought what they thought was the product/service that they needed. The organisation loses in terms of reputation
(poor customer experience) and possibly lost future earnings.
The solution? “Sales”
needs to understand “Customer Service” and vice-versa. Sales, after all, do bring in the new and
expanded sales that keep the business alive and growing, whilst “Service” are
the ones who look after the customers who pay everyone’s salary. Neither can work without the other. “Service” need to understand the pressures on
“Sales” and support with suggestions, information, etc so that “Sales” can
perform more effectively.
Equally, “commission”-based incentives for sales people are
dangerous as they may result in the sales force cutting corners or failing to
reveal vital information to secure the sale.
A prime example of this was the mis-selling of Payment Protection Insurance
(PPI) by UK banks in the first decade of the new millennium. Staff had goals to meet, so they sold to
everyone, whether the product was appropriate or not. Whatever profits the banks made from such
sales were wiped out by fines and loss of reputation.
I have spent more than half my life
delivering change in different world markets from the most developed to
“emerging” economies. With more than 20 years in international financial
services around the world running
different operations and lending businesses, I started my own Consultancy to
offer solutions for improving performance, productivity and risk
management. I work with individuals,
small businesses, charities, quoted companies and academic institutions across
the world. An international speaker, trainer, author and fund-raiser, I can be
contacted by email . My website provides a full picture of my portfolio of
services. For strategic questions that
you should be asking yourself, follow me at @wkm610.Labels: Customer Care, Leadership, Selling, Strategy, Teamwork
