FINANCIAL FAILURE

There are many ways to learn a lesson but for some reason man learns best utilizing the method known as trial and error. No matter how much wisdom is imparted to an individual, he feels the need to test things out for himself. This means that mistakes will be made and there is the real possibility of financial failure along the way. Financial failure can sometimes be our best friend rather than an enemy.

We are living in a day and age when failure is not allowed. If there is some kind of competition, there are no winners. Everyone gets a medal for participating. What this does at a psychological level is to teach that there is no difference between excellence and mediocrity. Everyone a winner and no one a loser. The important thing is not to reward excellence and ability but to penalize those who do well for doing well.

The world of reality separates the competent from the incompetent. This is a good thing because someone that is not qualified to a job can move to another for which he will be more qualified. If he is allowed to demonstrate his incompetence, he is forced to either upgrade his skills to become competent or find another line of work. In other words, he is allowed to fail that he might learn to succeed.

By failing, he will learn what went wrong originally and then he can make the necessary adjustments that will ensure future success but he must be allowed to fail. Some think that failure is a bad thing. It is if you do not try to succeed but you will fail all the way to success, if you do not give up. However, our government system will not allow anyone to fail financially. They bail out the incompetent who have failed in business thus ensuring that the financially incompetent will continue to squander scarce resources. These businesses are not allowed to fail and thus they will not be forced to make the necessary adjustments that will result in financial success.

When you know that there are no repercussions for failing financially, you will not take the necessary precautions. When you know that the government i.e. taxpayers will bail you out no matter what you do, you will spend money as if there is no end in sight. You will throw caution to the wind. When your money is on the line and you know that no one is going to bail you out should you fail, you will be cautious in your spending and business practices.

Many big corporations know that the government will bail them out should they go bankrupt. This sends the wrong message to businesses. They will not alter their behavior unless they know that the market will bring financial sanctions against them for their reckless business practices. The government is not alone to blame in these bail out schemes. Businesses needs to get their financial houses in order. They must be allowed to fail no matter how big they are and how painful it is. Failure is the key to success.