John Stossel documents his transition from a typical left-wing government-knows-best journalist hack to a thoughtful free-market libertarian — and the price he paid to make that journey. The experience has given him a unique perspective on the issue of bias in journalism.
Reporters who think coercive government control is generally good and I, who thinks voluntary market forces are generally better, both have a point of view. So why am I the one called biased?
Posted in Business, Economics, Government, Media
The Obama administration asked Rick Wagoner, the chairman and CEO of General Motors, to step down and he agreed, a White House official said.
As Obama continues to wriggle his way into the operations of American private enterprise, he is increasingly setting himself up for responsibility for the outcome.
Americans will rue the day they elected this man as President.
UPDATE: Mickey Kaus calls Wagoner Obama’s Ngo Dinh Diem. For the uninformed, Diem was the corrupt President of South Vietnam, who was assassinated in 1963, alledgedly with tacit CIA help. Diem’s removal marked a turning point in the war, with the U. S. increasingly responsible for the conduct — and eventual outcome — of the war.
Wichita city leaders have issued a formal invitation to President Obama to come to Wichita, “to see the aircraft industry firsthand and to recognize that corporate jets are ‘an essential part of our economy.'”
This follows Obama’s earlier remarks denigrating corporate executives who fly on small business jets.
Wichita is home to several major aircraft manufacturers: Boeing, Cessna, Hawker Beechcraft, and Bombardier, as well as hundreds of smaller suppliers. These operations employ tens of thousands of workers. Business jets are a critical part of what these companies do. So the President trashing business jets didn’t set well with folks in these parts.
Will Obama accept the invitation? I doubt it. In fact, given his administration’s record of extremely poor accessibility, I doubt that he will even hear of this invitation.
Robert Samuelson gives a simple explanation of why recessions happen — and how a recession can turn into a depression.
The “wealth effect” refers to the tendency of people to adjust their spending as their wealth — concentrated heavily in housing and stocks — changes. When wealth rises, spending strengthens; when wealth falls, spending weakens. For the past quarter-century, higher stock prices and home values propelled the economy forward by inducing Americans to spend more of their incomes and to borrow more. , , , ,
But now the wealth effect is reversing. As stock and home values drop, Americans are scrambling to increase savings and curb spending. . . . Everywhere, financial commentators urge “belt tightening” and more thrift. If the swing toward saving is too sharp, consumer spending wouldn’t just weaken; it would collapse.
But the solution is not a return to binge spending. We just need to be patient.
With time, economic slumps correct themselves as borrowers repay debts, surplus inventories are sold, industries consolidate and government policies promote recovery.
Alex Taylor III is a senior editor at Fortune Magazine, who has spent the better part of his career covering the automotive industry. Over the years he has seen a lot of changes at GM — but not the kind that were needed to save the company.
The story of General Motors since the 1960s is a tale of accelerating irrelevance. Customer preferences changed, competition tightened, technology made big leaps, and GM was always driving a lap behind.
Should the government bail GM out of its financial tailspin?
If Washington wants to bail out GM, it’s fine with me. A lot of short-term angst will be avoided, and taxpayer money has been spent for worse purposes. But you have to wonder whether the insular, self-absorbed culture that still dominates GM is up to the job of restructuring the company quickly enough to make it profitable and competitive again. GM has been on a downward path ever since I began covering it. What is going to make it different this time?
This confirms what I always knew from personal experience: Those “slashed prices” at going-out-of-business sales are discounts from inflated prices, not the normal pre-sale prices. The “sale” price may not be any lower than what you can find elsewhere.
Going-out-of-business sales are more of a play upon human psychology. “Retail is all about excitement, to get people into a store and get them into a mood to spend money.” . . .
But it’s not necessarily a rip-off racket.
It’s not that you can’t get good deals at going-out-of-business sales. You can. Just don’t assume the prices are lower there. You need to shop around as you would with any other purchase.
Cal Thomas, on why a federal bailout for the big three automakers is a bad idea:
The argument made by those favoring a bailout of Detroit is that it will save more than 100,000 jobs in the auto and related industries. But what good does that do if people are not buying cars in sufficient numbers to allow the Big Three to make a profit? This becomes the kind of corporate welfare Democrats decry when it comes to Wall Street. But, then, Wall Street isn’t unionized and Democrats want and need the union vote.
A free market is a powerful shaper of ingenuity — if the government will get out of the way and let it operate.
Fed Ex CEO Fred Smith, in an interview with Stephen Moore, argues for a return to basic value-add entrepreneurship as the antidote to our Wall Street driven financial crisis.
He has come to hold the get-rich-quick Wall Street financiers in more than a little disdain. He views the heroes of the U.S. economy as the companies that actually produce real goods and services. He sees the Wall Street collapse as an inevitable byproduct of investment bankers building multitrillion dollar debt pyramid structures.
So how do we fix this problem and retool our industrial sector in a pro-competitive fashion? “We’ve got to reduce the taxes on equity. Let companies expense their capital purchases.”
Posted in Business, Economics, Government
Robert Samuelson: “Wall Street’s business model has collapsed.”
Samuelson explains three fundamental changes in how the giant Wall Street firms did business over the last twenty years that has contributed to the current mess. What does the future hold?
It’s hard to know, because financial crises resemble wars in one crucial respect: They result from miscalculation.
Once again, the screaming headlines are designed to get a weary public up in arms over the “obscene profits” of the evil oil companies. See, for example, this headline on yesterday’s Drudge Report: “RECORD: EXXONMOBIL: $11,700,000,000.00.”
But look closer at the facts: Yes, ExxonMobil had record profits last quarter. But they also paid record taxes. Mark Perry provides this chart to put things in perspective.
Now if a $11.68B profit is “obscene,” what label should we attach to the government’s take?
It’s been almost two years since Alcatel and Lucent Technologies merged to become Alcatel-Lucent. The merger was supposed to create a strong telecommunications equipment manufacturing competitor. That didn’t happen. The new company has yet to post a profit, and second quarter losses were just announced at $1.7 billion. Consequently, the company’s top executives are being forced out. Analysts apparently never expected this combined leadership team to make it, and their hunch has played out.
I have a personal interest in this story. I began my career in high-tech at Lucent shortly before its creation as a spin-off from AT&T. I watched from the inside as the company rode the dot-com bubble for all it was worth, then crash spectacularly when the bubble burst. Carly Fiorina’s book, Tough Choices, revealed some of the discord that went on among the executive team as they tried to deal with a rapidly changing market. But there was too much of the old AT&T regulated monopoly mindset still running the show, and the company never could break out of the pack. The endless rounds of layoffs finally caught up with me in 2003, and I moved on to greener pastures.
It’s sad to see a once-great company reduced to such a pitiful condition. High-tech has always been a gambler’s game, but no amount of luck can overcome executive mismanagement.
Posted in Business, Personal, Technology
My late father worked as a field hand for Exxon from the late 1940’s until his retirement in the mid ’80’s. So oil is in my blood. And it makes my blood boil to hear politicians denigrate “big oil” as a bunch of greedy corporate fat cats who are out to gouge the little guy. In my personal experience, that is definitely not the case.
The Houston Chronicle recently ran this article by Tom Potts, an Exxon retiree whose career covered the same time period as my father’s. Potts provides an excellent insight into the corporate culture that motivates Exxon — and serves our nation so well.
Profits are a measure of success — a universal goal of free enterprise — and Big Oil should be congratulated, not condemned for its success. We should be grateful that these U.S.-based corporations are alive and well. Were they not willing to invest substantial portions of their earnings in exploration for new petroleum reserves and the development of new energy sources, someday we might all be riding bicycles to work. And were they not willing to pay substantial dividends to shareholders, including pension funds and other financial resources important to all of us, our economy truly would tank.
Potts details the employee savings plans, philanthropic contributions to schools and universities, commitment to personal and corporate ethical standards, and shareholder dividends as examples of what every corporation should aspire to achieve. Our nation is fortunate to have such corporate citizens.
Personally, I’m proud to be an Exxon kid. I wish our politicians shared that appreciation for what “big oil” has done for our nation. If they follow through on their threats to punish the oil companies with windfall profit taxes, they will be killing the goose the lays the golden egg — and all of us will end up paying even steeper prices for our energy.
Here are a couple of interesting factoids on those incredible oil company profits that I’ll bet you haven’t heard. First:
While crude oil has gone up from about $66 a barrel to almost $119 — an 80 percent increase during the last year — gas has gone from $2.71 a gallon to $3.60, an increase of only 33 percent.
In other words, the oil industry’s profits have not been keeping pace with the rising cost of their primary raw material.
Second:
Mutual fund giant Vanguard . . . has more than $18 billion in ExxonMobil stock. Most of that is owned by investors in the company’s S&P 500 index fund and its total stock market index fund. And it’s not just Vanguard. Almost every major mutual fund company owns oil stocks. Two of Fidelity’s mutual funds, for example, rank in the top 10 holders of ExxonMobil stock.
The oil companies are “broadly owned by tens of millions of middle-class Americans, anyone with a pension plan or 401(k) or IRA account, a mutual fund,” Dougher said. “They’re really the owners. So, when their stock portfolios go up, that’s really who benefits.”
In other words, if Congressional critics act on their threat to rein in those evil corporate profits of the oil companies, guess who’s gonna feel the pain? That’s right — the millions of small investors who are depending on those profits to finance their retirement.
It’s called “free enterprise,” people. Why aren’t they teaching this in high school anymore?
Posted in Business, Economics, Energy, Government
Daniel Gross bemoans the loss of America’s prestige as a leader in financial management.
Americans’ ability to manage complex systems has been the ultimate competitive advantage. It has allowed the United States to enjoy high growth and low inflation—a record we haven’t hesitated to lord over our foreign friends. . . .
But now, thanks to widespread incompetence, American management is on its way to becoming an international laughingstock. Faith in American financial sobriety has been widely undermined by the subprime mess. The very mention of the strong-dollar policy now elicits raucous bouts of knee-slapping in even the most sober Swiss banks.
Okay, the American economy hasn’t been managed very well. Someone please educate me: Is that the fault of corporate management, governmental policy, or both?
Posted in Business, Economics, Government
Arnold Kling polishes his crystal ball and looks ahead at what we can expect if the Democrats win the White House and increase their majorities in both houses of Congress in the next election.
Promises of middle class tax relief and fiscal responsibility will pretty much guarantee constraints on spending.
That leaves regulation as the primary tool of choice. Expect a rash of new government mandates and regulations on health insurance, pharmaceuticals, hospitals, energy, automobiles, appliances, executive compensation, wages, and more. These will, in turn, stifle entrepreneurial innovation, drive up prices, and reduce the quality of everything we buy. The result will be a rise in unemployment, and even more regulation as the government seeks to drive inequities out of the private sector.
What then?
Somewhere down the road, as people see the indignity of the many intrusions and the adversity of the consequences, I hope that there will be a backlash. Otherwise, if the era of mandates emerges as I fear it will, then the engine of capitalism in America may run out of the fuel of competition.
In other words, America will become just another lethargic, moribund socialist state, like most of Europe is today.
All of this assumes, of course, that the Dems take full control of the government in the November elections. That’s why this election is such a crucial milestone in defining what kind of country Americans really want.
Posted in Business, Government, Politics
Millions of employees across America (including me) faithfully follow the Dilbert comic strip. One of the great appeals of the strip is its depiction of clueless management, personified by Dilbert’s Pointed-Haired Boss. Every employee can relate to Dilbert’s frustration dealing with a corporate leadership that just doesn’t get it. Just walk through a typical cubicle farm in any office and count how many Dilbert comic strips are posted on the walls. Dilbert is the patron saint of office workers everywhere.
Which makes this story all the more funny. A casino in Des Moines fired David Steward for posting a Dilbert comic strip on the office wall. They found the message of the strip to be “very offensive.” Steward filed suit to get his unemployment benefits, and won.
The casino’s action serves only to reinforce the basic message of Dilbert: Management can become so convinced of their own self-importance they forget their humanity. People who cannot laugh at themselves generally make poor leaders.
The Wichita Eagle carried a front-page article in today’s edition about an ex-FBI agent, Dan Jablonski, who has established a second career advising corporate clients. In this new role, he has learned a lot about good and bad corporate managers. I was especially interested in his description of the bad ones.
Bosses ask for efficiency evaluations because they want to know how their companies can be more efficient, or whether they have problems. Sometimes their numbers aren’t adding up, or customers are complaining.
After a few such jobs Jablonski noticed patterns. That’s what the FBI teaches: Look for patterns.
He saw problem employees. But he also saw problem bosses isolating themselves, staring at computer screens, deluded about how things were going.
He saw that this was costing buckets of money.
“A lot of these bosses don’t know what’s going on outside their own office doors,” Jablonski said. “They sit in their offices feeling confident that everybody in the company is on the same page. And then I talk to employees and find a completely opposing viewpoint.”
The root problem, he says, is a simple one: The boss is out of touch with his people.
Many employees know about these problems, but no one tells the boss, and the boss doesn’t ask.”Oftentimes, all the boss needs to do is just ask how things are going. But they aren’t doing it. They sit in their offices,” he said.The gulf between reality and delusion surprised him.
“I saw places where everybody in the company knew what the problem was,” he said, except the bosses, who seem surprised by the results: resignations, loss of contracts, sabotage, customers going elsewhere.
“Do they talk to their employees one-on-one once in a while? I was surprised to learn they often don’t,” Jablonski said.
“One thing the FBI teaches you to look for is a culture, such as a culture of thought,” he said. “I think after the Internet started, a whole culture developed where a lot of bosses drifted into a mistake. They think their job is to manage their computer terminal.
“That’s not what a boss is supposed to do. A boss is supposed to manage the people.”
This further reinforces the age-old axiom that good management is simply a matter of basic interpersonal skills.
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