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Originally posted by JohnT
You know... I'm looking here at the wreckage of ATT, GM, Sears, UAL, Polaroid, Bethlehem Steel, Westinghouse, Kodak, Delta, the big-three networks, hundreds upon thousands of dot.bombs and telecons, MCI, Chrysler, Ford, Enron, etc etc, and I just have to wonder what is going on: why is it that America's largest corporations are seemingly failing across the board? It's like the Grim Reaper is taking a leisurely stroll over the Forbes 500
I'm beginning to think that Corporations are inherently unstable, that as an agglomeration of competing interests they act as if the Law of the Commons is in effect and they do as much as they can to extract every pound of flesh from the company. This deprives the corporation of needed funds to stay current with ever-changing practices, and slowly dooms it to obsolescence. Now, not all corporations or industries are like this (an obvious example being banks: the same banks that were movers and shakers in the 18th century are movers and shakers now), but enough industrial organizations are.
Look at GM. In the 1950s you had Harlowe Curtice, the first President/CEO to make over $1,000,000/year, GM the first company to have $1billion in profits, giving their shareholders rich dividends, and it's employees were raking in the benefit of newly conceded UAW contracts.
They all took this money: labor, management, and shareholders, and they pocketed it and spent it on bowling leagues and/or 2nd homes in the Rockies. And they did this, together in lock-step, for, ****, what: 30 years? In the early-80s, GMs labor force was 700,000 people strong, a number reduced more than half by 1994, when GM reported 312,000 people on their North American (NA) payroll (another decade, another halving as GM reported 161,000 people on NA payroll in 2004.)
And if you look closely at the history of the companies in the first sentence, you'll see the same. A period of growth and riches where the company is increasing stock price, followed by a plateau, where dividends (taking cash out of the company) rule the day. And then... the rules change, beginning the long, slow, inevitable fall, whereupon within a mere quarter century, a company with a monopoly over the entire nations phone network (and the most widely-held stock in America for 30+ years running) can be reduced to a mere brand name, owned by one of its own post-monopoly spinoffs.
So while it's fine to invest in corporations for purposes of capital appreciation, I'm coming to the opinion that it is a foolish thing to trust retirement funds to an organization that has a very good chance of not being around as long as I am.
In short: who is the Corporation for? The shareholders? The workers? The consumers of the companys products/services? Is it possible to balance out the needs of the Corporation itself from that of the competing interests that create it? Is what happened to GM et al doomed to repeat itself, over and over, just with different names (Intel, MS, Red Hat, IBM)?
You know... I'm looking here at the wreckage of ATT, GM, Sears, UAL, Polaroid, Bethlehem Steel, Westinghouse, Kodak, Delta, the big-three networks, hundreds upon thousands of dot.bombs and telecons, MCI, Chrysler, Ford, Enron, etc etc, and I just have to wonder what is going on: why is it that America's largest corporations are seemingly failing across the board? It's like the Grim Reaper is taking a leisurely stroll over the Forbes 500
I'm beginning to think that Corporations are inherently unstable, that as an agglomeration of competing interests they act as if the Law of the Commons is in effect and they do as much as they can to extract every pound of flesh from the company. This deprives the corporation of needed funds to stay current with ever-changing practices, and slowly dooms it to obsolescence. Now, not all corporations or industries are like this (an obvious example being banks: the same banks that were movers and shakers in the 18th century are movers and shakers now), but enough industrial organizations are.
Look at GM. In the 1950s you had Harlowe Curtice, the first President/CEO to make over $1,000,000/year, GM the first company to have $1billion in profits, giving their shareholders rich dividends, and it's employees were raking in the benefit of newly conceded UAW contracts.
They all took this money: labor, management, and shareholders, and they pocketed it and spent it on bowling leagues and/or 2nd homes in the Rockies. And they did this, together in lock-step, for, ****, what: 30 years? In the early-80s, GMs labor force was 700,000 people strong, a number reduced more than half by 1994, when GM reported 312,000 people on their North American (NA) payroll (another decade, another halving as GM reported 161,000 people on NA payroll in 2004.)
And if you look closely at the history of the companies in the first sentence, you'll see the same. A period of growth and riches where the company is increasing stock price, followed by a plateau, where dividends (taking cash out of the company) rule the day. And then... the rules change, beginning the long, slow, inevitable fall, whereupon within a mere quarter century, a company with a monopoly over the entire nations phone network (and the most widely-held stock in America for 30+ years running) can be reduced to a mere brand name, owned by one of its own post-monopoly spinoffs.
So while it's fine to invest in corporations for purposes of capital appreciation, I'm coming to the opinion that it is a foolish thing to trust retirement funds to an organization that has a very good chance of not being around as long as I am.
In short: who is the Corporation for? The shareholders? The workers? The consumers of the companys products/services? Is it possible to balance out the needs of the Corporation itself from that of the competing interests that create it? Is what happened to GM et al doomed to repeat itself, over and over, just with different names (Intel, MS, Red Hat, IBM)?
Cavuto said that he saw a pattern in failed companies. The seemed to have a hard time defining their business. I worked for just such a company. Near the end, it too could not define with any clarity what its business was. It failed.
Smaller businesses, or well managed big business, have clearly defined business goals. As a result, employees work as a team.
But there obviously is another problem for American, and perhaps, European companies: unions. Granting excessive wages and benefits to union members is a formula for going out of business. It is just a matter of time.
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