Salesmen Bookkeepers and Politicians

There is an old salesman's theory. When the CFO and the finance department take over the company, it is time to walk away.

Customer retention is no longer the priority. The narrow, black or white, bottom line view of the bookkeeper will eventually destroy customer satisfaction and in the end the confidence of your customer base. That theory, in my humble opinion, explains why Paul Martin is not the prime minister, today.

Paul Martin was a good, if not great CFO, but as the front man he was no salesman. He was the honest and ethical bookkeeper who didn’t realize that sometimes, shades of grey are required. It was necessary to create the Gomery Commission, but it was naive and just plain stupid to hold daily televised hearings in Quebec, where they became a daily soap opera featuring the flaws in your product offering.

There has to be a balance within an organization between the back room role of the fiscal managers and the public relations role of the sales and marketing staff.

Conversely, speaking as an old commissioned sales rep, you run away from any company where the marketing department controls finance and the budgeting process.

That company is in it for a quick hit and short term gain. Their smoke and mirrors budgeting will not only result in less revenue in the long run, but more importantly it will hurt your long term relationships and destroy your reputation the marketplace. The company will never be able to deliver on what they have promised and instead will just keep changing the projections.

Welcome to the Harper government.

As has been written around these parts, many times, by many bloggers, everything about our current government is marketing. From the mandatory PMO approval to attend the opening of a local hockey rink, to billion dollar international summits, or more recently, forcing our public workforce to count and report on the number of economic recovery signs, still standing each week, the main concern of this government is the messaging of the Harper brand.

Don't get me wrong, repetitive advertising is necessary, especially when introducing a repackaged product that has failed in a larger market. But, you do not replace your fiscal managers with brand managers, and your bookkeepers with copywriters.

During the last election our finance department refused to admit that a recession was starting until two weeks before the vote. The message then changed that through no fault on their part, the country was being dragged down with the rest of the world. Of course, the followup message advised us that Canada would be the first country to recover.

The government would try to prove that, by being the first to raise our prime lending rate, although tentatively and marginally, at the billion dollar marketing event that took place this summer. An event where our economist prime minister as the leader of the hosting nation would espouse the rollback of world wide recovery programs. This of course resulted in a polite but deafening, silence from the rest of the world leaders in attendance.

The reality is that some economies are in worse shape than ours, look south for one example, but there are also other countries of similar size and circumstance whose economies are in much better shape.

Australia for example is a resource rich, country, of 20 million people that is going through a boom period economically. Their largest trading partner is China who is buying up anything that Australia can dig out of the ground. Australia just raised their prime lending rate 25 basis points from 3.5%. They never had to drop close to zero like we did.

The leaders at the G8 and G20 summits realized that Harper’s pronouncements were intended for local consumption only. Financial ministers and economists worldwide realize that despite all the national rhetoric, Canada’s economy will remain stalled until our largest trading partner gets its own economy back on track.

It is beyond my abilities and one dimensional view of the world of finance, to rehash, at least in this post, all the falsehoods in the current governments fiscal messaging.

The poor financial forecasting that took place in their first two years of operation, when they foolishly cut their second largest revenue source by over 28% or the introduction of sub prime mortgages into Canada, that forced them to move $75 billion worth of high risk paper from the banks to our government books last fall.

It should be self-evident to any Canadian, who is concerned about our economy, that the fiscal responsibility of previous governments, resulting in operating surpluses was immediately replaced by deficit spending, long before the recession started.

Instead compare the financial messaging between governments, past and present.

Neither Jean Chrétien’s PMO marketing department or his ministerial caucus as salespeople ever risked claiming, economic nirvana. Instead Paul Martin as finance minister would always forecast for the worst case scenario, projecting modest surpluses. Then miraculously at government year end or if suddenly required for an international crisis or a national emergency, additional funds would be readily available due to a better than forecasted performance.

If it really is all about the economy. We need a government whether right, left or center that consists of more than just marketing.

We need a government with a leader that understands the importance of fiscal management and is also smart enough to prevent the bookkeepers from setting policy.

Unfortunately, as an economist, our current prime minister is better at marketing and sadly as a marketer, his product is flawed, his messaging too transparent and his market base too narrow.