Looking Ahead

LOOKING AHEAD by Wally Dobelis Strange debate, good employment figures If you are looking for a commentary on the first Obama/Romney debate, I can only offer observations, from an East Midtown NYC vantage point. In a gigantic shift, Romney offered a miraculous solution to the budget deficit, by offsetting his expenditure of $5T in tax cuts without raising the costs of the middle class Americans. It is to come from the increases in employment and productivity that would offset the tax cut, particularly in the world of small business, the backbone of industry, which will get a huge tax reduction, down to 25% (I always thought that the Boeings, GMs and GEs were the mainstays in American businesses, but we will let it pass). You really have to live in lalaland, as the red state people may be (we have long suspected the Kansans to be the prototype daydreamers), but Romney is really stretching their imagination. From the NYCity’s 17th Street perspective, let me inform us that the first objective of business continues to be maximizing profits. What does Business do in recession, big or small, when the customers cut down on purchases? It raises prices. If you go to the supermarkets in the T&V area, you find that fruit and vegetables and other essentials cost more. Maybe it is also due to the climate, it has been another dry year, although the same Big Bus people deny the greenhouse effect. A logic problem, what? Further, there are the sneaky price changes – Smart Balance, the omega-3 rich cholesterol resistant buttery spread changes its NYC package from 16 to 13 ounces, hoping it will passes unnoticed among the legendarily careless New York City consumers, as did the tuna and other fish product changes over time, from eight to six oz, and the tomato crush and cat food cans and, oh well, any number of utility-level products. Yeah, so how about lowering prices and acquiring more buyers and then hiring more production help? Forget it, Business says let’s use overtime, save some payroll and benefits costs, or even do outsourcing abroad. To nicely bribe high earning companies to increase payroll. i.e. jobs, by reducing taxes does not work in this environment. Providing employment via government supporting such efforts as energy-productive industries is iffy, the Chinese have monopolized sunlight conversion (Obama’s support of failed American efforts draws GOP fire), and fracking for natural gas destroys American drinking water supply and threatens life on this planet. Parenthetically, there is a cereal grown in India that produces a non-poisonous grain with eight-time thickening ability, to add weight to the water used to push out the gas. Why does it not have more attention? Fracking has established itself because it is state controlled. And no matter how much Governor Andrew Cuomo controls it in NYS, Pennsylvania and Ohio are committed to it, and North Dakota thrives on it. Anyway, despite the GOP, and, more specifically, the tea party efforts to stifle President Obama, in September the US joblessness was reduced to 7.8 percent. The increase in jobs in private industry, ongoing for months, was masked by the wholesale eliminations of teaching and civil service jobs (vide Wisconsin and Florida), but it did exist, despite claims of some GOP adherents suggesting manipulation of Bureau of Labor Statistics data, denied not just by Democrats but also by independents and some Republicans. Notable among those suggesting hanky-panky by the Chicago crowd was Jack Welch, retired CEO of General Electric and my one-time hero. He was the most shining example of increasing the value of his corporation, from $14B at his appointment in 1980 to $400B by 2004, four years after his retirement. In 1980-85 he reduced the GE staff from 400K to 300K, some through selling or liquidating unsuccessful companies (GE was the grandest conglomerate, with literally hundreds of subsidiaries) and buying No 1 or 2 producers in whatever business line, but mostly by shrinking staff. He had his managers rated annually, the best in bonus-earning top 20 percent, then average at 80, and bottom at 10 percent, and fired the bottom group every year. Since managers were expected to rate and fire in the same pattern,, there was fear throughout the enterprise, but also a feeling of purposeful life, expectation of recognition and a career path for the energetic. A managerial innovator (Nine Sigma quality control system), he was also good in resurrecting a relatively sleepy, stilted and stuffy organization, killing the nine-layer management structure and bringing people closer to the decision marking process, meanwhile expanding GE from a technology empire into finance (insurance, worldwide ) and news/entertainment (RCA, i.e. NBC), He was a good example for Boston Consulting Group, Bain and McKinsey, all followers of the ruthless method of analyzing a company from inside, then taking over, issuing bonds , and shrinking jobs and changing the mission, sometimes to flourish, often to fail. Bankruptcy as a management tool? People, jobs? Those are not the driving motives to bring a nation out of recession; these management experts mostly ignore social contract is mostly ignored. What made Jack Welch accuse the President of manipulating data is a mystery to me, since in these columns he has been shown as harsh but unfailingly a person of honor. Meanwhile, this chat should highlight, to no one’s surprise, the finding that lifelong training in adherence to the overwhelming corporate strategy of maximizing profit is not the quality that readies an executive for the job of running the world’s most important country.

Labels: smart balance