Solve Real Problems

A university professor once told me that the very best grant situation was to get money for a project that you had already completed.  Ethics aside, the statement makes an interesting point.

The very best deal on the recipient side is to get value to solve a problem that is already solved.  By extension the most costly thing to do is to pay to solve a problem that no longer exists.

Spending time, energy and money to fix problems that are not there or will fix themselves is a wasteful use of scarce resources.  Most businesses and many people learn to stop solving problems once the solution is implemented.  Bureaucracies tend to be the worst offenders.  Their problem is their reason to exist.  They cannot allow it to be solved.  They must make it more complex and harder to measure.

For instance, world poverty is not attached to a particular bureaucracy, but is a pervasive idea.  Is it still a problem that needs relentless and costly intervention?

I have been tidying my documents folder and came on this article that I saved a few months ago.  Economic World History in One Chart.

The graph within is the important part.

WorldIncomeDistribution1820to20002

Over the past two centuries there has been a dramatic improvement in the economic lot of mankind.  From 1970 to 2000 truly amazing.  Economic growth across the world is moving people to the middle of the normal distribution.  No matter what happens form here the middle will remain the largest part.  That is how the normal distribution works.  The gini index may be terribly misleading.  Who knows what it should be.  Until people decide what the distribution should be, a proper balance between potential and distribution is impossible.  Too much distribution becomes too little potential.

Enhancing the ability of people to grow and prosper solves poverty.  There may not be anything the governments need to do, save stay out of the way.  The best poverty prevention program is a job.  The best chance to get a job comes from businesses innovating, training, and growing.

Business is less likely to do it if problems are created by other bureaucracies. If tax rates restrict the formation of capital, or if regulation makes automation more attractive than people, or if working conditions are regulated past the point of sanity, then jobs do not form.

There are hundreds of government departments and program.  Does anyone consider their combined effects?  Maybe there needs to an agency, like your pharmacist who says if you take this drug you cannot also take this other one.

Every law has side effects and every law interacts with other laws, the people and an extraordinarily complex society.  Some objective global oversight could help avoid the truly lethal good but narrow ideas

Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

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