Cringley on How the Bogus Shareholder Value Theory is Wrecking the Computer Industry (and America Generally)

Normally when I come across an important piece, I put it in Links and instruct readers accordingly. Lambert and Mike B pinged me about a new Bob Cringley piece, The U.S. computer industry is dying and I’ll tell you exactly who is killing it and why, which makes such a powerful and compact statement of how American management has become virtually incapable of building successful, durable enterprises that I wanted to make sure I did what I could to help make sure it gets the attention it warrants.

Cringley correctly focuses on the single worst management idea evah to gain legitimacy: the idea that the job of executives is to maximize shareholder value. That catchphrase is widely presented as if it were a legal obligation. It isn’t. It’s an idea made up by economists that got traction because it was useful to the capital owning classes. As we wrote in 2013:

If you review any of the numerous guides prepared for directors of corporations prepared by law firms and other experts, you won’t find a stipulation for them to maximize shareholder value on the list of things they are supposed to do. It’s not a legal requirement. And there is a good reason for that.

Directors and officers, broadly speaking, have a duty of care and duty of loyalty to the corporation. From that flow more specific obligations under Federal and state law. But notice: those responsibilities are to the corporation, not to shareholders in particular…Shareholders are at the very back of the line. They get their piece only after everyone else is satisfied. If you read between the lines of the duties of directors and officers, the implicit “don’t go bankrupt” duty clearly trumps concerns about shareholders…

So how did this “the last shall come first” thinking become established? You can blame it all on economists, specifically Harvard Business School’s Michael Jensen. In other words, this idea did not come out of legal analysis, changes in regulation, or court decisions. It was simply an academic theory that went mainstream. And to add insult to injury, the version of the Jensen formula that became popular was its worst possible embodiment.

Cringley simplifies, and arguably oversimplifies how the “maximize shareholder value” myth took hold. Its father was Milton Friedman, in New York Times op ed noteworthy for its internal incoherence in 1970. Cringley is correct to point out a 1976 paper by the University of Rochester’s Michael Jensen and William Meckling, Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, as officially putting this thesis on the map. But what gave it real impetus was the leveraged buyout wave of the 1980s. Swashbuckling takeover artists who gobbled up companies (typically overdiversified firms trading at conglomerate discounts) magically created fortunes by breaking them up and selling off the pieces for more than they’d paid for them. Their success was depicted as proof of the Jensen/Meckling theory, that company executives had bad incentives, and “aligning” theirs with those of shareholders would produce better outcomes…well, certainly for shareholders, right?

Cringley points out that there were plenty of other remedies for the problem that Jensen and Meckling were pretending to solve, that the interests of managers and shareholders weren’t aligned. And he stresses that as CEO pay has skyrocketed by virtue of granting them more equity linked-pay, which in turn puts them in the business of goosing the stock price rather than running the business, underlying economic performance has deteriorated:

The average rate of return on invested capital for public companies in the USA is a quarter of what it was in 1965. Sure productivity has gone up, but that can be done through automation or by beating more work out of employees.

And he really gets rolling on how greedy and destructive the executive classes have become:

Now let’s look at what this has meant for the U.S. computer industry.

First is the lemming effect where several businesses in an industry all follow the same bad management plan and collectively kill themselves…

The IT services lemming effect has companies promising things that can not be done and still make a profit. It is more important to book business at any price than it is to deliver what they promise. In their rush to sign more business the industry is collectively jumping off a cliff.

This mad rush to send more work offshore (to get costs better aligned) is an act of desperation. Everyone knows it isn’t working well. Everyone knows doing it is just going to make the service quality a lot worse. If you annoy your customer enough they will decide to leave.

The second issue is you can’t fix a problem by throwing more bodies at it. USA IT workers make about 10 times the pay and benefits that their counterparts make in India. I won’t suggest USA workers are 10 times better than anyone, they aren’t. However they are generally much more experienced and can often do important work much better and faster (and in the same time zone). The most effective organizations have a diverse workforce with a mix of people, skills, experience, etc. By working side by side these people learn from each other. They develop team building skills. In time the less experienced workers become highly effective experienced workers. The more layoffs, the more jobs sent off shore, the more these companies erode the effectiveness of their service. An IT services business is worthless if it does not have the skills and experience to do the job.

The third problem is how you treat people does matter. In high performing firms the work force is vested in the success of the business. They are prepared to put in the extra effort and extra hours needed to help the business — and they are compensated for the results. They produce value for the business. When you treat and pay people poorly you lose their ambition and desire to excel, you lose the performance of your work force. It can now be argued many workers in IT services are no longer providing any value to the business. This is not because they are bad workers. It is because they are being treated poorly. Firms like IBM and HP are treating both their customers and employees poorly. Their management decisions have consequences and are destroying their businesses.

At this point some academic or consultant will start talking about corporate life cycles and how Japan had to go from textiles to chemicals to automobiles to electronics to electronic components simply because of limited real estate that had to produce more and more revenue per square foot so it was perfectly logical that Korea would inherit the previous generation of Japanese industry. But that’s not the way it works with services, which have no major real estate requirements. There is no — or should be no — life cycle for services.

So evolution is not an option because there’s no place to evolve to… You can’t succeed by merely saying you will solve your problems by selling more. You have to run your business a lot smarter. The way for an IT company to succeed is by being being smarter than the competition, not sneakier, dirtier, or less empathetic.

Even though I’ve highlighted some of the really good parts, there’s plenty more. Go read the entire article, now, and circulate it. And I hope some of you will come back and chat it about it here.

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  1. John Smith

    “But what gave it real impetus was the leveraged buyout wave of the 1980s. Swashbuckling takeover artists who gobbled up companies (typically overdiversified firms trading at conglomerate discounts) magically created fortunes by breaking them up and selling off the pieces for more than they’d paid for them.” Yves Smith

    How does the common stock of companies become undervalued in the first place? So that companies can be bought for less than they are worth? Is not the bust phase of the boom-bust cycle a (the?) major cause?

    And what is the cause of the boom-bust cycle? Is it not an elastic money supply that expands too much during booms only to contract too much during busts?

    Not that inelastic money supplies are good; they aren’t.

    1. Larry Headlund

      And what is the cause of the boom-bust cycle?

      Back when I studied control theory you would expect to see oscillations in a complex system with feedback, usually unstable oscillations which would eventually lead to self destruction. This was especially true when there was a delay in the feedback, as in most real world situations.

      It is not booms and busts (oscillations) which cry out for an explanation. The absence of booms and busts is what would be remarkable.

      1. John Smith

        “The absence of booms and busts is what would be remarkable.”

        Good point. The question is then: Why does the US (more dangerously, the entire world) have nation(world)wide, synchronized boom-bust cycles?

        1. Art Eclectic

          Because gambling is an addiction. Boom and bust cycles are just gambling. As soon as the players zero in on a table that looks hot or a machine that’s paying out, they all flock in. It’s a clear pattern and the smart ones know how to ride the wave up and get out once the little old ladies are seated and ready to play.

            1. Carlos

              There’s always a faint chance the old ladies will figure out they are being cheated and beat the casino owner senseless with their handbags.

            2. Art Eclectic

              Yeah, but you don’t know just HOW BIG you’re gonna win. And then there’s the high art of looking for the top and finessing just the right time to sell to some Greater Fool. Too early and you miss out on some gains, too late and you lose some gains.

              It’s the same game guys play with trying to beat their best time driving to work. Even though they know perfectly well they will arrive at the destination, they just have to game it because it’s who they are.

        2. NoFreeWill

          Because Capitalism is inherently an unstable system. Can lead to overproduction (or financial bubbles) and many other causes of crisis. Read Marx.

        3. Larry Headlund

          Because the US (and increasingly the entire world) are getting more connected. Sometimes making a sytem bigger or connecting disparate parts damps down oscillations. Sometimes the connected systems will increase (pump) each others oscillations.

          Note we had frequent worldwide (more or less) panics pre-WWI, the previous high point of globalization.

          1. Demeter

            That’s the symptom of positive feedback in a closely coupled system (like having the microphone too close to the speaker).

            Good way to break the machine and ones eardrums….

      2. Synoia

        The control theory you (and I studied) did not involve non-linear feedback, the feedback inherent in chaotic systems.

        Non-literary in system changes everything.

    2. Christer Kamb

      Expanding money supply(Mx) by banks is not really elastic money in it´s ordinary meaning.
      Newly created central bank money is. I guess you talk about new debt?

      I could think the closest definition of elastic money in the corporate world is when companies buy another company by paying with their own highly valued stock. But it´s still not true.

      I think the boom-bust cycle is a free market(or badly regulated) business-cycle which not always is dependent on overindebtness. It´s more about man´s optimism transforming to overoptimism.

      But when the banking sector becomes an unregulated “shareholder maximizer” then things easily get out of hand re-inforcing the boom-bust cycle.

  2. ArkansasAngie

    I would argue that the problem is that people running companies are not owners. They are employees and their interests are not the same as owners. This causes a short term attitude.

    The company … the asset … isn’t maximized over the long term.

    An owner takes care of their asset. They don’t put their asset in jeopardy. They don’t steal from the asset because they don’t steal from themselves. And when someone else misbehaves there is no one there to say “no” not with my asset you don’t.

    For me this is caused by financialization of company ownership. Individuals don’t own enough of a company to have power or a sense of ownership.

    1. Demeter

      II worked for owners who did just that….of course, they went out of business in the ’80’s….

  3. Drew

    Even if the duty of the board and the officers is to the corporation itself, they are still elected solely by the shareholders. Expecting the officers and directors to serve anyone else’s interests is foolish.

    1. Yves Smith Post author

      Under the law, board members have a duty of loyalty and care to the corporation, not the shareholders. Officers are not hired by the shareholders except in small, closely held corporations. And your view is contradicted by the fact that until the Jensen/Mickelberg thesis became popular, the view in executive suites all over America was that they had to consider their duties to all of their stakeholders, including employees, communities, and customers. Limited liability share corporations are normal in the rest of the world, and you will find in almost all societies, save the UK, where the US model has taken hold. that they also view corporate board and offices as having to consider the interests of multiple constituencies. In Japan, employment is considered to be the most important duty of a company. In China, I have heard of owner-controlled companies taking insufficiently profitable orders from WalMart because they had a social duty to maintain employment. The US view is extreme and eccentric by global standards, as well as a historical anomaly.

      1. Mbuna

        This question arises in my mind- How much of this “enhancing shareholder value” is now just a smokescreen for the executive class to enhance their salaries? Even if this started off as an academic exercise that caught on, do all these executives really still believe this? Or are they just saying so in front of the cameras while they knowingly are lining their pockets on the way to the bank? I tend to think the latter is the case because I can’t believe they are all that shallow and naive.

          1. swendr

            I think you’re over-simplifying the matter. Sure, for a few psychopaths, it’s a smokescreen. For many others, it’s just the accepted norm. They probably never thought much about it except that it’s one of the tough realities facing executives today.

            I recently listened to an interview with Stephen Kotkin about his book Stalin. One of the interesting observations he made was that the communists of Stalin’s era, behind closed doors, talked exactly like they did in their propaganda. In other words, contrary to what many in the West thought, they actually believed their rhetoric. It is entirely possible to believe in something and act on it with integrity only to have things go horribly wrong.

            1. Brooklin Bridge

              I know at least one who is quite bright and yet who fully buys into that nonsense. We are talking about very large egos here. Also, there is no doubt that some of them have reasonable skills and this helps to support at least the launch pad of the illusion. The only thing that can keep up (for the most part) unquestioning faith with the truly orbital extent of the fantasy is ego combined with greed.

              By in large, I think one would be amazed at how many CEO’s swallow the skills-match-the-staggering-pay+bonuses meme hook line and stinker.

      2. Fool

        …the view in executive suites all over America was that they had to consider their duties to all of their stakeholders, including employees, communities, and customers.

        Oh please. Evidence? That sounds more like what they may have told their shareholders when Carl Icahn wanted board seats. (Also who are you referring to? I though “executive suites” refers to Management though the rest of your point seems to be about directors…)

        In any case, Yves, I’m surprised by your nostalgia for pre-80’s corporate governance — a point in time when being a woman would have precluded you from the boardroom. Or perhaps that’s just my perspective as a Jew…

        1. hunkerdown

          It is possible to admire particular sensibilities of particular times out of context without any desire to reenact those times in their entirety. It’s something that nations of habitual reenactors (like the USA) sometimes can’t dig.

          1. Fool

            “Shareholder Value” isn’t merely “a theory made up by economists,” if for the very fact of its actual, real-world embrace by the corporate establishment. Today, unless you’re Mark Zuckerberg and can go public while retaining virtually all governing authority, when you sell your company to the public, you’d better be satisfying your shareholders, or else. That’s the world we live in — for better or for worse — but it’s hardly a “myth”. Personally, I believe it’s sinful how much CEO’s get paid, but at the end of the day, true corporate democracy — and with that a democratization of wealth — isn’t impossible so I’m all for empowering the shareholders. Indeed, shareholders can vote on executive compensation; is the fact that they enable outrageous pay packages not more a reflection of our society’s values than it is, say, the undeserved influence of Michael Jensen?

            Dobbin’s paper is good — though I feel he underestimates the extent to which the lawyers, bankers, lobbyists, etc. were behind all this. I mean, WLRK was legally structuring incentives for executives to put their companies in play (viz. golden parachutes, stock-based comp, etc.) while at the same time decrying acquirers as Bad for America, or whatever. (In other words, what was supposedly “Bad for America” was, to such discontents, good for business). At the end of the day, acquirers and targets and friends all got rich. Labor, needless to say, did not.

            My point is that blaming a Michael Jensen for the degeneration of American capitalist values falls short of the bigger picture, which transcends any singular person or occupation. As the “Bad Man of Private Equity” shows, the incentives of the system (taxes, regulations, etc.) practically encourage greed, a demoralization of law, and a degeneration of the American laborer. With that in mind, a more democratized market — of democratically governed companies that are subject to democratically conceived regulation — can underlie an empowerment of public-market shareholders (of the people).

            PS: Cringley? Really? The self-proclaimed “sex symbol, airplane enthusiast and adventurer [who] continues to write about personal computers and has an active consulting business in Silicon Valley, selling his cybersoul to the highest bidder”…

      3. Christer Kamb

        Yves wrote “Officers are not hired by the shareholders”

        I guess CEO´s are. The board decides to fire one and recruit another.

        The CEO is managing the shareholder´s(majority) strategy. A strategy that CEO´s develop to get acceptance from the board.

        Unfortunately shareholder-majority today involves public stockfunds demanding fast profits and soaring stockprices.

  4. MartyH

    Cringely is an observer/analyst with a good eye. Where he errs, it is because he isn’t actually in the conversations, meetings, email-flow so he has to interpret from subsequent history. His recent book on IBM, was painful to me as one who lived it from the inside for a couple of decades. I’m still in the industry and working with the people he’s analyzing. On balance, he’s right.

    There is a thread of work emerging that says “Financialization is Bad for your economy’s health.” Cringely points out that “Financialization” (the running of a business by the accountants and bankers) is bad for actually operating a business that isn’t a financial institution. By extension, start-ups that mortgage their futures by eliciting and getting big initial Venture Capital cash infusions gives the VCs the chance to start maximizing financial benefits from a very early stage.

    I guess it’s a Feature, not a defect.

    1. TheCatSaid

      Yes, and I’ve been told that some governments and their enterprise-supporting departments or semi-state bodies have this as an unspoken agenda–while supposedly promoting “innovation”, they are really promoting financialization, including young companies.

      Organic growth is not sufficiently “interesting” or “viable”; companies are encouraged to “think big” and “go for export” regardless of whether the timing is appropriate or not. This “thinking big” of course requires lots of outside capital, which coincidentally comes with multiple strings attached that allow the financial middlemen to do very well indeed. The target company, not so much.

  5. Eric Patton

    Cringley points out that there were plenty of other remedies for the problem that Jensen and Meckling were pretending to solve, that the interests of managers and shareholders weren’t aligned [emphasis added].

    Nor are the interests of workers and managers aligned. There are three classes, not two. There are owners, workers, and coordinators — managers — not just owners and workers.

  6. marco

    As a software developer with 15 years in industry, Cringley’s comments regarding off-shoring and the signal it sends to remaining technical staff are spot on. At my last contract (healthcare software company) they off-shored about 40% of the IT staff to South Asia over the course of 2 years. They also laid off 4 of 8 program managers with team leads basically taking up the slack (without a promotion, pay increase or even a pitiful change in title). A former colleague still working there told me the atmosphere is toxic, fear-based and adversarial even among lower level staff…utterly depressing.

  7. alex morfesis

    passing on v-capital…

    as cringley rightly points out…one of the main problems today is the designed for failure aahhrssezz running most (tech) businesses today…but anyone who looks for fast and furious v – cap bux is probably not too bright to begin with…the next wave of tech or other start ups will avoid venture money…just by working around the issues.

    wanted: stealth startup looking for partners who can put in 5 to 10 hours per week for 18 months…also looking for sales staff…retirees over 67 preferred…multiple languages helpful…

    there are plenty of very hungry securities attys for start ups who will work for gas money and a piece of the deal…cpa’s with pcaob designations not so much…

  8. jonf

    I was first introduced to the ” maximize profit” meme back in the 90s. It became a big thing in our company as our CEO fully embraced it. That was followed by programs to “improve the process”, aka reduce costs by eliminating jobs. Executives, of course, were a different class and stock options became more plentiful. At the annual review cycle we were forced to rank the staff, and those at the bottom joined the unemployed at the next almost regularly scheduled layoff. And we did make more money, just not so much more as to make any of it worthwhile. One thing some of us noticed was that we were not developing new products or customers. (marketing development was not my favorite side of the business, but it is necessary.) For a time we even went through a “new business development ” cycle buying other companies. But that failed, as the fools who ran the program were more interested in stock options than a successful business. Anyway, that gave way to the corporate raiders who figured out the company could make more money for the owners if it were split up. We went through several of them. What now remains is a shell and has been purchased by another smart guy. That shell is a mere shadow of its former self. I pass the place every day and the cars in the parking lot are less than half they once were and old friends have sad tales of old customers lost. Progress, I suppose.

  9. Stephen Rhodes

    Again, what do NC sophisticates think?

    Cohan’s Modest Proposal (Oct. 2010 NYT)

    …We can’t turn back the clock: Wall Street’s big firms will never again be private partnerships. Instead, I propose that each large Wall Street firm create a new security that represents — and is secured by — the entire net worth of its 100 top executives. This security would be subordinated to all other creditors as well as to all preferred and common shareholders; in other words, if a firm goes bankrupt, this security is the first to be wiped out.

    Had such a security existed at the time of the collapse of Lehman Brothers, the net worth of the top 100 Lehman executives — no doubt totaling several billion dollars — would have been collected after liquidating everything they owned and paid to Lehman creditors, who under the current system will be lucky if they get back 10 cents on the dollar.

    Wall Street’s first reaction to this idea — aside from profanities — will be that it cannot possibly be done. Or that it would somehow threaten the sanctity of our capital markets.

    But, in fact, it can and should be done. Indeed, Wall Street has all the intellectual capital it needs in its own archives to construct such a security: in the old partnership days every partner signed an agreement requiring him (and rarely her) to put his net worth on the line every day. Surely, clever Wall Street lawyers can draft a 21st-century version of the old partnership agreement…

  10. Ivy

    Anecdote: I worked for a company some years ago that practiced ‘the customer comes first’ and had that in our DNA. The employees were focused on anticipating and meeting customer needs, and were successful at executing that.

    We got acquired and the new owners had a different philosophy. They subscribed to a decision-making hierarchy that focused on owners, then vendors, then customers and lastly employees. What wasn’t shared with employees during the transition, but soon became apparent, was that the CEO leading the new owners was getting incentive payments to slash and burn. The hierarchy had that little exception for him. He ended up alienating vendors, customers and employees, and the business shrank. Then he cashed out. The End. Except for the survivors, who continue to seek more fulfilling options.

  11. Brooklin Bridge

    In the early 90’s, I worked for a computer company that had been taken over by a so called “white knight” outfit but where the result was the same as if it had been taken over by the worst corporate raider. For five years straight, they had lay-off after lay-off; always to maximize profit (illegally on more than one occasion) and that made less and less sense internally. Toward the end, they seemed to go berserk; for instance, one day they laid off the entire admin group in one fell swoop leaving multiple buildings, each with multiple climate conditioned rooms full of very expensive servers (for the time) simply running by the grace of what ever deity takes care of those things.

    All this caught up with them of course, though they couldn’t have cared less. Word got out. Eventually, no one in the industry worth anything would even accept to interview with the company, never mind work for them. But the ceo and senior executives had long since fled with their piles of dough to greener pastures where they could repeat the whole sequence. Incredibly ugly and scarring.

    And yes, it was simply amazing how many times the ceo would use that phrase, maximizing profit for the sacred “shareholders”, to explain each and every insane dismantling of the company. It got to be a joke about all the little old ladies with white sneakers who would be destitute if upper management didn’t continue the madness (which was more often than not for their own personal gain).

    1. Fool

      I believe the semantical nuances distinguishing “white knights” from “corporate raiders” depended on whether the bankers/lawyers with whom they had relationships worked with the target or the acquirer (respectively). Your anecdote is instructive in that regard.

      1. Brooklin Bridge

        Right, they fit the legal description of the white knight and the horror story behavior of the dreaded corporate raider.

        1. Fool

          We live in an age in which people are called what they want to be called, e.g. Carl Icahn the Activist, Michael Milken the Philanthropist; [“white knight” firm/corp] is a “strategic acquirer”, Bruce Jenner is Caitlyn Jenner….

  12. Jazzbuff

    I have been in the tech business for over 50 years and have watched the deterioration of quality of service. I have seen fraud, blackmail, and kick-backs used to secure and retain business. There is rampant manipulation of sales figures to show steady earnings growth to keep Wall Street happy. The needs of the customer and quality of service delivery is an afterthought.

  13. Min

    How did the idea of maximizing shareholder value get divorced from the idea of maximizing return on investment? Maximizing return on investment and avoiding bankruptcy are not only compatible, they are intrinsically linked. (See the Kelly criterion, for example.) If I am considering buying shares in a company, I am definitely looking to maximize return on investment.

  14. NotSoSure

    “If you annoy your customer enough they will decide to leave.” That assumes that some executive somewhere still cares about customer service. Well what happens if everyone in the tech industry is crappy?

    1. Brian M

      Yes. What if there is no choice because the entire industry either follows the same metrics or has been “merged and acquired” by a handful of companies based off-shore?

  15. keviearick

    Programming a Living

    The critters are trying to program life, and that’s not going to work, which should be obvious, but isn’t to those seeking external security for internal insecurity, the majority, which exists in spiritual, intellectual and physical poverty. Once you are in depression, you are in no position to make decisions, logically or emotionally, but you can create a lot of busy work, and call it economic activity, measured as GDP, surprise.

    The accountants don’t lead empire ‘modernization’ by accident. Programmers are brought in to take the snapshot they are shown, a rough one at that, and program it to replace certifiably redundant people, with a redundant program. Most programmers are led to believe they are smart, but are simply writing a script, with blanks for decreasing variability, for even more redundant people to fill in, exactly what the accounting firms want, to increase the efficiency of redundancy. Some programmers are a little smarter.

    So, you are a young person just starting out, and are not blessed with parents that can show you how to navigate, and are stuck with trial and error to begin. You take a snapshot of Pluto, get in your rocket, and take off. You don’t get there, because you did not anticipate the gravity of other planets, and even if you did, Pluto is no longer there.

    You need sustainable disposable income to get where you want to go, sufficient income/rent, with momentum, somewhere in the middle, just on the other side of the fulcrum, like an accountant or some such other nonsensical job. You are beginning at a gas station or something, to begin collecting the necessary pieces, renting a room or staying with your parents.

    At each event horizon, you are going to be surrounded by the majority, which wants to get to the next energy level up, but wants to do so for free, and has habits, false assumptions embedded in their behavior, which they got from the “it takes a community to raise a child” crowd. You are the potential ride, to be used and thrown away. And, you really have no idea where you are going, because you are exploring your talents and developing your skills accordingly. You have to “fit,” employing as little energy as possible, with others pretending to work 40+ hours a week.

    Anyone can fall through energy levels, say from accountant to homeless, and most do, and anyone can be used as a rigged lottery winner to keep everyone else playing. The point of incorporation, the counterweight, is to waste your time doing so. Don’t take it personally and expect to get anywhere. Of course the public, private and non-profits are going to tax you into the grave, if they can see your course. Employ natural uncertainty, reward on risk, which the majority is trying to avoid, with monetary and fiscal policy, to propel yourself. Let Skynet see what you want it to see.

    Once you see how slow the system really is, because your automatic system responds to the automatons, you can begin to see, that it’s really all about who you want to work with, who is looking for you. Timing is far more important than speed. Tourist jobs are always available. Better jobs are hired between January and May. Better jobs are hired once every 4 to 7 years. And you will always find stepping stones wherever you go, if you look, because you aren’t the first to go. Open your mind, before you begin.

    Can you imagine my kids in Public Education with an understanding of cash flow, margin, and confidence in future cash flow, at 7 or 8? What do you suppose they are going to think, and more importantly, do, when teachers open their mouths and false assumptions fall out, only to fall back on peer pressure to maintain class order, with textbooks arbitrarily written for the purpose?

    I have done everything I can to give you a head start on my next set of kids, but they have me, and my wife, which as you can now see, is why the State is so determined to commandeer my children, and why I train them accordingly. Imagine what 7 and 8 years-olds with functioning brain cells are thinking now. If you think things are bad now, you might want to be on another planet 10 years from now.

  16. keviearick

    in case you didn’t know it, everyone in the chain is calculating your position, as you enter your comment.

  17. John Smith

    Not to play Devil’s Advocate but isn’t a leveraged buyback of a company’s common stock an effective “poison pill” strategy because it:

    1) Decreases the number of outstanding shares at risk of being acquired in a hostile takeover attempt?
    2) Decrease the attractiveness of the company by encumbering its assets with debt?

    Thus preempting leveraged buyout attempts?

    Note that the banking cartel, as is typical, thrives on the conflict or the threat thereof.

  18. Demeter

    The Crapification of Everything

    Our community used to have a functioning social committee (of one, plus whoever showed up early).. It produced parties, lectures, performances, for $1500/year for 360 families. Maybe 50 families participated at any event.

    But envy stalked the Board of Directors…in the form of a perniciously evil person who sought to remove the committee, and did so.

    So now, the food is bought and cooked by vegetarians who thinks pink slime on the worst white cotton bread America is infamous for makes excellent “hamburgers” for those that eat meat. And they pick really crappy vegetarian food, too. One of the cooks has terminal diabetes and has had a foot amputated, the other (female) is nearly bald from poor nutrition (lack of proteins and vitamins).

    The house band occupies the dining room, forcing people who want to eat and converse to go out in the weather. This is especially hard on the elderly, the physically disabled and those with hearing difficulties.

    The complaint was “too much food”…so it’s a good bet that there’s not too much food, just too much garbage that no one wants to eat. And as for the presentation….there is no such thing anymore. Bet you it costs more, too.

    Knowing how to cook for a large party and to provide for all, including the dietary quirks, takes thoughtfulness, training, compassion, organization and practice. Also a palate. The old social committee person had a restaurant in a previous existence. The present committee has an attitude…the band is especially “entitled”. As if that was why people came out to a BBQ!

    I’m not going to the 4th of July BBQ, just as I didn’t attend the Memorial Day BBQ. I don’t believe in poisoning myself, family or friends.

    1. Mel

      Eeww. Chance to practice local politics? Get public debate going? Share and discover common opinions? Re-discover an ability to negociate? The Archdruid this week is talking about inability to negociate, but he’s picked extreme examples. You’re looking at the problem right where you live. There will be pain, I bet, but unilateral opting-out is just as unhelpful, long run, as Europe’s our-size-fits-you. As you say, you can lose your community center and the community in it if you don’t fix this.

  19. Doug

    “Maximizing shareholder value” is one of several pernicious examples of single-answer fundamentalism. Like it’s twin — free market fundamentalism – it claims to answer any and all questions, challenge, issues, problems and so forth. In this respect, it is no different from any other form of terrorism — whether religious or racial or otherwise. True believers cannot see the world except through this lens — and, as a consequence, have lost all power of critical thought and action.

  20. washunate

    I would bring a much more critical eye to that piece. First, the author confuses the basic idea of running publicly traded organizations for the benefit of shareholders with the specific tactic of giving management lots of stock options. The latter can be a bad operational move without saying anything about the former.

    Secondly, the author is making a huge unfounded claim that the U.S. computer industry is in trouble. IT is one of the few places where the U.S. actually still has some influence in the world. IT is one of the few places where significant numbers of workers actually make pretty decent wages. Apple, Microsoft, Google, and others are major global players. Then there are the consulting firms and smaller companies and so forth.

    And what’s gone wrong in IT is public policy, from intellectual property to spying on the planet.

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