Bailout Fever

Well it seems that Jamaican companies have now joined the calls, which started in the United States and spread to Europe and other parts of the world, for bailouts to be given to them.  At a time when everyone is feeling the crunch companies are requesting all kinds of assistance from the government.  Now I am not opposed to the idea of providing incentives to companies to help to stimulate the economy but some of the companies requesting bailouts are certainly not deserving of one.

Why is it that when the average worker has to pay out more than half their salary in taxes (including GCT) that companies want to be in a position where they pay none?  Surely it is the consumer who should be calling for a bailout?  Many companies have reaped huge profits at the expense of the consumer and now want to get a bailout. Company executives paid themselves big salaries, built extravagant buildings and offices, and have enjoyed many additional perks of the job.  Most of these companies did not give thought to putting aside money for a future time which may bring challenges with it.

Let us look at some examples:

• Interest rates are lower but banks refuse to reduce loan rates;
• Flour prices drop but has any bakery reduced the price of bread or has any supermarket passed the savings onto customers?
• Gas prices have fallen by more than 15 dollars but has the cost of transportation and trucking been reduced?  In fact the average mark up per litre of gas is ten dollars whereas earlier this year it was seven dollars and last year it was four.

The problem is always the same, when costs go up the prices of products are increased but when there is a reduction in input costs prices remain unchanged.  There are of course small businesses that are hurting from the recession but any help to be given must be controlled.  The first requirement for a company to get help is that they should be compliant with all tax payments and the second is that they must be efficiently organized.

Companies must remember that consumers are having a hard time as well and that just because you are in business it does not entitle you to receive a bailout.