BY JACOB T. SIMON
There’s a very good chance that I will never know how the mind of a major corporate executive works. I don’t mean the guy who carries a business cards with CEO printed on it. The execs I’m referring to are the leaders of our largest companies – Coca Cola, Exxon, Goldman Sachs, GE, Bank of America, etc. I’d like to dive into a mega-CEO’s mind if only for a few days, just to see how these companies are actually run. Are they only concerned with the following quarter’s profits? Are they wary of the possibility of governmental regulation?
It’s my humble opinion that the recent downturn of the market is not the end of the world. Or even much of a hiccup. A market correction such as this is the completely foreseeable result of a market with restraints such as ours. It’s predictable, happens about every 10 years or so, and it is right on schedule now. Come to think of it, it’s a little bland.
Lavish spending by CEOs? Seen it. Large corporations cooking books? Please, this is old hat. Well all (hopefully) remember Arthur Andersen, Enron’s personal whipping boy. Arthur Andersen, LLP is kaput. But the consulting arm of the former accounting giant has become one of the largest consulting firms on earth, now called Accenture. Ebb and flow. Give people room to create and they will. The human market evolves.
After some bluster I’ll finally get to the point of this post, that being the U.S. Government under our new regime.
With BP’s oil drilling catastrophe in the Gulf of Mexico, I wonder if the federal government will take a closer look at issues pertaining to our natural resources. The current administration has discussed the possibility of reform, but have been slow to move. Some recent developments however, have almost convinced me of a possible shift in power. As in, a shift in power from the private industry to the federal government.
First, there was the recent mine collapse in West Virginia. 29 people were killed a month ago in the worst U.S. mine disaster is decades. We all know that a huge death toll is often a precursor to regulation. Yes, the mining industry has a very powerful lobby, but that’s just the first point.
Second, there was/is the BP oil fiasco. Satellite images of the Gulf of Mexico resemble oil slick on the highway. You know when you see a pool of oil on the pavement and if you look at it from the side it gives off a rainbow mirage? That mirage is what 25% of the Gulf looks like right this second. BP has scored points recently for efforts to make their practices more ecologically friendly, but they’re going to have a hell of an investigation on their hands with this one.
Third, there’s the whole student loans mess. Too much to summarize here so I won’t try. In short, tens of thousands of undergraduate and graduate-level students have a debt they will still have when they die. Forget the argument that they knew what they were doing and were not coerced into getting this money – that is irrelevant to this post, even though the point is completely correct.
The point we must deal with is that we have a crushing debt that is seriously hindering many young professionals from scraping together enough for the rent, let alone anything to put into savings. This is a problem.
Despite the bonds of the contract these people entered into, society now has a large portion of the population who is extremely well educated, but is to a large extent hopeless about the future, unmotivated, uninspired, seriously underpaid, and usually overworked.
Whoever the culprit for these issues is again, absolutely of no consequence here. The point is that the federal government makes the laws. Private industry has a real problem, and in some cases, their problem might be that their profit-making tactics have worked too well. Just look at the credit industry. The major card companies have done well to make billions from charging insane amount of interest without (we’ll just assume without for this post) breaking the law. To that I say that you can sheer a sheep many times, but you can skin it only once. Mastercard (or Visa, AMEX, etc) might have gotten too rich. Who could possibly take their side when a person files bankruptcy? Ok, maybe some people. But what if that person got their because they were paying interest on a balance of $5,000 that suddenly became 3X overnight? Sympathy ends there folks.
The piper is the federal government. While corporations typically do business by looking one quarter into the future, they might have done well to look a little further. Some of their practices have produced results too far outside the mean, and definitely outside their normal wiggle-room afforded by lobbyists.
The feds may very well decide that too many sheep have been skinned.