Back to when you were on the playground.?
Back to the days of grade school.?
Back to a simpler time.?
A more humbler and honest time.
Back to a time when you didn’t know of greed or corruption.
Remember when you were a kid learning simple economics.?
How you were taught the basic functions of a business.
How you learned that Profit is equal to Income minus Expenses. The simplest fact there is to business.
How you learned that in order for you to have a profitable business you need to have a good, and that consumers needed to have a want or a need for that good. Once again, real simple stuff.
How you learned to make a budget of needs and wants, and how the needs are priorities over wants.
Imagine now each student is given $60 to run their business.?
The average class room size for me growing up was about 30 students, so let’s say these thirty students all received $60 to run their business.
As a kid who is learning the basics to business you would proceed cautiously as the teacher gives you a paper of all the things you could buy or pay for.
Obviously you have to account for the basics like rent, electricity and employees.?
Once again the simple things.
You then have to make a competitive price for your good; otherwise you won’t be able to sell the good.?
If you price too low, you won’t make any profit. Price too high, you won’t make enough sales.
All these things, just to clarify are all grade school economics.
The kids start making profits and are operating their pseudo businesses successfully, but something happens.?
They want more.
They decide to raise the prices on their products. While some customers can still afford the new prices, the kids aren’t profiting as much.?
Rather than addressing the issue the kids decide the solution is to rent out a nicer office location. One that has all the bells and whistles; that way they can charge more and say it is because the customers are paying for the “whole experience”.?
The basic fundamental issue is that the kids have lowered their income and raised their expenses.?
What did we learn in grade school again?
Now while some of the students are still making a little bit of profit due to having either a great product, or loyal customers, most of the other children are now losing money.?
It is time for those kids to start being more conservative and make decisions that won’t hurt them financially.?
Nope, as most children they feel their way are right and decide to continue.
Instead of trying to lower prices to their products, they raise them. Instead of being conservative with their employee’s wages they actually pay them more.
Now imagine these kids decide to overpay employees who underperform.?
Why are they overpaying them you ask??
Because the other kids are trying to take their employees, so the only way to guarantee they will stay is if you over pay them.?
You want to take someone else’s employee; you got to over pay them.?
It’s not the employees’ fault that the kids are overpaying them.?
It also isn’t the employee’s fault that the kids decided to raise the prices on products which is making them lose sales; all this while also raising their expenses.
Now the kids are mad because they are losing money.?
They want to take it from their employees and well the employees are obviously mad about that.?
Why should the employees sacrifice their pay when it was the kid’s dumb decisions that made them lose money in the first place??
No one told the children to keep piling on different expenses they couldn’t afford.?
It would be understandable if the employees were making a horrible product and no one wanted to buy because of that, but that’s not the case at all.
If anything the kids have some of the best employees in a long time.?
They are selling a great product, but it is so overpriced that few people can afford to buy it.
Why don’t we lower the prices on the product?
Stop overpaying subpar employees.?
Why can’t the kids be more conservative with their decision making and maybe then they wouldn’t be losing so much money.?
The system isn’t broken, it is simply bad decision making by the kids.?
Silly little kids.