Monday, February 13, 2017
Evil and Greedy
Mentioned as well, as it often is, was the fact that people can no longer get out of school and go to work for a company for forty years at the same location and then retire. Of course this isn’t universally true, but widely. It occurred to me that people say they would like that, but they really wouldn’t. They don’t want to live in the same tiny house that they could barely afford the down payment to buy for forty years. The one with no off street parking and no basement. They don’t want to go to work and have to wait for the people that were already there to die or retire so that they can get a promotion, more responsibility, more authority, and more pay. We don’t want to wait any more. We want it NOW. It’s why we have credit cards and mountains of consumer debt.
Also mentioned, tangentially, in our discussion was the “global” economy and of course that’s had some effect. The American steel and auto industries were overtaken and sometimes absorbed by foreign competition, but why was that. Was it only the Snidely Whiplash of the American middle class worker “Cheap Labor”? Or did high corporate taxes, union work rules, and environmental and corporate regulation have roles to play as well? Of course you need to be a Wall Street banker or a well-connected Congressman to know the ins and outs of the whole story but allow me to think that poor old Snidely carries the burden for a LOT of unseen and unsuspected economic villains.
But the discussion got me to thinking about how unfair it is to tar CEOs with the “Evil, Greedy” moniker. Take a mass layoff as an example. Say company XYZ Inc. is to lay off some of its twenty thousand employees, and two thousand people will lose their jobs… on Christmas Eve….. in the worst snow storm in recorded history. It would be ordered by the CEO. Now why would he or she do a thing like that? Well, it was because they looked at the profit and loss sheets and understood what they said. Market share had dropped, productivity was down, raw material costs were up, energy, physical plant, regulations, taxes, the new union collective bargaining agreement or a combination of all of those things plus they didn’t get any sex last night on their birthday and they’re understandably cranky. And so they lay off two thousand people.
This is a tragic thing. I’ve had two different startups fall out, and the rug yanked out from under me a couple of times and it’s no fun. It can, quite literally, turn your life upside down. But what was the alternative? What was the other choice the CEO could have made that would have been better? The company’s numbers aren’t secret. Everybody knows when a company starts to lose market share and they need to make a correction. If they fail to make that correction then the stock price will start to drop. People will start to look for other places to invest their savings or 401k contributions. This means less capital for new machines and raises. This means lower production and a further erosion of the stock price. There’s no stopping the spiral. It’s like the inevitable collapse of a breached damn or levee. One thing will lead to another until the CEO is replaced by the “Evil Greedy” board of directors that hired them. And of course they were elected by the major stock holders. So the “Evil Greedy” chain stretches all the way back to middle class man on the street who happens to own some XYZ Inc. stock. And finally if someone doesn’t become sufficiently ruthless to fire those two thousand workers, eventually, the enterprise will be driven out of business and all twenty thousand people who work for XYZ Inc. will be laid off and the facilities will close their doors.
How much more compassionate is that than laying off the original two thousand?
But that’s just what an average guy thinks.