Just here to say "Thanks!", Like Treasury Sec. O'Neill Said

The BBQ Pit
41

I’ll differ slightly with Cheesesteak here–I would say self-interest is what makes capitalism work and that there’s no reason to loathe self-interest. I think greed is neutral in its effects on capitalism–it often helps grease the wheels and spurs innovation, but in other cases (and sometimes the same ones) it can lead to abuses.

Mom and Pop aren’t driven by exactly the same motivations?

And there are plenty of additional reasons the market is at a five-year low (including the greed of the little man), and the market is not the only factor driving the real economy.

42

Sure they are, I think the difference here is in scale. Leaving aside the fact that “mom and pop” still need to be able to meet the eyes of their neighbors (unlike a Bill Gates who probably does not give a rip about what I think), the fact remains that if pop is caught steeling from the till, the Tokyo stock market probably won’t crash.

also,

43

Actually, you may do these people an injustice. Based on what I know of corporate execs, particularly in startups and tech industries, what primarily motivates them is the feeling that “if I don’t do it, someone else will f*** it up.”

It’s not greed (although none of the execs I know would object to making a packet), and it’s not power * per se *, it’s mostly the belief that they and they alone are most qualified to do the job. You can call it arrogance (particularly if they are wrong in their belief) but at its heart, it’s the desire to see the job done right.

44

Explain again how they’re going to “use their size” to drive out Joe’s Pharmacy, if the people in these two small towns don’t want to shop there. Conversely, if the people in those towns do want to shop there, who are you to force them to continue to pay higher prices for their goods by keeping WalMart out?

Unfair business practices are one thing, but until you see the WalMart storm troopers, clad in black and wearing the Smiley face where the ATF sign should be, rounding people up and throwing them into black, unmarked vans to be shuttled to the local MegaMart and forced to shop at gunpoint, the consumers have a choice.

That’s fine, you’ve made a decision that supporting the local business instead of the mega-mart is worth approximately $1. There’s nothing wrong with that choice. But it is a choice.

Let’s also remember that prior to the Mega-Mart moving in and undercutting the prices of the local businesses, the consumers were quite happily paying the prices set by those local businesses. Why can’t they keep paying those prices without any loss of “quality of life” in order to support those local stores? They might incur an opportunity cost by not shopping at the Mega-Mart, but that shouldn’t really matter if the health of the local small businesses is so important to the community.

**

I’m forced to agree with you whole-heartedly there. There’s nothing wrong with a WalMart that several hundred pounds of Semtex couldn’t fix.

**

**

Some are, some aren’t, there’s a whole variation in the behavior of large corporations, just as there’s a variation in the behavior of small business owners, citizens and government employees. Singling out corporations and pretending that all of them have sunk to the despicable levels that Worldcom and Enron have plumbed is engaging in sterotyping of the highest order.

As for the drop in the markets… of course it’s the fault of the corporations. It couldn’t possibly be the result of the influx of huge sums of cash over the last decade and a half overvaluing the market. It couldn’t possibly have anything to do with the downturn in actual business precipitated by the attacks on September 11. There’s absolutely no way the basic causes are economic in nature and are smiply being magnified by the news coming out about corporate mismanagement. Nope. It’s the evil corporations that are doing it all.

I hope there are global consequences to these revelations. I hope that the oversight rules are tightened on the way corporations do their accounting. Not because I think the majority of corporate officers are plotting somewhere in the depths of their dark little hearts to subvert the accounting practices we now have, but because there are a few out there who are willing to cut any corner they have to in order to make the balance sheet look good. I wouldn’t want any one else to have to go through what happened to Enron and Worldcom employees over the last few months. If tightenng the rules will help to prevent some mercenary sunovabitch from diddling the numbers so his stock options are going to go through the roof, I’m happy to see them come in. But I’m not going to pretend that all or even most of the people involved in corporate America (or the rest of the world) are heartless pirates that are only interested in raping and pillaging, leaving nothing but a scorched earth behind.

Pissed off about what? The horrendous conduct of Enron, Worldcom, Arthur Andersen et. al.? Absolutely. String the fuckers up. Their actions were criminal. but let’s not suddenly pretend the each and every CEO runs around with a Jolly Rogers and an eye patch.

All rats are rodents, but not all rodents are rats. There’s a difference between the species. Figuring out which are which is the key, particularly when they all wear the same tie.

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Cheesesteak: *Greed is what makes capitalism work […] Capitalism takes the basest, the lowest of human desires and uses it to distribute wealth in a fairly equitable manner. *

Well, in the first place, while capitalism has a very good record of creating wealth, it doesn’t actually produce a very equitable distribution of it; consider the wealth disparities in our own heavily capitalist economy. Are the ones receiving the most money necessarily the hardest workers, or making the best contributions?

In the second place, I’m struck by the contrast between your championing of “greed” (or johnson’s less loaded “self-interest”) as the mainspring of capitalist success, and the tributes we just heard from, frinstance, manhattan and pld:

manhattan: *I’d like to thank the CEO […] for not laying anyone off after the ‘87 crash, for teaching the sales force […] the importance of clients’ diversifying even though all they really wanted in the late '90s was an internet fund […] *

Weirddave: I’d like to thank the CEO of the company I work for for […] buying a large chunk of our stock when it’s price was depressed with his own family money and guaranteeing that we, the employees, would be able to purchase the stock at that price with the company stock matching plan for 3 years, regardless of what the price went up to in that time.

pld: I would like to thank the founder and president of the medium-sized, non-public corporation for which I work for […] leading the way when instituting a temporary salary freeze this year by taking a 50% reduction in your own monthly salary.

Seems that what these lauded CEO’s are getting gratitude for is not “greed”, or even simple short-term “self-interest”, but for having forsaken their short-term self-interest—in some cases, even taking money out of their own pockets—in order to try to preserve their employees’ financial security. (Geez, sounds even a little bit, I don’t know, socialist??) What these happy corporate employees seem to be saying to their bosses is, in effect, “Thank you for being bad capitalists.”

Now you may respond that, in fact, such self-denying measures are actually examples of good capitalism because they are valuable for the companies’ long-term interests by fostering solidarity and retaining valuable employees. Sounds good to me, but in that case, why is our society in general so richly rewarding and praising so much bad capitalism?

If sweating workers and maximizing one’s own salary while minimizing employees’ pay and cutting staff and benefits to the bone and so forth is actually stupid and inefficient capitalist practice, then why is there so much of it going on? Why do company structures reward such behavior? Why do tax laws provide incentives for it? Why do regulators permit it? And why are we so strongly encouraged to be proud of the economic structure that produces it?

Or, on the other hand, if that’s the way capitalism is really supposed to work and the way it works best, then why should we thank CEO’s for practicing bad capitalism with such pinko bleeding-heart measures as avoiding layoffs and subsidizing employees’ stock purchases?

46

Kimstu Well put. An addendum, if you wouldn’t mind.

Wall Street changed a lot during the years when money was falling from the skys. Previoius to that, there was a growing tendency for investors to act primarily in favor of corporations that promised a higher re-sale value, rather than corporations that offered a steady, but modest, dividend. The dot.com years simply poured the kerosene.

Worse still, corporate biggies began to be paid primarily based on how they affected that value. A huge cut in staff sends Wall Street into multiple orgasm, even though it very well may be a poor decision in terms of longer term goals. Thus, they are led to see as positive anything that makes Wall Street think things are swell.

Further, it strongly affects the very nature of CEO’s. Financial press media whores glorify “lean and mean” “hard-headed” executives. the competition between contenders then becomes who can look more like Ayn Rand’s love child. Hence, the system encourages, even more than it did, that the top tiers of decision making are occupied with persons with no humanistic values whatsoever. The Peter Principle meets the Vicious Circle.

Which is why it sucks.

47

One of the reasons why I don’t slug it out in GD regularly is that I always let my emotions get the better of me and blurt out stuff without thinking which leaves me open to counterattack. I guess it’s a good thing I didn’t go to law school like my mom wanted me to.

Thanks, Stofsky for the cites on Wal Mart’s labor practices. But I guess the folks of my hometown are actually to blame for all the bad stuff that Wal Mart has caused. You should have seen how they were dressed. They were asking for it.

And I’m sorry about the slander against the Plebian Tresury Sec. O’Neil. I don’t have have any evidence that he has personally been involved in any of the harmless corporate shenanigans that had me all in a tizzy before these powerful, powerful antidepressants kicked in. I think what happened was that I conflated him with Army Sec. Thomas White, who made a killing by, among other things, making sure the Army bought energy from Enron. Oh, and did I mention he used to be a vice chairman of Enron? My mistake.

No wait, it wasn’t White I was thinking of, it was SEC Chairman Harvey Pitt, the accountant who promised a “less confrontational approach” to enforcement. Kudos to him for keeping his word! He’s the one I was confusing with O’Neill.

Or maybe it was Vice President Dick “Undisclosed Location” Cheney, whose ass is currently chafing because of the Judicial Watch lawsuit concerning his stewardship of Haliburton Oil. Yes, he must have been the one.

No, I know! I was confusing Treasury Sec. O’Neill with…wait for it…President George W. “At Least Nero Could Fiddle” Bush! See, it was the whole Alcoa/Aloha thing. O’Neill was the CEO of ALCOA, while Bush was on the board of Harken when they pulled an Enron by selling themselves a company called ALOHA. I think you can all understand how I made the mistake. Surely just because O’Neill is a former CEO and was appointed by and taking orders from these characters doesn’t mean I have any right to trash his good name. I’m sorry.

Now if you will excuse me, there’s a bottle of Prozac with my name on it.

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elucidator: Hence, the system encourages, even more than it did, that the top tiers of decision making are occupied with persons with no humanistic values whatsoever.

If so, then it sounds as though vibrotronica rather has a point in her OP. I’ve got no problem with thanking those CEO’s who are obeying the law and looking out for the little guy at the sacrifice of some short-term profits. (Hell, I’ll thank 'em right now. Thanks!!! :)) But from what you suggest, the laissez-faire practices that Secretary O’Neill, among others, have supported will tend to produce a very different kind of CEO. In other words, the big economic boom that recently ended isn’t actually a very shining chapter in the history of capitalism, and maybe we shouldn’t be so quick to assume that our system is “the envy of the world”.

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Stofsky, thanks for the links. I would never have believed it possible that a major corporation would lock employees in a building and force them to work w/o pay. I must be truly naïve.

50

Was I the only one that read this? I am fed up with this kind of “double moral” expressed by many fucking morons (This is the pit right?)
YES Wal Mart is responsable (If they payed a bribe) that politicians are un-principle bastards. After all the law is not only broken by those that receive the bribe but also from those that pay it.
I am from the third world, it’s really amazing when O’Neill mentions the “corrupt leadership” of Argentina (They most certainly are and he forgets this:

The world certainly needs a change in attitude.

51

Scrubing toilets 10 hours a day seems to be a hard job (fortunately I hadn’t have the pleasure). Of course you can argue that market values a ceo more than a janitor and that in capitalistic society everyone has the potential to raise from to the gutter to downtown. Unfortunately things are not like that in reality (and for the matter, Santa doesn’t exist, it’s your parents). There many success stories (mostly on the movies) but it is rarely difficult to create wealth from poverty, most ceo’s don’t care they had a rich papa.

52

Heh. I’m not sure how the boss would react to that, his $300,000 stake now being worth about $180 MM, but what the heck, I’ll bite. You don’t like our CEO’s as examples, so I’ll pick some from the thread.

Thank you, Orin Smith, CEO of Starbucks, for daring to think that coffee servers should have health insurance and stock options, for expanding the choices available to me in the market place, for continuously upgrading the conditions of the places where you buy your coffee (the whining of people who don’t know what poverty really looks like notwithstanding), for being a good corporate citizen and for running your company so well.

Thank you Sam Walton, for making more choices available to the consumer at lower prices, for clearing the market of poor merchandisers such as K-Mart and for making health insurance available to retail workers, something essentially unknown prior to the growth of your company. Oh, and for allowing my Mom and her husband to retire comfortably, but you have to share credit for that with Mom, who bought your stock.

Pld, you wanna take care of the pharmaceutical companies and the whole “fewer dead and sick people” thing?

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**

Yeah, because the two items can’t be discussed separately.

I hate to break it to you, but standing around with your fingers in your ears and singing “La-la-la-la-la-la-la-la-la” to prevent you from hearing opposing arguments isn’t the best way to get your point across. It’s great for keeping your mind uncontaminated by facts, but of little other use. I’ll take it slow, one more time. If the consumers in your community were lined up 14 deep when WalMart opened that first week, forcing the greeters to suddenly transmorgify into a reasonable facsimile of oshiya from the Tokyo subway just to get everyone in… yeah, the were asking for it. They made the decision on where to spend their dollars in exchange for goods and services. They could have gone back to the stores they’d been supporting up until the DeathMart plopped down into town like an 800 pound gorilla, but if the consumers migrated en masse to line up at Wallyworld, it’s their own fucking fault that the town’s business district dries up and blows away.

As an aside, trying to link the behavior of consumers voting with their dollars and the act of rape is such a low-brow attempt at punching emotional buttons it could have only been dreamed up by a slack-jawed fuckstick like yourself, shitswallow. Why not ask some of the people on the SDMB who have actually had to deal with the horrors of rape if they find the comparison valid.

**

Good, now that you’ve got all that cleared up, try to keep the difference between “unindicted co-conspirator” and “no fucking evidence” clear in your mind.

I hear Walmart has a special running on those, you can probably get them cheaper than at Joe’s Pharmacy.

54

Do you have any basis for such an opinion or are you just going by the idea “they’re rich now, they must have always been rich.”?

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[quyote]Well, in the first place, while capitalism has a very good record of creating wealth, it doesn’t actually produce a very equitable distribution of it; consider the wealth disparities in our own heavily capitalist economy.
[/quote]

I wouldn’t say that that’s a result of capitalism qua capitalism, but of market capitalism + a government system that allows (encourages?) legislation to be sold to the highest bidder + heavily entrenched racial and social dysfunction + some other factors. Germany, just to pick one example, seems to have pretty good wealth distribution with a combination of market capitalism & state capitalism + a markedly different set of government priorities. They, for example, have listing requirements set and regulated by the government rather than by the Bourse; whereas in the U.S. the NYSE, AMEX and NASDAQ, as well as the commodities and regional exchanges, each determine their own listing requirements.

56

manhattan: *Thank you, Orin Smith, CEO of Starbucks, for daring to think that coffee servers should have health insurance and stock options, for expanding the choices available to me in the market place, for continuously upgrading the conditions of the places where you buy your coffee (the whining of people who don’t know what poverty really looks like notwithstanding), for being a good corporate citizen and for running your company so well. *

Great, but all of those (except “expanding market choices” and “running the company well”) are, like the examples I mentioned before, about putting non-market values—the wellbeing of employees, fair trade with poor coffee producers, giving back to the community—ahead of maximizing short-term profits. Now, should that be considered good capitalism or not? And if so, then why do we as a society tolerate so much pure-profit-maximization bad capitalism that doesn’t abide by that sort of good citizenship?

Thank you Sam Walton […]

Wait a sec, I thought Secretary O’Neill said we were only supposed to thank the business leaders who were not treating their workers, customers, or investors unethically. Judging from the links stofsky provided and the sheaves of lawsuits discussed at Wal-Mart Watch, it’s by no means clear that Mr. Walton’s company makes the cut on corporate ethics. Glad to hear your folks did well off it, though.

pld: Germany, just to pick one example, seems to have pretty good wealth distribution with a combination of market capitalism & state capitalism + a markedly different set of government priorities.

I see what you’re saying, but it sounds to me as though a more straightforward way to put that would be “Germany has a less disparate wealth distribution than we do because their mixed economy is in many respects more socialist than ours is.” That is, unregulated markets, for better and for worse, do tend to be wealth concentrators, and unregulated (or very lightly regulated) markets seem to be characteristic of most visions of capitalism.

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[quote]
In other words, the big economic boom that recently ended isn’t actually a very shining chapter in the history of capitalism, and maybe we shouldn’t be so quick to assume that our system is “the envy of the world”.

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Don’t know what happened there…as I was saying:

I don’t know about that. I’d say our nearly unbroken 20 year period of economic growth was rather remarkable. I’m not at the office, but when I am tomorrow I will check to confirm my suspicion that the real per capita income in America increased more from 1983 to 2002 than any other major advanced country, due in large part to the activities and decisions of thousands of CEOs across the country. And those gains in income are lasting–despite the goings on in the stock market, personal income is not declining, and job losses in this recession have been extraordinarily mild (though some areas of the country have been hard hit)–and spread across all income classes.

Abuses? Sure–that’s what often brings an end to periods of economic expansion. Should reforms be made? Absolutely–some of the needed reforms have been apparent, and proposed, for some time, such as requiring stock options to be accounted for as a cost (which I see the Democratic-controlled Senate has just defeated).

On a related note, there was an intersting article in the June 22 Economist about a recent study comparing, among other things, economic freedom (including small government, low taxes, protection of private property, and free trade), wealth and income distribution. There’s a chart showing that in all cases, the poorest 10% have between two and three percent of total income. But in the 60% of countries at the “least free” end of the scale, per capita income is well below $2,000. For the fourth quintile, per capita income was $4,000. For the top quintile, per capita income was about $7,000.

Our system isn’t perfect. Some of the imperfections are seemingly obvious to everyone but politicians of both parties whose pockets are being lined by corporations and other interest groups. But I’ll sure take our system, warts and all, over any other.

59

Good capitalism. Starbucks didn’t just spontaneously decide to offer options to baristas. Actually, maybe they did – Starbucks is weird that way. But the reason there is a Starbucks visible from every point in America instead of having 5 stores in Seattle is that their formula answered the question of “How can I pick off the absolute best retail employees in the area as part of our plan to create a customer experience that encourages people to spend 3.50 for a .75 cup of coffee, and how can I keep them around long enough to actually become productive?” It increased short term and long term profits.

Likewise, my boss didn’t roll out of bed one morning and decide to offer phantom stock (any more than he spontaneously offered casual days, which I’m convinced he resisted even more strenuously – he’s a pretty old-fashoned guy). He did it to attract and retain profit-generating employees.

Today, Worldcom closed at $.16/share. Enron is bankrupt. Adelphia is bankrupt. All without a teensy bit of government intervention. I think your premise is incorrect. See below for a brief discussion of “layoff payoff.”

I of course have no further information than you on the suits, but I’d make the following points:

  1. The “locked doors” thing is a canard, as two seconds thought would reveal. All sane stores lock their doors when they close – that’s how customers know not to go in. If they didn’t lock their doors, employees would be suing (or at least should be suing) because the store provided inadequate security after hours.

  2. At the end of each shift, employees went home. And they returned the next day. From that, I conclude that even with the alleged overtime abuses, the WalMart gig was the most lucrative (or otherwise welfare-maximixing) one available to them.

  3. At the end of the day, the sum of these suits is small – if the company violated the labor laws, of course it ought to be punished, but I propose that it’s unfair to call them unethical on the whole even if all the allegations here are true. Our theoretical pharmacy (the one put out of business by WalMart earlier in the thread) must have done as bad or worse, or the employees would never have gone to WalMart to begin with (unless they were desparate for health insurance, which the local pharmacy did not offer).

Thanks. Upon further thought, though, it was that other big-box retailer that I can’t stand to shop in, Home Depot, that made them the cash. I apologize for my poor memory, but I wanted to get all the facts out there.

OK, layoffs. The impression that Wall St. uniformly rewards companies for laying off employees is incorrect. There are a couple of kinds of layoffs the Street “likes” to see"

  1. “We are correcting our errors.” When a company has over-hired (or overspent on plant or otherwise made an operating mistake), Wall St. of course likes to see the error corrected.

  2. “We’re keeping our eye on the ball, and recognizing reality.” If domestic auto production was 17MM cars and light trucks last year but will only be 14 MM this year, of course Wall St. expects the auto companies and parts makers to contract to face the new reality. When stocks go up in this circumstance, it’s mostly because they had gone down previously because the Street was afraid management would be too optimistic and keep their costs too high during a down cycle.

  3. “We’re more productive.” This is actually fairly rare, but sometimes a company will come up with a technological breakthrough that allows them to make a lot more widgets per worker in a short time frame. Generally, investors prefer that companies use this new productivity to grow the business, but sometimes a company has such a high market share and limited prospect for new markets. In cases where investors already discounted the possibility of growth, reducing costs will pop the stock.

  4. “We’re saving money by eliminating redundancies from the big merger.” This is self-evident – one company doesn’t need two human resources departments, etc.
    What kind of layoffs doesn’t the street like to see?

  5. “We were full of crap about our growth prospects.” Wall St. isn’t (usually) dumb – we know it takes workers to produce products and services. When the dot-gones and telecoms started with the layoffs, it was seen as a capitulation that the projected growth just wasn’t there.

  6. “No one needs our product anymore.” Kind of self-evident, this is another kind of capitulation, where management admits that the market for the company’s product is permanently shrinking because of a substitution product.

  7. “Amalgamated widget is kicking our ass.” Again, self-evident, but in this case instead of a new product it’s the same product from someone more capable of doing the job. K-Mart, for example.

It’s simply selective memory that so many people remember the headline “Wall St. cheered Amalgamated’s layoff announcement, and the stock closed up 2 points.” (Aside: It seems like a distant memory that any stock closed up two points, but that’s neither here nor there :frowning: )

60

Well, that’s ok as far as it goes.

But it does kind of pre-suppose a calm, reasoned, well-informed investing public that makes more or less intelligent decisions. The Wall Street that the Wall Street Journal thinks exists. Presumably, some of these are the same people who lost a gazillion bucks betting that an internet pet shoppe was a good idea.

People who look to financial media whores for advice. You remember those guys, right? Kept saying “buy” on Enron while it did a flaming augur right into the Tar Pits. (These guys still probably get paychecks for being “experts”, youwannabet?)

So when they announce layoffs and they attach the appropriate spin control, as you have outlined above…badaboom badabing, Bob’s your uncle…instant rise in net worth and self esteem.

There is no “good” capitalism, nor bad, as there isn’t a good socialism. These are merely systems for conducting economic interaction. There relative moral value is derived entirely from the people who engage in them.

If Company A is esteemed for its social responsibility and employee relations, (All That Good Shit), and that draws investors precisely because they prefer that thier investment go towards ATGS…then Company A is probably prospering in a just, humane and egalitarian society.

And if this isn’t what we’re trying to build, why in the fuck are we bothering?

We don’t need better laws. We need better people. And a society centered around loud, shiny crap just doesn’t get it.