We have all heard the saying, “That dog just doesn’t hunt,” which, loosely translated, means this idea or business is not working anymore. In the economy, things change. Sectors and businesses rise and fall. New products come and old products go.
The invention of double-knit fabric killed 50% of the nation’s dry cleaning stores. One of McAllen’s first successes was getting McAllen Block Ice Company in 1906. Refrigeration then killed the icebox and the block ice business. The airplane replaced the train. The train replaced the stagecoach. You get the picture; new ideas replace old ideas.
Here are some key economic points:
- Only people have expenses. I have a house payment and a car payment. I have bills that I have to pay and I am responsible for covering those expenses. Governments and businesses don’t have expenses, they pass their costs on to consumers and taxpayers. The profitable businesses not only pass their costs on to customers, they make more money than their total costs.
- Only people create opportunities for businesses. When I lived in West Texas, a huge concern for every community was the loss of population. When people move, their money goes with them. The mindset and attitude is different in a shrinking pool of people and money. A growing community provides “replacement dollars.” Replacement dollars is new money that is in the economy to replace dollars that leave when people move away or die or slow their spending. We can make it easy for people to spend their money with us or more difficult but it is our choice.
- Risk and profit are twins. The person who is willing to accept risk differentiated the entrepreneurs and the spectators. I have seen some really cool ideas – not come to fruition because people did not have the willingness to risk their money, time and endurance. I have huge respect for the men and women who risk everything in starting a business. We need more people who are willing to risk starting something new.
- What is good for one may be bad for another. When we were hit by the hail storm several years ago, it was a huge inconvenience for businesses and homeowners, but it was great for roofing companies, home remodeling companies, painting companies, siding companies and the list ges on. Some see opportunities and others see problems and expenses.
- There is no free lunch. Everything costs something, and someone is footing the bill or will be footing the bill in the future. We have become a culture of entitlement. The attitude is , “you owe me this,” or “it’s my right.” We are losing our focus on producing, earning and creating. I enjoy working with start-ups and new members of our business comunity because they see so many opportunities and wide open possibilities. They don’t feel the heavy hand of an inefficient bureaucracy.
What we are really talking about is how people, companies and countries decide how to spend their money.
Quote of the week: “A study of economics usually reveals that the best time to buy anything was last year.” Marty Allen
See you in Mcallen