Summary: America’s institutions are falling like a row of dominoes. That includes our major corporations. Once world leaders, now they are slowly decaying – and taking America down with them.
In March I said that America’s institutions are falling like dominoes as we enter the Crazy Years (as predicted by Robert Heinline in 1940). The State Department was one of the first to fold (during the Who Lost China madness of the 1950s). The Roman Catholic Church is a wreck, as seen in its response to rampant pedophilia among its priests. Our military can’t win wars. Our police wage a mad war on drugs, looting citizens through civil asset forfeiture. Many of our grade schools can’t teach their students the three R’s. Science is gripped by the replication crisis, a rot whose dimensions are far larger than most believe (some key fields, such as climate science, are broken). Professional associations abandon their standards and obligation to protect us. Congress will do anything except govern. The President is the tweeter-in-chief. Our political campaigns are better described by Jefferson Airplane’s song “White Rabbit” than anything in the New York Times.
“When the men on the chessboard
Get up and tell you where to go …
And the white knight is talking backwards
And the red queen’s lost her head.”
This is ClownWorld. Rule One is “nothing makes sense.” This post discusses Rule Two: “it is always worse than you think.” Let’s look at one of America’s strengths: its vibrant business sector, our engine of economic growth. But this too is broken. In good MBA fashion, here are a few case studies. These were all failures conducted by managers from America’s best universities using state-of-the-art methods. These are too-typical stories of slow decay. These are not among the more spectacular management screw-ups, such as Westinghouse, Xerox (who dominated the copier business and invented most of the key elements of personal computing), and Kodak – inventor of the digital camera (1975) and organic LEDs (1987), one-time leader in digital radiography and blood testing equipment (history here).
Failing from financial excellence: GE
Raytheon invented the microwave oven and sold the first commercial version in 1947. In 1967 Litton sold the first countertop microwave oven. See this history. America’s idiotic but lavishly paid management gave the market away to Japan and Korea. In the last phase of the competition, GE saved pennies in outsourcing production while losing everything. America’s competitors worked hard and earned their success.
See how it happened in “Fast Heat: How Korea Won the Microwave War” by Ira C. Magaziner and Mark Patinkin in the Harvard Business Review, January–February 1989. My favorite section …
“A few weeks later, Roger Schipke, the head of GE Appliances, decided to go to Korea. He was walking down a Samsung corridor with his hosts when a crowd of white coats came bustling the other way. He had to stand against the wall to let them by. There were dozens of them, all very young. When they’d passed, he asked who they were. ‘Those are our new microwave-oven engineers,’ his host told him. There were more of them than Schipke had working in his whole microwave division, and these were just Samsung’s newest hires. Louisville, he realized, was probably outengineered ten to one. He asked where the new hirees were trained. The answer came back: Purdue, the University of Southern California, the University of Washington. …
“The company has hundreds, all working the same 68 hours a week. …In most companies, only the sales force travels. Samsung, like many foreign companies, sends engineers abroad to learn buyers’ habits too. That’s why Jang, head of production, was sent on regular marketing trips to the United States. …
“General Electric began shifting more of its orders to Samsung. Soon, GE’s Korean models were selling as well as those GE itself made in the United States, and at a much higher profit. Some in Louisville began to wonder whether it was time to source everything. …In May 1985, GE publicly announced it would stop U.S. production of microwave ovens. From now on, GE would be doing the sales and service side of the product; Samsung, the manufacturing. Soon, the people in Suwon would be the biggest makers of microwave ovens in the world.”
This is the story of the decades-long fall of GE. “Neutron Jack” Welch fired the people who were the foundation of GE and shifted it into increasingly speculative financial services. When those bubbles popped, one by one, only a shell was left. GE’s stock price peaked at $60 in 2000 (equivalent to $90 now); it is $12 today.
GM works very hard to fail.
General Motors once was the largest and greatest automobile company in the world, by a large margin. Today it is a weakling in the industry, with neither prestigious nor high-quality brands. It was long run by financial experts, who slowly ran it into the ground. On 1 June 2009 it filed for bankruptcy (chapter 11 reorganization).
In her 1989 book Rude Awakening: The Rise, Fall, and Struggle for Recovery of General Motors
“Executive Vice President F. Alan Smith noted that GM’s capital investment over the previous five years had totaled $45 billion. For that money, Smith reminded his audience, the company could have purchased Toyota and Honda.
“Then GM President Jim McDonald lamented the automaker’s lack of progress on quality. …Ever since he had been named president in 1981, McDonald had preached the need for better quality. At one meeting of senior executives, he had handed out small pocket mirrors, then asked each manager to peer into the mirror to see who was responsible for the quality of GM cars. …McDonald lamented the company’s heavy capital expenditures. ‘Improvements are important,’ he said. ‘But unless we interrupt the alarming rise in fixed costs, we could be improving ourselves right out of the ballpark.’ …McDonald added a startling coda: ‘We don’t need more capital investments. We don’t need any more mission statements.'” {From Auto News, which also lists some of GM’s other long list of serious errors.}
Roger Smith was GM’s CEO from 1981 to 1990. Under his leadership, GM had gone from the lowest cost producer in Detroit to its highest cost producer – with massive gaps in quality and productivity to the top Japanese manufacturers. It gained little or no productivity gains from the massive capital investments he made.
Another great book about the fall of this core American industry is David Halberstam’s The Reckoning
IBM: lost excellence in a key industry.
IBM was a colossus of the information technology industry for generations. In the 1980s it lost its way, with leaders blind to the revolution that had begun. Its revenue has stalled since the early 1990s (see graphs here and here) while the industry skyrocketed. Since then, IBM abandoned attempting to stay on the cutting edge. Instead it pursued what its MBA financial experts thought were of easy profits in services. Instead of growth, it pretended to be vibrant through financial engineering (especially stock buybacks).
Boeing.
Enough said. People warned of the coming disaster, but – just as in the above disasters – the key people did not listen. Now all we get post-mortems. But I doubt that many other corporate managers have learned anything, and the Wall Street managers who control the shares of these megacorps do not care. Failure to Learn and Failure to Care are lethal aliments for a nation.
“Crash Course: how Boeings Managerial Revolution Created the 737 Max Disaster” by Maureen Tkacik in The New Republic.
“Why Did The Boeing 737 Max Crash?” by David Perell – Because management steered Boeing into the ground.
“The Long-Forgotten Flight That Sent Boeing Off Course” by Jerry Useem in The Atlantic – “A company once driven by engineers became driven by finance.
The new era: fortunes for management, no profits.
The new era of American business is building giant companies that make little or no money. Amazon is the model of eventual success, although it became moderately profitable due to a fluke (from cloud services, not retailing). Uber, Netflix, Tesla, etc. The 2019 class of IPOs is equally unprofitable. But fear not! Their executives are rich and getting richer! This is the grifter economy in action.
Conclusions
“Nothing is written.”
— Lawrence of Arabia, said in the 1962 film.
This need not be our future. We can take a different path, if we have the wit and will to do so. But the nature and scope of the problem is typical of the challenges presented by ClownWorld, complex, with no easy solutions.
There are ample historical precedents. In the 1840s, Britain face a host of problems – just as America does today. But Britain’s people elected representatives, led by Benjamin Disraeli and William Gladstone, whose wise policies brought them through those difficult times. Britain’s Victorian boom brought it unprecedented prosperity and social harmony. See the story here. The same can happen in America.
“Choice. The problem is choice.”
— Neo in The Matrix Reloaded.
For More Information
Ideas! For shopping ideas, see my recommended books and films at Amazon. Also, see Chapter One of a story about our future: “Ultra Violence: Tales from Venus.”
If you liked this post, like us on Facebook and follow us on Twitter. See all posts about forecasting, about economic growth, about the coming industrial revolution, and especially these with bad news…
- Why America’s growth is slowing, and a solution — Imagine bringing June Cleaver from her 1957 home to today’s equivalent; she’d be astonished at our lack of progress. Look at how we’ve underperformed futurist Herman Kahn’s 1967 expectations for the year 2000.
- Ben Bernanke sees the great slowdown in technological progress.
- Larry Summers gives us the bad news. Worse, the only solution is more of the same.
- Do we face secular stagnation or a new industrial revolution?
- The IMF warns us of economic stagnation & suggests fixes. We should listen.
- The Fed sees years of slowing growth. Prepare for years of political turmoil.
- Do we face secular stagnation or a new industrial revolution?
- The fast rise and fall of two industries show the coming singularity. Let’s prepare now.
- Prepare for the next singularity. It will change everything.
There is good news, too.
- Ignore the skeptics. America can still grow.
- Good news: here’s why we won’t run out of minerals (including oil).
- 50 years of warnings about the new industrial revolution. It’s here. Ignore the naysayers.
- The bright light of fusion might burn away climate doomsters’ fears.
To better understand what lies ahead for America…
I recommend reading The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War
“In the century after the Civil War, an economic revolution improved the American standard of living in ways previously unimaginable. Electric lighting, indoor plumbing, motor vehicles, air travel, and television transformed households and workplaces. But has that era of unprecedented growth come to an end?
“Weaving together a vivid narrative, historical anecdotes, and economic analysis, The Rise and Fall of American Growth challenges the view that economic growth will continue unabated, and demonstrates that the life-altering scale of innovations between 1870 and 1970 cannot be repeated. Gordon contends that the nation’s productivity growth will be further held back by the headwinds of rising inequality, stagnating education, an aging population, and the rising debt of college students and the federal government, and that we must find new solutions.
“A critical voice in the most pressing debates of our time, The Rise and Fall of American Growth is at once a tribute to a century of radical change and a harbinger of tougher times to come.”
Short term balance sheets vs long term growth
Spot on, Larry. A slight correction to Sven’s comment: Short term profits vs. Long term growth.
This has been enhanced in the last decade by the recent trend I wrote about earlier. To reiterate:
Most current CEO’s of major corporations are more concerned with immediate profits and converting their stock options to cash than they are about the company’s position in 10 years. Because they won’t be with the company when it crashes.
The only people who could fix the CEO problem are the stockholders, who cheer on the CEO’s. In many ways the Crazy Years are are already here. Fortunately there are a few leadership teams who are bucking the trend and might serve to lead a few corporations beyond the Crazy Years.
Pluto,
“are the stockholders, who cheer on the CEO’s.”
It’s worse than that. There are few “stockholders.” Shares are held by giant financial entities – pension funds, mutual funds, hedge funds, etc. They have little interest in the inner workings of the company, any more than a poker player cares about the artwork on his cards.
Boards of Directors are controlled by the CEOs or Chairmen. Being a director is one of the best gigs in the grifter economy. Meetings in nice locations. No work or responsibility. High prestige. Good pay. Anger the CEO or Chairman (whoever is the power) and you’re gone. Most charities are also run like this.
This is the agent-principal dilemma on steroids. It is one of the out-of-control social dynamics wrecking America. Almost beyond our ability to see, let alone manage.
Larry: “This is the agent-principal dilemma on steroids.”
Agreed, Larry.
The few semi-good examples I would hold up are Warren Buffet (I know, last of a dying breed and unique to begin with) and some smaller companies such as SpaceX (NOT Tesla).
The one good thing about this madness is that it allows room for privately held companies to compete. I worked for an employee-owned company for over a decade and it kept getting better and better while its publicly held competitors kept losing their advantages.
I’m now selling my shares back to the employee-owned company at about a 10:1 profit margin to fund my retirement. But I would be the first to admit that I got lucky in addition to working very hard.
Pluto,
“The few semi-good examples I would hold up are Warren Buffet (I know, last of a dying breed and unique to begin with)”
I’m unconvinced that Buffet is more than the luckiest guy at the slot machine. There are more money managers than stocks. Random change will give one an extraordinary record.
“some smaller companies such as SpaceX (NOT Tesla).”
SpaceX is run by Musk, who is also a major owner. So it is not affected by the agent-principal dilemma.
“I would be the first to admit that I got lucky”
I was a ghost on Charles Schwab’s second book. They brought me in when it hit the rocks. It had stories about successful investors, most of whom were just lucky. One guy invested in his company’s stock – and thought that was a brilliant investment strategy! Why doesn’t everybody just do that? I and the other guy brought in (an English Lit prof at U Chicago) said the project was hopeless. My report was technical and boring. His was fun mockery; it was a great read.
Would removing limited liability help ensure that grifters can be held responsible?
It may be my mistaken impression that limited liability shields directors and CEOs from consequences.
info,
“limited liability shields directors and CEOs from consequences.”
Officers and directors have almost no liability to the corporation’s creditors. They have a complex array of exposures (liabilities) for their actions. Some to the corporation’s shareholders, others to government regulators, and others to the public. “Limited” does not mean “none.” If it was unlimited, who in their right mind would be an officer or director?
Of course, corporations often insure officers and directors against exposure to litigation.
Here is a good guide for laypeople about liability of directors. Officers of a corporation have even more exposure to litigation.
Thank you for the info. Now in regards to solutions on a meta level.
I believe complexity as a result of a solution to a new set of problems as a result of a previous solution or solutions. May end up being some kind of liability.
As in resulting in overcomplexity
Whilst it works to know why said solution exists. Perhaps certain “solutions” are more trouble than its worth.
And chains of solutions may need to be undone to undo the manifold problems that result and threatens to overwhelm.
A series of inferior solutions is like a Jenga tower that has a buildup of problems as a result of faulty premises or faulty solutions to previous problems.
Perhaps a better solution in place of a series of inferior solutions may be in order.
The right wing’s obsession with privatisation and profit has hollowed out the society where anyone could do well without shafting their fellow workers, starting rumours that failure to thrive was one’s own fault while stripping opportunities from them and making education a profit operation so they ended up mired in debt. The concentration on profit no matter wher it came from hollowed out profits from industry and knowledge and over to the grifters at the helm today. It’s all very sad and avoidable,.
John, if this trend was limited to the right wing’s obsession I’d be less concerned.
Just look how the auto unions negotiated their most recent contract. Less interest in long-term retirement benefits (which are already beginning to fail) and more interest in immediate pay increases.
The sickness is not confined to the right. The left is a shambles, headless chooks. What do the unions do?Be just like everyone else. Go for the short term.
John,
“The right wing’s obsession with privatisation and profit has hollowed out the society”
Total nonsense, delusional even. First, it is a bipartisan thing. Look at Hollywood, run by Lefties but has one of the most exploitive business cultures in the US. Second, the US has had few “privatizations.” Third, its silly to say that the Right has hollowed out society – as if the Left was building a village with its mad disruptive social engineering projects.
The rest is sillier, too silly to comment on.
The lesson that technology based companies need engineers, not MBA’s is constantly forgotten in the US at least.One of the most pernicious beliefs of MBA’s is that persons have equal capability, such as a trained technician of 20 years can be readily replaced by an unskilled worker who has a little training.
The management that produced these failures also show something in common. I you look at the descriptions over time, you realize two things stand out: 1.) the loss of qualified people, 2.) the protection of those who are in the power structure.
The best example above is GM. “Executive Vice President F. Alan Smith noted that GM’s capital investment over the previous five years had totaled $45 billion. For that money, Smith reminded his audience, the company could have purchased Toyota and Honda.”
Why didn’t they purchase them? Look at GE, why didn’t they purchase Samsung?
John,
“Why didn’t they purchase them? Look at GE, why didn’t they purchase Samsung?”
Because the failure rate for large mergers is over 90%. Combining companies with drastically different cultures produces monsters. Many companies have merged themselves into oblivion. ATT almost did so. Cisco spent tens of billions on mergers during the tech boom, and got almost nothing from them (squandering their attention and resources during that pivotal moment). Boeing was a great company until it bought McDonnell Douglas.
Successful mergers are most often done by companies that do many acquisitions (its a skill) and do so within their industry. For example, much as CBWL became Smith Barney.
John: “Look at GE, why didn’t they purchase Samsung?”
John, what you are proposing is madness. As Larry noted, very few major corporate mergers succeed.
Considering the social and corporate culture issues (not to mention language issues), GE would be set up for failure in more ways that anybody could count. It would make the “War on Terror” look sensible by comparison.
Yes, fine piece, exactly right. See also David Halberstam, The Reckoning.
GM senior management was puzzled and dismayed that the quality of the cars was an issue. They drove them every day, they never had problems, they knew they were great cars.
What they did not know is that every day, as soon as they parked, a crew descended on them and went over every inch for anything that could go wrong.
Anyway, that is Halberstam’s story.
As always, Why? is the complicated and difficult question. But nature of the failure is indeed as described.
My impression is that Ford quality caught up to the Japanese quite a while back, and stayed caught up. Disclaimer: I drive one.
Henrik,
Reckoning is a great book. I’m adding it to the post.
“My impression is that Ford quality caught up to the Japanese quite a while back”
Your impressions are a meaningless guide to something like that. Reliance on “impressions” is why US auto execs ran their biz into the ground, while the Japanese – who used statistical measures – thrived.
Henrik: “My impression is that Ford quality caught up to the Japanese quite a while back, and stayed caught up. Disclaimer: I drive one.”
I believe you’re right on this one (depends on which Japanese company you are using for a comparison). However, the US has started exported the MBA phenomenon to other countries and Japan has been the most avid in soaking it up. This is one of the reasons why the Korean car companies are surging so quickly against the US and Japanese auto companies.
Pluto and Henrik,
“I believe you’re right on this one”
Can you produce anything to support your guess? J. D. Powers Vehicle Dependability Study disagrees with you (looking at problems per 100 vehicles after 3 years). See the 2018 summary: Ford is a bit below average. Lincoln, their premo brand, is slightly above average. The asians companies don’t break out their brands into high and low names. Kia, Hyundi, Toyota, Honda, and Nissan are all above Ford.
Larry: “Can you produce anything to support your guess?”
You apparently missed the key part of my sentence: “depends on which Japanese company you are using for a comparison”
I was looking at the Consumer Reports reliability guide, not the JD Power study. If I recall correctly, Acura has recently dipped barely below Ford in reliability. I had troubles finding a reliable, non-paywalled website so I’m referencing the link below which somewhat confirms this, based primarily on the lower reliability of the Acura MDX.
Consumer Reports rates the 2020 Acura MDX as the 7th least reliable new automobile sold in the US. Ford does not have a single model in the bottom 20 but it also doesn’t have a model in the top 20 either. Mediocrity seems to be their key to success, which reinforces your message.
https://www.truedelta.com/Acura-MDX-vs-Ford-Edge-reliability-comparison,293-728
As a side note, the Tesla Model X is the 8th least reliable automobile but has one of the highest user satisfaction scores. People are crazy.
Pluto,
Cherry-picking one brand to compare Japanese car companies with Ford is silly. In 2018, Acura sold 158,938 cars in the US. Honda sold 1,445,894.
Okay, Larry, my son finally got up so I have access to my paper Consumer Reports issues.
In 2020, Ford beat barely beat out Nissan, which is what I was trying to remember earlier. Furthermore, Consumer Reports rank the Ford F-150 (which is Ford’s biggest winner) as one of the 10 best (but not most reliable) vehicles. No Nissan vehicle is on that list and the Nissan Titan pickup is rated as “very low reliability.”
Nissan sold 1,344,597 vehicles in 2018.
While I strongly agree with the general flow of your statement that Japanese vehicles are more reliable than US vehicles (particularly Chevy/Fiat!), the US does NOT have exclusive rights to corporate stupidity (in fact, we seem to be exporting it to a growing audience).
Pluto,
“In 2020, Ford beat barely beat out Nissan”
That’s impressive, since it is only 2019. Also, those stats about out of the box errors are fun press copy – but pretty meaningless. Hence 3-year rates, or comparisons of used vehicle prices.
“While I strongly agree with the general flow of your statement that Japanese vehicles are more reliable than US vehicles (particularly Chevy/Fiat!), the US does NOT have exclusive rights to corporate stupidity ”
So you agree with what I said, but disagree with something that I didn’t say – and that only a total moron would say. Well, OK then. Nice to know.
Larry: “but disagree with something that I didn’t say – and that only a total moron would say. Well, OK then. Nice to know.”
I understand that you get depressed by reading the comments but I feel that you are out of line in the comment above.
You challenged me to find some statistics that supported my statement that Ford is more reliable than at least one Japanese automaker. Quote shown below:
Larry: “Can you produce anything to support your guess?”
I did so from my own data (Consumer Reports auto edition in 2019, you were correct I mistakenly wrote 2020).
You also provided further data supporting my statement. Your JD Powers vehicle dependability shows that Ford during the 3 years study was more reliable than Subaru (admittedly a smaller Japanese auto manufacturer).
In response my success, you appear to have called me “a total moron.”
I have admitted when I have made mistakes (as above), can you do the same?
Failure to do so will have NO consequences for you other than my departing your website for good and failing to list you as a reliable source of useful information. If you disagreed with my comment there were better ways than sending me off to prove my statement and insulting me when I succeeded.
They do though… Acura is the high end division of Honda, Lexus the same for Toyota, and Infiniti the same for Nissan. And apparently Hyundai has a luxury brand too – Genesis.
Henrik,
“My impression is that Ford quality caught up to the Japanese quite a while back, and stayed caught up. Disclaimer: I drive one.”
Imo, FMC’s quality is at best, average. I was a Ford, L/M dealer tech for thirty-six years. They pay dealer techs shit to fix their design and manufacturing mistakes (warranty flat-rate pay).
I bought a Nissan 370Z after I retired, they build a much better product for less money.
I’m in Europe, which may make a difference. I don’t have references to prove it however. Just rather vague recollections of reports of surveys, and personal experience. Bought quite a while back now, three years old, with the intention of driving it into the ground, and it refuses to go!
Female invasion of corporate America; hr, pr, women promoted to management without having a clue about what’s being produced. Corporate America has become a female dominated institution, thus it fails. ZERO innovation, vastly lowered productivity all subordinated to social justice, feminist triumph feels. Any institution that females take over will fail. Education, family court, corporate America. All failures. Women fail as a collective coalition. They always fail.
Kaminsky,
I would love to see a comparison of performance of men and women senior executives – esp CEOs. There are probably enough so as to give tentative but useful results.
Kaminsky: ” Corporate America has become a female dominated institution”
The two links below show that is not accurate.
CNBC article: “Of the CEOs who lead the companies that make up the 2018 Fortune 500 list, out today, just 24 are women.”
Forbes article: “In addition, between 2017 and 2018, the share of female CEOs in the Fortune 500 dropped by a whopping 25%.”
https://www.forbes.com/sites/ninaangelovska/2019/04/23/female-leadership-be-competent-like-a-woman-and-confident-and-ambitions-like-a-man/#53591bda201c
https://www.cnbc.com/2018/05/21/2018s-fortune-500-companies-have-just-24-female-ceos.html
Please let me know if you have data sources that support your position.
Pluto,
To be fair, CEOs do not make the biggest part of work force in corporate America. And I don’t see Kaminsky mentioning female CEOS in his comment, so…
HR has staged a coup and taken over nearly complete control of the hiring process (as well as pay and promotions). HR is run by women. They openly boast about their goals to hire and promote more women. They have women only industry networking groups. Blatant discrimination against men is not only condoned, it’s encouraged, if not mandated. Recruiting firms and employment agencies are filled with women (e.g., a hen house called LaSalle Network in Chicago).
In some cases they’re run by feminist men who openly spew pap about female supremacy on LinkedIn (e.g. the founder/owner of Logitalent in Chicago, who boasts about how they place more women candidates in jobs and posts links to all sorts of “studies” that “find” that women are better at this or that and that companies with more women in leadership positions are more profitable and innovative).
When you control the hiring process, you effectively control the business–or at least its future. The feminists in HR are out for total control.
Bandito,
That’s a powerful comment! I had sorta seen that, but not as clearly as you describe it. This is worth writing about. Have you seen anyone do so?
What you describe is pure fourth-wave feminism – the quest for superiority, not equality. See more about it here: Women are winning the gender wars.
Larry,
I haven’t seen anybody writing about what I described, even on websites that might be inclined to do so. Of course, for anybody to point it out in a business oriented forum is professional suicide.
For a fictional account that probably isn’t too far off the mark (but coming soon), see the last installment of Alexander McCall Smith’s “44 Scotland Street” in which the women conspire regarding a promotion.
Steve Forbes’ daughter is a rabid feminist and has been brought into the organization and is behind ForbesWomen. When they published “Power of the Pack: Women Who Support Women are More Successful”, I saw it being posted and shared numerous times on LinkedIn, with VP level women commenting favorably (we have to stick together!). They are so brazen about it.
“HR has staged a coup and taken over nearly complete control of the hiring process”
Unless you’re a STEM major you have virtually no chance of being hired by Corporate America if you’re a white male. I think some guys are seeing the writing on the wall, and are instead opting for trades where there is zero chance of having to compete with women for the jobs.
A relative of mine, who had a solid career with his multinational employer, with years of positive annual reviews, was suddenly dismissed (fired, not laid off) with no warning. He learned through the grapevine that he was replaced by a woman, who was being groomed to replace him.
Frank,
“Unless you’re a STEM major you have virtually no chance of being hired by Corporate America if you’re a white male.”
That’s a big exaggeration. But there is an element of truth in it. The discrimination against men is esp severe in some fields, such as in parts of academia (eg, humanities and, to a lesser degree, the social sciences).
50 and 60 something males still are the top brass. Meanwhile their salaries (and salary gap fiction) are used to justify the fact that 22-35 year olds are likely about 70% female and probably up around 80% outside of stem-skilled jobs. Just looking at a 68 year old male CEO and deciding that women aren’t steamrolling corporate America is a very poor observation.
Corporate America is basically for women now and that’s why it’s failing. Women fail. They turn everything into a Grrrl power celebration and never get anything done. They just resort to their one same old narrative. Advertising, Education, Corporate America, Law. Same grrrl power energy. No innovation, no effectiveness at all.
If corporate America even is a thing in 20 years, you certainly will see a lot of female CEO’s. It likely will merge (if it hasn’t already) into a coalition with the government. It will become the public sector’s version of the private sector, if you will. Remove government bailouts from corporate America and women will ruin it in the blink of an eye.
Look at Yahoo. They used to compete with Google, went grrrl power, and disappeared. Marissa Meyer destroyed it faster than any rival ever could. Her term was a whirlwind of failure and discrimination against males. She is the best example of failure/grrl power focus instead of focusing on the actual product.
Feminists even came up with the term “Glass Floor” to hamster away the fact that so many females failed as corporate leaders. Their hamster came up with the hilarious notion that companies (who somehow knew they were bound for failure) would intentionally hire female CEO’s so it would be a woman blamed for the failure. The patriarchy does these things, you know. Establish an entire corporate entity, tweak it to set the course for failure, then hire a female just to snicker with each other in leather chairs, drinking whiskey and smoking cigars at the men’s club when it goes BK under a females watch. Smarter companies will find workarounds.
Like Microsoft who culled about 8000 employees then hired many back as ‘contractors’ I live in the area and a few friends who worked there were very much in agreeance when I suspected that it was Microsofts way of getting rid of 5 thousand dead weight females in hr, pr etc., But of course they had to axe a bunch of men too, in order to shield it. Then the men (who actually do things) began to trickle back as contractors.
“The discrimination against men is esp severe in some fields, such as in parts of academia (eg, humanities and, to a lesser degree, the social sciences).”
As far as motives are concerned, I think it’s more a matter of discrimination in favor of women than discrimination against men, even it amounts to the same thing. And the Women uber Alles mentality has taken hold in all sorts of industries, including railroads (especially Union Pacific and CSX) and trucking/intermodal (esp. J.B. Hunt).
It’s easy to pull up examples from those companies of unqualified women being hired and then fast-tracked in industries that have traditionally been male dominated. When J.B. Hunt hires a woman who had less than a year work experience, and then left work to be a stay at home mom for 5-6 years, into a Pricing Manager position, that means that other applicants who are far more qualified, including current J.B. Hunt employees, are being screwed and held back. That stay at home mom was hired under a program to bring women back into the workforce. If a man has a 3-month employment gap, he’s screwed for life, but if you’re a mommy wanting to work again, you not only get a job but one that entails a promotion.
Bingo. Ref. two of the case studies shown–IBM and GM, both now headed by female CEOs. While it is fair enough to say that they weren’t in charge when the SHTF, it is also fair enough to say that both of them (Ginny Rometty at IBM and Mary Barra at GM) haven’t done a damn thing to turn their firms around.
If anything, they’ve made things worse. Rometty overpaid for Red Hat and Barra has turned GM into an SUV company. How GM will be able to deliver a 54 mpg fleet of big, fat and heavy SUV’s is anyone’s guess, which is probably why they (and everyone else) is rushing to make electric SUV’s. I wonder who will be able to afford them?
370H55V,
You are being too kind to Rometty at IBM. Revenue has dropped every quarter YoY. An amazing 24 consecutive quarters of decline. Most male CEOs would have been canned by now.
But Rometty’s time as CEO has been a parade of awards: Bloomberg’s “50 Most Influential People in the World”, Fortune’s “50 Most Powerful Women in Business”, Time’s “20 Most Important People in Tech”, and Forbes’ “America’s Top 50 Women In Tech.” These were given her for Breathing while Queen of IBM.
Imagine the awards she would have received if she had accomplished anything!
IBM has missed every boat under Rometty’s watch. They completely missed the move to the cloud, which is why she paid $35B for Red Hat. To little, too late, as Amazon and Microsoft have PaaS and IaaS all sewn up.
IBM won’t be gone anytime soon, but anyone who works there should expect to be laid off at some point.
Frank,
“IBM won’t be gone anytime soon,”
It is almost impossible to kill off a major US corporation. A few, such as Xerox, managed this herculean feat (despite inventing almost all the basic elements of PCs). Others make a series of massive errors but still stagger on. Such as Eastman Kodak. Founded in 1881, it dominated the photo business – and made tech breakthroughs which should have made it a powerhouse in the 21st century, such as the digital camera (1975) and organic LEDs (1987). They were also a leading in digital radiography and blood testing equipment. But management sold off or threw away their innovations, and attempted to grow through cost cutting.
EK’s price peaked at EK hit $94.75 in 1997 (equivalent to $153 today). It’s now $2.39. See Kodak’s amazing history here.
So IBM is unlikely to not die. But in a growing world, it probably will continue shrinking into obsolescence. They are hoping that AI will be their salvation, but so far they have been “all hat, no cattle.”
I’ve noticed that IBM hasn’t been plugging their Watson AI they way they once did.
Frank,
For good reason. The health care test was Watson’s first time at bat in the big leagues. See the result: “How IBM Watson Overpromised and Underdelivered on AI Health Care” by Eliza Strickland in IEEE Spectrum – “After its triumph on Jeopardy!, IBM’s AI seemed poised to revolutionize medicine. Doctors are still waiting.”
“It is almost impossible to kill off a major US corporation.”
True, but as you pointed out, many shrink into utter irrelevance. Polaroid comes to mind.
And some corporations do disappear, some outright shutdown and others have their carcasses acquired, like American Motors, which lives in in the FCA’s Jeep division. There are many consumer electronics brands that exist in name only, and many are out right gone. I can’t remember the last time I saw an Admiral brand TV. Of course, most “American” brand TV’s these days are just rebadged generic Asian TV’s.
“Most male CEOs would have been canned by now.”
Gotta say that ALL male CEOs would have been canned in 1/8th the amount of time for the same performance. Corporate America was built by males and flourished for decades when it was a male institution. Women come in and it’s ruined. Simple stuff.
Only the last vestiges of male ingenuity keep it going still. That too will diminish as an awful lot of geniuses (all male) decided early on in childhood to enter the alternate universe of gaming where there is some sense of fair play and they can simply remove themselves from the world that insults them.
Good luck to female corporate America when there are no longer any male geniuses around to bail them out with ingenuity. It’s hopeless. You can’t just be 90% hr or whatever monikers they are calling the social justice/leftist/feminist departments in corporate America. I’m sure they will be savvy enough to divide it up into all kinds of different terms.
This could also be the last era of the ‘male feminist’ as many of them are safely upper middle class and can indulge in real-time femdom tingles in the workplace. Driving home in the beamer, lovestruck by the hands on hips scolding they got from their clueless but hot 28 year old ‘manager’ while they are a 55 year old programmer, either divorced or married to a cow. How many male feminists will you see coming from the male lower class in the future, during that brief time in our future when females vastly out earn males (thanks to social engineering, not performance) before productivity just comes to a halt?
Remember that female productivity is basically an oxymoron. They don’t do anything. They’ve been allowed to be a part of peripheral things due to wasp males incredible overproduction and it has spun out of control. A combination of boomers’ archaic chivalry, govt, and full blown grrrl power coming together through entertainment, advertising, legislation, and education all at once. This is the tempest time because it can’t last much longer once you eliminate wasp male overproduction, which they are bent on doing.
kaminsky,
I’m pretty certain that your fears are exaggerated. Women are more competent than you think. And social trends are never ever linear. At some point, negative feedback kicks in.
On the other hand, it does appear that women have a competitive edge in buracratic systems – especially when they are no based on external performance metrics. Women are neat, follow instructions well, obey the rules, and know how to skillfully flatter their superiors and play office politics. Young studs are capable of outperformance, break rules, are disinterested in spelling or coloring in the lines – and challenge their superiors. In darwinian environments – combate or business or politics – the latter have advantages that count. In purely court politics – much like our large multinational corps often create for themselves – that’s less so.
Time will tell how this all plays out.
This makes me think of Carly Fiorina. She was handed the reins of Hewlett Packard, which was successful prior to her taking over as CEO. She was called a “rock star CEO”. Unfortunately she was incompetent and HP never recovered from her blunders and is doing poorly to this day.
But as she was wrecking HP the media would not criticize her. It became clear that she was meant to succeed at any cost because she was a woman, until the cost became so great that she was fired. She also made those “most powerful women” lists and the press yammered about how she would transform HP, which she did by firing tens of thousands of employees and leaving the company in shambles.
And bureaucracies don’t produce anything. That corporate America has become pure bureaucracy and SJW oriented office politics is reason why they’re failing. Women will excel in a failing institution. I wouldn’t argue against that. Women moving in is the sign that an institution is or will soon be failing/irrelevant. An institution can’t survive without production/competence/innovation.
Just came across a good example of what the end goal is. The World Woman Foundation held their 2019 Summit last week in Little Rock. Per their website, “The World Woman Summit 2019 will focus on #RedefiningRules by women, for women and of women to build the new chapter for change.” Get that? “[B]y women, for women, and of women…” You can’t be more explicit than that. Speakers on a panel discussing Diversity & Inclusion included execs from Wal-Mart, J.B. Hunt, Unilever, and Tyson Foods.
Bandito,
Thanks for the pointer! I’ll check it out.
I am currently reading “Kochland” about Charles Koch and Koch Industries. It seems so far that he successfully continued classic American business strategy from an earlier era combined with innovations.
I dislike Koch for many reasons, but he seems to have done a lot right.
One important factor is that it is privately owned and not beholden to the stock market.
Agreed on ALL counts.
For those who suspect that decline like this is irreversible, I warmly recommend a biography, “The Count Duke Olivares,” which catalogs Spain’s decline – despite the determined efforts of her king and his best minister.
National turnarounds are hard.
Godfree,
“despite the determined efforts of her king and his best minister.”
The Lone Ranger rides again, with Tonto. People’s faith in such things is amazing. Amazingly bizarre.
“National turnarounds are hard.”
Everything worthwhile is hard. How many serious problems in life – for an individual, family, corporation, government, or nation – do you see that are easy to solve?
The hardest part is changing the paradigm of the leadership class.
I studied modern Asian history extensively once upon a time and encountered a fascinating number of works documenting the 19th century efforts of the Chinese to modernize, much like the Japanese Meiji Restoration.
The Chinese leadership struggled with the this enormously, as China in 1800 was the most powerful nation on Earth and found itself weak a half century later. The modernizers experienced constant political disputes and lacked the unity the Japanese had in the same time period.
The Shogunate started a little before the Qing dynasty, so the two systems were of similar age. Japan had the revolution and united society, while the Chinese continued with the falling dynasty and ruled by the Dowager Empress Cixi.
Perhaps the key difference was that China was an empire with many diverse people, ruled by a foreign people while Japan was culturally and ethnically united.
Gaius,
That’s helpful historical context! Yet I don’t believe our situation is like that of 19C Asia.
Our elites are quite unified. The peasants are docile while the elites harvest the economic gains from rising productivity.
Our problems, to use that perspective, are two-fold. First, our elites are satisfied with the current rate of growth. The effects of their extractive rule – the “grifter economy” don’t bother them.
Second, the form of social disorientation – aka the Crazy Years, of which ClownWorld is a stage – so far is seen by neither elites or the public. They see the individual symptoms, but that’s like attempting to treat the symptoms of syphilis (the bacterial cause). Futile. Worse, the loss of social cohesion (multiple causes) probably will make an effective response difficult even after the problem is recognized.
Larry,
I think incentives should be structured in a way that follows this dictum “good to the good and bad to the bad”.
In a way society should work in such a way that the book of proverbs is practically a prophecy.
The fact is grifters are shielded from the impact of their parasitism. When it should be that their wellbeing and wealth directly depends on the health and prosperity of their lessers.
And that the diminishment of one is diminishment of the other. Feedback should be as short as possible as are consequences.
Thereby setting of an evolutionary process for the most symbiotic and beneficial elites and sloughing off the bad.
Now the hard part is how to do it in a way that is most simplistic and cost effective.
info,
“I think incentives –”
The difficulty of reforming society lies not in dreaming of solutions, but implementing them.
@Larry
Hence my last sentence.
Although I have already refused to spend my money on any business that goes “woke” like Gilette and Star Wars for starters.
But the hard part is how to ensure such incentives I proposed are automatic.
info,
You have hit on the only effective way to respond to corporations that go woke – and oppose us. The Left shows how to make this tactic work.
@Larry Kummer
Shows that the Right refuses to adopt techniques that in a sense is “mucking around the mud with one’s enemy”.
As if a sense of fairness is respected by an opponent that has none at all.
There was a superb article written for the NY times authored by a former pilot/accident investigator that I wish I had retained the link to. His conclusion was the Malaysian and Egyptian crashes were caused by poorly trained, overworked, lowly paid, under-experienced pilots.
The best analogy to those accidents I can provide from his piece is this: A car is driven on a two-lane highway where it encounters very heavy perpendicular winds on the right side of the vehicle which pushes it into the on-coming lane, and instead of the driver rotating steering wheel clockwise to steer the car back into its proper lane, the driver stupidly accelerates the vehicle to maximum speed resulting in a head-on collision with oncoming traffic.
“In the now infamous debacle of the Boeing 737 MAX, the company produced a plane outfitted with a half-assed bit of software programmed to override all pilot input and nosedive when a little vane on the side of the fuselage told it the nose was pitching up. The vane was also not terribly reliable,…”. As for the sensor on the pilot’s side, it was replaced with a cheap used one whose calibration was not correct and not checked by the Malaysian maintenance personnel, a matter further compounded by the absence of airworthiness of the pilot by not checking the readings from the other two properly functioning sensors which did not indicate a problem. The software program was not half-assed – the poorly trained pilots were not informed of the proper safety measures to follow in that instance.
That doomed Malaysian airliner had encountered the same conditions during the immediate preceding flight wherein a competent pilot was able to overcome similar adverse atmospheric conditions merely by flipping two proper toggle switches.
The NYT author emphasized that certain 3rd world countries failed to ensure their pilots met the very high standards which American and European countries pursue. In contrast to Boeing’s false perception of high airmanship qualities of those 3rd world airlines, AirBus rightfully decided to “dumb-down” the electronic safety features of its planes in order to accommodate the lesser pilots those 3rd world airlines would employ, thus making their jets safer from pilot error.
My input here is not to say I concur with Boeing’s management makeover.
Chad,
Your analysis is accurate on a micro level, but misses the key points. The internal systems of Boeing worked quite well. The problems with the aircraft’s systems were identified by the responsible engineers and safety officers. Management decided to ignore them.
It was not an engineering failure. It was not the fault of poorly trained pilots.
“It was not the fault of poorly trained pilots.” – Agreed. Even “well trained” US pilots from American and I think also Southwest have expressed that they will not fly the MAX until they are satisfied that the problem as been resolved.
I will say this, the revised MAX had best be flawless. If another one crashes after being “recertified” it will be the end of Boeing.
“The problems with the aircraft’s systems were identified by the responsible engineers and safety officers.” I don’t disagree with that, and nothing in my post indicated that I thought the MCAS system was the greatest thing since sliced bread.
“It was not the fault of poorly trained pilots.” What! As the pilots involved were unaware that merely changing the positions of two toggle switches would disable the MCAS system, thus avoiding a 600 mph collision with the ground, is not a symptom of poor training, then what is?
Chad,
“As the pilots involved were unaware that merely changing the positions of two toggle switches would disable the MCAS system”
I suggest that you ask that question of a commercial or air force pilot of a four-engine jet aircraft. Everybody else’s job seems soooo simple…
I am visiting my brother for Thanksgiving, and across the street lives his retired airline pilot friend to whom I previously posed that question. His answer, being familiar with the less than satisfactory MCAS, was the same as the crash investigator I referenced – pilot error due in large part to inadequate pilot training conducted by the two cut-rate airlines.
Chad,
Interesting to hear. Someone should tell the FAA and NTSB, and all the airlines canceling orders. Plus all the experts who have documented the Boeing story – but come to different conclusions than your friend.
Those dummies!
Larry, you and I are in far more agreement than you think. I am just saying Boeing should have engineered the plane and the software to be more pilot friendly, which would have decreased any adverse training issues. Not faulting the engineers – the corporate structure was an impediment to sound construction/engineering practices, and because of that, Boeing is suffering the adverse economic consequences thereof.
Here is the link the retired airline pilot provided me:
https://www.nytimes.com/2019/09/18/magazine/boeing-737-max-crashes.html
Larry, I think the disconnect between your attitude and my points revolve around the concept of pilot error. When I mention pilot error, it does NOT necessarily signify fault. When a teenage infielder boots a ground ball because his butt was in the air, his feet were too close together, and his “hard” hands did not cushion that ball, he is assigned an error; however, the fault lies with the lousy adult coach not teaching him the proper fundamentals and the high school hiring a coach who is way in over his head.
The fault in my estimation lies squarely with Boeing management and the ownership/management of the two affected airlines which utilized under-trained pilots and maintenance personnel.
Boeing’s fall from grace is especially dismaying and disturbing. Boeing’s profits soared as it cut costs and penny pinched. And it’s not just the 737 MAX. Boeing opened a plant in low wage South Carolina where it builds some of its Dreamliners. The workmanship on the South Carolina built Dreamliners is so shoddy that some airlines are refusing to take delivery of jets built at that plant, as they have discovered the shoddy work upon their delivery inspections.
Automakers might get away with building cars that break down prematurely and turn into money pits (GM has plenty of company) but if I’m going to board an airliner with my family, I expect it to be flawless. Boeing once had an unparalleled reputation for excellence: “If it ain’t Boeing I ain’t going.”. That reputation has been squandered, and Boeing’s management will learn the hard way that it will a long time to earn it back. It’s worth remembering that Douglas never recovered from its DC-10 fiasco.
Frank, the Boeing space division is undergoing a similar process. When Boeing encountered technical problems on a fixed bid contract they focused first on extorting additional money out of NASA in violation of the contract rather than on fixing the problem.
The latest NASA report shows that Boeing will now cost $30 million more per astronaut to reach the International Space Station than their competitor, SpaceX. To rub more salt in NASA’s wound, Boeing and SpaceX supposed to cost less than the current Russian charge of $86 million per astronaut and Boeing will actually raise the cost by $4 million per astronaut to $90 million.
https://www.floridatoday.com/story/tech/science/space/2019/11/15/nasa-report-blasts-management-boeing-and-spacex-transport-iss/4200112002/
When the report came out Boeing stated that the NASA report was inaccurate but had accuracy issues of its own. For example, they disagreed with NASA on the price per seat but could not tell the reporters what they anticipate the actual price per seat will be because “For proprietary, competitive reasons Boeing does not disclose specific pricing information, but we are confident our average seat pricing to NASA is below the figure cited.”
Here’s the rest of Boeing’s rebuttal if you want a good but cynical laugh:
https://spacenews.com/boeing-fires-back-at-nasa-inspector-general-regarding-commercial-crew-report/
Haier appears to be the exception for now:
I wonder if their organizational structure will stand the test of time.
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