Friday, August 30, 2013

Job creation my ass.

If there ever was a time when the titans of American industry were indeed the civic-minded "job creators" beatified in the GOP's incessant campaign drone, this Washington Post piece by Jia Lynn Yang makes clear just how far off-shore that ship has sailed. Nowadays, shareholder value is the boardroom buzzword, such that the interests of the company and the interests of the working stiff are often disconnected, if not antithetical. Similarly disenfranchised are the bedroom communities in which those value-minded corporations operate. Writes Yang of Endicott, New York, the once-vibrant home of IBM:
It used to be a given that the interests of corporations and communities such as Endicott* were closely aligned. But no more. Across the United States, as companies continue posting record profits, workers face high unemployment and stagnant wages.... Driving this change is a deep-seated belief that took hold in corporate America a few decades ago and has come to define today’s economy— that a company’s primary purpose is to maximize shareholder value. [emphasis added]...
More to come...
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* Detroit, too, comes to mind, though that's a case where union excesses/hubris also played a major role. Nothing in this melodrama is as black-and-white as it seems.

13 comments:

Weston said...

While I agree that "a company’s primary purpose" should not be "to maximize shareholder value" that begs the question of which one would you invest in? A company that has it's primary purpose maximizing your investment or another that does not?

Assuming that everything is being done lawfully, I'm much more likely to invest in a company laser focused on maximizing the value I receive in return for me risking my hard earned money on their shares. I owe that to myself and my family.

I really believe that the overwhelming number of investors feel the same way although many would not admit it. Whether the tactics they use in attempting to maximize that value are effective and/or short sighted is another issue entirely.

Steve Salerno said...

Weston, I don't know that I can really disagree with you--from a selfish, investor's perspective. What I'm commenting more on is this notion, promulgated by the right, that businesspeople have as one of their primary aims the creation of jobs--as if that's uppermost in their minds when they first get the germ of an idea for a company or a new venture within a company--and I just don't buy that. Give a top-level manager a choice between (a) showing more of a profit, (b) distributing the extra wealth among the workers, or (c) hiring a few more workers just because he can--almost as a sort of "private public-works" project, and he'll pick (a). In fact, he'll pick (a) while voting to distribute some of that incremental profit among his fellow managers as bonuses, so they can all go out and lease nice new cars or buy the wife a fur. (I don't intend to be sexist. If the manager is female, she might buy her husband the car. Or the fur?) Point being, I'm cynical enough to believe that few large businesses give a damn about the people who work there, or could work there.

roger o'keefe said...

So who is supposed to create the jobs then by your logic. Please don't tell me the GOVERNMENT! There is nothing Uncle Sam does that the private sector can't do more efficiently, Steve. All the government does is waste money and if it comes down to a choice between the government wasting my hard-earned tax money and my driving around in my new Benz, I'll take the Benz every time and never feel a moment of shame about it. Why should I?

RevRon's Rants said...

Roger - You going to fix the roads you drive on so your car doesn't get trashed? Protect your investments from being stolen by stuffing money in your mattress? Foil the next terrorist attempt on American lives with your Glock and your fellow homeowners association buddies as backup? Set up the communication system that allows your business to function on a daily basis? See to it that the next generation is educated, so that the country can remain competitive? Ensure that the medicines you take are safe and uniform? Same for the foods you eat and the water you drink?

If you do all that, I wonder how you find the time to post online... on a computer and using the Internet, neither of which would have come to fruition without some serious government involvement.

Nobody is suggesting that investors not make a profit. Only that the direction we're headed, those investors will continue to make ever larger profits, while the regular folks who actually drive the economy fall further and further behind because they have less and less to spend. Perhaps when they get really hungry, you could offer them some cake...

Steve Salerno said...

Roger, I think you're unwittingly making my case. You say that the private sector can operate "more efficiently." What that generally translates to is "fewer employees" or "leaner" procedures like "just-in-time inventory," etc. I'm not suggesting that companies should purposely hire workers they don't, in fact, need, or stock tons of products they can't, in fact, sell. But hell, I can think of at least three local businesses who have just barely enough staff (and/or stuff), with the result that when there are vacations, or something unexpected happens (e.g. a digestive bug takes hold), the work suffers and so does customer service. Now what is wrong with the idea of having "a little bit extra" employee coverage? If every company does that, who gets hurt? (Have utility players around, like baseball teams do.) So instead of having a bottom line artificially swollen with profits, you have an extra family or two who don't need to be on unemployment or collect food stamps (those awful, awful gov't-run programs).

roger o'keefe said...

Ron, normally I don't come back at you after one of your diatribes, it seems such a waste of time. I don't even think you listen. But here when you've trotted out every worn cliche in an effort to show me how defective my thinking is I can't resist turning the tables.

What have both the government and the private sector ever done where the private sector didn't come out ahead? Name me one thing. When FedEx came into being it was the beginning of the end for the US Postal Service with its rude and mentally challenged workers who apparently think they have a guarantee of lifetime employment regardless of how poorly they do their jobs. The only reason the military is successful is because of the technology provided to it by the private sector and even there the gov't almost manages to screw everything up by changing its specs and requirements so often and for such poor reasons that even the best defense firms can't make sense of it. The successful prison systems nowadays are run by private enterprise. The best so called public works programs are those farmed out to private construction and engineering firms, and again the gov't tries to muck up the works with its insistence on giving preference in some contracts to minority run firms that like it or not can't compete. In dangerous places like Iraq and Pakistan companies hire private security forces like Blackwater because they know the military can't protect their interests. In education, the best schools are the parochial schools where there is a minimum of gov't interference. And even there gov't is trying to ruin a good thing with its Common Core standards.

Anything undertaken by the gov't is wasteful, inefficient and often poorly done. That bring me to Steve's point about how a business is supposed to hire people just to hire people, to have them on hand. Same thing with inventory, apparently, just order stuff to keep people busy! Thank God you don't actually run a for profit business Steve. I can't imagine!

Steve Salerno said...

Rog, so tell me how you really feel...

RevRon's Rants said...

Roger, I don't blame you for not wanting to respond to my latest "diatribe." I find it interesting that you failed to answer even one of the questions I put to you. Cliches? Admittedly so, but only because they have been so frequently asked, and so infrequently answered, for obvious reasons.

Your example of the USPS versus FedEx might actually sound reasonable, were it not for a couple of "incidental" factors. First, let's look at the business models. The USPS is mandated by law to maintain a fully-funded pension plan for its employees, with *current* funding levels sufficient to maintain viability of the pensions for a period of 75 years, whereas FedEx is not required to maintain any pension plan whatsoever. Were FedEx to be required to maintain the same level of current funding for future pensions, it would be immediately bankrupted. Ironically, lobbies for the private delivery industry had significant input into the drafting of the USPS mandate, and have been significant donors to supporters of the legislation. In case the significance of such a discrepancy in business models escapes you, I'll boil it down to its basics: FedEx and its private industry counterparts have managed to so effectively stack the deck against the USPS that its long-term viability is severely challenged. Were the mandate eliminated, USPS would be highly competitive with its private sector counterparts.

The second factor is admittedly incidental, but I suggest that it goes to show the degree of bias in your assumption. You described the Postal Service thusly, "with its rude and mentally challenged workers who apparently think they have a guarantee of lifetime employment regardless of how poorly they do their jobs." While I have encountered some less-than-professional Postal Service employees, my experience has been that most have been quite professional. I can't speak to the mental challenges you describe, simply because I've not observed any pattern of clinical evidence of such impairment in those USPS employees I *have* encountered, and refuse to project a strawman upon the group as a whole. Perhaps the attitudes you encounter are the result of some other factors you haven't mentioned.

I'll offer an example that I've researched pretty extensively: the privatization of prisons. The prison populations have skyrocketed in the last couple of decades, coincidentally along with the move to privatize corrections efforts. The private prison lobbies have donated untold billions of dollars to groups and legislators in the effort to maximize sentences, to fight the decriminalization of truly victimless crimes, and to loosen the regulations governing the administration of prisons and the treatment of prisoners. They have also pushed (and spent) to increase the size of law enforcement agencies that offer the very real promise of even further increasing prison populations. The result is that we're spending far more, and incarcerating more people per capita than any other country. Of course, the executives and shareholders in the private prison companies are tickled, receiving nice dividends on their investments and ever-increasing salaries. Social ramifications? Meh...

I *have* run for profit businesses, and have also managed departments and divisions of large corporations. I learned early on that those departments and divisions that focused upon the bottom line, to the detriment of the production workforce and suppliers, ultimately suffered, even at that bottom line.

While there are abuses and waste in virtually any program - public or private - you seem intent upon ignoring the abuses and ensuing costs - both apparent and hidden, economic and sociological - of the private sector, while focusing myopically upon the shortcomings of the public sector, even to the point of ignoring how some of those shortcomings are actually the result of private-sector game rigging.

Oh... and I really enjoy it when you "turn the tables" on me. :-)

RevRon's Rants said...

OMT - I suggest you read "Blackwater: The Rise of the World's Most Powerful Mercenary Army." Blackwater was retained because the government realized that it could not effectively prosecute the multiple theaters of military engagement in which it had engaged, since there was no longer a draft to fill the necessary ranks. The company - like all mercenary groups throughout history - was freed from the restraints imposed upon the country's military, and provided a degree of immunity for the government from those pesky Geneva Convention rules that were instituted to maintain a degree of humanity, even during wartime. You might also be interested in learning how Blackwater was awarded the largest private-sector paramilitary contract in modern history. Follow the money and the ideology that led to Blackwater's extensive activities in the Middle East. While I doubt that such research would do much to change your perspective, at least it would offer you the opportunity to realize how much influence those factors had on Blackwater's selection and actions, and how little concern was given to US genuine interests in both the short and longer term.

roger o'keefe said...

Ron, every time you say something in your defense you only succeed in giving us another peek into your neo-Lib soul. You do it again here with your broadside at private prisons. You act as if the prisons and their "lobbyists" cause people to commit crimes. So I'll ask you, did the criminals commit the crime or not? Did they break the law or not? I don't believe in a softer stance on crime and criminals, while naturally you and your Lib pal Steve do. New York City was a sewer until Rudy Giuliani started busting people for even petty crimes. In the course of arresting and processing these petty criminals they often found there were warrants out for more serious crimes, so with a pot bust or a public intox they ended up taking a dangerous thug off the street. It goes without saying that people who commit crimes have less respect for the rule of law. If private prisons help keep those people off the street so I can take my wife to a show or a ballgame without fear of being accosted more power to them! Build as many as we need to lock up everyone who breaks the law, I say. If "lives are ruined" because of it, as you bleeding hearts argue, then too bad, tell the offenders to obey the laws and their lives won't be ruined.

RevRon's Rants said...

To be honest, I take your categorization of me as a "bleeding heart neo-liberal" as both a supreme compliment and a clear statement of irony. I figure that I have some pretty amazing role models to emulate - one or two of whom, you would probably claim, as well. You would probably have preferred Christ to have qualified the worthiness of the needy before helping him. I took away a different message from the story.

I find it alternately amusing and pathetic when some of the absurdly misnamed "conservatives" of the day pound their self-righteous chests about the need to lock up everyone who commits a crime, yet sing an altogether different song when it is they or someone close to them who gets nabbed. Have you never exceeded the speed limit in your beloved car? You do realize that such behavior has killed far more people than smoking pot or consorting with prostitutes, don't you? I certainly can't imagine you consorting with a prostitute (or a prostitute with you), but if you have on occasion driven faster than the speed limit, by your own logic and admission, you - and all like you - should be imprisoned, even if it means putting the majority of the population in prison, because that's the way we do it in this "land of the free!" I suspect you didn't even see any hypocrisy in the disconnect between Rush's insistence that *all* drug addicts should be imprisoned, and his polar reversal when *he* was shown to be an addict, and fairly wet himself, pleading to be treated differently than he had prescribed for all his fellow addicts.

And once again, I note that you failed to answer the very straightforward questions I put to you in my initial response to you. I would be very interested in reading how you built your astonishing level of success all by yourself, from the infrastructure and technology on up, with no help from anyone, particularly not from some peon employee or that evil government. I'll wait... :-)

roger o'keefe said...

Ron, I love the way you build your case on sneering hypotheticals about me and my car and the crimes against humanity that I and my self-righteous capitalist friends must have committed, or so you assume. Is that your evidence against me? This is why I make my comments and so seldom engage afterwards, because you're all about snark and flourish, like the smug and presumably superior way you end your comment, with a nod to your friend Obama's "you didn't build it" line of reasoning. You can keep waiting, my friend. I have no desire to fuel more of your "rants", as you acknowledge in your screen name.

The facts are on my side.

RevRon's Rants said...

"I and my self-righteous capitalist friends..."

Don't be so hard on yourself, Roger. Just admitting the problem is the most difficult step! :-)

I probably should have posted a SARCASM ALERT above the initial questions I asked, since I knew full well that the answers - which were glaringly obvious, anyway - weren't forthcoming.

BTW - Those "facts" to which you so proudly claim ownership lay within the answers to the very questions you avoid, and those "sneering hypotheticals" just aren't much of a stretch at all. And faced with the flawed logic of those who insist upon applying harsher standards to others than they will accept being applied to themselves, smugness is frequently the only appropriate response. :-)