I just had to add a quick ramble here....
When 5% of the people hold 90% of the wealth in this country, most business essentially operates to serve the interests of that 5%, not the other 90%.
I disagree, business operates to satisfy the stockholder, and today, in the U.S., that is every working stiff with a 401K or mutual fund investment, plus a lot of small busnessmen who have their pension plan invested at least partially in stocks and bonds. The 1960's idea that only the idle rich care about stock prices is long gone, the man on the street is just as likely to check his investments as the tycoon.
I guess I presented it wrong. You are correct that there is broad stock ownership withn this country. However, by the dollar value the majority of this ownership is held in the hands of a small percentage of people. A simple analogy is, as a machineing business, you tend to serve your large customer with more care and interest than your small customer. most people imply that they are treated the same however, if time was important, who's order would be put off and who's would get the priority?
I don't buy your comparison of stockholders to large or small customers, ALL stockholders want the same thing, returns. To think a business decides to serve it's wealthy stockholders, while screwing the small stockholders, is crazy.
With respect to the pension plans, they do hold a great deal of the stock in this country. It's a bigger picture than that though. The fact that most companies can borrow and use the pension plan that is supposed to service the employees as colatoral for that loan..or borrow the money from the pension funds directly...shows that these have very little impact on decision making.
How does using a pension plan as colatoral threaten you, me or anyone??? Give us one single instance where retirees went unpaid.
The result is that the overall goal is to result in "short term" profitability rather than overall business strength.
I disagree again, you assume that a small cadre of ultra rich are running the country to suite their fancy. The facts are that those running business today answer to almost the entire spectrum of American society, look at the Enron executives either doing time or about to do time, in prison. This should reafirm your flagging belief in the free market system as practiced in America. I was not implying that the ultra rich "control" things, just that the focus of the government and it's policies tend to be toward the production of "wealth" and those who have it. It's no different than the example above where the large customer gets priority over the small customer. I imply absolutely no "conspiricy" theory or anything else to this. Simply that becasue most of our officials come from backgrounds of money, they tend to foster a system that revolves around this. An example of this from another sector would be management of schools. Most of the people in school management positions come from the education field. The result is an inertia to keep things running the same...rarely a new idea introduced to improve education (more money for teacher's and smaller class size...how long have you been hearing that repeated?)
example of this is the HUGE focus of the governmental policies to try and and keep stock prices going up. This also puts o focus on CEOs to artificially inflate those prices through layoffs, cost cutting measures, etc which cause huge short-term profits at the expense of any long term company strength. A good example of this is US steel dumping all their fabricated product divisions in the early 80s.
Your example of what is wrong with corperate America come from the 1980"s! Are you kidding! A lot of things are done wrong in every decade, that is the human element, but to try to buttress your arguement with examples from 20 years ago is simply irrelevant.
I used that example because it was close to home and I participated in the closure and saw the actual accounting figures for it. Rather than just repeat something someone else had presented in a news article, I went with something I had first hand knowledge of.
Those divisions were making profits for the company (small and consistent) but when the overall stock price was falling, they dumped all fabricated products and re-worked the accounting system to make it look like cost savings and bolster the stock price.
That was their perogative, if it was the wrong decision, they would be punished by the market, again 20 year old examples are obsolete when talking about the big business climate of 2003, soon to be 2004. Of course it was their perogative. I am not speaking of taking away freedom to run your business as you want...I own a business myself. What I am speaking of is an entrenched business focus that emphasizes short term profitability and discourages long term investment. How many accounts in US businesses sign off on capital purchases for equipment that pay off in a period of more than 2 or three years? It is rare these days, with the exception of construction of new facilities, to see investments with longer pay-offs.
One should also take note that "increase in worker productivity" is seen as a GOOD thing in all the government reports. Yes, slight increases in productivity are good but for most workers, this figure means they are working harder and longer for the same money. How many of you can say that you are paid more and work less than 20 years ago?
I most definitly can, 20 years ago I was making a fraction of what I make today.
I'm glad. The DOL statistics for pay schedules shows that the amount of hours worked by most US workers is increasing and that pay is not increasing as quickly as cost of living for most.
Can you even say that you are paid more and work about has hard as 20 years ago?
Of course I can.
As long as the government operates in a mode where decisions are made with such a high focus on "short term profitability", as they currently do for that 5% who hold the 90% wealth, we will always be weak and nationally insecure.
I am, and I believe WE are, neither. Keep your weakness and insecurity to your self, I am, and those I befriend and associate with, are NOT weak, and NOT insecure. I feel sorry for anyone that, living in the most freedom loving country in the world, the country with the greatest amount of opportunity ever available on the face of the earth, that finds their predicament so depressing, you my man would have been eaten alive in the middle ages, you would have never survived on the plains in the 1880's, and you probably only survive (to whine) due to government assistance in the year 2003.
JTMcC.
Strength comes not from the size of your armament,
Where in the world did I refer to armament???
but from the desire of the people to protect their way of life. With eroding standards of living,
I see no decline in standard of living, I see people with more of everything and the highest standard of living in the history of the world.
a general perception that the government is not working for the individual
I don't want the guverment to work for me, I want them to do what they are constitutionally mandated to do, and get out of my way.
, declining education, declining access to health care
Who, pray tell, in the U.S. is going without health care? Go to your local hospital emergency room, you will see a steady stream of welfare cases using the ER as their own personal doctor, for everything from minor scrapes to cold symptoms.
, etc, we risk declining security.
We risk declining security when we elect politicians more concerned with those sniveling that they just can't make it in the most prosperous land ever on earth, than they are with those enemies that plot and plan to destroy us. JTMcC.
Koz (and yes it is a ramble, no it isn't suggesti Today the business section of the NY Times had two interesting articles. One was entitled: "Wall Street Shaken by US Job Losses in August" and the other was front page, "Drop in Jobs is Continuing: 93,000 Lost Last Month."
Excerpt from the first:
.... yesterday the labor department reported that while the unemployment rate slipped to 6.1% in August, companies cut payrolls by 93,000. The report was weaker than expected and delivered mixed signals about the nation's overall economic health. Wall Street was expecting jobs to increase 20,000 to 25,000, Mr. Hogan [chief market analyst at Jeffries and Company] said.
"We are concerned about the jobs-creation part of the economy," Mr. Hogan said.
The second article is highly remiscent of the discussions that went on here on rcm in the past few months, here I quote from that article:
... What suprises many economists is that the job-shedding has continued despite what they describe as an extraordinary level of economic stimulus. Low interest rates, tax cuts and rebates, a rise in military spending, mortgage refinancings, growing corporate profits, even a long-awaited improvement in business spending on new equipment and software have all all contributed to the rise in the economic growth rate.
But jobs are disappearing, and employers continue to resist adding hours for their existing workers. Economists warn that without payroll expansion and rising income from wages, sustaining the economic growth will be difficult once the stimulus weakens.
"If we go into next year without job growth, then the consumer's willingness to keep spending comes into question, and recovery is in danger of unwinding," said James W Paulsen, chief investment strategist for Wells Capital Management.
Seeking an explaination for the job drought, some economists call attention to the shifting of production overseas, particulary to China, and to the american economy's rapid gains in productivity. The productivity gains allow companies to maintain the same level of production with fewer workers.
Both trends have proceeded at a stepped-up pace in recent months so the economy, in response, may now have to expand at an annual rate of 5 percent or more, simply to keep employment levels stable, said Albert M. Wojnilower, economic consultant and wall street forecaster. ....
The article also mentioned that about half of the 93 thousand jobs lost were in the manufacturing areas.
Frankly it sounds to me like the company's dreams of increased profit by shifting production overseas where labor rates are very low is already showing signs of failure. My bet is that the management in firms like that is driven by the pure and simple desire to temporarily boost profits, so that they can line their own pockets before the rent comes due. Yep, plain old greed.
The problem that nobody anticipated is, the feedback time constant is way, way too far short for this to work. To boost their profits, they need to lay off american workers. Sure the workers have some savings, but once you lay off the worker, they stop buying - instantly, and almost completely.
Which leaves no market for the goods that the companies are trying to peddle. A lot of this stuff is about perception, all a person needs to hear is that their friend has just been laid off, and he thinks, "that could be me. I better start tightening the belt now before it's too late."
Somebody has to knock these idiots' heads together and holler in their ears, that NOBODY BUYS ANYTHING WHEN THEY HAVE NO JOB. This seems simple but they just ain't 'getting it.'
How much do folks want to be that the next big export overseas to china is going to be those executives themselves, when they discover that their efforts have destroyed their companies - and the US economy as well. I suspect they will also be making 1/20 of their present salary or thereabout - IF china is interested in hiring them. Otherwise it's off to the rice farm for them.
Jim
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