Killing the goose that laid the golden egg

Capitalism is described as "an economic and political system in which a country's trade and industry are controlled by private owners for profit."  That's it in a nutshell, and it's worked better and benefited more people than any other economic system the world has ever known.  But somewhere along the way our system of classic capitalism has been compromised, subverted, and dare I say even perverted.

My brother and I are the owners of a privately held corporation, meaning the two of us are the only stockholders.  On an almost daily basis we do things above and beyond what is required by any regulation because we feel it is the right way to do business.  This costs us a bit more to deliver our product, and reduces our profits somewhat, but we're still doing OK, and our clients say they appreciate our extra effort and attention.  We'll never get rich doing business this way because we're "leaving money on the table", but we sleep well at night.

Today's publicly held corporations can't afford to leave money on the table.  They must lie, cheat, and steal to squeeze every last penny from their customers.  If they don't, their thousands of stockholders will demand a change in executive leadership and/or dump their stock, possibly tanking the company.  If their product can be made the slightest bit cheaper, they'll do it.  Cutting corners has become a fine art.  Profits come first, always!

Consider this:  Pharmaceutical manufacturers employ tens of thousands of brilliant researchers who spend years developing and testing new drugs that improve our quality of life, and in many cases actually save lives.  They're amazing people doing incredible work.  God bless them!

One of their creations was "opiods", drugs that can help those with chronic pain.  This was a godsend for those hurting.  But according to the new rules of what I call "perverted capitalism", pharmaceutical company executives have no qualms at all about turning these miracle drugs into an addictive nightmare for millions (?) of people.  Opiod abuse has now become a national crisis.  Lives and families have been torn apart, all so the drug makers can maximize their profits.  Shame on them!

And, yes, they know exactly what they're doing.  They know they're producing many times more opioids every year than can safely be prescribed and used by actual patients.  Through their lobbyists they even pushed a bill through Congress last year that prohibited the Drug Enforcement Administration (the DEA) from investigating and interdicting massive opioid shipments to "suspicious" distributors.  Had the drug companies failed, the DEA would have put a huge dent in their profits, and to them their profits are more important than peoples lives.  That's just wrong!

Then we have corporate mergers that have the effect of reducing competition and inflating their bottom lines.  Remember when we had Exxon and Mobil and Chevron and Texaco?  Now we have Exxon/Mobil and Chevron/Texaco.  United and Continental merged to form the new United Airlines.  Delta and Northwest merged to form the new Delta Airlines.  American and US Air merged to form the new American Airlines.  Fares are up, and customer satisfaction is down, but airline profits are at record highs.  

Remember when Macy's, Neiman Marcus, Lord and Taylor, Saks Fifth Avenue, and many others were all independent companies?  Now they're all owned by giant retail conglomerates.  Walmart and Amazon have taken over their sectors, too.  Remember local hardware stores, mom and pop restaurants, community banks, and independent car dealerships?  There are relatively few still in business, left behind in the race to merge, "increase synergy", and maximize profits.

And do I even need to mention corporate subsidies, aka "corporate welfare"?  What the hell is that all about?  Did they think we wouldn't notice?

I've heard it said your "character" is defined by how you behave when no one is looking.  If that's so, then many of our players today have terrible character.

It's no longer about doing what's right, but only about what will make the most money and what they can get away with.  At many businesses today doing "right" will get you fired, that's how cold blooded we've become. We're being attacked from within, and we're losing.  Capitalism in 2017 is NOT your daddy's capitalism!

S

Label snobs

We are obsessed with labels.  Sometimes labels can serve a very useful purpose, but at other times they just get in the way.  How...why have we become like this?

When I was a kid in the last century I remember there were Ford guys and there were Chevy guys, and the two would never mix.  Each felt they were always right, and the other side was always wrong.  Fast forward and today we have rock-solid Lexus guys and Mercedes guys.

Wine:  Aristocrats (wannabe or actual) always chose French wines.  California wines were unthinkable.  Labels rule!

Style:  Neiman Marcus vs Saks Fifth Avenue has now deteriorated to Walmart vs Target.  Labels rule!

And of course, philosophy.  We Americans seem hopelessly wed to our labels of either Democrat or Republican, liberal or conservative, capitalist or socialist.  Labels rule!

Today there are a few new caveats, however.  A new subset of voters is based on race or gender or sexual preference.  A female candidate will pull in many more than the usual number of female voters.  A black candidate will get the black vote.  An LGBT candidate will likely get the LGBT vote.  Labels rule!

As President Nixon was boarding his helicopter to leave Washington back in 1974, there were still 24% of the American people (mostly hard-core Republicans) who supported him.  Labels rule!

Currently a vast majority of Republicans (but only 35% +/- of the population) feels President Trump is doing a great job.  Labels rule!

Listen up knuckleheads:  LABELS ARE STUPID!  We're being played.  It's a public relations game.  The PR guys can regurgitate on demand all the "facts" that support their point of view, and just conveniently omit those pesky facts that don't.  And if they don't have any facts to support their position, they just make some up.  Why do you think Snopes exists?

Democrats need to understand that Republicans CAN have some good ideas, and vice versa.  Capitalism is great, except when it's hijacked by greed.  Socialism is IMO generally flawed, but can also give us some incredibly useful programs, like public financing of schools, and (some would argue) Social Security and Medicare.

Learn to think for yourself, because if you let someone else think for you, they will own you.  And there's a label for that, too.

S

Mine...mine...IT'S ALL MINE! *cue the scary music*

Did you see the roll-out of the new Trump Tax Reform Plan yesterday?  Have you actually read it?  If you have, it probably didn't take you more than a minute or so as it's really not a "plan", but just a few bullet points.  Here it is if you're interested:

That's it.  This is what The Prez and his Team have been working on for the past 98 days.  Honestly, it looks like something I might have whipped out at 2am the night before a college paper topic outline was due.  I give it a half hour effort, max.

In short, it's insulting.  It seems at first glance to give a break to the middle class by increasing the Standard Deduction, but also seems to take away some possible deductions, too, most notably property TAX deductions.  Property INTEREST deductions appear to be left intact.  What will the middle-class bottom line look like?  Probably either "revenue neutral" (Gubment speak for "no change") or maybe a slight tax cut, just enough to give the incumbent Congressman a good shot at re-election, which is all he cares about.

On the other side, corporations, notably including privately held corporations like Trump, Inc, will make out like absolute bandits!  It will result in tax cuts, on paper at least, to small businesses like mine, but it will be a drop in the bucket compared to what the ultra-wealthy will get.  Let's face it, this is simply another wealth transfer to the rich.  They haven't even made much of an effort to disguise it.  We reportedly already have approx $1.7 TRILLION +/- parked in short term investments looking for a better place.  Another trillion dollars isn't needed....there is NO shortage of investment capital.

The bean counters say the tax cut will leave the Treasury short by approx one TRILLION dollars, to be offset by the ever popular "future growth" somewhere in the future.  Maybe.  Hopefully.

The one possible good thing in there:  The one-time opportunity for corporations to bring back earnings from overseas that they haven't before now because of the higher taxes that would be due here.  This has been done before (so much for "one-time") with minimal success, as it didn't create the new jobs it promised.  Instead companies used their windfall for stock buy-backs and dividends, which *big surprise* went primarily to the already wealthy.

Those who read my protestations will again probably accuse me of being a pinko anti-capitalist, but nothing could be further from the truth.  I am an ARDENT capitalist, one who understands it is the middle class that is truly the goose that laid America's golden egg, and who is trying to see to it it isn't slaughtered.  Right now, in Washington at least, words like mine are like a lonely voice in the forest.

When you stiff the middle class and concentrate too much wealth in the hands of too few, you get Czarist Russia 1917 (revolution), America 1929 (Great Depression), TWA under Carl Icahn, (bankrupt), Eastern Airlines under Frank Lorenzo (kaput), etc.  When companies share their wealth, you get wildly successful stories like The Staubach Companies (Roger Staubach), Broadcast.com (Mark Cuban), Ford (after Henry Ford doubled employee wages), Southwest Airlines, Yahoo, Google, Facebook, Microsoft, and more.  The owners actually made MORE money thanks to the efforts of their grateful employees than they EVER made before. Come on people....this ain't rocket surgery!

*sigh*

Rough landing ahead.  Hold on.

S

Kudos, or cause for concern?

Today I was reminded of a situation, several actually, where foreign immigrants here in my area have done exceedingly well since coming to America.  They all happened to involve Asians or Indians (but it could have been any nationality) who made their fortunes in retail businesses such as convenience stores, grocery stores, liquor stores, home furnishings, women's fashions, etc.  They all worked extremely hard, long hours, and saved virtually every cent they made.  Being hard working and frugal seems like great virtues, right?  But is it really?

What they all seemed to have in common was that they were from countries where poverty was the norm and you either had to work yourself to near exhaustion or you starved.  That's the only way they knew how to live.  Entire extended families moved here together, pooled their meager cash, and started a business.  Mom and dad, brothers and sisters, aunts and uncles, cousins, and spouses worked in shifts keeping their business open sometimes 24-7.

The entire family might have only a couple of vintage cars and live in the same house.  They never went out for dinner or enjoyed any recreational activities.  It was just work, eat, sleep when you could, then start the process over the next day.  The kids would go to school, do their homework, then work their shift at the family business.  They were allowed no extracurricular activities.  It was a brutal schedule, but it paid off monetarily.  Over time they became quite well-to-do.

I've seen this personally when selling homes to them, sitting on college scholarship committees, etc.  Understand, this is not to say ALL immigrants live like this.  Many quickly adapt the "American lifestyle" (which in retrospect might not have been the wisest thing).

But think of the big picture:  How can established businesses here now compete with their extreme work ethic and pay "brother-in-law" wages that almost demand a communal lifestyle?  Aren't these the conditions that spawned labor unions a century ago?  If everyone is working extreme hours and pinching every penny, would our economy collapse?  Will this become more common with our next incoming wave of immigrants?  For capitalism to work, enough people have to spend to keep the cycle going.

Where is the fine line between working hard, living modestly, and saving vs enjoying the fruits of your labor, ie: living one family per residence, each adult having a car, enjoying eating out occasionally, taking a vacation, etc?  Will we someday find an economic equilibrium (statistics say we may be doing that right now), and if so, how much social upheaval, either locally, regionally, or nationally, will this transition cause our society?

I don't have an answer.  It obviously isn't a black or white issue.  Your thoughts?

S 

You do the crime, you do the time. Say 'hey' to your new roomie, Bubba.

I'm guessing one of my neighbors hasn't yet mastered the fine art of microwave popcorn.

Last night around 8 we heard a crash and looked out to see a 2-car wreck right outside our terrace.  I called 911 to report no injuries, but that cops and a wrecker were needed.  Within seconds we had 3 fire trucks, 3 cops, and an ambulance swarming all over us.  Turns out they were already on their way to a fire call at our apartments, and the fender bender was just a bonus.

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It seems the new "in" major at university business schools is Grand Larceny.  Management, Marketing, Accounting, and all the rest are now so blase.  Now "GL" is where it's at.

It has become a daily occurrence for one company or another to admit to doing something illegal and being fined millions....BILLIONS of dollars, even.  Yesterday SAC Capital was fined $1.8B for insider trading, in addition to the $616M they were fined earlier in the year.  

BP was recently tapped for $4B, GlaxoSmithKline was fined $3B, and even Johnson & Johnson, the baby powder maker (and pharmaceutical company) was fined $2.2B for urging doctors to prescribe some of their meds to treat ailments the FDA hadn't approved them for.  And of course JPMorgan Chase has agreed to a $13B settlement related to mortgage fraud, and billions more have been paid for interest rate rigging by all the world's major banks.  And there are plenty more I could mention, too, but I don't want to write all day.

I'm a staunch capitalists.  "Profit" is a good word.  But damn, people, doesn't anyone know how to make money without ripping someone else off in the process?  Seems to me we'll continue to have problems like these until we start playing hardball with them.  

Let's turn some pinstripes into jail stripes.  And/or maybe shutting down and breaking up companies who are serial offenders.  Talk about some pissed off stockholders!  Maybe then they won't be so insistent on demanding every last penny profit they can by any means possible, legal or not.

Only when the crime costs more than the potential profit will Management be a more desirable degree than Grand Larceny.  

S

"A fast nickel is better than a slow dime"

I recently saw a short 5-minute video presentation by Nick Hanauer, a mega-millionaire capitalist.  He had an interesting perspective that really got me to thinking.  You can see it here if you're interested.  His position is that the rich will benefit more in the long run if we raise taxes on them now and in effect subsidize the middle class.  Huh?


He disputes the idea that raising taxes on the rich will kill job creation.  He says entrepreneurs do create a few new jobs initially, but unless the middle class has enough disposable income to buy what the new companies are selling, the new businesses will stagnate or even fail.  Only when a company has more customers than it can comfortably serve will it expand and hire and thrive.  Why would a company hire new people unless they had enough customers to keep them busy?  The 1% can't buy enough to compensate for the millions of unemployed/underemployed who can't buy much of anything.  It's a simple numbers game.


Then the next day I read a news article that said the Big Three automakers are booming, running their factories at near 100% capacity, and are adding more shifts and hiring new people, just like Mr. Hanauer suggested they would.  I doubt the 1% are buying very many Chevys, Fords, or Chryslers.  (They're more the Mercedes / Lexus / BMW type.)  This is all due to middle class demand.


The middle class and only the middle class have the numbers to be able to consume in the quantities necessary to stimulate the economy and create jobs.  And when the companies they own thrive and become hugely profitable, the 1% will benefit handsomely.  Give up a little today (higher taxes) to get a lot more tomorrow (higher profits).  It's called "priming the pump."


It's just like the business advice my dad gave me decades ago:  "A fast nickel is better than a slow dime."  Think about it.


S


(For the record, I'm a moderate Independent, distrustful of both political parties.)