Politician-Business Men and Women

It appears that too many of our law makers in Washington and in our state houses, are lawyers. It is no small wonder. We probably have too many lawyers graduating college. They need something to do other than seek litigation briefs.

I have discussed this topic in the past. It helps explain why we have too little doctors, scientists and mathematicians. Let’s face it, when you cannot cope with science or math, it is far easier to become a lawyer. Years ago, you could become a lawyer without going to college. You took the bar exam after clerking for a lawyer in his office for a while.

I believe too many lawyers in government have become a major problem. We need representatives who actually represent the people. They ought to come from different job experience. Furthermore, politicking should not be a permanent career or trade.

I also strongly feel that we need small business men and women in Congress and in state houses. It would change the legislative outlook about taxes, business and, simply, everyday problems of the middle class as well as the poor.

It would go a long way in correcting a major failing in Congress today and in the Obama administration.

It’s Time to Do Away With Sarbanes-Oxley

Sarbanes-Oxley was passed in 2002, after the Enron and WorldCom disasters. Like all legislation by Congress, written and executed as a reaction to a media-enhanced investor-debacle, the law of unintended consequences is the ultimate result. The negatives far outweigh the positives in such instances.

Sarbanes-Oxley has been a great profit center for accounting firms. It’s also a good talking and campaigning point for populist politicians. It’s, nevertheless, an expensive headache for companies.

Lots of smaller companies no longer seek public funds. That’s because it has become too expensive for them to be publicly owned.

That is because audits are too expensive. What is more, the legislation helps little in preventing fraud in all types of companies, the intended purpose. That does special havoc with small business which cannot afford the added, expensive bookkeeping.

Moreover, all this keeps new foreign corporations, even giants, out of the U.S. or has existing ones reconsider their American status.

If any corporate executive wants to commit fraud, Sarbanes-Oxley will not prevent the collusion to do so. On the other hand, anyone with corporate experience (that leaves out most in Congress) knows that Sarbanes-Oxley places impediments that makes running a business more like a steeplechase or handicap than it should be.

Changing Proxy Voting

Attempts have been underway for some time to have companies put complaints of small minority shareholders into corporate proxies at company expense. Under the Obama administration, pressure has been building for additional regulation along these lines.

Like other added restrictions on business, they serve little purpose, other than a play to a voter block that feels the corporation’s primary care is not its product or service, jobs and profits that enable it to operate, but to seek secondary social goals, almost simultaneously.

Anyone with hands-on business experience knows it is impossible to focus on both at the same time and be profitable. Only community organizers and social scientists with no top-level business experience think that way.

This is unfair to all shareholders because many of these activist minority shareholders are not really interested in genuine company matters. Their primary goals are societal concerns that ought to be rectified by federal, state and local government.

For years, they have pestered corporations to have changes made in corporate activity which the vast majority of shareholders would not want. Today, corporations are being nudged by government to actually submit much of the proposals into their corporate proxies.

In addition: In many instances, such proxies may make it easier for takeovers to be made. It is not always a given that making it easier to foster corporate takeovers, is in the best interests of all stockholders.

The objectives of many of the takeover artists are often solely for quick, short-term profits. That may not be the long term interest of the corporation or most of its shareholders.

How to Protect Your Trade Secrets

The best and cheapest way to protect your trade secrets is to keep them under proverbial lock and key the best you can. Be sure your employees, customers or clients are not able to get at data that must not be made public. Admittedly, this is not simple.

Also, it’s logical at the very onset, to use trade names and logos that are hard to duplicate. Example: A made-up name such as Kodak. Use what is easily copied, and you can be sure it will be.

The best and cheapest way to protect your trademarks, apart from registering them, is to actively use them in commerce. The laws are friendly only to those who fully employ the names, marks or logos they want protected. Even registration is not an outright guarantee.

Stay out of courts if you possibly can, when you have disputes that concern trade secrets or trademarks. Those with the most money to litigate will win.

Unfortunately, patent and trademark litigation contests, I find, often are not proud examples of justice prevailing.

The EPA Gets Around the Democratic Process

Congress has not been able to pass a Cap & Trade bill because the public realizes the proposed legislation is a device for a powerful government taxation ruse. The measure is more a means for imposing those taxes on industry and consumers, than it is an environmental protection program.

So what does the Obama Administration do, in its effort to supposedly help reduce emissions it claims the bill will reduce? And will not accomplish, under close inspection? Especially when global warming is not scientifically proven.

It imposes the worst of such controls through unelected bureaucrats in the Environmental Protection Agency (EPA).

Only they can make CO2, which we exhale, and trees ingest, a poison.

Phony Job Creation

When you hear that jobs are being created always consider:

One: Are Jobs make-work for government or are they permanent?

Two: Are the jobs full time or part time? And if so, for how long?

If the work is for government, are they unionized with special pension programs? If the answers are that they are overwhelmingly government-oriented, you know they may be phony and costly. Particularly when so much of the so-called Obama administration stimulus went to states where they added government jobs.

Another important statistic is this. While economists may differ, spending for a government job is known to have an economic multiplier effect of 1.4 or 1.5, On the other hand, private jobs have an economic multiplier of close to 3.5.

So beware of job claims during the current recession, especially when you get those politically-inspired varieties.

Be Careful of Unemployment Figures

Raw government-announced unemployment figures can be completely misleading. They must be interpreted. They never fully are, in the media, often for political purposes.

Some examples: Unemployment figures do not tell you how long the unemployed have been out of work. Or how many are not working full days or have permanent jobs.

Nor do the say how many have given up looking for work. Those out of work a long time may not even be looking for employment any more. That means they’re not being counted as unemployed, That results in a better looking than reported unemployment figure.

Moreover, the time of year reported is a factor. And weather conditions may have much to do with short-term implications of job statistics.

Unemployment benefits and when they start have an impact as well. Extending benefits tends to make the unemployment rolls greater because it’s a disincentive for seeking jobs.

Realize, too, that average unemployment numbers are what we get, covering all age groups. That average can consist of different classes, each of which is affected differently. Classifications may consist of teens on up to age 25. Or all adults 25 and older Or high school graduates, or college graduates. The skilled and unskilled.

The adjusted unemployment rate now is closer to 17.5% not the 10% bandied about by the media and the Obama administration. The youngest are suffering the most from the current recession.

How Important is the CEO?

Studies have looked at the fact that new top management. changes have accounted for only about 10% of added profitability.

Often it is other circumstances that account for a company doing better or worse. The economy and business or general industrial conditions may have lots to do with any individual company’s near-term fortune.

There are business cycles as there are financial. Moreover, the bigger the company, the harder for any CEO to turn things around on his or her own.

Yes, the CEO is important. But never to the extent the public, or the media, may think.

Inability to Speak on Our Feet

The inability to speak on our feet has brought about what I call a new term: Telepromt-torical. I created it for this occasion.

Though this has nothing directly to do with business, it’s noted in honor of the top-most member of our government in Washington.

He has much to do these days with the state our business and financial climate. He appears to be vying with the status of those ancient Roman senators who stood around in togas making speeches. Interestingly, they did so without the use of teleprompters.

He, however, has changed things in this country. Yes, even the world. You might say, in fact, his speeches are very teleprompt-torical.

Kidding aside, I would think that schools today ought to include courses on debating, in addition to their regular curricula. The ability to think on your feet without having something to read from in front of you, other than note outlines, would be a benefit to all.

And not just for those who hope to become president some day.

MBA Environmental Studies?

Show me an MBA who wants to have an environmental-orientated career and I will show you an educational failure.

By now. there is enough evidence to show that the entire scientific evidence behind global warning is suspect. Environmental studies programs depend to a great extent on the premise of global warming. Cap & Trade legislation is actually a ruse to create taxation, based on dubious global warming science.

So why start off on a career with a new MBA degree in this specialty? It is either a marketing ruse to get a job that defies science or your own credibility as an MBA has become tainted by scientific doubt.

Government Regulation and Financial Bubbles

Politicians are having a heyday on how they intend to stop future financial bubbles

I have discussed the current financial meltdown in my reports before. Let me sum up a general review about all bubbles.

They are man-made, enforced by government policy and regulation. They breed on human psychological extremes. And they feed on panic.

The onus and guilt may be thrust on private parties for political purposes, but bubbles exist only if government agencies permit them to do so.

It is far better that the powers-that-be in government sit on their hands than “do something” too fast in the way of remedies. The long-term in a bubble event often takes care of problems better than short-term panaceas.

Apart from those called in to do the short-term patchwork remedies, If there has to be basic blame for recent bubbles in the U. S. it can be placed on the heads of the governors of the Federal Reserve. They are the guilty, who have made money too cheap. That is always the fuel for a bubble.

Bubbles can be dampened when the availability of currency is tightened. However, the opposite monetary policy has been the story in U. S. bubble experience.

I will have more on this subject from time to time.

Corporate Statism in Washington?

This is a particularly timely subject when left-leaning, statist politicos are in power. Especially if accused by some of us of having opinions related to those of Benito Mussolini, with his brand of Corporate Statism.

Liberals will fight you to the death, should you accuse them of this fascistic offense. Yet they are, nevertheless, guilty of corporate state politics, right here in the good old U. S. A.

Example: Right now, their argument is that super financial regulation is the answer to stopping bubbles and financial risk. More regulation, they say, will reduce financial meltdowns. That same financial risk that past regulation failed to catch. When 50 locks on the door fail, add the 51^st. If that doesn’t work, add more.

And if large companies “too big to fail” look ready to do so, the U. S. ought to be the employer of last resort, to bail them out. While you operate them.

Well, that is corporate statism, pure and simple. That was the road taken by the Obama administration in 2009 and it is a permanent fixture. There were alternatives, of course. Actions that would have been better solutions and less destructive to our long-term economy.

I have been commenting on them all along.

Futures Markets on Future Events

Some businesses have employees create a form of futures markets on a subject of importance to the company. They feel that certain points of view, though a gamble, can be prescient, if the gamblers or speculators have no inherent bias in their choices.

Future projections on business concerns always are difficult to estimate. Thus, if any can be predicted with more independent accuracy, they would be welcome.

But caution is in order. For such markets to have value, they must have lots of independent input volume. Sampling should be efficient and unbiased.

I find that is more easily said than done in most business projections. Future markets, though, may have their place in foretelling political outcomes and general marketing concepts.

Ignorance Of Capitalism

Those who know the least about capitalism rail the most about it. To those I would suggest going to the library or online, to study the life and work of Joseph Schumpeter, the Austrian-German-American economist. He died in 1950 and has been since, unfortunately, overlooked in academic circles and the media.

His view of “creative destruction,” how the demise of established companies led to a growing economy has been the foundation of the American dream for many in the U. S.

Personal incomes have doubled every fifty or sixty years in America, when entrepreneurial zeal is permitted to operate.

Yet, listen to left-leaning politicians and you will never guess there is any economic opportunity without government the instrument of largess.

That visit to the library or a view of an online search engine could provide an education that I am sure an expensive general college education these days will not replicate, on the subject of Joseph Schumpeter.

Labor Unions and Real Wages Are in Conflict

In an ideal productive society, a worker gets what he or she produces. Labor has to be productive. If it is not, there is an eventual disconnect somewhere.

The perfect example is the downfall of the American automobile industry which priced itself out of business primarily because of its labor costs. You can talk style and product non-competitiveness, but the bottom line is this: Management was bulldozed into giving eventually catastrophic labor contracts, in order to avoid immediate catastrophic union walkouts.

The breakdown in schools can be attributed to the same cause. Here it is the avoidance of competition in the form of breaking the public-school-only monopoly unionized teachers have. A choice of vouchers would make for better productivity of teachers and better schools.

Unfortunately, the labor unions and real wage conflict has grown into the American social and cultural contract, and has been so highly politicized by union campaign funding, it will be almost impossible to rectify in the foreseeable future.

Will We Ever Recoup Recession-Lost Jobs?

It will take many years for lost jobs to come back. In fact, many may never be available again. Our only solution will be to produce new jobs.

Small business, which accounts for more than half our work force, is a solution to the employment question. Unfortunately, most bureaucrats and influential politicians, especially in Washington, are not attuned to their interests. The heavy lobbying and influence comes from big business and labor unions.

You can be sure: Ever-higher minimum wages, higher taxes and higher insurance costs are the poison that will guarantee that small business will not be able to fulfill its conventional role of creating new jobs.

Therefore, all you get from Washington is political talk.

Who is a Good Manager?

Good managers in mid-ranks or as far up as CEO levels, are hard to evaluate. It is not as easy as it is with an athlete who wins or loses events and games, or has statistics that can be measured. I know that the sports media have their experts but they make a lot of senseless noise, comparable to idle locker room or bar room chatter.

True, business sales can be measured, as well as profit and loss. But it is not that simple to evaluate executives who may or may not be responsible for the bottom line after all. I have always said a good executive may still lose money for his or her company. But less than a poor manager or executive would have lost under similar conditions.

So more arcane yardsticks must be employed, depending on the type of business under analysis or evaluation.

Moreover, what incentives do you give to get results? What is good pay? Or options? Do more and more money inducements really make a difference?

The definition of a good manager is difficult when the evaluation is equally hard to make. On-the-job experience does it, not text book explanations and suggestions.

Business Management: Centralized vs Decentralized Styles

Companies can be managed from the top in two ways. The public is not generally conversant with the difference. They’re:

One: Very strongly, or centralized, where the CEO is in complete control of the company’s daily operations. Many executives prefer this approach. I ran a highly successful 74-office employee-contracting firm using this management principle. Those offices operated within a myriad of industries.

Two: Loosely and decentralized, where more local control is allowed. Warren Buffett operates his different companies in varying industries on a decentralized basis. He has his individual companies perform without much strict daily direction.

I prefer centralized, hands-on oversight, which I believe is better from the operational standpoint. On the other hand, if your goals are primarily that of an investor, you never have the time, nor perhaps the ability or inclination, to cope with daily administrative duties.

In short, there are two different types of CEOS for two different styles.

Potential Damage of Cap & Trade

Right now Cap & Trade legislation appears to be stalled in Congress but left-leaning politicians and their groupies never give up trying. Those who still believe in global warming science as being truly unpolluted, are still true religionists.

Added to these entrenched-religion environmentalists are practical leftists who realize that Cap & Trade is an instrument for enforcing control and taxation across the board on the entire population. And without designating the effort for what it truly is.

The main problem is that economic damage will be imposed, though the vast majority of Americans do not want Cap & Trade.

The government is enacting many of these global warming tenets without the approval of the electorate, by stealth and undercover means.

It’s weapon? The almost unrestricted use of the Environmental Protection Agency.

Incentives For Creating Jobs

Left-leaning politicians and their economist advisers have no idea how to create jobs. Their training, experience and inclination work against such effort.

Jobs as a rule do not come from the government creating a post in a government office, or handing out a pick, shovel or hammer for a construction project. They come from real work demand of consumers. When the demand is not there, the job can never be viable or stable.

Incentives in the form of one-time tax credits are not valid inducements. Politicians and economists who cannot even operate a pushcart never learn this. True incentives come from permanent tax cuts.

To assist job incentives, there must also be minimal fiddling, causing higher costs for employed workers, on wages, fringe allotments, or threats of additional business licensing fees. And no veiled or actual increased taxation on income.

Psychological disincentives always are the culprits in destroying real job formation, a fact left-leaning politicians and their economist advisers will never learn, or they will lose their credentials.

Man-Made Economic Woes

I have commented in the past on our economic financial meltdown and economic woes, but I think it worthwhile repeating.

Far too many folks are still getting misled by the slanted media and by politicians who have their axes to grind.

One: Up and down economic cycles are normal, but excesses may have other causes.

Two: The current financial meltdown started as a direct result of a concerted government policy of making home mortgages available to folks who could not afford to have those mortgages.

Three: Because of government pressure, and threats of law suits from “do-gooders,” in addition to the opportunity for profit, banks collateralized the mortgage date obligations (CDOs) that facilitated mortgage sales the world over.

Four: Government-licensed rating agencies gave these CDOs the AAA ratings that assured the global sale of the securities.

Five: Thus, a bubble grew and grew until, like all bubbles, it burst.

Six: To add to the bad psychology that accompanies any bust, the government came in with a series of disastrous man-made steps.

Among just a few disasters: The decision to determine bank value on a daily fictitious basis. Catastrophic, unnecessary bailouts of banks, when ordinary guarantees would do. Buy-ins of auto companies to form a fascistic corporate state (a la Benito Mussolini). The government takeover of AIG when an ordinary bankruptcy would do less damage.

In short: The government has seen to it that a slight economic downturn has become a Great Recession. With an unconscionable deficit to go with it.

When GDP Fails, You Can Fantasize

GDP stands for gross domestic product. It’s a measure of a country’s economic output, the value of all its goods and services produced. It therefore represents the country’s standard of living.

The French GDP is falling, so they want to substitute their vacation time and other assumed “joie de vivre” as an additive. After all, it can be embarrassing when the French have to compare their left-oriented economy to those more attuned to capitalism.

Why not come up with some phony, arbitrary adjustment that assumes your way of living is superior to others? You may take the month of August off for holidays. So you come up with an arbitrary value from under your hat, (or is it chapeau).

But what about the lack of services during August? And those constant, paralyzing public union strikes?

How Easily Should Patents be Available for Business Methods?

Patents were originally intended for pure inventions. They contributed to our ability to become the industrial leader of the world.

Now they are being issued not only for actual products and things, but for general ideas and for business solutions. Or even the way collections are made online.

The U. S. Supreme Court is now looking at cases in dispute, to see if clarification of patent law is necessary and whether interpretation of the law is to be more limited.

We Never Learn About Practical Global Trade

Barack Obama appears to be becoming the first protectionist president since Herbert Hoover. That is a distinction he should not be proud to achieve, but his actions so far put him in line for the designation and distinction.

It was the Smoot-Hawley protectionist import duties that set off the world-wide trade craze that created the atmosphere, whereby industry was stifled and the Great Depression became global. That, along with Franklin Roosevelt’s high U. S. taxation policy and reckless government spending, and a mindless Keynesian philosophy.

A pump-priming stimulus theory that the Obama Administration is so keen about today.

Remember: We are an export country, with about $20 Billion at stake each year. Playing games with protectionism can be deadly for our economy.

Some Serious Judicial Thinking

We have received some serious and original judicial thinking from U.S. District Judge, Jed S. Rakoff, of the Southern District of New York. This ought to alert all business men and women as well as the general public.

In the matter of a fine imposed on Bank of America by the Securities and Exchange Commission, the Judge said: Hold it. The executives of the bank had consented to a proposed judgment by the SEC to pay a fine of $33 million.

The judge, however, held that bank executives had acted on the advice of their lawyers. Why then penalize the bank and its stockholders? Would you penalize the bank executives for taking legal advice in good faith? Why not penalize the lawyers for the advice?

This opens up the whole matter for discussion in the court proceeding being scheduled.

The Government Does Not “Create” Jobs

The government can employ people. It can thus achieve full employment by drafting every unemployed person to work in a government job. Particularly, high-cost, make-work jobs. Federal “stimulus” spending is promoted for its job creation. But such spending does not “create” jobs.

Private industry jobs are created in response to economic demand, incurred in response to a need. A businessman knows that expenses should be kept to a minimum, so jobs are genuine. Real job growth requires business optimism. Training along with payroll expenses make human resources a long-term investment.

Government work also absorbs tax money, that could have been used for economically useful job growth. The government uses tax dollars as “stimulus” funds only as it sees fit.

The government can help create jobs by cutting taxes. That would make it easier to create business. They can help also by limiting restrictions on terminating employees. The latter would therefore more easily get hired by private industry.

Those “Greedy” Credit Card Companies

A question for the Do-Gooders in Washington who pick on those “greedy” credit card companies. Along with commentators in the media who fulminate over those “outrageous” charges and fees.

Bad debts incurred by the companies generally run close to 10%. The companies in the business are losing money, so they are attempting to earn fees where they can. If they cannot get it from the relatively few deadbeats, they will receive it from the many customers who pay their bills on time.

If the business is so great, why aren’t so many more banks running to get into it?

In fact, many credit card companies are losing so much money on their credit card operations, they are are cutting back on card issuance.

Questions About Corporations Not Treated As Individuals

The status of the corporation as a person, in law, has been considered going back to Chief Justice John Marshall in 1819.

Equal protection laws always applied to corporations in the past. There are questions which arise from time to time and which occurred more recently during the nomination and approval of Supreme Court Justice Sotomayor.

In a hearing prior to her approval, Justice Sotomayor made a remark about corporations not being people. However the Supreme Court has always held that corporations held broad First Amendment rights, the same as individuals.

Warning: Should her stance become the view of future Supreme Court rulings, the entire basic commercial structure of this country could be overturned.

Writing a Job Resume

The right job resume is important, especially these days. Make a job application simple and current. Keep it up-to-date. Dates are important, of course, as well as your formal education reportage.

In fact, these days, the latter appears to count primarily for inclusion on a resume. Much of what you learn in school is useless for a practical job.

Be sure you are explicit about what have you done to make money for your past employers or how you have been able to help them save money.

Or if you feel you have talents as an organizer, describe what you have done and accomplished in this type of effort.

Are You an Employee or Contractor?

This is a long running problem, especially for small business. I have written extensively on the subject in the past from practical experience.

The subject has become trickier, as the courts are more vague and tort lawyers have been given more leeway by judges and juries who know ever-less about business.

The rule of thumb for business is this: Basically, if you control how a worker performs, he or she is an employee, not a contractor. Tell the hired person how and when to report to work and you have an employee, not a contractor. Also, when you provide tools for the work, you have an employee.

Tricky vagueness comes about when a question arises as to how important the job is to an employer’s business. You can be a genuine contractor by all conventional definitions and still be considered by some courts an employee of a business. Sharp lawyers come in to help make a complaint against the boss and trouble then starts.

Remember, many newly hired want to escape employee taxes just as much as employers do, and prefer being contractors. Until they are no longer working and seek unemployment insurance. Then they complain they never were independent contractors but really employees, after all.

Contractors do not get unemployment checks

How to Ruin the Environment by Greening it: Part II

The Obama administration plans to have wind power supply 20% of our energy by 2020. The project calls for 186,000 50-story wind turbines to be built in California, Nevada, Arizona, Utah, Colorado and New Mexico, along with 19000 high-voltage transmission lines.

Besides the probable killing of tremendous numbers of birds as a result, and the outlay of huge taxpayer subsidies, all this could be accomplished, according to the Nature Conservancy, by a minimal number of atomic energy facilities. And at much lower ongoing cost.

Without the eyesores that will beset the Southwest of the U.S. if the Obama Administration planning comes to fruition.