Do you remember "Chainsaw Al" Dunlap?
In the 1990s he was a famous CEO at Scott Paper and appliance-maker Sunbeam. A few days after taking over at Sunbeam, he unsheathed his stock in trade: He fired most of the company's senior management, and announced 6,000 layoffs, about half of the firm's work force. Sunbeam's stock soared. Then it crashed.
John Coster's guest post on Trump, who sold Americans that he was a turnaround CEO for a failing country, brought back memories of "Chainsaw Al."
Some of the most valuable assets of a company or a country are built up over generations. It is a reputation for integrity, reliability, and fair dealing. It is expertise within the employees. It is trust.
Coster had a long career managing multimillion-dollar development projects for high-volume users of electricity. He recently retired -- or is trying to. Amid the rush to build data hubs on Earth and in space, large technology companies keep trying to lure him back to work. They need his expertise.
Guest Post by John Coster
Your post Saturday quoting The Wall Street Journal got me thinking about how Trump, the “Turn-around CEO,” weaseled his way into power with the tacit endorsement of the business elite where he operates with a kind of corporate-valuation mindset. In this model, the CEO and his executive team drive up market valuation by slashing costs that produce short-term earnings that cause the market to react favorably for a few quarters. The CEO gets rewarded on earnings and market cap (or higher valuation for a sale) even if the long-term impact on the business is net-negative. Or worse, some of these companies just disappear, or get absorbed into something unrecognizable. The market understands these guys and plays the game.
Trump convinced enough people (think of the voters as the "Board of Directors") that the country was in his words “a disaster”; undervalued if you will, and only he could “turn it around.” And he promised to do it with swift, decisive and merciless action on trade, taxes, immigration, slashing environmental regulations, and entitlements – and especially all that social-equity malarky. Enough of the “The Board” liked what they heard and hired him – again.
Just like a typical “Turn-Around CEO,” he began doing what he said with little pushback from those who could if they had the courage. In this second re-hire, the assets he’s been stripping are not just financial; they are non-monetizable things like reputation, trust, and good-will, the loss of which is hard to restore. He is insulting our allies. He is threatening invasions. He treats trading partners like enemies. Ultimately the burden is on the well-being of the people who put their trust in him, and the likely irreparable damage to our admittedly imperfect, but working systems of government that will be impacted for generations to come. Like corporate raiders, he is impoverishing everything he is overseeing -- with the single goal of enriching himself and his insatiable ego.
And now the venerable WSJ notices.
[Note: To get daily delivery of this blog by email go to Https://petersage.substack.com. Subscribe. The blog is free and always will be.]
A pithy summary, thank you.
ReplyDeleteSpeaking of Wall Street, I wonder if the very avatar of the so-called Decade of Greed, Gordon Gekko, could have possibly imagined that thirty years later a crass, lazy, bloated, impulsive, thin-skinned, poorly-educated and willfully uninformed simulacrum of himself would lead the very Western world, his credentials established primarily by way of a fatuous television game show.
The WSJ notices, indeed.
The “Board of Directors” rehired a known felon who had made a coup attempt. What a basket of deplorables! Now they act surprised that he’s enriching himself at their expense. Quick, somebody call a waambulance.
ReplyDeleteIt’s raiding the pension system, converting it to a high interest annuity “that’s just as good” which then goes broke and the pensioners are out of luck. ‘Sorry.”
ReplyDelete