Posted on 09/08/2006 6:01:12 AM PDT by governsleastgovernsbest
"Yet if we try to stop the pendulum at its absolute fair point, we stop the energy. "
I agree. I am very aware of the cyclic nature of who has the advantage in business. What distresses me is when people look at the current situation and say: "That's capitalism, that's the way it works, it is as it should be."
Now if the situation were more like it was in the 60s and 70s when labor was extorting business, those same people would be screaming for remedies.
The system is a good one. It's the best one that we can come up with. But, it's not perfect, and not self maintaining. Many of the pendulum swings are the result of tweaking. Specifically I'm thinking of anti-trust laws.
At this point in time, I think that there are more than a few people who have figured how how to subvert businesses purely to enhance their own personal wealth. That's not good for anyone except a select few, and it's not capitalism.
Your point addressing institutional investors, and short term gains is a good one. Ford was looking into going private to avoid that exact problem. Ford could do real R&D and not be driven by investors who don't know the business if they did indeed go private.
Closer to my point, Cavuto has an article on the Foxnews website about how golden parachutes kill the incentive for executives to perform.
The system doesn't need to be scrapped, but it does need to be tuned.
Prosecuting the people who were responsible?
That's already happening. What else?
So far as Enron is specifically concerned, I think Peggy Noonan put it best. Upon being asked to prepare an article for their annual report and making two trips to Houston to interview the principals, she found herself unable to define what it was that the company actually did!
She resigned the assignment.
As a casual observer from outside the company, but as one who has worked with a vast range of companies -- big and small, good and bad -- my personal impression of Enron was that it was built on a solid foundation of...air.
Sometimes, these things work out (e.g., LTV). More often, they don't.
At any rate, employees are responsible for their own decisions. Ken Lay didn't hold a gun to their head when they were hired. And remember, if a job opportunity sounds like it was too good to be true, it probably was.
It's not like I haven't made my own mistakes...
And here I thought the Left honored diversity as a strength.
Excellent points. I'll take a look at the Cavuto material. I'm not in favor of lassez faire but I am extremely skeptical of tweaking for the purpose of freezing a situation as it currently is. Complete fairness is impossible. Abuses are fixable, either through action by government demand or by investor demand. Surely the pendulum swing is in favor of corporations right now and we need to get out of the "managerial class" mentality that has executives skipping from one corporation to another leaving glowing quarterly reports but lousy long-term viability. (By the way, I see the same problem with the public education "superintendent class"). These are people who are not personally invested with the health of their company (or school district), only in having that golden parachute for themselves.
"So, what would you propose doing about the Enron debacle? "
Enron in particular, nothing. That ship has sailed. But I would like to see some reforms in how boards of directors are elected, and some restrictions on relationships with the executive staff.
I'm not a socialist. There should never be limits on what anyone is paid. A business that is determined to commit corporate suicide shouldn't be stopped.
But, potential stock holders should be appropriately advised, and have some input. Employees deserve a fair heads up when a company is engaged in creative management.
It would be great to see a solution to managing for the quarter, instead of managing for long term growth, but I don't know how do get there from where we are.
I don't have all the answers, if I did, I wouldn't be posting on FR. :)
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