Wednesday, February 22, 2006

Re: Needed laugh and Bush II economic policies

I appreciate and have lived to an extent LJ's situation and know it isn't fun. Having said that, I hope this will be taken in the strictly analytical meaning in which it is intended.

A business's goal (providing maximum return for its owners) is usually in line with the goals of its employees and its customers. I mention employees and customers because they are the two constituencies most closely associated with the company's owners. Often, perhaps most of the time, their interests overlap. Clearly, if customers and employees are not happy with the company, there will be some negative repercussions to the owners' profits.

Occasionally, and increasingly often in a time when technology is advancing more quickly than ever before and a time of globalization (sorry, that's not going to change), those interests diverge.

Suppose a company has a contract terminable at will (as this contract was, notwithstanding the promises at annual reviews, however unfair and morally wrong those broken promises may have been) to obtain anything at $X. The company can later obtain the same resource necessary to provide its product to its customers at $X-$1.00 and therefore, ultimately, provide an increased return to its owners, does that company not have an obligation to to terminate that contract...all other things being equal? (I recognize that employee-owners would argue that all other things in this situation are NOT equal...that situation requires those employee-owners to handle the situation by carefully monitoring the situation and voting in the management that agrees with them. I also acknowledge that in the situation being discussed here...a virtual impossibility with such a huge business entity...but that is the risk run when working for an entity over which one has no control.)

LJ's most revealing comment: "All they have done is gotten rid of American employees (with American salaries, American benefits and American retirement plans) and hired people in other countries (and given them a much lower salary, very few benefits and I can only imagine what type of retirement program they get)."

Well, yes...that is precisely what they have done. And folks are lining up for those jobs in India (in my example) and elsewhere (at least for these white collar jobs) precisely because they are much better jobs than those available from their local employers. American worker suffers and Indian worker profits. American investor/owner and American customer also profits and therefore have more capital to invest or spend. The unemployed suffers, at least temporarily, while s/he determines where her/his value/intellect/skills are better utilized.

Reluctantly resorting to over-used blue collar example: Do we really want to protect the jobs of the the horse drawn carriage manufacturer at the expense of the convenience of the automobile? No, the person who upholsters the carriage seat needs to learn how to work the assembly line in Detroit putting the upholstery on the car. Thank heaven the white collar skills are much more adaptable.

Is the American aspect of this thing really what is so important? Isn't that what we heard in the 70s and 80s so often in connection with the auto industry? How many foreign car manufacturers now employ Americans, in the USA...Toyota...San Antonio? Now, in the energy industry, I can make a national security argument for no foreign outsourcing but that is an issue to be addressed by legislation or shareholder revolt.

Do hope this is taken in the spirit intended.


Michael said...

Hey LJ, I'm a lawyer and find this stuff to read.

Michael said...

Should have said TOUGH to read.