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What is the difference between financially healthy and unhealthy companies?

Healthy companies

When companies are healthy, businesses have many highly qualified workers who produce and sell high-quality products. Companies receive a lot of money for those products, which they use to pay their employees a good salary. In addition, they have assistants/apprentices who support the production and sale of those products and also earn a fairly high salary.

When companies are healthy, people fulfill three roles: employee, consumer, and client. In their role of employee, individuals earn money they can spend, buying expensive products as a consumer. As a client, they have work done in their houses and gardens. Therefore, they hire artists to create art they can display in their homes and gardens or produce exhibits they can visit. They hire caretakers to look after disabled family members.

When companies are healthy, the government fulfills a limited role

When companies are healthy, the government fulfills a limited role. The government owns the infrastructure that businesses need to function. Those are roads, railways, telephone and internet cables, cell towers for radio and TV, airports and traffic control for aircraft, etc. The government offers the use of this infrastructure to companies at the amount needed to pay for the maintenance. But the maintenance is also carried out by companies. A company that owns the infrastructure can establish a monopoly and push prices up mercilessly. That’s why telephony, internet, and TV are so much more expensive in America than in the Netherlands.

When companies are healthy, the government is very small and needs little tax money to function.

Unhealthy companies

When companies are unhealthy, they dismiss most of their workforce. Thus unemployment rises and wages drop.

When companies are unhealthy, small businesses disappear, and large companies employ as few workers as possible, paying them a low salary. They have a lot of administrative employees who also earn a low salary. They have a large number of managers who attend many meetings and earn a good salary.

When companies are unhealthy, people fulfill two roles. As an employee, they earn little money that they turn around and spend on cheap products as a consumer. So companies earn little money and (are forced to) limit themselves to producing a lot of cheap products. People don’t have money to do maintenance on their home and garden, so maintenance companies go bankrupt. People have no money with which to contract artists, so they also go bankrupt.

Prisons have grown hugely over the last forty years because the government has had to keep the unemployed off the streets

When companies are unhealthy, the government soon discovers two things. That unemployed persons who are bored become destructive, and it develops methods to take care of those unemployed. Traditionally, this was done by recruiting people to the army. Over the last forty years, governments have turned to unemployment benefits, education (Europe), and prisons (US). Prisons have grown hugely over the last forty years because the government has had to keep the unemployed off the streets.

Healthy and unhealthy companies, how to tell? When companies are unhealthy, the government is huge, owns many of the companies necessary to run society. It needs a lot of tax money to do all its tasks.

Smart savings make companies healthy