THE PARABLE OF THE OLIVE JAR

By B D Fenton

I heard this supposedly true story many years ago in graduate school. Please bear with me as I try to tell it as I remember it – I am sure I will massacre it handily I, but I will welcome anyone who knows the facts and can verify its authenticity. As I said, it has been a long time since I heard it, but I think I can accurately convey the spirit of it and it really does have a point relative to our current financial crisis.

It seems that the largest purveyor of jars of green olives in the nation was concerned about their decreasing sales profit margin. Although they enjoyed a healthy lead over their competitors and enjoyed the lion’s share of the green olive market they wanted to improve profits so they decided to bring in an “expert” to advise them.

The expert consultant set up an office with a small support staff in their corporate headquarters and proceeded to study the situation. He toured the orchards that grew the olives and studied the planting, cultivating and harvesting procedures. Next he examined the storage and ripening process. He spent time with their transportation division noting how the olives were moved from the farm to storage and from storage to the plant. He carefully observed the bottling, packaging and shipping to the markets. Finally he looked at the marketing and sales procedures. After months of study he and his staff considered the mountain of data they had compiled and suggested a course of action.

He complemented the company first on a very well run and efficient operation. There were some minor operational procedures that could be adjusted to cut costs, but overall he recommended few changes. After evaluating everything he said there was one thing they could do to reach the profit level they wanted. Because of their huge market share and the large volume of units sold daily all they needed to do was reduce the volume of the contents of each jar by one olive. The cost savings of one olive per unit multiplied by the millions of units sold would result in increasing the overall profit margin above their target level.

 The company’s senior management went over the projections and exclaimed their unanimous approval. It was a simple plan, but absolutely brilliant. In fact, by following his advice they got just the results he had predicted. They promptly proclaimed him a genius and happily paid him his large fee.

The profit from the sales of the jars of olives was substantial enough that it was used to offset costs in other divisions of the company. They were able to even to subsidize the introduction of new products with the profits from the olives. As time passed they began to depend on those profits to compensate for other less profitable divisions in the company. Meanwhile their orchards were infiltrated by disease, their equipment aged, labor costs increased and shipping became more expensive.  When faced with rising costs after a difficult overall sales quarter senior management got together and decided to compensate by reducing the contents of their olive jars by another olive.  They were elated when it resulted in raising the profit margin once again.

Realizing nobody would notice one less olive they resorted to reducing costs and increasing profits by decreasing the content of the olive jars whenever they needed to boost their bottom line. Just one olive less multiplied by millions of jars and the profit magically went up. They didn’t even need to spend money on consultants – they could do it themselves whenever it was necessary. It was so easy it became almost automatic.

But then a funny thing happened. The profits began to decline. Sales started to fall. Suddenly they were losing market share. Since their profit model was based on volume revenues were decreasing. The sales of green olives wasn’t sufficient to cover shortfalls in other areas. They called in the expert again. This time after months of study he evaluated the data and told them that the consumers noting that their competitors offered more value by selling a comparable product containing many more olives at virtually the same price were switching brands and no longer buying their product.

 By continually reducing the numbers of olives in their jars they had ceased to provide a good product and lost their market share. They were astonished. It was only one olive here and another olive there. Who notices such things?

This story reminds me of the attitude of our elected representatives in Washington, D.C.  Unfortunately our legislators have not only reduced the product they deliver to their constituents, they have compounded the situation by incrementally raising our taxes. Just a little here and a little there, until the burden has become almost unsustainable. Each little increase is just another olive out of the jar. Who notices?

They are not businessmen or businesswomen. All they know is when they need revenue they only need to take it from the people. It is easy and so simple. They look at the American worker as their personal golden goose. Squeeze it a little and out pops a golden egg. Squeeze it again and out pops another. It works every time.

The majority of them have never had a real job. They don’t understand the concept of a ‘bottom line because they don’t have one. All of their expenses are paid for by their constituents. Their office overhead, support staff, rent, supplies, transportation, meals, gifts, telephone, mailing and travel are all paid for by the taxpayers. No wonder they can’t pass a budget that doesn’t spend more than it takes in. They have never had to. Of course their answer to every issue is to raise taxes and spend like drunken sailors. They have an unshakable faith in our ability to provide them with funds.

Unfortunately our economy is reaching the ‘tipping point’. But it appears our political leaders still can’t stop. They are going to squeeze and squeeze until the goose dies in their hands. Even then I am not sure they will get it. They will more likely pass harsher laws to try to force compliance from its lifeless body. They will call press conferences and jostle for position in front of the microphones to threaten our future and our children’s future if we don’t keep popping out those eggs. They don’t know any other way.

 That is precisely why we need term limits – the time has come for us to break this cycle. Our current DC gang of “professional politicians” needs to be sent packing regardless of their party affiliation. We need to replace them with people who have had real jobs in the real world, who don’t look at taxpayers as a government ATM  – people who will serve their terms and go home.

Too many olives have already been taken out of the jar. It doesn’t matter if you look at it as half empty or half full. It certainly is not worth what you are paying for it. Next election vote against the incumbents. Replace them with citizens who know we don’t work for the government – it works for us.