Make Money Reliably Forever Or . . .


From I.O.U.: Why Everyone Owes Everyone and No One Can Pay.:

This is how it’s supposed to work. A well-run bank is a machine for making money. The basic principle of banking is to pay a low rate of interest to the people who lend money and charge a higher rate to the people who borrow it. The bank borrows at 3 percent (say), and lends at 6 percent, and as long as it keeps the two amounts in line and makes sure that it lends money only to people who will be able to pay it back, it will reliably make money forever.

Reliably make money forever! Instead the banksters got greedy, decided that a return on equity of anything less than 25% per annum was unacceptable began their binge of serial acquisitions and soon we all crashed headlong into a crisis.

Me? I'd rather make money reliably forever. Boring is good. Singles win championships and all that. But hey, I'm not a greedy, megalomaniacal, ego-centered fucktard.


Sean Paul Kelley February 6, 2010 - 4:33pm
( categories: Global Financial Crisis )

The problems are structural and cultural. I think that's something we tend to ignore because it's all around us. People from the U.S. go to Mexico and see why some things don't get done, or done quickly enough. They say, "the problem in Mexico is . . . " and then you get a bellyful of obnoxious explanations. Many of them true. But the U.S. is not perfect, and things seem to be going downhill fast, for reasons that ordinary Americans are blind to, because they see it every day.

The U.S. system is in decline and has been for decades. The business school culture and teachings are as doctrinaire and erroneous as anything in a Communist reeducation camp. The way they train MBAs and accountants these days, they'll squeeze a penny till it shits, but burn seventy acres of ancient old-growth forest to do it. Some of the plans they come up with to squeeze a few pennies here and there are truly laughable, and anything that doesn't show up on a ledger gets little consideration, if any.

Consider Circuit City. They were competing in my neck of the woods with Best Buy, but some accountant convinced the CEO (maybe it was the CFO) that in order to compete, they could fire all their middle managers. After all what do they do? Well, they fired the middle managers and found out pretty quickly what wasn't getting done: discipline on the sales floor and in the back room, and customer service to guide people into purchases that suited their needs and expenses. If you visited a Circuit City during that time, you'd see a dirty store with bits of junk on the floors, sloppy displays, listless 20-something employees who were just as like to pick their noses or be texting their BFFs for twenty minutes as to help a customer. When they did answer questions, they were no help. No middle managers to read through boring manuals and give them training.

The place was a depressing dump that no one wanted to buy from. Circuit City management had squandered the goodwill of its employees and customers, two things that never show up on a ledger. Call it "management by spreadsheet." The geniuses that came up with that plan offered the middle managers their jobs back--at beginning wages. After a while, they started begging them to come back. But it was too late, and they went bankrupt. Thanks accountants!

But that's just one example. There are several articles of faith in the MBA gospel that have been disproven, and disastrously so. Like the idea that you have to wage a constant class war against your own employees, indeed any employee, to gain decisive advantage. Henry Ford's famous eureka moment when he realized that his own employees would be his own best customers appears to have been forgotten. As employers have broken the social contract with their employees (yes, there was once such a thing called "the social contract" between employee and employer), no one had any reason to work hard or give their best. Not unlike Communist Russia. Another article of faith is "free trade." "Deregulation."

You could go on and on and on. SPK mentions a return on equity of 25%--that was what newspapers gave, and that still wasn't good enough. What we have here is basically a confidence game using profitable businesses as proxies for value-extraction and debt strip-mining. At any rate, it's a much, much bigger problem.

Jonathryn February 6, 2010 - 6:30pm

At my job, the expression "this company will step over a $20 bill to pick up a nickel" is heard fairly often. For example, all IT and HR is officially "self service" meaning I spend hours trying to find answers that I could get with a two-minute phone call to someone, but I don't have that option. This tells me that the company considers its employees' time to be worthless. It must be some fairly recent MBA management fad as I hear of other companies pulling the same shit.

It even states right on the main IT "help" page that you are responsible for learning all about whatever technology it is that's not working e.g. Windows domain administration (despite having no admin rights) and solve your own goddam problems. Email support is worthless because as soon as you open a case, it will always be automatically closed because it was sent to the wrong department. It will *always* be sent to the wrong department. So I've pretty much given up.

Oh, and this is a $100 billion+ market cap company, not a small business.

You can attempt an online chat with "Frank" in Bangalore or Manila, but he will do nothing other than read the script and close your session. You can also call "Frank" but that doesn't change anything as he doesn't speak English too well and cannot deviate off script.

HR queries are handled pretty much the same way, as is travel. I have to book my first business trip this week and while I've very familiar with booking travel online, I'm assuming that the corporate travel portal thingie will be another boneheaded nightmare of a website.

It's a good thing that I like my job.

forty2 February 7, 2010 - 8:44pm

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