Friday, February 08, 2013

Across-the-board cuts are always a bad idea

To avoid making decisions, politicians and executives often talk about across-the-board cuts.  Not only are the cuts a bad idea because they rarely include politicians' and executives' salaries and perks, but because the cuts often include both the essential and the frivolous.

Let's take a family example.  Dad gets a wage cut because the execs decide there should be across-the-board cuts.  Now should Dad decide his family should have across-the-board cuts?  Is he going to cut the mortgage payment?  Is he going to take the bus instead of driving?  Probably neither.  Is he going to cut the kids' milk budget and his beer budget by the same percentage?  If he wants to invest in his kids' futures, he better cut his beer budget a lot and leave their milk budget the same.