Monday, 30 March 2009

Updated Cow Analogy

I just received the following by email:

After the recent teetering-on-the-edge-of-total-economic-and-financial-meltdown couple of weeks it seems economic systems and their workings have pushed their way into the need-to-know-category. Well, we can now simplify this all by explaining 9 economic models with cows.

Socialism

You have 2 cows.

You give one to your neighbour.

Communism

You have 2 cows.

The State takes both and gives you some milk.

Fascism

You have 2 cows.

The State takes both and sells you some milk.

Nazism

You have 2 cows.

The State takes both and shoots you.

Bureaucratism

You have 2 cows.

The State takes both, shoots one, milks the other, and then throws the milk away...

Traditional Capitalism

You have 2 cows.

You sell one and buy a bull.

Your herd multiplies, and the economy grows.

You sell them and retire on the income.

An American Corporation

You have 2 cows.

You sell one, and force the other to produce the milk of four cows.

Later, you hire a consultant to analyse why the cow has dropped dead.

2008 Venture Capitalism

You have 2 cows.

You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more. You sell one cow to buy a new president of the United States, leaving you with nine cows. No balance sheet provided with the release. The public then buys your bull.

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