Zombies, zombies... everywhere... - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 12 August 2014
Zombies, zombies... everywhere... A  A  A

Ouzilly, France

Dear Diary,

A regular reader writes in. The bone he picks concerns our definition of zombie.

    Your definition of ZOMBIE is WRONG ....

    A ZOMBIE lives on the back of someone else and is not productive (he consumes more than he produces) ...

    This is true in PRIVATE and PUBLIC BUSINESS ...

    Zombies in the private sector are the most dangerous
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Most dangerous? Probably not. There are plenty of zombies in the private sector. But they usually are unarmed. It's the armed parasites that pose a risk to your life as well as your money.

Still, there plenty of zombies in the private sector...and the semi-private sector. The Wall Street Journal:
    U.S. Postal Service Posts $1.96 Billion Loss in Third Quarter

    The agency boosted revenue by 2% to $16.5 billion in the period ending June 30. The improvement was due mainly to growth in its package-delivery business, which saw revenue rise 6.6% to $3.19 billion as postal customers increased their online spending.

    The service's operating expenses rose 9.2% to $18.42 billion, as compensation and transportation costs grew.
According to our chief researcher, EB Tucker, the USPS is basically a zombie jobs program. It employs 627,000 people...and loses about $12,760 per worker per year:
    "It's basically the same as putting them all on SS Disability payments but we can still mail people something if we want to....and if we buy the stamp."
A zombie is not necessarily idle. Or lazy. An honest letter carrier, for example, is a decent fellow who earns his money.

So what makes him a zombie? You can't always tell a zombie by looking at him. He doesn't always have greenish skin, hollow eyes and blood dripping from his chin. Often, he walks among us...wears a suit to work, speaks politely, and could pass for a productive member of society.

You can only tell he's a zombie by looking at what he lives on. Is it a profit-making business? Is he providing a product or service that people would be willing to pay for?

In the case of the Post Office, the answer appears to be 'no.' The fees collected in postage and other revenues do not fully support the employees. USPS runs at a loss, which must be covered by productive taxpayers.

A company that runs at a persistent loss is one that consumes - in time and material - more than it produces. It is a zombie - living at the expense of others. In the private sector, zombie companies usually run out of money and go out of business. That's why most zombies tend to be on the government payroll. The government can take money by force...or just print it. So it is able to support zombies for much longer.

Zombies collect in low-lying areas. There they hide for entire careers without being detected, their output never marked to market. Nobody knows what they are worth.

That is why you find so many in charity organizations. After Hurricane Sandy, for example, the American Red Cross raised $312 million to aid victims. What happened to the money? The organization's million-dollar-a-year director won't say. According to ProPublica, she's hired an expensive law firm to fight a request for information, claiming that the use of funds is a 'trade secret.'

Did donors get their money's worth from the aid they gave to the Red Cross? Or did the money go to support zombies?

Our guess is that it went to zombies. First, because bureaucracy always expand to fill the money available to it. And second, because charitable work attracts zombies on both ends - the givers and the takers. Even if the zombies at the Red Cross didn't keep the money for themselves it probably went to other zombies in the private sector. You can see this process at work in the following example.

Jon Mitchell, writing in Foreign Policy Journal:
    ...corporations and special interest groups have permeated even the most well-intended of US [foreign aid] policies...
And now we can connect the thigh bone to the kneebone.

The feds use their flexible dollar and EZ money policies to support programs that should be cut back - such as foreign aid. Zombies working for the US government give the money to zombies working for foreign governments. (Our friend Doug Casey describes foreign aid as "poor people in rich countries giving money to rich people in poor countries.") Cronies in the private sector make sure strings get attached to the aid package. Money to El Salvador, for example, was withheld until the country agreed to buy genetically-modified seeds from Monsanto.

Zombies, zombies... everywhere.

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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