Wednesday, March 11, 2009
Why do progressives hold the opinions about business that they do?
Answer: Because they cannot do math.
Separately, I have long marveled at the lefty idea that "corporations" should not have free speech. Unless, presumably, they are the New York Times Company or Gannett.
7 Comments:
By 
Escort81, at
Wed Mar 11, 05:03:00 PM:
This comment has been removed by the author.
By Escort81, at
Wed Mar 11, 05:07:00 PM:
So Jane Hamsher thinks Deborah Weinswig of Citigroup engaged in a "reckless and overt political act," by noting the problems that EFCA could pose for Wal-Mart, and wants to "be looking a lot more closely about how, and when, these ratings get made"?
Wow. On several levels, wow.
Would Jane be happy or sad if Deb called her up and told her that they both voted for the same ticket in November? (I don't know if that's the case, but I think it is a bit better than a coin toss; but just substitute Warren Buffett's name in for Deb -- and his views on EFCA -- if you need to be sure).
Or is this just a case of a the real left slapping around the center and center-left? "We need to keep pressing our case, comrades, be part of the vanguard of change!"
It is hard to top Tom's critique of Jane's "higher costs = higher profits" thesis. In fairness to Jane, there are scenarios in business where management might have a short term increase in an expense area (marketing and promotion for a new product, for example) in order to have a long term positive impact on sales. A deliberate long term raising of the wage cost structure, however, probably does not fall under such a scenario.
I think it speaks well of her that she has dealt with the adversity of her health problems with metastatic disease. That said, we should cut a deal with Jane: she promises to refrain from acting as a management consultant to American businesses and/or attempting to restrict their free speech (at least where no direct threat to public health and safety exists), and we won't try to produce movies.
By 
, at
Wed Mar 11, 10:22:00 PM:
"A deliberate long term raising of the wage cost structure, however, probably does not fall under such a scenario."
So you think the Bank of America was wrong when it admitted in an internal memo that increased wages for working people would mean "increased spending power of lower income consumers," which would mean that even if Wal-Mart was successfully unionized -- a big if -- they could make up the cost of higher wages with an increase in sales?
The lower income workers are the ones who will benefit the most from unionization and the first thing they will do is run to the nearest Wal-Mart and spend it there.
Unionization rates were highest during the fifties, one of the most prosperous periods in US history.
By Escort81, at
Thu Mar 12, 12:09:00 AM:
Polderjongen -
In my opinion, a large retail corporation that deliberately raises its long term wage cost structure would recoup some, but not all (and probably not even most) of the effect of those increased costs in the form of slightly higher sales. The net effect on the P&L and on shareholder value would most likely be negative. The primary reason for this is that retail margins in the big box niche are relatively thin to begin with, so a $1 billion increase in wage costs per year would need at least a $5 billion increase in sales per year to result in the same level of operating profit.
Further compounding the problem at present is the fact that lower income workers may well be inclined to deleverage as much as the rest of the population, so it seems likely that added wages would go towards that end, instead of increased spending at the retail level.
With respect to the 1950s, I would submit that the post-war boom may have been even stronger had it not been for the high unionization rates you cite (although I am not clear whether you mean newly unionized workers per annum or the overall ratio union to non-union workers). Remember that Truman, a Democrat, nationalized the steel industry in the name of national security during the Korean conflict so that a Steelworkers' strike would be averted in April 1952. In June, the SCOTUS handed down its famous Youngstown Sheet decision, saying that the president did not have the authority to seize the mills. The strike followed, and in late July, the union won. With hindsight, it is easy to see that over the next two decades, the U.S. steel industry experienced a steady decline, albeit for a variety of reasons, at least some of which had to do with cost competitiveness vis-a-vis foreign manufacturers.
All of this is not to say that unions are bad. Clearly, in the early days of industrialization, unions fought against the enormous power of large employers (many of whom were also near-monopolies) to improve what we would now consider to be inhumane working conditions. By the 1950s/1960s, the pendulum had swung in the other direction, and union power was abused, both through work rules that violated the common sense sniff test (try to hold a convention in Philly at the PA Convention Center and ask an electrician to even pick up a 2x4 -- that's a carpenter's job) and through outright corruption (see: Teamsters).
By , at
Thu Mar 12, 06:02:00 PM:
I've been to trade shows where we had to pay union electricians to plug in our computers for us, we engineers being unqualified for the job. Technically, we were also supposed to let them wire up our network, but since there was no way we were going to let those bozos touch our million dollar server, mostly they just sat around while we did the work. They still got paid the outrageously high union scale, though.
By Escort81, at
Thu Mar 12, 07:07:00 PM:
Randian -
They still got paid the outrageously high union scale, though.
I think the retort to that or the expression is: "So, you got a problem with that?"
The work rules can be quite befuddling at trade shows and conventions, especially for those folks who have not previously encountered that phenomenon.
By Doug Muder, at
Fri Mar 13, 10:05:00 AM:
I'm not seeing the "free speech" issue here.
The question is whether Citicorp is serving its clients by providing its best prediction (good) or trying to manipulate the market and public opinion (bad).
Now, I think it's probably the former -- if Citicorp's clients started discounting its opinions for their political bias, that would be bad for Citicorp. So I think Hamsher is being too suspicious because she doesn't trust businesspeople.
But it's not impossible to imagine a situation where the later would be true. If that were in fact happening, it ought to be exposed. As I read Hamsher, that seems to be what she's calling for -- not some kind of punishment for disagreeing with her.
How the blogosphere works -- on both the left and the right -- is that people throw out half-formed ideas for other people to work on. A lot of those ideas suck, and the collective intelligence of the community lets them die. That's what will happen here.
