The Goose That Laid The Golden Egg - Part III

Aesop's Fable
A man and his wife had the good fortune to possess a goose which laid a golden egg every day. Lucky though they were, they soon began to think they were not getting rich fast enough, and, imagining the bird must be made of gold inside, they decided to kill it in order to secure the whole store of precious metal at once. But when they cut it open they found it was just like any other goose. Thus, they neither got rich all at once, as they had hoped, nor enjoyed any longer the daily addition to their wealth.

The goose is the free market economy that continues to lay the golden eggs of prosperity.

The government views the goose as a never ending source of money. Not just money that is needed for appropriate role of government (Article I Section 8 of the Constitution, i.e. national defense, regulation of commerce, coining money) but money that it is doled out to affect every segment of society. So there is constant pressure to raise taxes to fund a never-ending intrusion into the lives of Americans. The tax and spend behavior of the president and congress, past and future, are killing the goose. Ronald Reagan summed up government's view of the economy like this: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

Businesses and some of the people that run them also view the goose as a never ending source of money. Not just money that is needed to run and expand a business, not just money that is needed to pay salaries, invest in new equipment or expand into new markets but ever increasingly to pay themselves exorbitant salaries and bonuses. This is the new American greed.
Take Dennis Kozlowski as a poster boy for American greed.

Dennis Kozlowski takes dull little Tyco and creates a brand name that's making its stockholders rich. Wall Street takes notice. Kozlowski's winning smile peers out from a Business Week cover. He becomes one of the country's highest paid CEOs.

Kozlowski goes on a buying spree. $4 million for a Monet painting. $2 million for a birthday party, and the infamous $6000 shower curtain. Authorities are suspicious. Kozlowski is accused of plundering the company that made him rich.

Once a CEO, now a convicted felon, Kozlowski says he's innocent...his only crime, making too much money and drawing the ire of Tyco's board of directors. Kozlowski speaks out from prison and tells his story of American Greed.

A sometimes all too greedy corporate CEO and other executives can kill the goose that lays the golden eggs to the harm of not only themselves but to employees, employee families, and stockholders, the ones that actually own the company.

And finally just everyday people can get caught up in the hysteria of the goose that lays golden eggs. The two best examples of this in recent years have been the .COM bubble of the late 1990's and early 2000's, and the overheated housing boom of the last few years. As investors we wanted more and more golden eggs from the goose, not just one a day but several everyday. We weren't satisfied with normal golden eggs (returns of 8-12% per year), no we wanted returns of 20-30-40% or more. But we killed or severely maimed the goose. Did we learn our lesson about the goose. Sadly, no. It wasn't but a few years later when we were expecting our homes to increase by 10-20% per year. We then borrowed against the supposed increase and spent it on things we really couldn't afford. But alas the goose has died and there are no more golden eggs. Greed has won out again.

The Moral
Much wants more yet often loses all.
Greed destroys the source of good.
Think before you act.