In general, the bigger the organization, the more poorly it is run. The huge revenue manages to cover up a lot of sins, which is yet another reason why growth is desired. The budget is an attempt at a self-fulfilling prophesy, but ends up being only a reflection of the assumptions, egos and emotions of those who craft it. Since the numbers are contrived, the budget can be used to bludgeon or reward the employees, at the will of the next manager up in the chain of command.
Budgets exist because there is a desire to control both sides of the equation. Revenue (R) is desired to be as high as possible, and expenses (E) are desired to be as low as possible. This is "buy-low sell-high.' The belief that money is real is the most ubiquitous idea in the world. The belief that money should be handled in a "buy-low sell-high' manner is the second most ubiquitous idea in the world.
The inflation spiral by Steve Consilvio
The greatest failure of the budget process is the drive to make the numbers happy while making the people miserable. Instead of having many hands having light work, the budget seeks to have fewer people work harder. Budgets are diametrically opposed to all the goodness in commonwealth. They represent the worst type of planning and subtly destroy the quality of life.
Money has exchanged hands the same buy-low sell-high way for thousands of years. Eliminating budgets will not eliminate the nature of the exchange.
Planning is often appropriate. The problem with budgets is the attitude of the managers and their institutionalization of incorrect assumptions. The job of a manager is to make the work easier. Budgets are generally the reason work is harder. The managers want more from others, but have low standards for themselves. The budget gets used inappropriately to acclaim and condemn employees.
If writing numbers down leads people to treat others badly, then it would be better to not write numbers down at all. After violence, budgets are the cruelest way that humans treat one another. They provide an excuse for the banality of indifference. A faith and fear of numbers takes precedence over reason and compassion. Customers, employees, citizens and vendors are the sources of revenue and expense, and there exists a perpetual attempt to squeeze more out of each group.
Budgeting would not be possible without the advent of double ledger accounting in the 15th century. Double entry accounting provides a snapshot in time of cash flow, assets and liabilities. It is a great historical and planning tool with or without the formalization of budgets. One would hope that with more information, there will be less chaos and more control. In practice, the chaos, greed and struggle are the same or worse, but they are better documented.
Cash flow is an unintended consequence of creating cash. Money, rather than solving problems, has become its own problem. Budgets are an unfortunate response to challenges caused by the Cost of Living within an inflationary spiral. To solve the problems that budgets are meant to solve, we need to get closer to the source of the problem: inflation.
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