The Fat Man Theory

The Fat Man Theory

Are you familiar with the fat man theory? I consider it a good analogy to bear in mind regarding work, family, or public policy.

The fat man theory rests on the concept of one man carrying another on his shoulders. When a large man carries another large man, they will not go far; just a couple steps in all likelihood. When a small man attempts to carry a large man on his shoulders, they may well collapse before a step is taken.
Yet when a large muscular man carries a small man he may be able to cover quite a bit of ground.

In terms of public policy, consider the private sector carrying the public sector. We all recognize the need for a public sector albeit our view of how much public sector responsibility there should be will vary. Most agree we need roads, bridges, schools, police/fire departments, and some level of national defense. Yet many evidently forget that irrespective of the level of public sector activity desired, it must be carried by the private sector. Take away the support of the private sector, which is the sole funding mechanism, and the public sector has no resources upon which to call.

What is the private sector? Ultimately it is firms, it is companies. Of course, these institutions are comprised of people, but at the root of our analogy the health of our man doing the carrying equates to the health of our business community. His health equates to the environment in which these firms operate. Equates to the rules, regulations, taxes and restrictions placed upon them by the public sector.

We want a strong man carrying a slim man to make the most progress, do we not? It does not take much imagination to forecast a poor ending to a circumstance where the weight of the public sector overwhelms the strength of the private sector. Circumstances abound where this approach has failed. Venezuela stands as a recent example; two decades ago it was a sterling story of success in South America. Today its citizens are fleeing. In our own country we have seen cities in Pennsylvania and California go bankrupt; the state of Illinois has incredible debt; Taxachusetts, New York, New Jersey, Connecticut and California have seen the flight of high earners who see the writing on the wall. I left New York in no small measure due to the two thousand a month I spent in property taxes for a middle class single family home. $24k a year.

We are most fortunate insofar as the current environment sees cutbacks in regulation, permitting requirements, corporate taxes and the like. These steps suggest that we will revert to the levels of economic growth we’d once considered normal. Without robust economic growth we cannot hope to carry the bloated public sector we now have. It is not a slim guy we carry on our shoulders; our public sector is large and voracious.
When we have government funded (your money)radio ads encouraging folks to sign up for food stamps even if they have cash in the bank we’ve jumped the shark.
Our public sector rewards failure amongst its bureaucrats. Failure to meet the community needs results in more funding. Not less. More. The department that fail generally add the most staff and receive ever higher levels of funding.
The bigger the failure, the more the funding gets added. The worse the students perform, the more funding the schools get. Generally speaking, the worst performing school districts spend the most money per student and this is done where economies of scale would suggest the opposite should be so.
Is that how it works in the private sector? Is that how it is for you at work? The worse you perform, the worse your metrics, the more staff you get to hire, the more money you make? Is that how it works? I suspect not. I suspect if your department fails in its mission, the results affect you personally and quite negatively.

The fat man theory works as you assess your family’s finances and it certainly applies in your firm. We all know instinctually that revenue forgives all sins. Drive enough top line and you can make some spending mistakes. Yet without robust revenues no firm can long survive.

A departmental culture which concurrently honors revenue generation and frugality is a recipe for success in any industry. It is why clients are treasured beyond measure. Firms which treasure their clients are the most unlikely to use the three dreaded letters in a caring management environment: R.I.F.

Reduction in Force.

I’ve had to walk hardworking and invested colleagues to HR for the reduction in force step. Few actions in my professional career have been more distasteful. These experiences trained me to be frugal and to cherish clients. I never want to do that again. It was awful in each case.

Living below your means is a wonderful adage at home and at work. It equates to a strong man carrying a smaller man on his shoulders. The fat man theory.

I will close by encouraging you that recent events suggest a booming economy may be in its early stages. Kennedy, Reagan, and Bush all had large increases in tax revenue subsequent to income tax cuts. This may seem counterintuitive to some but is easily understood within the bounds of man being a rationale being.
Provide positive reinforcement for any behavior and you get more of that behavior. And the reverse. Clearly, the friction of taxes is negative, and the more negative reinforcement is applied, the less a behavior will occur. High tax proponents are either fools or more concerned with power than national vibrancy. High taxes weaken the man doing the heavy lifting.

In any event, a booming economy presents opportunity to the prepared. And luck is the combination of preparation and opportunity. A booming economy is a great time to escalate your career. Grab the brass ring. Be hungry. Be alert for opportunities. We do not seem to be in a time when the public sector will recede much, but at least the private sector is muscling up.

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