Cap & Trade or Michael Jackson

July 7, 2009

Regardless of which side of the issue you’re on, it should bother you that the news media is spending far more time keeping the American people up to date on the Michael Jackson memorial service than they are in informing us of the progress of the Cap & Trade legislation.

And why are they placing so much emphasis on a dead celebrity? Why are they ignoring more important issues that could affect all tax payers?

Some right wing conservatives would have us believe that the left leaning media is intentionally taking the focus away from Congress so the Obama administration can shove another giant spending (and taxing) bill down our throats.

The left wing radicals would argue otherwise.

Naturally – and unfortunately – the truth has nothing to do with politics. Sadly, the media is giving the American public what the American public wants. I’ll admit I haven’t checked, but I’d bet that any broadcast of the American Idol show garnered a much larger share of the viewing public than any of the Presidential debates.

The truth is a large portion of our population doesn’t care about what goes on in Washington, D.C. In fact, they care even less about what goes on in their own state capitols.

Many years ago I attended a Key Club convention in Philadelphia. Each delegate was given a key ring. On one side was the Key Club logo. On the other was the phrase, “Combat Complacency.”

I believe we’ve lost the battle. In the 1960’s, college students stood up and voiced their opinions. While many of them were wrong in their beliefs, they all had the courage to stand up for what they believed. As a result, many things in our society were changed.

The youth of my youth took the time to learn about things that mattered. Sometimes they heard one side of the story and jumped to incorrect conclusions, but in most instances, they looked at both sides and came to good logical conclusions.

I’m afraid today’s youth are too busy twittering their lives away.

Perhaps that’s the major difference. While we didn’t have CNN, FOX News Channel, C-SPAN, or… come to think of it, we didn’t have any cable channels because we didn’t have cable. We also didn’t have lap top computers and the Internet. But we did have newspapers, news magazines, and the library.

We paid attention to the world around us – sweat bullets during the Cuban Missile Crisis – and felt a responsibility to speak out against what we saw as injustice.

Perhaps that was the influence of John F. Kennedy. I know we all admired the man and took the “New Frontier” very seriously. And we all deeply mourned his passing.

Until President Obama came along, we hadn’t had another President who could reach out and stir the interest of the youth as JFK did. But it appears that the interest of our current youth petered out once their man was elected.

It’s a shame because, the way I see it, it’s the youth and future generations who will be most harmed by what is currently happening in Washington.

The U.S. Government has no business being in business. Every time government has taken over an industry, that industry stops being self-sufficient. For example, independent bus and trolley companies operated in major cities for decades. They competed for riders and most of those companies were profitable.

The companies that couldn’t compete went out of business and their assets were bought up by the other companies. Then, the government decided to take over. The two ‘companies’ I’m most familiar with – the Port Authority Transit (PAT) in Pittsburgh and the Metropolitan Atlanta Rapid Transit  Authority (MARTA) – have both operated at a loss for decades. Taxpayer subsidies are the only way they stay afloat.

Will General Motors be any different? Will taxpayer subsidized pricing put Ford, Chrysler, and others out of business?

The Federal Government has put itself in a very awkward position. Congress is talking about passing a ‘clunker bill’ that will give citizens a tax break for trading in an old car for a new, more fuel efficient, car. Will the tax break be higher for those of us who buy a GM product? It would make sense if the government wants their ‘company’ to flourish.

But wouldn’t that be unfair to the other companies? Does the government care?

There are many people who believe the economic crisis could’ve been solved months ago simply by the government letting workers keep their entire paychecks. Think about that. The typical worker has almost a third of his or her paycheck withheld every pay day. If that money had been available to the individuals, they would’ve spent it. Even if they simply paid off some bills, the economy would’ve improved.

Foreclosures would’ve been reduced dramatically and banks would’ve had more money for other loans. Consumers would’ve bought more cars, televisions, and other big ticket items… which would’ve resulted in more jobs.

If consumers bought Fords and Toyotas rather than Chevys and Buicks, GM would’ve had to fix their problems or go out of business. With increased sales, the other auto makers would’ve been able to buy GM factories and put the former GM employees to work building other makes of cars.

Is it too late for the government to get out of the auto business? I hope not. And while they’re at it, they should also get out of the banking and investment businesses.

Come to think of it, maybe it’s time for MARTA and PAT to liquidate and let the private sector show the politicians how it should be done.

Considering the business acumen of most politicians, it wouldn’t take a business genius to repair the damage done by congress. Think of it! How many politicians have held a ‘real’ job during their adult life. There may be a few, but most of them were borderline lawyers who recognized they could make a lot more money supporting the causes of special interest groups.

If they were intelligent enough to be successful business people, why would they even consider becoming a member of Congress?

Now, if you’ll excuse me, I have to go and see if Michael has been buried yet.

History Lessons

January 10, 2009

Between my junior and senior years in high school, I dropped by Alvin Yetter’s house. I was met at the door by his grandfather who ushered me in and tried to engage me in small talk. His first statement – I don’t think it was more than a rhetorical question – was, “Wasn’t it terrible what Truman did to MacArthur?”

I had absolutely no idea what he was talking about. American History, as taught at Langley High School in Pittsburgh in 1961 stopped far short of WW II.

If you follow my blog on a regular basis, you’re probably wondering where I’m going with this. Well, it’s very simple. When I began writing today’s post (which was actually done yesterday), I looked up January 9th instead of the 10th. What I discovered was a headline: “US soldiers led by General Douglas MacArthur invade the Philippines.” That event occurred on January 9, 1945. Since it was during my first year as a human being, I thought it would be an interesting topic to explore… especially in light of Alvin’s grandfather’s comments.

However, since today is January 10th – even though I’m writing this yesterday – I should look and see what historical events happened today.

Once again, I only focused on 1945 – my first year of existence. There were two events that were newsworthy – although one of them got two entries at the website I examined –

One indicated that the LA Railway (with 5 streetcar lines) was forced to close. I’m assuming that was Los Angeles rather than Louisiana. I remember reading somewhere that General Motors had something sinister to do with the elimination of streetcars in Southern California so they could sell more buses.

The other two – it figures – had to do with sports. It seems the august body that determined who could enter baseball’s Hall of Fame decided that no one was fit to have his sweaty smelly old uniforms displayed in Cooperstown.

Since 1961 I’ve learned quite a bit more about President Truman and General Douglas MacArthur (old soldiers never die – they just fade away). I’m still not prepared to take sides… Truman may have done the right thing.

But I find it extremely interesting that the war effort took a back seat to other news on Wednesday, January 10, 1945. Come to think of it, my guess is the economic situation and sports will be the headlines in 2009.

Corporate Revolutions & Bailouts

November 20, 2008

It has been more than 200 years since we’ve had a political revolution in the United States. But there have been numerous revolutions in other areas; the political kind in many parts of the world, technological revolutions both here and abroad, and social revolutions that have moved much more slowly and are less obvious.

Technological revolutions now occur almost daily (as, in some countries, do political revolutions.)  That makes me wonder about all I will see during the remainder of my life.  My father, born in 1891, began his life by watching people travel by horse and buggy.  His life ended after he saw men walking on the moon.  I was born just before the dawn of the atomic age.  What lies before me is as much conjecture as space travel was to my father.  I’ll have to leave that conjecturing to the science fiction writers.  My interests have always had more to do with people.  Therefore, I will endeavor to use the crystal ball to predict revolutions in our social structures.

When I entered the job market in 1966, the common practice was to join a firm that offered good medical benefits and a solid pension plan.  That was it.  For the next thirty or forty years, you would do whatever the company asked of you and eventually retire and move to Florida.  The company I joined was IBM.  As with most other companies, it was almost a marriage.  Both sides had responsibilities and there was a bond of loyalty.  As long as I did what the company needed me to do, they would take care of me and my family and as long as they took care of me and my family, I would do whatever needed to be done.

In those days, IBM was unbelievable in the way they treated the families of their employees.  When a baby was born, letters of congratulations were sent along with an engraved silver spoon.  When there was a death in the family, flowers were sent along with condolences from the Chairman of the Board.  No detail was ever overlooked.  From the family picnic to the family dinner to the family Christmas party, IBM made you feel that you were part of a much larger and more important family.

But the 1980’s brought some economic revolutions.  Foreign competition and leveraged buyouts caused the bottom line to become more important than the employees and their families.  IBM was no longer the only real game in town.  We could no longer be successful in spite of ourselves.  Since sales did not increase, costs had to be cut.  “Respect for the Individual,” one of IBM’s Basic Beliefs, found itself at death’s door.  To be fair, IBM showed tremendous respect during the early cut backs.  They encouraged people to retire by offering fantastic financial incentives.  But those incentives grew smaller which each successive cut back.  The last few labor force reductions were simply layoffs – a term that was not in the IBM vocabulary prior to 1994.

With most down-sizing, a company loses valued employees as well as the dead wood.  As a result, they don’t have the resources they need to continue to serve their customers.  So what do they do?  They hire the good people back as “contractors.”

More and more companies are turning to contract employees and, from a company’s standpoint, it makes a lot of economic sense.  A contract employee is paid an hourly fee and that is that.  There are no benefits, no retirement fund, no unemployment insurance, no company-paid social security contributions… and no loyalty.  When a job is completed, the contract is terminated. For many companies, this represents at least a 40% savings over the traditional payroll.  IBM now utilizes contractors for everything from the mail room and secretarial pool to product development and marketing.

In fact, IBM has not only changed their structure from the standpoint of employees, they’ve also changed their product line. IBM now sells services. Hardware and software are secondary products. If they must install a competitor’s equipment to win the contract, that’s precisely what they will do. And, through it all, they continue to be successful.

It’s important to note that IBM has never gone to the government and asked for monetary assistance. Their management team recognized the need to change directions and did so.

It’s not beyond the realm of possibilities to see IBM someday sell off their remaining manufacturing facilities – they already sold their computer printer manufacturing business to LEXMARK many years ago.

Once all the hardware and software development facilities are gone, IBM’s workforce would be reduced to a management team and a variable number of contract employees. For that matter, the management team could also be paid as contractors. Then, it would be a company with no employees doing a land office business!

With this in mind, consider the Big Three automakers and their financial woes. From an ignorant outsider’s point of view, it seems there are many things they could do to right the sinking ship – besides begging for taxpayers’ money so they can continue to ignore the winds of change.

The first thing they should do is sell off as many of their dealerships as possible. General Motors’ 7,000 dealerships sell less than five percent more vehicles than Toyota’s 1,500 outlets. Let some of those dealerships sell the KIA or Honda products.

The second, and much more difficult, action they should take is to change the UAW contracts.

Having grown up in Pittsburgh, and having at one time been a member of the Teamsters Union, I realize many will see my thoughts as blasphemy. But I watched the unions destroy some companies in Pittsburgh. First, their demands caused A&P to close their bakery in Pittsburgh; shipping baked goods in from Cleveland was cheaper than meeting the union’s demands. A few years later, A&P left the Western Pennsylvania market completely because of labor demands.

The same thing happened with the steel industry. I often wonder why the steel companies agreed to a contract that gave the workers a thirteen-week paid vacation every ten years. This was in addition to their normal two week annual vacation. When companies are forced to pay workers to not work, someone has to pay for it. Companies are forced to raise their prices, which opens the door to foreign competition.

I’ve been told that when GM ‘lays off’ workers, those workers are required to report to a facility where they spend the day reading, chatting, watching television, or finding other ways to pass the time – and are paid about 95% of what they were earning before they were laid off. If the ‘worker’ gets bored and goes out to find another job, he or she is finally taken off GM’s payroll.

I believe the problems of the U.S. automakers are a combination of poor management – refusing to build the kind and quality of vehicles the American consumer wants – and union contracts that make manufacturing costs ridiculously high.

In my humble opinion, I believe bankruptcy is the best course of action. That would force the union contracts to be renegotiated and force management to pay closer attention to the demands of the market.

The steel industry died in Pittsburgh many years ago, yet the city is more vibrant than ever. Why? Because the steel workers went out and found new jobs, and other industries moved in to fill the void.

Labor unions, in many instances, are absolutely necessary to protect the worker. But, when the demands of the union leaders cause their members to lose their jobs, the leaders have pushed the envelope too far.

IBM never had labor unions to deal with, yet they have always treated their employees and contractors well.

Somewhere there has to be a middle ground, and this taxpayer doesn’t want his money spent so the Big Three and UAW can delay efforts to find it.