Off to a bad start

The country's second-largest mall operator has just filed for Chapter 11 bankruptcy, and I think I know why the company failed.
Its name is General Growth.
Which describes what's wrong with this company and many others that have gone bust.
That name implies that the firm's business is growth. Just growth. Getting bigger.
It doesn't imply getting better, or getting smarter. It doesn't say anything about pleasing its customers.
Growth, it seems to me, ought to come as a result of being a better, smarter company. Instead, General Growth apparently thought growth was its purpose. Generally speaking, though, companies that grow too fast get weaker instead of stronger. They add weak links, not strong ones. Strong companies don't want to get swallowed up; weak ones do, with gratitude.
This same misguided trajectory has led to disaster for banks, manufacturers, builders--yes, and governments.
A song in "The Music Man" says it all: you gotta know the territory. You might be terrific at running a mall in your home town; you know the customers, you know the marketers, you know the territory. But move from your home town across the country? You're likely to get lost. You'll look at balance sheets and demographics and past sales and projections, but you don't spend nearly enough time looking at the territory: the people who buy, the products and services they buy.
So your mall fails.
Diversification is often a good thing, but not always. Companies are almost always better off sticking with what they know, and learning even more about what they're really earning their money from.
It stands to reason.

Open House at the Hoosegow

Why isn’t Allen Stanford eating beans off a tin plate in a Virginia jail? And why isn’t Bernie Madoff sitting next to him?
Why aren’t those bank CEOs singing close harmony in the calaboose? Why is Dick the Torch Cheney still wearing dark suits and blue ties instead of stripes?
I know, I know: in America, you’re innocent until proven guilty.(Dick Cheney doesn’t believe that, except when it comes to him.) But how can these guys be walking around free when smaller fry are clapped in irons for far less egregious offenses?
It seems to me that this whole financial forest fire we’re in was started by a bunch of arsonists: men who lit matches by doing what they must have known was wrong.
Somebody in the banks must have realized that buying a bagful of bad mortgages would lead to trouble some day. Somebody must have approved the second and third and fourth mortgages the birddogs were peddling/
What enrages me about this whole mess is that the talking heads on television imply that it all just mysteriously happened. Well, not the talking heads on Fox, who blame it all on some poor schnook who bought a house and then found out he had cancer and couldn’t pay both the mortgage and the medical bills. Or else Bill Clinton.
I sense a building anger among the people who are footing the bills for all this: the people whose IRAs are in the tank; who can’t afford a new car or a full tank of gas for the old one. We’re mad as hell—but we’re taking it, because we don’t know what to do.
We know that Allen Stanford, who stole eight billion dollars, and Bernie Madoff, who stole 50 billion, and the bank CEOs, who demonstrated their incompetence and greed so blatantly, and Dick Cheney, who gave the nod to torture, and the predatory lenders who conned poor saps into not reading the teeny-tiny fine print, and who knows how many other crooks, are walking around free as Spring robins.
If a few of them were clapped in irons, maybe the rest of us would feel more confident about the future.
And isn’t that what the stimulus program is all about? Confidence?

The fatal flaw in Republican reasoning


How many times did I hear John Boehner, Republican house honcho, say, “Our program costs half the money and creates twice the jobs”? Many. How many times did I hear John Boehner tell me what the Republican program was? Never.
I surmise, though, that the Republican plan consisted mostly of tax cuts, especially for businesses.
I am no economist. (Neither is Mr. Boehner.) But it seems obvious to me that tax cuts for business will create no jobs. For the awful truth is this: business creates no jobs. Let me repeat that: business creates no jobs.
If Caterpillar Corporation gets a tax cut, will it hire a bunch of workers? To do what, exactly? Build more tractors that nobody will buy?
If General Motors gets a tax cut, will it build more Hummers? Will the corner convenience store hire another counterperson to wait for customers who don’t come in?
Anyone who says yes to any of those questions isn’t thinking. Business does not create jobs.
Customers create jobs. Customers create jobs. Customers create jobs.
If people start buying tractors, Caterpillar will hire assembly workers. If people start buying Hummers, GM will hire people to build them. If people start dropping in at the corner store and complain about long waits for service, the proprietor will hire another counterperson.
Government can create jobs, too. But business can’t—except for the occasional make-work job for the boss’ wife’s idiot brother. No business hires more people than it needs, or makes more products than it can sell. At least, no business that stays in business long does.
We’ve had decades of tax cuts for people who can’t spend any more no matter how much money they keep. Will John McCain buy a ninth house or a fifteenth car? Will Alex Rodriguez hire another driver?
What Republican tax cuts have created is not jobs, but a wider chasm between what the workers earn and what the big bosses earn. What makes that even worse is that the big bosses have demonstrated again and again that their brains are very, very small, with no room for long-term views, ethics or civic responsibility. John Thain, Robert Rubin, Ken Lay—the list of corporate leaders who failed miserably, yet earned enough to support dozens of families, is long and dismal. Yet these are the people the Republicans would turn the money over to—and are, in the case of the bankers who lead the naion’s major financial institutions.
Government isn’t bound by the profit motive, which is its great strength.