Inflation and Disinflation


Fiscal policy is related to inflation, which occurs when the prices of goods and services rise steadily throughout the economy. Although many factors (such as increases in the prices of imported goods) contribute to inflation, government borrowing is major factor. When the government borrows great sums of money to bolster the economy, the total amount of money circulating tends to increase. With more money chasing the same quantity of goods and services, inflation increases too.

Theoretically, the government is supposed to pay back its debt during inflationary times, thereby taking some of the excess money out of the economy and slowing inflation to moderate level. This system worked throughout 1950s and 1960s, but during the 1970s, inflation kept building. By the end of the decade, prices were increasing by almost 14 percent a year.

Inflation of this magnitude brings an unproductive mind-set. People become motivated to buy “before the prices goes up,” even if they have to borrow money to do it. With greater competition for available money, interest rates increase to a level that makes business borrowing riskier and business expansion slower. Businesses and individuals alike begin spending on short-term items instead of investing in things like new factories and children’s education, which are more valuable to the nation’s economy in the long run.

Because of the peculiar psychology that accompanies high inflation, slowing it has always been difficult. In addition, the causes of inflation are complex, and the remedies can be painful. Nevertheless, several factors conspired to bring about a period of disinflation, a moderation in the inflation rate, during the 1980s.

Whether inflation will remain under control is debatable. The country is still vulnerable to outside shock. Bad weather could jack up food prices, and political upheavals could limit the supply and boost the price of vital raw materials. Also, government efforts to stimulate the economy could rekindle inflation. When the economy slumps, the government is inclined to increase the money supply, which tends to drive prices up.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Deficit Budget


If you do not earn enough to cover your expenses and show some profit, then you have to consider what to do about it. There are four possibilities:

  1. You can raise your rates, something that, ironically, freelancers seem most reluctant to do, it is the first thing most business owners would think of doing in such a situation, if they possibly could.
  2. You can increase your workload. This is feasible in some fields and not in others. Most editors, for example, cannot learn to edit any faster, and their income is limited by how much they can physically accomplish. On the other hand, you may subcontract, that is, hire someone to work for you and take part of his or her earnings. This works especially well if you can find someone to train who wants to learn you trade. You can also often subcontract with colleagues when they are in slow periods.
  3. You can expand into related kinds of work that pay better or that you can do faster. One editor, learned to do indexing. Fewer people have indexing skills compared to the number who copy-edit, and the hourly rate for indexing is higher than for copy-editing and proofreading.
  4. Finally, you can reduce your expectations. While freelancers can do and earn a healthy living, free-lancing will probably not make you rich. As a general rule, unless rare luck strikes, or you are willing to expand through subcontracting or finding new and more lucrative areas in which to work, your income will probably not soar dramatically. On the other hand, it should rise steadily, and it must keep pace with inflation.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Manage for Consistency


Most companies would prefer to grow steadily at a healthy rate rather than doubling in size one year and losing money the next. No one can manage this kind of schizophrenia effectively with any long-term success, and no one should try. Next to profitability, the most important goal a company should strive for is consistency.

If flexibility is the means, then consistency—of performance and growth—is the end. This sounds like something of a contradiction. If one is being flexible how can one be consistent? In fact, not only are they compatible, but a flexible, responsive management virtually guarantees consistency. It is inflexibility that causes erratic behavior. A company goes on for too long adhering to all the old rules and outdated modes of performance. Then one morning someone wakes up, panics, overreacts, and throws out all the rules. That can make people nuts.

To manage consistently you have to behave consistently. Even if people don’t like what you are saying, they still want to know where you are coming from.

Inconsistency in management breeds all sorts of unnecessary anxieties in the people being managed. There are enough legitimate anxieties in business without adding to them by not letting people know where you are coming from.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Customer Value Action Items


  1. Describe the relationship between process and value;
  2. How does the process view differ from the functional view?
  3. Explain how you would use the marketing cycle and process model to analyze your current business situation.
  4. What quotations would you ask if your company was currently under-doing a review of its processes?
  5. What is a value statement? See if you can describe your firm’s value statement.
  6. What is service blueprinting and when is it appropriate to use?
  7. Suppose you are the manager of a quick-serve restaurant and you begin to notice that your lunch business is steadily declining. Moreover, you notice that customers are queuing up longer at the drive-through window. Which of the process improvement tools would you consider using, and why?

 My Cosultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight