Business Loss: Is That A Spade I See?

The other morning on the televised news I heard of (yet another) corporate muckety-muck drawing a comfortable salary (USD6M, in this case) despite their company’s recent losses (some USD40B). And it got me to thinking about terminology.

Take the term from which this entry derives its title: ‘loss’. I’m thinking that this is one of the most misused terms around – especially today, as it applies to business and economics. It seems to be deliberately chosen to create a feeling of sympathy for the ‘lossee’, and I think that the feeling is completely misplaced.

Let’s first look at a perfectly accurate usage. “Joey Psychotic lost his home and all of his possessions to fire this morning, believed to be started when his hungry cat kicked over an unattended prayer candle…” This makes sense – Mr. Psychotic had a home. But it was consumed by fire, reduced to a wet, smoking pile of rubble, crawling with investigators. Not a home by any stretch of the imagination. You feel sorry for Mr. Psychotic, and you should (even while questioning his religious rituals).

Now, how about this one: “The Acme Prayer Candle Company lost forty billion dollars over the last three quarters of this year due to slacking demand. Stockholders fear bankruptcy as…” Nope, I don’t buy it. That which you do not have cannot be lost. Acme didn’t lose anything – they never had it in the first place. See the difference?

Let’s take a stab at writing that a little more accurately: “The Acme Prayer Candle Company failed to realize forty billion dollars in profits over the last three quarters of this year. Acme executives cite slacking demand as the cause of their failure to deliver promised value to stockholders, who fear bankruptcy as…” Acme didn’t lose, they FAILED.

Fail brings a whole different set of emotions than loss. It’s not that failure is necessarily bad, either. After all, failure can be a very powerful teacher – well, provided one can grasp its message, which isn’t a given.

I don’t feel much sympathy toward anyone that can (mis)direct their company to failure, and yet still pull down six million greenbacks. I won’t bet on their learning anything, either, unless it’s something along the lines of, “hey, look what I just got away with!”

Maybe the companies that are failing should be allowed to fail, their directors along with them. A multitude of companies, built on good ideas, managed competently, would certainly spring up in their place. I’m not denying that there would be great steaming heaps of economic pain along the way, the likes of which most alive today have never seen.

But America, still the greatest land on Earth, would emerge stronger than ever.

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