OurFuture.org Blogs: myles spicer

Why American Capitalism is in a funk

myles spicer — Fri, 18 Jul 2008 15:43:44 -0400

Phil Gramm, not withstanding, it is not only our economy that is in the toilet, American Capitalism is also in a funk. And, I contend it is largely due to a failure of leadership at the corporate level, and the policies of the current administration.

The problem at the corporate level has for years been the result of very short term planning on the part of company executives fighting for “instant gratification” on the bottom line, along with a large dose of greed. This has resulted in short-sighted planning among American top executives – quite unlike business leaders in a number of other countries. No where is this better seen than automobiles and the airlines.

The gas “crisis” first reared its ugly head in the 70’s. Japanese automakers understanding where this was headed were gearing up to build quality fuel-efficient automobiles with emphasis on reliability, desired features, and style. American manufacturers, taking the short term view, saw a relaxation of fuel prices, and fat profits in SUV’s trucks and large cars. But that was not to be the future; and now the chickens have come home to roost.

While companies like Honda and Toyota were developing hybrids, and churning out their incredibly desirable Camrys, Civics and Accords, the American corporate leaders only started getting the message a few years ago. So, to hedge their bets, they tossed pieces of fuel efficient crap into the market, like GM’s ugly and poorly rated Aveo. Now, of course, American manufacturers are in the tank, and hustling to catch up; and General Motors currently has a market capitalization slightly less than Hershey. Meanwhile, Honda in recent months was able to show a sales increase and good profits.

Conversely, in the airlines industry, the America corporate leaders are in a tizzy trying to deal with rising fuel costs. Their solution: cut everything to the bone including passenger comfort, convenience and cost. The result, a spiral down that will likely continue. One of the interesting side stories about this activity is the recent call by airline executives to request government regulation of fuel prices! These were exactly the same folks who cry out for less government regulation, and in fact wanted the industry de-regulated.

As juxtaposition to the American business leaders in the airline industry, we can again turn to Japan, where Japan Airlines took a much more creative approach. Knowing prices would have to rise due to fuel costs, JAL decided to improve service! They improved seating; added upgraded classes; serve delicious food from well known Japanese restaurants, and most of all have friendly well trained personnel. They put special emphasis on their flights to and from the United States. Guess whose planes are flying full, and which airlines are cutting back as fast as their little jets will let them?

As a prime example of the above dynamics, take a look at Northwest Airlines (NWA) derisively referred to as “Northworst” Airline in my home town of Minneapolis. NWA has had a history of mismanagement, poor customer service and low employee morale for years. About three years ago, they finally gave up, and entered bankruptcy. After beating down their employees for severe compensation concessions, they emerged from bankruptcy – and gave their top executives tens of millions in bonuses for the engineering the emergence! Remember, these were the same executives who got them into bankruptcy. Now, about a year after that fiasco, NWA stock has again declined 60% from its post-emergence high...the airline is cutting back on everything possibly short of removing the seats...and seeking a merger with Delta who also filed for bankruptcy. This is a strategy for success? Meanwhile, the top executives in the company have suffered little from their mismanagement; indeed, they seem to have been rewarded. This is modern American capitalism at work...and at its worst!

Again, on the transportation front, a French company (Alstom) now has in production a 300+ MPH super train. What a great way to travel; plus it is energy efficient and a fine alternative to travel by air. American companies have ignored this solution, and along with it, a great long term Capitalist opportunity for jobs and profit.

As noted above, there is a strong emphasis on trained and friendly personnel at Japan Air. American airlines – indeed American businesses – have been an expert in providing lousy service at virtually every level. Part of it is lack of training. Part is again the desire to generate short term profits, by cutting costs at precisely the wrong places. And part is the terrible discrepancy in executive wages vis-a-vis those of the average worker. That not only is unfair and a negative for sound capitalism, it is also a component for poor worker morale. In 1965 (According to the House Committee on Financial Services) U.S. CEOs at major companies earned 24 times the average worker’s pay; by 2004 it was 431 times the pay of the average worker! In fact, according to this same study, the real wages for the 92% of Americans who earn under $92,000 per year have actually fallen since 2001.

Which brings us to the failure of political leadership at the national level. The Bush administration has been one of the worst enemies of strengthening American capitalism. They have harmed our economic system in a variety of ways – but the two largest are: running massive deficits (and the related decline of the dollar); and Bush’s stubborn adherence to the Chicago School’s trickle-down economics which, while clearly benefiting those at the top of the economic ladder, has proven to be a flawed policy and antithetical to robust Capitalism. Further, he has regularly eschewed valuable and cooperative pubic/private partnerships through his lingering dislike of anything resembling government participation or regulation, thus discarding a valuable economic tool.

The deficit, and subsequent dollar decline, has poured incredible amounts of money into less than friendly nations and/or positioned foreign companies to literally “buy” American business at will. That translated into $276 Billion of foreign purchases of American business in 2007. Abu Dhabi buying the Chrysler building was a bit embarrassing; but even though I am fond of imported beer, the sale of an icon like Anheuser is kind of the last straw. Indeed, foreign companies now have a huge stake in our economy, with a contingent ability to buy virtually any company in sight.

Trickle-down has been a mantra of conservative philosophy for decades. Problem is, history shows it has never matched the “rising tide benefits all” way of thinking. This point could be argued about endlessly – but here are the facts as we know them today. For 6 years the Bush administration held all the levers of power in our country with an especially compliant Congress; and for two years, Bush has held the power in the Executive Branch and Judiciary. His trickle-down tax policies (heavily skewed to less taxation on the wealthy) have prevailed during virtually this entire period...and I ask you: has this been a road to a successful economy and growth of Capitalism?

America is such a great country, with a history of leading the world economically. We still have great imagination, creativity, production capacity, and strong (if not ebbing) financial strength. But corporate greed and mismanagement; lack of long term planning; poor stewardship of our resources; a horrendous deficit; and a specious tax policy have all contributed to the decline of a robust Capitalism and American leadership as it used to be. To paraphrase Winston Churchill’s remarks on Democracy: “Capitalism is the worst form of economics...except for all the others that have been tried.” We’ve been here before, and survived; but the world is different now, with wealth spread over many nations and continents. Only a radical change in American corporate governance and enlightened fiscal policies can get our Capitalism out of the tank this time.

Obama, and the nation, owe Bush a significant debt of gratitude

myles spicer — Mon, 09 Jun 2008 10:04:38 -0400

In all the euphoria surrounding Barack Obama’s meteoric and unlikely rise to become a viable candidate for President of the United States, one factor is almost entirely overlooked. It is the assistance George Bush gave to the effort, without which there would surely be no black candidate on the 2008 ticket.

Yes, Obama brings many of his own personal assets to the event: his eloquence; his reasoned and equitable positions on many issues; his hoped for independence from corporate and lobbying influences; and his charismatic personality. But all these assets would not have allowed Barack Hussein Obama from rising to this position, had it not been for the dire straits we are now experiencing from the sad stewardship of the Bush administration. As it is said: extraordinary times require extraordinary measures...and to use Obama’s own words: “the time is now”!

The worst and sickest parts of the Washington scene have existed for decades, in a clearly non-partisan way. But, the 8 years of the Bush administration seems to have distilled those problems....concentrated them...and extended them to the Nth degree. The result: what many have described as the worst administration in modern times – if not in our history. Whether it be rampant influence peddling, unfairness in the application of taxes, corruption, the attack on civil liberties, the funk we are experiencing in the economy, or the now known deception of an unwarranted war -- all have contributed to a condition so dire and drastic that the country is willing to embrace a person and solution without primary regard to race or gender. Thus comes Barack Obama.

Given “normal” times, with “normal” issues and “normal” candidates, Obama would not have stood a chance. Why reach out to an unconventional candidate, when conventional ones are available to conduct business as usual? Obama’s voice would have difficulty emerging from that kind of scenario – plus he carries extra baggage of race, experience, and the inane rants made by some obscure minister years ago. But now....people are hungry for his message; and he delivers it with style, panache and clarity. His time is now! And he owes most of it to George Bush.

Surely some day, we probably would have elected an African American, or a woman, or a man or woman who was not a WASP. But the Bush administration has accelerated that process, probably by decades at least. For that (and probably only that) we should be grateful to the way Bush has mismanaged our country. The test of governing – as Ronald Reagan said – are you better off today than you were 8 years ago?
Bush has answered that with an exclamation mark. We could count the ways of deficiency, but space does not allow.

Note, we have not said yet that America is ready to elect Barack Obama; only that they are willing to have him as a viable and legitimate candidate. The rest of that story is yet to be told – and it is not clear how much more Bush can help him in that effort. Thus far, he does seem willing to assist. Even as a lame duck, he has stood stubbornly by his egregious decisions; he is unable to cover his deceptions with the continuing revelations of his perfidy; and his administration continues to display ineptness, plus a careless disregard for civil rights. These actions may yet keep driving America into electing their first African American president. But, even with Bush’s help wild cards abound.

Will deep imbedded racism show its ugly head in the privacy of the voting booth? Will Americans return to the illusion of greater national security from an ageing war hero? Will the “swiftboats” come out again with their lies and damaging personal attacks? All these are legitimate concerns as we head into what will likely be an ugly and unsavory election. All this is yet to be heard from, but for now there is a unique and rare opportunity to elect an unusually gifted and charismatic man who apparently can make a difference in America’s future. And for that we should say: “Thank you Mr. Bush”.

Americas leaders have failed us on a realistic energy goal

myles spicer — Mon, 02 Jun 2008 12:40:58 -0400

America’s leaders have failed us

on a realistic energy goal

The failure to provide our nation (indeed, the world) with an effective, realistic and timely new energy policy, might well go down in history as one of the greatest failures of modern civilization. If you think this is hyperbole, and you think oil at $130/barrel is outrageous...imagine what the last barrel on earth will cost. A vision out of sight and time? Well, likely only a few generations away. And, if I hear one more politician rant how “important it is to start weaning ourselves from fossil fuels”, I will totally flip out – because while leaders of both parties cleverly “talk the talk” – they have failed us. That’s the bottom line, pure and simple.

There is absolutely nothing new in what you are going to read here – and that is exactly why it is so upsetting. There is no gas “crisis” that has suddenly appeared. There are no “surprises” to $4/gallon gas. Everything – everything—that has precipitated this rise in price has been known for at least decades. So why is there so much shock and discussion?

Consider these facts:

First and foremost, oil is a finite product! It was never if we were going to run out of oil…it was always when. The real problem is that no one ever seemed to address that issue, as long as oil remained cheap. Gutless leaders avoided telling us that; the oil companies and SUV automakers stonewall it; and consequently, Americans just don’t get it! And of course now, the leadership of our country is in the hands of two former oil company executives – both of whom lead us to believe we can “drill our way” out of this situation. That may be good for their compatriots in the oil industry, but it is no solution to this problem. In fact, it is counter-productive in a variety of ways.
This irrelevant talk of reducing the gas tax; and Congress berating oil executives merely rearranges the deck chairs on a Titanic disaster that looms ahead. It makes for good media copy, but is not a solution in itself. And ending additions to the national petroleum reserve is a band-aid on cancer.
The major portion of world oil production has always been in the hands of despotic, uncaring, unreliable countries. It will be to the end. Nothing new here.
Additionally, the oil company executives actually are accurate when they state current (and future) pricing is essentially the result of demand exceeding supply (even with some speculative excess built in). That’s good for them...bad for everyone else.
Natural disasters, such as Katrina, or other calamities, which disrupt supplies, are common occurrences around the world. This is not new.
The last Energy Bill had strong incentives for more drilling…and meager incentives for alternate energy, and limited emphasis on conservation. Again, crafted with the direction of the Bush team (many ex-oil executives), it provides significant additional handouts to the oil companies, which is exactly what we do not need. The bill was widely reported – no surprises here either. The only possible surprise, to me, is the lack of outrage.

Though not a “surprise”, it may interest you to recall that 10 years ago oil was selling for about $13/barrel, about 1/10 its price now. From then to now, there has not been a single leader who created a competent, comprehensive energy policy which could have avoided our current distress...and future damage. We have heard all the talk about the “urgent need” and creation of a Manhattan-type program to bring mankind into a less fossil-dependant condition. But, it has not, and is not, being done. Just lots of talk. Assigning blame. And wringing of hands. “Alas and alack”. Crocodile tears. And useless unfulfilled promises. Worse yet, even if such a program were to be started, it could still be decades before it is in place and operative. So, tighten your seatbelts...it’s going to be a bumpy ride.

Regarding a Manhattan-type program, it is interesting to note the dynamics of that effort.

Though atomic research had begun in the 30’s in a primitive way, it was not till 1942 when Roosevelt and the Allied leaders realized the importance of developing an atomic bomb. Within a few short years, an amazing team was assembled...research was completed...fission piles were created.... thirty different research sites were involved...three secret scientific cities were built...and the bomb was made. It was done before Germany could develop one of its own; and ended the war with Japan. That was leadership! The Manhattan Project cost $2 Billion (in 1940’s dollars); equivalent to $24 Billion in today’s dollars. That’s about 6 months of Exxon’s NET profits this year. Meanwhile, alternate energy development goes on underfunded, disparate in its organization, and without cohesive or coordinated direction.

So, where are those kinds of leaders today who could lead us out of this current morass, and future danger? Apparently nowhere. At least not one who is capable of taking charge of the problem to aggressively mobilize our resources and human creativity; and put on a full court press that will lead us into a cleaner, safer, less costly long term energy solution. If one should emerge, I would urge you to elect him/her quickly, because time is shorter than we imagine. Hello...is anyone listening?

America's leaders have failed us on an energy goal

myles spicer — Fri, 23 May 2008 15:39:31 -0400

America’s leaders have failed us
on a realistic energy goal

Consider these facts:

• First and foremost, oil is a finite product! It was never if we were going to run out of oil…it was always when. The real problem is that no one ever seemed to address that issue, as long as oil remained cheap. Gutless leaders avoided telling us that; the oil companies and SUV automakers stonewall it; and consequently, Americans just don’t get it! And of course now, the leadership of our country is in the hands of two former oil company executives – both of whom lead us to believe we can “drill our way” out of this situation. That may be good for their compatriots in the oil industry, but it is no solution to this problem. In fact, it is counter-productive in a variety of ways.
• This irrelevant talk of reducing the gas tax; and Congress berating oil executives merely rearranges the deck chairs on a Titanic disaster that looms ahead. It makes for good media copy, but is not a solution in itself. And ending additions to the national petroleum reserve is a band-aid on cancer.
• The major portion of world oil production has always been in the hands of despotic, uncaring, unreliable countries. It will be to the end. Nothing new here.
• Additionally, the oil company executives actually are accurate when they state current (and future) pricing is essentially the result of demand exceeding supply (even with some speculative excess built in). That’s good for them...bad for everyone else.
• Natural disasters, such as Katrina, or other calamities, which disrupt supplies, are common occurrences around the world. This is not new.
• The last Energy Bill had strong incentives for more drilling…and meager incentives for alternate energy, and limited emphasis on conservation. Again, crafted with the direction of the Bush team (many ex-oil executives), it provides significant additional handouts to the oil companies, which is exactly what we do not need. The bill was widely reported – no surprises here either. The only possible surprise, to me, is the lack of outrage.

Regarding a Manhattan-type program, it is interesting to note the dynamics of that effort.
Though atomic research had begun in the 30’s in a primitive way, it was not till 1942 when Roosevelt and the Allied leaders realized the importance of developing an atomic bomb. Within a few short years, an amazing team was assembled...research was completed...fission piles were created.... thirty different research sites were involved...three secret scientific cities were built...and the bomb was made. It was done before Germany could develop one of its own; and ended the war with Japan. That was leadership! The Manhattan Project cost $2 Billion (in 1940’s dollars); equivalent to $24 Billion in today’s dollars. That’s about 6 months of Exxon’s NET profits this year. Meanwhile, alternate energy development goes on underfunded, disparate in its organization, and without cohesive or coordinated direction.

Obama IS Different

myles spicer — Wed, 30 Apr 2008 12:46:22 -0400

Paul Krugman’s
Self-Inflicted Confusion

Rarely, if ever, have I differed with Paul Krugman on the important issues of the day; but this time I must make an exception to his recent op-ed piece in the NY Times regarding Barack Obama’s “Self Inflicted Confusion”. Indeed, it is not only Krugman whom I feel is confused about the Obama campaign, the media in general is conflicted about what they hear and what they say when it comes to understanding Barack Obama. And this is not without good reason, because Obama is an anomaly that has never appeared on the American presidential scene, and “understanding” him is not easy and lacks precedence.

Krugman rightfully suggests that “he might well lose to McCain” in the general election. I do not doubt this, because I have felt from the beginning of his campaign that America really is not ready for a black president. It is not because of racial prejudice, which is obviously present in any such endeavor, but more likely it is the product of the baggage (and inevitable background) any black candidate carries into the contest.

Let’s face it; Obama knows what Reverend Wright stands for (and has answered him). He has heard his sermons. The danger here in not that he has been “infected” with some lack of love or patriotism for America, but rather that he is coming out of a milieu different from Hope Arkansas, or Independence Missouri, or Boston Massachusetts...or wherever former presidents have typically emerged. What else would you expect from a Community Organizer on the South Side of Chicago? No other candidate before Obama has “walked the walk” of this environment; and if Obama is to be elected and accepted, this component comes with the package. In my view, it is precisely because of these experiences that Obama can better unite and bring about reconciliation of the races. And, it is these same factors that can allow him to present a more diverse face to the world for America.

Never the less, the mass media – starved for content – cannot give enough press to Wright. They heard (and aired) Obama’s excellent speech and explanation of his relationship to Wright, his church and race relations in America, but was anyone really listening? Did anyone really understand what it meant? I don’t think so, because the media has become so inured and deadened to the “political speak” they took it with a grain of salt. Finally, of course, came the Obama “divorce” speech designed to put a final end to the controversy.

Normally, this too would be suspect and politicized, But, this time it is different! It is different because Obama is a different candidate from anyone we have ever seen or had before. And it is a template for presidential races we have never experienced before, and probably never will for decades when Obama loses. Note, I use the word “when”, because I have a nagging fear Obama will likely lose because the establishment will destroy him somehow before he is elected; and the public (especially blue collar whites and older voters) cannot swallow hard enough to elect him over an aging white war hero who will lead us backwards into the illusionary safe path of the past – disastrous as it may be in these circumstances, and these times. It’s not that Obama has neglected to confront the issues of working class families, as Krugman suggests, it’s more that working class families prefer listening to the siren song of the old politics, which they better understand. It apparently is a song to which Obama does not know the words, and to his credit, prefers not to learn.

True, since Obama’s message is new, different, and embraces “new politics” (to use Krugman’s phrase), it requires an extra effort to appreciate what it means to America and our governance in coming years. Obama cannot be understood through the normal prism of political analysis. The media has failed to understand this, but that does not mean it is irrelevant or without redeeming value. Obama’s rhetoric and value system is needed at this time and place in our history, if the country is to truly make a significant change in the next administration. The role of a new president may well be to inspire the country in the way Jack Kennedy did, with as much, or even more, importance as proposing specific legislation. Obama can do that, and at this point, only Obama.

Which brings us to Krugman’s comments on Clinton. To say she has not damaged the Obama campaign is totally disingenuous. She has damaged Obama by repeating the mantra of fear about him from the Republican playbook. She has damaged him by covertly playing the race card vis-à-vis Wright. She has damaged him by sucking off his crucial resources he will need for the general election. And she has damaged him by laying doubts as to his ability to beat McCain – a claim now affecting the confidence of Democratic voters.

Finally, Krugman states the Democrats suffer from a “self-inflicted state of confusion”.
I suggest the Obama message is indeed clear, consistent, refreshing, and needed. I do not believe he is confused or conflicted. This, to me, seems to be a case where it is the media that is confused....not the messenger.