Is government irrelevant?

Years ago, when the dot com boom was blossoming, IFO confidently declared that government was irrelevant.

She had been covering government news in previous decades and had grown discouraged with the totalitarian tendencies even at the most local level, not to speak of the state level. Land use planning, building fees and regulations, environmental protection, garbage and landfill management – all led to the need for larger and larger private sector entities to deal with these developments.

Things looked bad for freedom and prosperity… until the Internet bloomed. By then, we had switched emphasis in our own career and were concentrating strictly on business news. As a result, we got the coolest gig we’d ever had – covering high-tech, venture-funded companies in our entire state.

There was sort of a 1920s feel to the era – big parties put on by high tech business associations and recently-funded young companies. Gourmet snacks, fine wines, live music and exciting speakers from the creative world of advertising, art and animation, in the city. In the Spartan high-tech suburban area, pizza parties with soda pop and speakers from engineering and coding.

One memorable debate in the suburb occurred between Microsoft operating systems and Linux.  The cultural divide was stunning – MS coders: clean-shaven, well-dressed (not suits like IBM, but still…) and dead serious v. Linux creators: scruffy, sleep-deprived and happily passionate.

As the era progressed, we hardly saw the deadening hand of government anywhere. “Government is dead!” we proclaimed to DDH, who couldn’t believe our naivete.

As the boom turned into a bubble, and the frenzy intensified, we began to cover meetings between Venture Capitalists and government officials discussing “private-public partnerships,” whereby the state pension fund could set up a VC fund consisting of pension money plus private investor money. We covered other meetings where VCs and established high-tech companies pleaded with Big Education to raise their academic standards and Big Ed responded, “Get us more money!”

When the Bubble burst, our news company went BK and we slept for three solid weeks, recovering from the excitement, intensity and hard work we had enjoyed for 18 months.

Investment lessons:

1. When you are making lots of money, save half of every dollar you make. You may end up making $ 0.00 for a while.

2. Learn to recognize signs of a bubble.

3. Don’t fall for the hype.


About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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2 Responses to Is government irrelevant?

  1. savernation says:

    Your lessons are right on. I have had my own companies for the past 40 years and always banked 2-3 years of revenue in the event of the inevitable recession. This practice served us well until the Depression of 2007. Going into our 5th year of the recession/depression the practice that served us well did not hold and it has been a battle since the current business environment is recessive at best. The current government policy induced downturn was most certainly caused by the opposite of the Dot-Com bubble which was private equity/IPO funded. (we are a high tech company and have been since 1982).

    So, as the title of your article about the relevancy of government, I guess my take is that it should be but will never be due to self serving politicians and an ever present of supply of leeches in our private sector ready to suck the life out of the rest of us. The irony of the Dot-Com bust was that it was people from our own industry pressuring politicians to look into Microsoft’s business practices, that started the landslide. Using the morons in Sacramento who filed an anti-trust suit against Microsoft as an example, this started the Microsoft stock to slide. These morons did not check with their counterpart morons who managed the State pension fund investments for the PERS. By filing the law suit and driving the Microsoft price down, followed by Intel, QUALCOMM, etc., stock prices, the public sector union pension funds were clobbered along with the rest of our 401Ks. So, is government irrelevant? NOPE. They can screw up a private equity bubble or create, then destroy, the largest public sector bubble ever by using the housing industry/mortgage industry/derivatives to completely crush an economy!

    • True, but it looks as if the worm has turned. The Walker victory could have been because he’s steadfast and good-looking, but the victories in San Jose and San Diego say that the public has really, finally has caught on to the scam. We just have to stay alert.

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