What difference an hour makes
Posted by aogWednesday, 05 November 2008 at 12:01 TrackBack Ping URL

I did find some humor in these two back to back posts at Brothers Judd

I think that, while McCain made numerous mistakes, and was fighting a very uphill battle, his biggest failing was his inability to articulate any coherence in his political stances. It was just a grab bag of things, and if you want that sort of mish-mash Obama said it a lot better.

Comments — Formatting by Textile
cjm Wednesday, 05 November 2008 at 12:28

i think mccain didn’t really want to win, he just wanted to run.

h-man Wednesday, 05 November 2008 at 15:05

OJ is busy pushing his 3rd way, but of course you’ll never get the 3rd way unless someone is pushing the 1st way. So we’ll probably end up with the 2nd way and he will then attack the Republicans who pushed the 1st way. I’ve already forgotten which way is which.

erp Wednesday, 05 November 2008 at 15:46

IIRC, the first way is us, the second way is them, and the third way is Clinton.

Annoying Old Guy Wednesday, 05 November 2008 at 16:21

I must say that I think OJ’s “third way”, when he’s not waxing pedantic about it, is actually

  1. Interesting
  2. The best we’ll do in terms of personal liberty in our lifetimes

I think we’d be doing much better now, politically, if President Bush understood this. I think OJ is presuming a much higher level of understanding than exists.

h-man, I agree, but it’s not really OJ’s fault that the GOP, especially the Congressional delegation, has been so lack luster if not outright hostile to personal liberty. I think that was actually a bigger drag on McCain than Bush.

DPD Thursday, 06 November 2008 at 05:40

PJ and the Religious Right loves W because he is pro-life (abortion being the only issue in their universe). Well I hate to break to them, but abortion is still very much legal. All Bush has done is talk the talk. Apparently they don’t care if he walks the walk – provided he serves as a comforting symbol of their worldview.

Besides, the GOP leadership doesn’t really want abortion to be illegal. They need it as a symbol of the “5 minute hate” that they use to rally the Religious right to the GOP banner. Abortion must always be legal and remain a threat for the same reason that Oceania must always be at war with Eurasia (or is it Eastasia?). Rove has cynically played the religious right for two election cycles. However, the monster he created is now metastasizing and taking over the GOP. It’s destined to be a fringe party, kind of like a religious version of the Dixiecrats.

And so the snake handling, tongue speakers have taken over the GOP, which explains OJ’s obsession with that ignoramous Palin. Apparently basic intelligence, education and knowledge don’t matter as much as good old faith. And no other issue but abortion matters at all.

Caligula’s horse would have been a better choice.

Annoying Old Guy Thursday, 06 November 2008 at 08:46

I quite like Governor Palin myself as an atheist, so I find your argument unpersuasive. I also think that the motivations of OJ, Bush, and Rove are somewhat broader than your take.

cjm Thursday, 06 November 2008 at 09:21

talk into the mirror and it will make more sense. what a loser.

Hey Skipper Thursday, 06 November 2008 at 11:28

So, how’s that whole 60/40 nation thing going, anyway?

As a dunnoist, I also like Gov Palin. If Pres Bush had governed the US the way Gov Palin has done with Alaska, I think the outcome of this election would have been much different.

Abortion does indeed figure prominently in OJ’s universe. It is worth noting that all three choice-restricting measures on state ballots this year failed.

I agree with AOG about the “Third Way”, since most people seem to prefer security to liberty.

If I got to lead the Republican Party, I would drag it in the direction of Paternalistic Libertarianism.

Good thing for me my investments go to index funds.

BTW — cjm, I enjoyed meeting you over breakfast. Since you have a real job, though, I should have stopped by for dinner; there just wasn’t enough time to solve the world’s problems.

Harry Eagar Thursday, 06 November 2008 at 11:50

‘The best we’ll do in terms of personal liberty in our lifetimes’

Well, unless you think women are people.

Peter Thursday, 06 November 2008 at 11:59

I would drag it in the direction of Paternalistic Libertarianism.

Not me, Skipper. I’m dedicating the next four years to dragging it in the direction of theocratic secularism. Hey, maybe we’ll meet along the way. :-)

Harry’s point, or what I think is Harry’s point, is very interesting. The hard part is that so many women seemed to be leading the anti-women charge and I guess their partners didn’t dare object.

Annoying Old Guy Thursday, 06 November 2008 at 12:14

OK, Mr. Eagar normally mystifies me with his comments, but that last one I think tops the list of non-sequitors. Can anyone explain it to me? How do government mandated retirement accounts require women to be considered non-persons?

Harry Eagar Thursday, 06 November 2008 at 13:47

I thought you were talking about Orrin, who treats women as unpersons.

As for Peter’s speculation, as my friend Don Kaul wrote long ago, in a democracy, it’s hard to feel much sympathy for an oppressed majority.

Ali Choudhury Thursday, 06 November 2008 at 14:19

Not knowing Africa is a continent takes dunnoism a little far.

Annoying Old Guy Thursday, 06 November 2008 at 14:23

I think Skipper is aware that Africa is a continent.

cjm Thursday, 06 November 2008 at 16:24

i expect skipper has seen africa from a vantage point no one lese here has, and is very aware that it is a continent (nice meeting you too, skipper:)

my idea of a 3rd way is to have formal social contracts. if you graduate high school and stay out of trouble you are guaranteed vocational or further academic schooling. if you learn a trade or get your bachelor’s degree you are guaranteed a job. match socialism with capitalism. it’s just easy for something outside your control to cause your house to be lost before you can pay it off, or for you to lose medical coverage. tie good behavior with support.

for example, like everyone here I have paid in hundreds of thousands of dollars in taxes over my working life, and if i hit hard times i get six months of paltry unemployment and then squat. what kind of deal is that? meanwhile someone who never worked a day gets total support, albeit in an urban hell hole.

what i am proposing isn’t welfare, it’s social stability.

Hey Skipper Thursday, 06 November 2008 at 17:06

Harry:

‘The best we’ll do in terms of personal liberty in our lifetimes’

Well, unless you think women are people.

I was talking about the Third Way (for some reason I hate that term), not Orrin.

While I would be able to ID 3rd Way tenets from a list, off hand I can’t remember many. Things like mandatory HSAs, or mandatory retirement savings in lieu of Social Security (with SS becoming essentially an insurance policy against penury in old age) are both things that sound 3rd Wayish and also come under the heading of paternalistic libertarianism.

In other words, it is not necessarily a huge impingement on freedom to force people to do things that will ultimately benefit them individually; also, it is not entirely inconsistent with liberty (depending upon the means) to ensure some minimally acceptable material existence for those who have been unlucky in life.

Ali:

Not knowing Africa is a continent takes dunnoism a little far.

Dunnoism is my religion — apologies for the confusing reference.

As for Gov Palin, an amazing amount of unfounded, outlandish stuff has been said about her. Consequently, I reserve judgment without much better verification than is on offer (SFAIK).

Should it be true, though, then I will have to adjust my estimation of her from teachably ignorant to ineradicably so.

Annoying Old Guy Thursday, 06 November 2008 at 18:01

cjm;

There are problems with that model, which sounds much like the Japanese model before the 1990s. You end up with a lot of coasters and very frantic high schoolers. It seems to me it shifts the stress to the wrong time of life (which is reminiscent of the soccer competition debate).

Now, in an Ownership Society such as OJ proposes, much of that tax money would have gone in to tax deferred savings on which you could draw while you were unemployeed. That seems a better system to me.

Skipper;

I think Mr Choudhury was joking, to which I responded in kind.

Harry Eagar Thursday, 06 November 2008 at 18:24

Well, by golly, we’ve strayed pretty far from free markets here.

Ali Choudhury Thursday, 06 November 2008 at 19:15

The reference was to this report on Fox.

cjm Thursday, 06 November 2008 at 20:49

i am thinking of the singapore system where money witheld from a person’s earnings is used as a downpayment for housing.

Annoying Old Guy Thursday, 06 November 2008 at 21:05

Mr. Eagar;

Yes, we have. But life is full of compromises. And that is precisely what I meant by “as close we’ll get in our lifetimes”.

Mr Choudhury;

It’s amusing that you castigate me for mischaracterizing the intentionality of a gesture which indisputably occurred, but you will repeat a rumour for which

  • the accuracy of the rumour cannot be verified
  • that the rumour was actually spoken by the alledged source cannot be verified
  • if spoken, the source is acknowledged to be someone who is strongly motivated to engage in blame shifting to protect himself
  • the very existence of the anonymous source cannot be verified

Can I cite as definitive any future reports on FNC that are as thinly sourced? Or better, any prior ones?

Bret Thursday, 06 November 2008 at 23:39

aog wrote: “Mr. Eagar normally mystifies me with his comments

Thank heavens. I’m glad to know that I’m not the only one who’s often mystified.

Bret Thursday, 06 November 2008 at 23:43

hey skipper wrote: “…it is not necessarily a huge impingement on freedom to force people to do things that will ultimately benefit them individually;

Whoa!!! Should we force people to exercise three times a week, force them to drink skim (as opposed to full fat) milk, eat always healthy diets, etc.

That attitude forms the basis of tyranny, not liberty.

Harry Eagar Friday, 07 November 2008 at 01:46

How about the regulator’s creed: It is necessarily an improvement on individual freedom, and collective, too, to force people not to do things that will ultimately (or even immediately) damage other people.

We don’t regulate in order to reduce liberty but to allow all to have some. Anatole France said, ‘The law in its majesty forbids the millionaire, as well as the bum, to sleep under bridges.’

I say, less sententiously, that requiring hotels to be fireproofed is a trivial infringement on the liberty of hoteliers to burn up their guests.

Hey Skipper Friday, 07 November 2008 at 14:56

Bret:

Key words are “… not necessarily …”

For many things, the Jeffersonian marketplace of ideas will work.

In others, a nod to human nature is necessary. For instance, most 401k plans require an opt-in. Human nature means lots of people do not gain the benefits of a 401k through simple procrastination. Would it impinge liberty for 401k plan contributions to be automatically set at the max, and require an opt-out?

Similarly for HSAs — does it impinge people’s liberty to force, or at least strongly encourage them, to save for their own health care costs?

To me there is a conceptual difference between nanny-state regulation of behavior, and strongly encouraging specific actions whose consequences result in each individual having the resources to cover foreseeable requirements.

However, I know the line is tough to draw, and the instances that fall on the acceptable side of the line are probably fairly few.

Annoying Old Guy Friday, 07 November 2008 at 15:27

It is necessarily an improvement on individual freedom, and collective, too, to force people not to do things that will ultimately (or even immediately) damage other people

If there were actually the regulators creed in practice, I would find the regulatory state far less onerous and improper. What we see happen in practice, as typified by the FMs, is the evolution from “prevent harm” to “help the oppressed” to “help my friends”.

But let me ask you a question on that statement — is it “damage” to not provide something of mine to someone else who wants or needs it? For instance, job wages.

The rest of your comment is why I am a minarchist and not an anarchist. I believe in a “Laffer Curve” of liberty, where minimums occur with anarchy and totalitarianism. As with tax policy, determining the maximum of the curve is rather difficult, but I hold as my philosphical goal to seek it and act to move society toward it. I think that we are on the over-regulated side of the maxima, although I suspect that you disagree. There’s also the case that it’s commonly the case that we are over-regulated in some aspects and under-regulated in others, so a single global value can be misleading.

Harry Eagar Friday, 07 November 2008 at 16:41

If it ain’t broke, don’t fix it. I have an essay on Fireproof Hotels in my other computer, the one in the shop, and I’m too lazy to rewrite it. If the computer ever recovers, I’ll post it at Restating the Obvious.

If it is broke, do fix it.

Samuel Hays, in ‘The Response to Industrialism,’ has this to say about regulation: ‘. . . the new industries sought freedom to embark upon their enterprises despite the possibility that they might harm others. Their ventures, they argued, were useful to society. They provided new goods and services beneficial to the public in general, and individuals who might be hurt should give way and accept the harm in order to benefit the wider society. If the farmer’s field caught fire from locomotive sparks, the farmer was at fault, negligent for leaving combustible material in the field.’

Sounds familiar, although Hays is referring to the 1890s. He has a nice phrase, ‘the unfortunate victims of progress.’

generally, regulations should protect the unfortunate victims of progress, If there are not any victims, just players jockeying for advantage, then regulation is probably unwise.

It can be a difficult call. Are German pure beer laws necessary? Perhaps not. American pure milk laws? Certainly yes.

So I would not say all food should be unregulated, nor that all food should be regulated.

It doesn’t have to be done by government. ASTM seems to work pretty well without government sponsorship.

Annoying Old Guy Friday, 07 November 2008 at 17:26

Interesting, but it in no way addresses my question. I would also note that in reality, the only way to really protect the unfortunate victims of progress is to not have any progress.

And who protects the unfortunate victims of stasis?

Harry Eagar Saturday, 08 November 2008 at 02:57

Depends on the circumstances. ‘Living wage’ arguments run up against the ‘whose life’ definition problem, but, curiously, when chief executives demand stratospheric compensation or they will go on strike, the CEO Defense Society finds many reasons to demand they be satisfied, even though the productivity of CEOs would be hard to quantify.

If some people want/need $10 million and the economic system is designed to accommodate them, then logically it is impossible to argue that some other people who want/need $30,000 cannot possibly be accommodated.

I’m pretty sure Washington and Jefferson and Adams did not envisage a society of non-hereditary useless aristocrats, but that’s what we’ve got.

Annoying Old Guy Saturday, 08 November 2008 at 11:11

That still doesn’t address my question. I did not ask about the amount of wages, but whether wagers are owed at all.

If some people want/need $10 million and the economic system is designed to accommodate them, then logically it is impossible to argue that some other people who want/need $30,000 cannot possibly be accommodated.

You’ve mystified me again. The system accommodates people coming to mutually agreed upon exchanges. If one group of people agrees to pay another $10M, that may be stupid but the system doesn’t forbid consensual stupidity. And, after all, that’s just jockeying for advantage which should be left alone, right?

Is your view that if I agree to one particular type of exchange, I am obligated to agree to any other of the same sort? If I buy a BMW, I am obligated to also to buy a Yugo? As far as I can see, lots of people are getting paid $30,000, so they are being accommodated as well. So what, exactly, is the system failure you are alluding to in this quote?

I’m pretty sure Washington and Jefferson and Adams did not envisage a society of non-hereditary useless aristocrats, but that’s what we’ve got.

But people like sports and movies stars so I don’t see that changing soon.

Harry Eagar Saturday, 08 November 2008 at 12:49

I was thinking of the average CEO, who has proven not merely useless but pernicious.

As for your other question, you are assuming an equality that does not exist. Perhaps I can explain with a World War II joke.

A man was accustomed to eat at a restaurant that was famous for its rabbit stew. During the war, meat was rationed, and the man became suspicious that his stew was no longer all rabbit. He accosted the chef. ‘Come on, I’m your oldest and best customer. I know you are putting something else in the stew.’

Chef: ‘I gotta admit, we are using horsemeat now. But it’s 50-50, one horse to one rabbit.’

I am not amazed but apalled that in 2008 you are making an argument that the Suoreme Court made in 1898 but later thought better of.

Annoying Old Guy Saturday, 08 November 2008 at 17:25

Hmmm. The “productivity of CEOs would be hard to quantify”, except by you, who can quantify it as “zero”. I also wasn’t aware that the average CEO makes $10M.

The rest of your comment mystifies me once again. I fail to grasp your point, your explanation, what 1898 case to which you refer, what later related case, nor what argument you think I am making. Why are you so reluctant to directly state your point? That’s the greater mystery, apparently.

Gronker Saturday, 08 November 2008 at 20:42

I really tire of this bullshit about executive compensation.

The average $30,000 worker isn’t asked to make descisions that can make or break a company. If bad decisions are made at the executive level in large companies (where the big salaries are earned) companies can fail, and your precious $30,000/y guy will be looking for a job. These guys make dozens of decisions each week that have these kinds of potential effects, and most of the big guys do a good job on those decisions. Granted, sometimes the value of these guys are their connections and their access to other CEOs and powerbrokers, but that doesnt lessen their value.

In the end, the top CEOs are a rare commodity. Guys who have “been there, done that” dont come along every day. When a company needs a new CEO and has to go out and get one, they are competing for a rare and valuable resource. And like all scarce commodities with high demand, they are expensive. This is a good thing, not a bad thing.

Sure, there are bad apples. There are guys that don’t belong at the top who get there. Same in every profession. But how many $30,000 workers do their jobs badly and end up in prison for it? Just remember that for every corporate executive you see frogwalked to court, there are hundreds who do their job and earn their paychecks.

My current startup is going to hit point, very soon, where we need an experienced, smart and capable CFO. We are already starting the process of looking, because we know that this process will take 6-months to a year. And we know that this guy is going to cost a CRAPLOAD. This guy is the next key piece of the puzzle for us. But only if he is just the right guy, with the experience and leadership to drive us to the next level. He will be expensive but we know he will be worth every cent and will gladly pay him what he is worth to us.

Neither you, Mr Eager Beaver, nor some $30,000 wage earner have the ability to run a large company. Its a skillset few can cover. If a large company needs that one guy who can take a company to the next level, they will pay whatever it is worth to them to do it. Pay a guy $10m to increase the corporate valuation an additional $500m…sounds like a good deal to me.

David Cohen Saturday, 08 November 2008 at 20:48

Actually, figuring out what effects corporate performance is, more or less, what I do for a living these days. Lot’s of things have been written about this. Before saying that the productivity of CEO’s is hard to quantify, you might want to go to Google Scholar and search, for example, the Strategic Management Journal for “executive compensation.” That’ll be a good start.

If anyone’s interested, this is a nice qualitative article showing what difference a CEO can make.

Harry Eagar Saturday, 08 November 2008 at 23:27

I’m aware of the job of compensation committees, David, and have read some of their ‘estimates.’ They tend to be written, shall we say, craftily.

After watching CEOs in action for 40 years, I remain profoundly unimpressed by most of them. I subscribe to the random walk explanation of market prices (over any term considered by any executive compensation committee), and consider that executives are mostly figureheads who luck out, or not, and would not be missed if they were replaced by one of the janitors.

It appears, for example, that with rare exceptions, the CEOs of most of the world’s financial businesses did not understand derivatives better than — or even as well as — their companies’ janitors did.

The figure of $30,000 has been misunderstood. Many, many workers do not make anywhere near $30,000.

Gronker Sunday, 09 November 2008 at 06:40

consider that executives are mostly figureheads who luck out, or not, and would not be missed if they were replaced by one of the janitors.

Then you are, frankly, a moron. But that comes as no surprise reading your posts here the last few months. You are consistently on the wrongs side of every issue. I pretty amazing display of consistancy, actually.

CEOs, CFOs, COOs and Presidents of major corporations are a very rare breed. Leadership, descision making at a high level, connections, crushing responsibility… your Janitor would be crying for mommy in a week, assuming the company lasted that long. The stock of the company would plummet. Key employees would pushing out resumes so fast the phone lines would be tied up from all the phone interviews. Banks wouldnt lend, suppliers wouldnt supply, contracts wouldnt be signed, employees wouldnt trust of follow. In a word, disaster.

Your view of the jobs these people have is obviously incomplete and skewed, like most of your views. The political wrangling alone would crush most people. Leadership comes from relationship building and trust. Setting a clear direction that has to be RIGHT everytime takes enormous effort and skill. Having the guts to trust yourself is rare, having the balls to lead when there are thousands of monday morning quarterbacks ready to pick apart your every decision — all rare qualities in people.

I would not take any random CEO and let him work on my cars brakes, he does not have the skills to do the job (likely). I would not take a mechanic and make him the head of a corporation because he doesnt have the skill to do that job (certainly)

There are many, many, many people who can do a janitors job and he may make less than $30,000 because he is not a scarce resource. My mechanic is much more scarce and has a rarer set of skills so he will likely earn more, maybe $60-70,000. CEOs of major corporation number in the hundreds (literaly 1 in a million) and they make $10,000,000… works for me.

Harry Eagar Sunday, 09 November 2008 at 15:18

You’re cute. Ever heard of the guy who invented mortgage-backed securities? He worked for Salomon then. Remember them?

Anyhow, he was too smart to buy his own crap but he went bust yesterday anyhow.

We’re in the same ballpark on the proportion of competent CEOs in the population, though. One in a million would yield around 150 or so competent CEOs to staff a market of (to take the Russell cutoff) 2000. That’s about how I dope it out, too.

Gronker Sunday, 09 November 2008 at 19:51

You just keep proving you are completely uninformed, Harry. And that is anything but “cute”.

First you low ball numbers to fit your arguement. 1:1,000,000 in a US population of about 305,000,000 would be about 305. And since the pool of CEOs includes Europeans, thats another 720,000,000 people. So add up another 720 folks. So, 1 in a million translates to about 1025 Americans and Europeans. Adjust this for working age (about 60-70%) we come up with at least 600 CEOs.

Then, in classic “over-Eager” style, you picked the Russel 2000 which is an index fund of SMALL CAP companies. Our discussion was about major, or LARGE CAP, companies. Perhaps the Forbes 500 list or the S&P 500 would be more appropriate. Most Russel 2000 companies dont attract experienced CEOs. If they did, they wouldnt be in that list for long.

So that would be ~600 “one in a million” CEOs for 500 jobs. Some of them start their own companies which havent gotten to the Forbes list, but they probably will…because thats what they do. Which means we have somewhat fewer 99.9999%ile CEOs then there are jobs.

Harry, you are just never, ever, right.

Harry Eagar Sunday, 09 November 2008 at 21:35

Sigh. I suppose after we import all the qualified European executives (why not Indian, too?), the European economy (which is larger than ours) will run of itself.

At my blog, Restating the Obvious, I said the other day I expect to see the day when an American company — headed by one of those top-notch CEOs — reports a quarterly loss of a billion dollars a day.

It hasn’t happened yet, but we’re getting damned close. The bailout cost for AIG has increased by a billion dollars a day — not even taking off Sundays and holidays — for the past month.

Poor AIG. Couldn’t afford good help, I guess.

Annoying Old Guy Sunday, 09 November 2008 at 21:50

Here’s another thing that mystifies me about you, Mr. Eagar. Suppose everything you write it true. Then consequent is … what? Better regulation? But if AIG can’t afford people smart enough to keep it in business, what hope is there of getting someone smart enough on government pay? You yourself noted that even Obama himself has to pay extra to get talent. Your items are not actionable.

The only solution I see is to keep power dispersed as much as possible so that

  1. The amount of damage an incompetent manager can do is limited
  2. Failures are more localized.

What would that look like? Quite a bit like a free market, wouldn’t it? If you rely heavily on regulation, then you have a concentration of power that makes having less than competent regulators a bigger failure. Where do these super intelligences come from that AIG can’t hire?

Harry Eagar Monday, 10 November 2008 at 00:27

I’ve been thinking about this today. There was a time when I accepted the myth of the competent executive. At that time, no $100 billion company had ever gone bust. Some had come close, but they had gone out and gotten new management and come back.

I thought, then, that no $100B corporation would ever go bust, because it would always be able to hire competent management.

I was wrong and am man enough to admit it. $100B corporations can fail. $200B corporations can fail. And on up, there seems no end in sight.

Conceivably the problem is that the job has gotten too complex (although I don’t really think that is the case, CEO strategic decisions are really pretty simple).

But you might be right. There was a lot of talk about how giant companies strangle entrepreneurialism 25 years ago. The answer then was supposed to be something called ‘intrapreneurialism’ or other nostrums.

Again, the diagnosis was wrong. There was too much entrepreneurialism going on 25 years ago (that’s when mortgage-backed securities were invented, after all), and nowhere near enough competent management telling the young geniuses to seek opportunities elsewhere.

It doesn’t follow that a decentralized economic system would rely ‘heavily’ on regulation, whatever you mean by ‘heavily.’ You could just pass a corporation law to make them like amoebas. Once they get to a certain size, they have to divide.

The law could be written in a short paragraph, and the enforcement could be automatic and simple. A junior clerk could handle it. Or 875,000 lawyers.

Harry Eagar Monday, 10 November 2008 at 11:33

Ah, I open up my computer for another week of admiring the acumen of the world’s CEOs and find this:

‘Nov. 10 (Bloomberg) — D. Carnegie & Co. AB, Sweden’s largest publicly traded investment bank, was seized by the government and will be sold off in parts after accusations that it took “exceptional risks” with loans.’

Sure, we could just import some of those wonderful European CEOs.

I wonder what Swedish incompetent CEOs blame, since they don’t have a CRA.

Harry Eagar Monday, 10 November 2008 at 11:48

Hmmm. Some more outstanding CEOs, again via Bloomberg:

‘Fuld’s Career

‘The fall of Lehman isn’t another tale about an overmatched or under-engaged CEO. For the 16 years Fuld presided over Lehman, he was considered one of the industry’s most skilled chief executives, boosting the firm’s profit from $113 million in 1994 to $4.2 billion last year and multiplying its share price 20 times. Fuld was no E. Stanley O’Neal or Charles O. “Chuck” Prince, late of Merrill Lynch & Co. and Citigroup Inc. respectively, who’d gotten top jobs without being steeped in their institution’s businesses. Nor was he a James “Jimmy” Cayne, who played bridge while New York-based Bear Stearns burned.’

Gronker Monday, 10 November 2008 at 15:08

CEO strategic decisions are really pretty simple
Your ignorance is staggering.

You could just pass a corporation law to make them like amoebas. Once they get to a certain size, they have to divide.
Again, your ignorance is astounding.

You call this not “heavily regulated”? Amazing. And who chooses this mitosis limit? Some smarter-than-a-CEO guy who is paid a government wage? Is it the limit same for all corporations and industries? Does it apply to LLCs? Is that point measured in GP, revenue, market cap, employee count, stupid reporter nose hairs?

And you think that a clever CEO wouldnt get around this kind of crap? Childs play. And those that dont want to play that game would just keep their companies slightly below that level, stymieing growth, investment and job creation. There’s an intelligent plan.

I mean WTF could you be smoking that makes you think this would even remotely be a sane way to handle corporate growth. Do you even think about what you are typing, or is like diarrhea: a uncontrolable burst of shit?

Harry Eagar Monday, 10 November 2008 at 17:11

We’ve seen it done for whole countries, so it shouldn’t be impossible for a mere corporation. Many of which are being divided as we speak, but without the forethought.

AIG, for example.

Here’s a corporate strategic decision that was pretty simple, that was demanded by interested outside parties for decades, but which the genius CEOs at Ford, Chrysler and GM never could figure out: We should build an American Corolla.

Smart guys, them, couldn’t see any future in that. Deutsche Bank estimates the market value of GM by Jan. 1 as $0.

Ya’know, Gronker, you really are poorly informed. I suggest you read some actual case studies of CEO performance. Our business schools are lousy at turning out capable, trustworthy managers, but they’re great at monographs. But before you get to the monographs, I suggest you look for (it’s OOP) a nifty little volume by one of the truly innovative (and very, very lucky) CEOs, “How I Lost $100 Million,” by Royal Little.

Gronker Monday, 10 November 2008 at 18:56

Harry, you are a hoot; a never ending fount of Non Sequiturs.

Hey Skipper Monday, 10 November 2008 at 19:07

Harry:

For your part, you need to understand the impact of the Wagner Act upon the auto industry.

If there was ever a case of “be careful what you ask for”, for the UAW, this would have been it. Tossing contractual medical costs onto the heap, and GM is trying to sell its vehicles with a $1500 millstone around every steering wheel.

The reason the smart guys couldn’t see any future in building Corollas is that dead weight cost — it was essentially impossible to build an econobox at a profit.

Within the housing market, the CRA is the root of all evil.

As for the big three, you need go no further than UAW being the monopoly provider to the automakers.

It is insane. I can’t believe the CEOs don’t just give DC the single digit salute as they walk off the property.

Annoying Old Guy Monday, 10 November 2008 at 19:20

I don’t think Mr. Eagar has every really experienced the large corporate environment. It’s easy to say “they should have just built a Corolla” but executing — that’s very difficult. It’s the Clausewitz effect. Making decisions for a business is very simple but the simplest thing is very difficult. To build a Corolla a CEO would have to overcome not just the factors Skipper mentions but many other things endemic to large organizations such as hostile cultures, CYA resistance, stakeholder cacaphony, etc.

But my likely to be unanswered question is, if this splitting thing is good, why isn’t Mr. Eagar a federalist? Why doesn’t the same logic apply to government?

Harry Eagar Monday, 10 November 2008 at 20:50

I am a federalist.

As for hostile cultures etc., that’s why CEOs deserve the big bucks, isn’t it? If they can’t deliver, find somebody who can.

Caterpillar is also UAW and it seems to be able to compete in world markets OK. Very OK.

Gronker Tuesday, 11 November 2008 at 05:16

As for hostile cultures etc., that’s why CEOs deserve the big bucks, isn’t it? If they can’t deliver, find somebody who can.
First intelligent thing you’ve said in this thread.

Caterpillar is also UAW and it seems to be able to compete in world markets OK.
Apples to Oranges. Percentage or labor costs are lower, competition has few players, transportation costs make overseas competition harder…and just think how much better CAT would do without the UAW baggage. I grew up in central Illinois and had family members who worked at CAT. I remember thinking how stupid it was that they got paid 2-3x most the computer programers I knew and they did basically a job anyone could do. That has stuck with me for a long, long time.

Annoying Old Guy Tuesday, 11 November 2008 at 08:54

Has Mr. Eagar forgotten his history? Caterpillar is famous for its efforts to break its union. I lived through those days and suspect Gronker did as well. The difference between CAT and the Big Three was the CAT management was smart and planned ahead, setting up a situation where they could go longer without the union than the union could go without CAT paychecks. As a result, CAT is still a good business paying wages, while the Big Three circle the drain and prepare to default on pensions. CAT management was portrayed as heartless and cruel, abusing workers just because they could. Yet which company did better for its employees?

Harry Eagar Tuesday, 11 November 2008 at 12:37

The idea that Caterpillar doesn’t face much competition is amusing. The rental yard I drive by everyday is filled with Komatsu etc. Hawaii is no farther from Japan than Japan is from Hawaii.

And you say Cat management was smart, as contrasted with Detroit management, which by contrast must be dumb. Wasn’t that my point? It’s just luck. Cat caught the swing that International Harvester missed. I was in Iowa (a big UAW state in those days). I saw it play out.

Let’s go back to the nation’s most admired CEO, Jack Welch. Are you guys telling me there’s some mystical reason GE couldn’t be broken up, that it has to combine making jet engines with usurious short-term loans to uncreditworthy borrowers, no other way to organize it?

Welch was just lucky, too. His banking strategy worked only in a bubble. He couldn’t keep it zipped and had to leave before the bubble burst.

Gronker Tuesday, 11 November 2008 at 15:23

The idea that Caterpillar doesn’t face much competition is amusing.
No one said that. I just said that they dont face nearly the same competition as an US automaker.

It’s just luck.
That’s what all your type thinks. And its why you will never be an effective leader and why you will never understand the free market. Excellence is just luck to you. And weren’t ineffective, just unlucky right. Its easier to tell yourself that. You remind me of a quote, “it takes years of hard work to become an overnight success”. Its folks like you that only see the “overnight success” part.

nation’s most admired CEO, Jack Welch
Only in your circles. Popular is not neccessarily admired. Not to say he wasn’t an effective leader, but his greatest gift was self-promotion.

Harry Eagar Tuesday, 11 November 2008 at 16:21

‘In 1999, Fortune named him the “manager of the century,” and the Financial Times recently named him one of the three most admired business leaders in the world today.’

Those aren’t my circles.

Gronker Wednesday, 12 November 2008 at 11:14

Those aren’t my circles.
Funny, I thought those were print media sources. Oh wait, yeah, they are. What do you do again, Harry?

Jack Welch is a pop star among CEOs. That doesnt make him a bad CEO or a good CEO, it just makes him popular. I like the guy, but in the end, I still think he was mostly one hell of a self-promoter.

Harry Eagar Wednesday, 12 November 2008 at 16:39

I don’t report on Wall Street. I follow what’s going on, although not through magazines. You’re just clutching at straws. The street loved Welch. They showed it the only way they know how. They bought his stock.

Whether you admired him is irrelevant. To say that he was not widely admired is incorrect.

Harry Eagar Thursday, 13 November 2008 at 11:38

I had forgotten but was reminded this morning about another top CEO, Nardelli, bounced from Home Depot and made head of Chrysler.

So much for the idea that CEOdom is a dog-eat-dog world where only the very most efficient and effective manage (heh) to cling to their precarious perches.

I also note that the Bucksbaums, who were thought very highly of during their lucky phase, turn out to have clay feet like everybody else when Lady Luck finds a different cute guy. If you’d invested a buck with the Bucksbaums last year, today you’d have a penny.

It would be an interesting exercise to figure out how far back you’d have had to purchase Gen Growth to be even today.

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