WHEN a friend of mine started his own company some years ago, he hired an accountant to initiate him into the mysteries of business. The accountant rocked back in his chair, drawing on his accumulated years of learning and experience. Then with the mien of a Harvard Business School professor, he said: ``First you must keep a careful record of the cash you take in. Then you must keep a careful record of the cash you pay out. If you pay out more than you take in, you go bankrupt.''
This is a lesson that every private citizen seems to understand, so how come the folks who run the government have so much trouble getting to grips with it?
Over the years, it has been my good fortune to live in a number of small towns, with populations around 5,000. For the most part, the local governments have done a good job. They have lots of people looking over their shoulders. They know which individuals are in need. They know what the problems are.
One of the problems is the penchant of state and federal governments to dump funds on them they do not want. In one such town, the citizens fought a stout battle against a state agency that wanted to upgrade and widen a minor road. The road was no hazard, there had been no accidents on it, the townsfolk liked it narrow and leafy. The state officials were nonplused, because as they said, they would pay for all the work. They could not understand the objection to widening a road that did not need widening when somebody else would pay for it.
What about government subsidies for college education? What is wrong with the argument by Secretary of Education William J. Bennett that government subsidies should go to those in real need, and the middle class should pay market rates for education loans?
This puritanical view of what the government should, and should not, do for you comes in part from a Welsh father who believed you should never buy anything until you had saved up for it. His conviction tumbled when it came to buying a house, the biggest purchase he ever made, but he was never really comfortable about borrowing even for that.
I realize that his rule, if observed, would bring commerce to a standstill. We live in a society where the credit card is supreme. If you don't have one, you are likely to be considered a just-arrived Martian who should be treated with suspicion. Still, there is much to commend an old-fashioned philosophy that says you should not buy what you cannot afford.
The problem is that the bigger government becomes, the less this philosophy seems to prevail.
That is why I nominate Dave Stockman for the Purple Heart for wounds suffered while valiantly assaulting the citadel of government overspending.
Mr. Stockman, as director of the Office of Management and Budget, is a sort of maverick divisional commander in the Reagan army. Apparently without signaling headquarters, he launched a broad assault recently on military pensioners, some farmers, and borrowers of student loans, who he thinks are being inordinately subsidized by the federal government.
Their counterattack lit up the whole political front. Chief of Staff Donald Regan went ``Tsk, tsk.'' Commander in Chief Reagan flinched. Back in his hometown, General Stockman was even castigated by his mother, who said what he had done didn't ``set too well'' with her.
Whether you agree or not with his specific proposals, Stockman's valor in pinpointing some of the realities of budget-cutting deserves applause. Of course, he knows the shot and shell will not last much longer. This is apparently his last campaign. He may soon be hanging up his government uniform for the private sector, where the businesses are responsible to the shareholders for budget-balancing.
But before he goes, he wants to have a last crack at vanquishing fiscal irresponsibility. Tattered and mud stained as he makes his last stand, he deserves a cheer.