Business “Honest-Services” Goals

                    

I often comment on a U. S. Supreme Court ruling on “honest-services” obligations and its effect on business executives who have a responsibility for operating a public company.

                 

A CEO has to be an optimist to prevent the corporate roof from falling in; employees and customers fleeing, and a loss of jobs. An executive must retain legal leeway on comments and be given slack. A top executive who is not a cheerleader is doing a poor job.

                 

Unfortunately, too many jurors and judges are not aware of this business fact.

                 

The public cannot scream “fraud” at the drop of a hat every time disaster strikes a company. That is a ploy used by plaintiff lawyers doing what they do best. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Inurance Company Earnings

Politicians and the news media know little of the insurance business.

                 

Add to this the fact that insurance companies must be large, to be in business. This makes such companies ideal scapegoats for politicos seeking votes from uninformed voters.

                 

Remember: Insurance companies are highly regulated by their state insurance departments. They’re not permitted to lose money for very long, while controls dampen “enormous” earnings.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Good Business Management Techniques

        

You hear of the best management techniques that are  successful. Every year or so, another business management expert is recognized for ideas on how to increase sales, or reduce costs, or enhance productivity.

                 

A few years later, these are usually forgotten, as a fresh crop of experts arise. In fact, It’s a repetitive cycle. If you want, you can write a book on that subject alone. or teach a course for a college.

                 

If you save the data you find the concepts become regenerative fads. The same ideas regurgitate every so often. What becomes stale in one decade becomes fresh in the next. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Business Expertise Reality

          

How many business-oriented suggestions you read come from true business people?

                 

My reality check: In addition to my extensive Wall Street background, I became a senior-level executive for public corporations, to see what it was like to be in actual business. Most Wall Street and business advisers have never operated a successful pushcart.

                                        

My  profitable publicly-owned firm I co-started from zero, grew to 74 coast-to-coast offices, by the time I sold my interests 17 years later.

                 

My comments, unlike the bulk of those in the media, are backed by real, practical experience. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

True Unemployment

              

Unemployment figures are misleading. The standards for measuring the workforce are not constant. How many folks are actually looking for work can be a matter of debate because many have given up seeking employment. The current official unemployment figure is far below the actual.

                 

But that is not all there is to the unemployment problem. The critical factor is loss of jobs after about six months of being out of work. That number is not easily offered up to the public. Long-term unemployment involves the loss of skills or results in less-sharpened skills. Along with poor on-the-job psychology and poor spending psychology. That is never reflected in a number. Companies will hire less and spend less. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

The “Jobs Saved” Fantasy

       

The Obama administration, faced with poor new job numbers, had scrounged around for something of “What

If” and “Would be” and “Could be” jargon and had come up with “jobs Saved.”

                 

This was a completely meaningless number. It was imaginary and got circulation only from an ignorant media, that elected to go along with the façade.

                 

Economic research had thrown this thinking aside years ago. If you use actual Bureau of Labor Statistics figures from the government you never arrive at such hocus pocus, arbitrary politicized cant that this had become. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Deep Recessions Can Be Easily Corrected

             

America has always had self-corrective economic cycles, but now we have more regulators than ever before; they

are doing their man-made damage, as never before. Corrections are available:

                 

By avoiding the massive bailout with regulators offering the illusion of doing something. Probably, all that was needed was a federal agency guarantee of all bank assets, with a fee charged to the banks.

                 

By avoiding “mark-to-market” accounting of mortgage assets, which had no market appraisal, which wiped out assets of major banks almost overnight, aided by short selling this enticed.

                 

By having a government agency buying up, at bankruptcy, and destroying, empty tract homes in over- speculative states such as Nevada, Florida and California.

                 

The government repeated the same errors made by Franklin Roosevelt during the Great Depression. We thus accomplished little for the economy but have revamped the form of government with state capitalism, a nasty type of socialism.

                 

The Dodd-Frank Act, in a further attempt to get us out of this mess, is a disaster beyond anything America has had. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Good Business Management

             

There is a partial truth to the adage: Good management makes money and bad management loses money. It’s always applied on Wall Street where analysts usually have no idea of how to evaluate those who operate corporations.

                 

Nevertheless, an executive must operate with the hand being dealt. If the business environment or the economy is poor, an excellent manager may do extremely well by just minimizing losses; there are no real standards to go by.

                 

Look at the techniques used and they are all the same. The same acronyms to describe managerial approaches. Those that worked in the past may not be working now. The ones that did not work in the past may be working today.

                 

Lesson: A lot of luck is involved. Also an eye on protective management. Keep away from lawsuits, especially employee harassment and EEOC suits. Stick to the employee manuals companies set up. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Ethanol Politics

          

About 6 million cars on the road are “flexible fuel” vehicles. Some can run on fuel that is 85% ethanol and 15% gas. However, when using E85 you get about 15% fewer miles to the gallon.

                 

E85 does burn cleaner and does not pollute as much but the overall benefits are highly questionable. And the cost exceeds that of regular fuel.

And the use has increased the cost of corn, which is a basic food worldwide.

                 

But ethanol has now become more of a political factor than a logical fuel for consideration as an energy alternative. Slowly but surely we have found this has become an environmental boondoggle. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

College May Not Be Needed

        

You don't need a college degree to be successful. Vocational education can pay off better for many who have lost jobs or are seeking entry-level positions in trades.

                 

Even lower-level electricians today make on average $48,000 a year. Plumbers make $47,000. That's much more than the average American earns. And those jobs are more plentiful.

                 

But some people look down on vocational school. A degree from a four-year college is considered first class. A vocational-school degree is not. We must overcome that prejudice.

                 

College administrators and politicians ought to drop promotional hype. Higher college enrollment and government loan programs and subsidies may be good for the college marketers, but they don’t produce the training needed to fill real, paying jobs in industry. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Risk-Taking Chief Executive Officers?

                                

I have doubts, from practical experience, about the operational success of CEOs who take risks.

                     

To begin with, the sampling used by researchers testing CEO risk-taking is relatively small. Secondly, the time frame of what is termed success in business is too subjective. How long a period are you measuring? Is it a year or five years?

                     

And finally, taking risks in a publicly owned business? In practice, the risk makes little sense. Shareholders are entitled to better judgment on that subject. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

The Media’s Economics

The media pundits should learn there is economic experience that goes beyond Keynesian theory that has been proven to be unsuccessful in its applications, back to the Great Depression.

                     

Somehow, journalism school, as most institutions of higher learning, manage to do their usual poor job in teaching economics.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Post Office Facts

              

The U.S. Postal Service loses $ billions a year; well over $240 billion estimated over the next ten years. A report from the Government Accountability Office says the Post Office's business model is not sustainable.

                     

Demand for conventional mail has been falling. First-class mail volume has declined about 20 percent since its peak in 2001. Even though the post office has cut staff and branches, it isn’t enough correction. While the post office is supposed to pay for itself, it has been covering its losses by borrowing from the Treasury. Treasury, plus unfunded pension and retiree health obligations and liabilities tops $90 billion.

                     

Wages and benefits account for 80 percent of Post Office expenses, exceeding those of other highly paid federal workers. To compound problems, about 85 percent of its postal employees are covered by union contracts which force the use of more full-time employees than are necessary; and restrict flexibility, outsourcing and layoffs.

                     

Also, the Post Office pays more for employees health and life- insurance than most other government agencies.

                     

A lesson of what to eventually expect from all government- sponsored programs. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Bastiat’s Essential Economics

                 

Frederic Bastiat’s economic views are important for understanding practical economics.

                     

In his 1850 essay, "What is Seen and What is Not Seen,” Bastiat noted " There the economist and member of the French parliament pointed out that law "produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them."

                     

Bastiat further stated "there is only one difference between a bad economist and a good one: The bad economist

confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen."

                     

Similarly, you can have compassion for workers who have lost their jobs. They can be seen. You cannot have compassion for unknown potential workers in other industries who don’t get job offers because a compassionate government subsidizes an unprofitable company. The potential employees are never hired and are therefore unseen.

                     

You may say that unfortunate, known homeowners who lose their homes through foreclosure, make it possible for unknown potential individuals, who may not have been able to afford a home in the past, to now buy one cheaply.

                     

Or, for that matter, many more workers profit from exports due to free trade agreements, for every worker who loses out to corresponding imports. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)