Government to Business – Don’t Do as I Do – Do as I Say!

This little story is imperfect but I think it does a pretty good job of showing the hypocrisy of our lawmakers when it comes to incentives and rewards (read – AIG/Wells Fargo and anyone else who is a recipient of Federal bailout funds in one way or another.)

A Fractured Fairy Tale

Meet Bob.  Bob has a family – 4 kids and a wife.  Bob has a business.  He provided services to clients who didn't pay him.  Bob didn't do a good job of vetting his clients and should have seen the problem.  But he didn't.  Now Bob needs money to keep his business afloat.  Bob's father-in-law (Frank) wants Bob's business to succeed since his daughter and grandkids depend on the income from Bob's business. 

Frank goes to Bob and offers to invest in the business.  Some money is just a gift – some money is a loan to be repaid when Bob get's the business back on his feet.  Bob is happy.  Bob uses the money to advertise his business.  Bob uses the money to hire talent to help him sell his product/service.  Bob is doing all the things his competitors are doing to drive business and stay competitive.

Soon after Bob made these investments in the business he gets a call from Frank, the father-in-law.  Furious, Franks asks Bob, "What are you spending my money on?  Advertising, staffing, marketing, equipment?  Are you crazy?  I didn't want you to spend money on that stuff!"

Bob asks Frank, "What did you think I was going to spend the money on?  I want the business to be successful.  I want to attract customers.  I want to be able to hire people who will help me attract customers.  I need to provide my staff with a reason to continue to positively impact my (now our) business.  If I don't do these things I won't be able to stay competitive and I won't be able pay you back."

Frank says, "That's not what I had in mind."

Bob says, "What did you have in mind?"

Frank stammers and says, "I don't know. I just don't like what you're doing to increase your business."

Bob asks, "What do you want me to do?"

Franks says,  "I don't know."

Bob is screwed.

Meanwhile Back at the Ranch…

Now this scenario isn't much different than the recent hub-bub around AIG and other financial institutions that offer incentives to their channel and their employees to drive business. 

Now, I get that there are excesses, and you can find them in any scenario, but the overall point is that there are a lot of programs and marketing efforts that are necessary in order to remain competitive and continue to drive business success.  These are common and generally accepted marketing tactics that show positive ROI.  To have the Government say what a business should or shouldn't do in the marketing of its business is bordering on insanity.

But here's the real rub in my mind… while the Government is deriding these companies for spending money on legitimate incentive activities that provide measurable returns, they fill their stimulus package with EXACTLY THE SAME STUFF! 

They are using the same tactic – incentives – to help get our country out of our current economic situation.  A quick Google of "incentives in the stimulus bill" provides the following (and I know it is far from exhaustive…)

• Incentives for adopting certified electronic health records – upwards of $40,000 per physician starting in 2011
• A $15,000 homebuyer tax credit, higher loan limits for Fannie Mae, Freddie Mac and FHA, and government spending to lower mortgage rates
• 10% tax credit for investment in current-generation broadband infrastructure for underserved areas
• 20% credit for current-generation infrastructure in unserved areas
• 20% credit for higher-speed next-generation broadband
• Tax incentives for energy efficiency, conservation
• Financial incentives for homeowners or commercial buildings that install green roofs on their buildings
• Increases tax credits for installing  high-efficiency air conditioners, furnaces, heat pumps and hot water heaters from $500 to $1,500 for the next two years
• Incentives For Plug-In Electric Cars
• Doubling the amount of equipment that can be expensed in the year of purchase

Hello… these are all INCENTIVES…

I now return you to your regularly schedule hypocrisy.