Taking a humorous but analytical look at just about anything in the spirit of Groucho Marx: I wouldn't want to belong to any club that would have me as a member!
Showing posts with label Business Commentary. Show all posts
Showing posts with label Business Commentary. Show all posts
The crash of the Air France Airbus A300 into the Atlantic Ocean off the coast of Brazil is at once a tragedy, a farce, and a mystery. A tragedy because of the loss of life. A farce because of the initial, erroneous reports by the Brazilian military of wreckage found and the general incompetence of the investigation until the past day or so. I am relieved that both the US and French navies have been asked to get involved in the hunt for the plane's black boxes.
A mystery? Not just because of the missing black boxes, thereby leaving investigators groping around for the reason(s) the plane crashed. But also because, for the life of me, I cannot understand why anyone would use the Airbus's "fly-by-wire" technology. You sure won't catch me flying in a plane that uses it.
Fly-by-wire systems make the pilot rely on sensors and computers instead of his/her own "feel" to fly the plane. If the sensors and computers conk out or give conflicting readings, the pilot has no way to control the plane. S/he cannot "feel" the plane through the stick. It's not unlike the difference between a car with an automatic transmission and power steering, and a car with a stick shift. If the automatic transmission and/or the power steering goes out, most drivers would be totally at the mercy of gravity and inertia. But with a stick shift, even if the clutch dies, drivers can still control enough of the vehicle's operating systems to bring the car to a safe, controlled stop.
So far, the scanty corroborated evidence in the Air France crash suggests that the computers and sensors got "confused" due to the extreme weather conditions in which the plane was flying. The scenario currently entertained is that the plane's sensors were providing contradictory data, which froze the computers, which kept the pilot from being able to control the plane, which caused the crash. Yes, it's speculative at this point, but it does fit all the facts as we know them so far.
Now, I know a few pilots (heck, I'm related to one of them). None of them likes the fly-by-wire system, period. None of them ever wants to be responsible for other lives when being forced to fly while using it.
So for me, the deeper mystery of the crash is why the heck anyone is using the fly-by-wire system in the first place. As with nearly everything else in this business-driven world, however, I suspect it has to do with the making of money at all costs, including the loss of many, many lives.
At least we can feel somewhat confident that the plane crash wasn't a terrorist act, if for no other reason than that no terrorist group has tried to "take credit" for it.
"I was in the right place, but it must have been the wrong time . . ."
Talk about your déjà vu all over again. I saw an article in this morning's New York Times that gave me a great deal of gratification while at the same time giving me serious regrets.
I refer to the proposal by one Mr. Shai Agassi, former software mogul, to build a worldwide network of car battery-changing stations to accommodate the coming influx of electric cars. I had this idea at least as early as 1990, but I did not have the funds nor the fame to do anything with it, like register it, so once again, I make precisely zip for being ahead of the power curve.
Nonetheless, I am gratified that the feasibility of my idea has been recognized by someone who has the money and the connections to make it work. Mr. Agassi's company is called "Better Place," in tribute to his inspiration for the battery-changing stations. He came up with the idea after asking himself "What can I do to make the world a better place?"
He's already done some studies on what the start-up costs per station would be. He's also signed agreements in Canada and Denmark to being mapping out systems for those countries. He is also working with auto manufacturers to encourage standardization in battery size, power source, shape, and location within the car's engine. His concept is that his company would own the batteries and that people would buy a charge the same way they buy cell phone minutes now.
His vision for how the battery-changing operation would work is similar to that of an automated car wash--the car goes in one end, and is transported through each step of the changing process on a conveyor belt.
I think it's brilliant, and I am all for it. I wish him all the success in the world, for the sake of the world. I just wish I'd been smart enough to copyright the darned idea back when I first had it.
And an Unhappy New Year to you, too. I just read an AP report that says Waterford Wedgwood UK has filed for bankruptcy. I am in mourning at this news, but not really in shock. For, you see, when I worked for Wedgwood some 17 years ago [it can't really have been that long, can it?--Ed], I saw it coming. Yes, way back then.
Sit back and get comfy, and I'll tell you the story. Waterford purchased a controlling interest in Wedgwood in 1986, which was implemented at the retail level in 1990. Talk about Jonah swallowing the whale! At the time, Wedgwood was the much bigger company of the two, any way you compared them: total assets, market share, physical size, worldwide presence, you name it. But the deed was done, and Jonah's had indigestion ever since.
Unfortunately for all of us who love the high quality and tradition of fine things made in the British Isles, the ownership of the combined company put ex-auto company executives in charge of restoring profitability. Their solution was to lower labor costs. [Where have I heard THAT before?--Ed.] How did they do that? They fired all the most experienced master cutters and craftsmen and women.
I was not the only American working for Wedgwood in Europe who screamed bloody murder at this, but I probably was the loudest. Every one of us who worked in the Army and Air Force Exchange Services Wedgwood concession shops (located on bases in West Germany, Belgium, Italy, and Greece) tried to explain to the "powers that be" that while Americans in particular love a bargain, they also have a keen appreciation for quality--and are willing to pay more so long as they perceive they are getting excellent (not just good) value for their money. Just as the Frugal Gourmet explained that the cheapest was not always the most frugal, and that quality entered into any calculation of "value," I tried to tell anyone in the hierarchy that Wedgwood's prices in and of themselves were not the problem with Wedgwood's declining sales.
As long as buyers perceived that the quality of their purchases was extremely high for the money they spent, they'd be willing to pay more and buy more. On the other hand, since Americans in particular live and die by the word "sale," I also noted that Wedgwood's sales might actually improve thusly: if prices were raised, then cut back a bit less than the increase, and the decrease was called a "sale," Americans would buy--happily. Repeatedly.
Well, no one in the hierarchy liked that. They were of a mind that the word "sale," in and of itself, "decreased the value of the brand." I was reasonably disgusted by this. People who do not understand to whom they are marketing are not going to have long-term success. And they didn't.
The problems increased in succeeding years. For as the manufacturing of both china and crystal was outsourced to less expensive labor markets (in places like Poland and Hungary), the buyers' perception of the quality of the merchandise went down. The prices, however, did not. I do not denigrate the craftspeople of Poland, Hungary, or anywhere else where WW UK outsourced labor. All those places have long and honorable crystal-cutting and china-making histories of their own. But they are not Wedgwood. They are not Waterford. The cachet of place cannot be underestimated in trying to sell fine china and crystal to buyers all over the world.
The upshot? Customers became increasingly unhappy with the quality of the merchandise they were being asked to buy. I cannot tell you how many emails and phone calls and in person conversations I've had with people who said they weren't going to buy any more Waterford unless it could be proved that what they were buying was MADE IN IRELAND. Ditto for Wedgwood and MADE IN ENGLAND.
Heck, I had that reaction myself. My biggest Wedgwood china set used to have the floral border motifs painted by hand. Every piece had three-dimensional texture; every piece matched; yet every piece was unique. However, it took me a long time to complete my set. The last few pieces I have were made after production had switched from hand-painting to applying lithographs--just a fancy word for "decals." You may or may not be able to see the difference, but I assure you: I can. And do. And I don't like it, not one bit. So I don't use those pieces except in dire emergencies. They don't look right. They don't look like, well, Wedgwood.
Worse, though production costs decreased greatly, the retail prices never did. So I feel as though I got ripped off merely because I wanted to complete my set. [It's moot now, anyway, as the pattern went entirely out of production about a year after I bought my last plate. And the prices on the secondary market, especially for the older, hand-painted pieces, are exorbitantly more than I can afford.--Ed.]
This is truly a sad day. Not only is the Waterford showroom in Waterford Town, Ireland, closed--which will have a ripple effect on the entire Irish economy, because tourism is what put Waterford Town on the travelers' agendas--Wedgwood itself may be sold off, piece by piece, if a reorganization plan cannot be implemented, or a buyer willing to keep running the company cannot be found.
I know how to fix it. I wonder whether Warren Buffett would loan me the $2-4 billion it would take to do so. Probably not. Damn.
As to WWJD ("What Would Josiah Do?")--well. Let me first note that in England, Josiah Wedgwood is regarded the way Thomas Edison is in the USA. He wasn't just a master potter and craftsman. He was a scientist, an inventor, and a shrewd businessman. He is largely responsible for the rise of the stable middle class, for he gave them things to buy with their new, Industrial-Revolutionarily-earned wages. He created AND satisfied increased aspirations. He's probably doing at least 78 RPM in his grave right now. If he were here, I daresay he'd be taking off his wooden leg and beating the lunkheads who so richly deserve it for running such a fine and storied company into the ground.
Forget about the War For the Union--what's going on these days is the War On the unions. Do not count me among those who are mystified by Washington's ability to throw endless streams of billions of dollars at banks and other white collar institutions but not to give even a few paltry billion to the auto industry--as a bridge loan, no less--to keep the last great bastion of American heavy manufacturing viable.
The people giving out the money come from the same white-collar backgrounds as those they are helping. Thus they are protecting their own best financial interests. They don't give a damn about blue collar workers, who are the real backbone of this country, and some of them actually desire to use our current economic crisis to bust the unions once and for all. After all, in the long run, that increases their profit margin. Who cares that it drives hundreds of thousands of people out of work and out of the lower rungs of the middle class?
I do, for one. There is a dignity to honest, hard, physical labor that certain "clever" people do not wish to acknowledge. They also cannot or will not admit that it is the ultimate source of the dollars they have to play their financial investing games. Since they don't recognize the connection, they don't have to see the consequences--the worst of which is that they are cutting their own throats in the long run. At some level, tangibles must be exchanged for other tangibles. "Cold, hard cash" for the physical results of production--an object. When it's just numbers on paper, it has no basis, no foundation, and ultimately will collapse.
I've been saying that for decades, but I'm not sure even I understood the implications completely. I am beginning to wonder whether our going off the gold standard during the Great Depression was such a good idea, though in the context of history, it was both good and necessary.
And I will say that any tangible production qualifies, even the production of ideas on paper. After all, that gives us books and pamphlets and magazines and newspapers--all things that exist, that can be touched and felt. The disconnect exists when we remove anything tangible from the equation. Think about it: even in the case of stocks, the certificates represent the tangible assets of the corporation issuing them. There is supposed to be some monetary equivalence between the value of the certificates and all the corporation owns and produces. This is one of the reasons a lot of people don't like stock splits. It makes them wealthier on paper, but does it really represent accurately the company's value? If everyone with shares were to demand all at the same time either cash or a literal piece of the company (a desk, say), would everyone get the total face value of his/her shares? If the answer is "yes," you have no problem. If the answer is "no" on the other hand, you are in deep, deep trouble.
For that's when you've disconnected the tangible from the tangible. Never forget, at some point somebody is going to want to reconnect and possess the tangible. If enough people get the same idea at the same time, it won't work when the on-paper value exceeds the actual tangible things the on-paper value is supposed to represent. So when you start trading the value of an adjustable rate mortgage based on its potential for profit (e.g., when the interest rate goes up), you've uncoupled the mortgage from the physical property it represents . . . and if you cannot sell the property for the inflated on-paper value of the mortgage, you lose money. If enough people lose money, we have a meltdown. Hence our current collective circumstances.
It is true that those who don't know history are doomed to repeat it. What I want to know is why do all the people who don't know history have all the money, but the rest of us are the ones who suffer the consequences of the others' ignorance? Because they are willing to do anything to keep their "piece of the pie" at the expense of the larger good of the entire country, that's why. They've convinced themselves that they are one and the same, and the rest of us don't count.
It's not unlike that crap that Sarah Palin, for one, was spreading during the recently concluded campaign about "Real America"--with her implication being that those who are not "Real Americans" are lesser beings, somehow, and are not worth the blessings "Real America" has to offer. If the economic meltdown completely destroys our manufacturing sector, however, those "Real Americans" with all the money are going to have a rude awakening: their "money" isn't going to be worth spit, either, precisely because they trashed the value of labor and of what labor produces. I'm not sure I want to be around to try to live through the chaos that will create.
It seems to be OK, according to the Dubya Administration, to give literal billions of dollars to financial institutions to keep them from total collapse, but not to give even 1/30 of that amount to help keep our troubled auto manufacturing industry from going under. What's wrong with this picture?
(1) The finance industry is white collar, generally conservative, and mostly GOP supporters--and not unionized, to boot. Besides, it's where the vast majority of the people in power have made their own fortunes. So they are in a real way protecting themselves and their own livelihoods.
(2) The auto industry has lots and lots of unionized blue-collar workers. Forcing it to go under will break the unions and thus help maintain the financial supremacy and security of those who already have the most money. The rich get richer, the rest of us get screwed . . .
(3) However: the fallout from the crash of the auto manufacturing industry will directly hurt a lot more people than would the crash of just some of our financial institutions. The auto industry crash fallout will ripple through the whole country, hurting car dealerships, automotive insurance providers, parts suppliers and retailers, body shops and mechanics, gasoline retailers, and even junk yards . . . not to mention consumers. But the fallout from the financial crash, while hurting many people on paper, has yet to directly affect everyone in the country--if for no other reason than that not all the banks crashed. The ones that survived are buying up the others' assets at fire sale prices. They'll be stronger in the end. If all three of the Big Three go down for good, however, we as a country will wind up even further in debt than we are now to other countries. Not a good way to maintain independence.
And yet there are those who insist the problem is that we don't "buy American." Well . . . even such American icons as the Mustang and the Corvette are not made 100% of US made parts these days. Besides, encouraging us to "buy American" is [in a very real way--Ed.] a total contradiction of the encouragers' stated preference for a truly "free market."
If we are to be the best possible consumers and are to make the "free market" work properly, we are supposed to buy the best products at the best prices. If that means buying a Honda instead of a Lincoln, so be it. Lincoln will either have to improve or go out of business. That's what a "free market" does.
If we are to look our for our own non-economic interests first, on the other hand, we should always "buy American" when we can. [Note: Defense spending is a special case. National security compels me to say that we must always "buy American" when it comes to things like military aircraft. Otherwise, some of America's enemies would find it much too easy to gain information about our security measures and abilities--thus the ways to beat them--that we really don't want made widely known.--Ed.]
I'm not keen on throwing good money after bad. Nonetheless, I think failing to help our American automakers is going to hurt more of us, and to a deeper degree in the long run, than will giving the banks a little less of the government's largesse. Besides, we can always put terms on the money we lend to the automakers that will help them (1) modernize their production facilities to let them produce alternative fuel cars sooner than they could otherwise; (2) limit the amounts of executive salaries and bonuses to a reasonable amount; (3) get some reasonable concessions from the unions--I don't know anyone who'd be so stupid as to say "no job with no benefits" is preferable to "a decent job with lesser benefits"--at least until the USS Economy gets herself re-righted. For that matter, we should have put similar (but appropriate to the industry) terms on the money we've already given and are yet to give to the banks.
The way things stand, however, I am forced to conclude that the only reason the financial industry is "worth" the 700 billion dollar bailout but the Big Three automakers are not "worth" 1/30 that amount is that the relatively few at the very tippy-top of the economic food chain as always want to protect themselves. If that's to the detriment of the rest of the country, so be it. Well, isn't that attitude why we "threw the bums" out in the just-completed elections? So let's work to get something going that will help the rest of us first, for a change!
A woman in California has developed a thriving business by creating and selling wedding cake toppers for diverse ethnic groups--including gays. She tried a year or two ago to get her merchandise included in Macy's wedding registry offerings, and Macy's turned her down flat.
Now that gay marriage is legal in California, however, Macy's jumped at the chance to add her product line to its wedding registry offerings. So much so that it took out a million-dollar full page ad in several of the state's largest newspapers to trumpet the fact.
Macy's has decided that it stands to make more money from courting the gay marriage market than it stands to lose by doing the same. Morality doesn't enter into it. Macy's is after the most money possible . . . all in the best interests of its shareholders, of course [she added, sarcastically--Ed] . . . and so will take advantage of whatever new business the change in California's law brings it. If that's not greed, I don't know what is.
What I don't know is why more people cannot or will not recognize that for what it is: naked opportunism. We really should either regulate our businesses to make them comply with our stated moral goals, or give up claiming we believe in one thing but acting like we believe in the exact opposite. I can't stand the hypocrisy.
Consider also the case of General Motors and its negotiations with the United Auto Workers in the 1950s. Walter Reuther, head of the union, suggested that GM come to Washington with him and lobby Congress to make health care for its workers (and by extension, everyone) a governmental responsibility, thus reducing GM's costs and responsibilities under the union contracts. Well, the dim bulbs at GM turned him down flat: (1) it's SOCIALISM [oh, horrors--Ed.]; (2) as the contracts were written, GM was out nothing, because it just passed all those costs along to those who bought its cars. "We don't care about anyone else--we are taking care of our own--and at your expense, so it's no skin off our noses," nicely sums up GM's attitude.
The upshot? GM is now paying for the health care expenses of workers who retired decades ago. Because GM never realized that it was going to have to compete in the auto sales market with higher quality, less expensive imports, GM never realized it was going to have to start eating those health care costs. And now Detroit is the heart of the Rust Belt, suffering unconscionably high unemployment, and GM as a corporation is losing money hand over fist and is no longer the world's biggest car company.
It would have been, and still is, much cheaper for everyone in the country to get health care from one provider than what we're suffering through now. Don't kid yourselves: GM's troubles hurt all of us, as declining sales increase unemployment and decrease demand for both new cars and car parts and thus ripple throughout the entire US economy.
The real reason people are against universal, single-payer health care is because they think it's going to cost them more than they'd otherwise have to pay. [We're back to greed as motivator.--Ed.] They are wrong about that for two reasons. (1) It doesn't matter how many people in your family lived to ripe old ages and died peacefully in their sleep and never saw a doctor till the day they died--it takes only ONE catastrophic illness or injury to wipe you out financially. There's no guarantee that you won't have such an illness or injury, either. You can plan and prepare and do everything right and still get hammered. (Look at what happened to me, if you doubt it.) John Lennon was right about this: "Life is what happens while you are making other plans."
(2) Everyone already is paying higher costs then they would under a single-payer system that covers everyone. Since those costs are indirect, however, people don't realize they are paying them. The simplest example (as cited by Roger Lowenstein in a recent NPR interview about his book While America Aged) is Starbucks Coffee. Starbucks pays more every year for its workers' health care costs than it pays for coffee beans, which are the sine qua non of its business. Starbucks is not paying those health care costs out if its own pockets. It's adding them into the price it charges you for those lattes you drink every day. You are already paying . . . you just don't realize that you are nor how much you are.
The reason a single-payer, truly universal health care system would be less expensive to all of us is that a single payer can negotiate rates for everyone, as opposed to Starbucks' negotiating rates for its workers, and GM for its, and every other employer's for its. [You'd also know exactly how much you were paying, because you'd be able to see the entirety, not just your part of it--Ed.]. To use a crafts metaphor, a single piece of fabric is both more uniform and stronger than a patchwork of pieces loosely stitched together. It's not socialism. It's sensible. Heaven help us if we don't recognize it and fix things soon.
The Berkshire Hathaway shareholders meeting, also known as "the Woodstock of Capitalism," just concluded this year's festivities in Omaha. CEO Warren Buffett, the "Oracle of Omaha," presided over events as diverse as a special shopping excursion to Borsheim's Jewelry and Fine Gifts, dinners at Gorat's Steakhouse, private bridge games, and the meeting itself.
Shareholders from all over the world come to Omaha for this event, to bask in Buffett's investing brilliance and to hear him deliver his evaluations on "life, the universe, and everything" [apologies to Douglas Addams--Ed.]. One of Warren's gems this year was to note that "risk is inherent in capitalism" as his reason for not helping bail out individuals trapped in the mortgage lending crisis.
Mr. Buffett is usually very wise and practical--for a maven of capitalism, he lives relatively modestly; he supports Planned Parenthood; he doesn't believe in investing in things he doesn't completely understand (one of the main reasons Berkshire Hathaway did not get caught when the so-called "dot.com" bubble bust). But I must disagree with his take on the mortgage lending crisis.
He did say that people who were misled about the adjustable rate mortgages they took should get some relief, but his implication is that many, many people were not misled and that their present problems are due to their own greed, so they should suffer the consequences and learn from their mistakes. (1) Is that even true? (2) Why doesn't he apply this same logic to the mortgage companies who lent exorbitant sums willy-nilly to people who really shouldn't have received such largesse in the first place?
The root problem is that we don't actually have true capitalism. Those with money and power influence legislation so that they get to reap the benefits of their money and power without taking any of the risks of doing the same. Joe Schmo, individual, is not afforded these same advantages, however. It's upside down. Collective greed, massed in companies to maximize power and influence, gets protected . . . and the majority of the burden is borne by those who can afford it the least. The little guy carries the big guys on his back. No wonder things break down and individuals' lives are thrown into chaos at the same time the biggest companies are reporting record profits. Anybody out there ever hear of noblesse oblige? Apparently not.
It's the same reason we need labor unions but much union-protecting legislation has been eviscerated of late. It's the same reason the US Supreme Court until after FDR's "court-packing scheme" in the 1930s, claimed that corporations, being artificial persons, had equal and identical bargaining power to individual job-seekers. It's the same reason the Fed will bail out Bear-Stearns but won't help individual mortgagors . . . except for the ones who don't really need it. The only individual mortgagors who will get relief under Dubya's plans are the ones who are not behind on their payments and whose credit is otherwise good. But the people who've been struggling along and whose crises are more immediate are hung out to dry. I've said it before and I'll say it again: "Them what has, gets. The rest of us gets screwed."
Then again, I'm basing my criticism of Mr. Buffett's remarks on a news report I heard yesterday on the radio. I, in turn, should know better than to accept what any reporter says without checking to make sure he didn't miss any nuances in what he's quoting. Context matters. I'll check further and post any changes to my analysis soon.
On the third hand, Mr. Buffett is also known to have said, "money cannot buy happiness." True enough. I wish, however, he'd indicated some understanding of the concept that the lack of money sure causes a lot of distress, especially when it forces people to choose between such frivolous things as eating or buying needed prescription medicines.
You remember Lily Tomlin's Ernestine, do you not? She was one of Lily's first major hit characters, way back from (ah, I do so hate showing my age) Rowan and Martin's Laugh-In. One of Ernestine's best observations was, "We're the phone company. We don't care. We don't have to."
Despite the truth of that statement, I objected to the court-ordered break-up of the Bell System in the mid-1980s. I abhor trusts, but I also recognize the everyday reality that a telephone is in essence a utility; thus, it should be run as a quasi-monopoly, but for the public good, not for private profit.
Not that my long-standing objections ever mattered, but the FCC of late has by inaction allowed most of the Bell companies to re-merge . . . not for the public good, however and alas, but for private exorbitant profits.
The latest "ferinstance": AT&T has stripped the last vestige of "service" from the concept of "customer service." Should you decide you'd like to pay your AT&T bill in person (maybe you're in the mall and you know the bill is coming due and you decide, spur-of-the-moment, to walk in to the AT&T store to pay, just to have one less thing to do later), AT&T is going to charge you an extra $2.00. Yup. You read that right. You have to pay more for AT&T to take your money from you in person.
As if that weren't bad enough, AT&T defends this extra charge on the grounds that the time of AT&T reps is valuable, thus you should pay more for taking up that time.
I must be old-fashioned. That strikes me as being exactly backwards. AT&T should be giving you a discount for paying in person and early/on time, not discouraging you from providing it with revenues. What do these AT&T reps have to do that's more valuable to AT&T than literally bringing in the money that pays for (among other things) their salaries? I just can't fathom it.
Well, that's not entirely true. I can fathom it just fine. I just do not care at all for what I fathom, which is AT&T is going to ding you for every single thing at every chance it gets, just like every other business in the world, rather than being willing to accept that some things are just part of its expenses of doing business in the first place.
The Irish are correct: there's many a dry eye at a moneylender's funeral.
