The General Motors Example

Here’s an illustration of the mentality of what has gone wrong with finances at the national, the corporate, and the individual level.

Between the years 1985 and 1994, General Motors earned $17.92 per share of stock but paid out dividends of $20.62 per share. So, where did the $2.68 come from?

But wait! In addition to paying out $2.68 more per share than they took in, GM also spent $102.34 per share on capital improvements.

But wait! There’s more: loss of market share, employees out of work (but still being paid) and under-funded pension plans and medical liabilities. No wonder they needed a bailout.

While the book is silent on how Donald Trump got himself in so much debt, the wisdom here applies to us all.

- from page 69.