Creative Destruction
Look out, here they come again — wild-eyed CEOs wielding chainsaws. They’re going after their own corporations: whacking thousands of jobs, severing subsidiaries, lopping off factories and scores of stores, and generally running rampant with a new round of Rambo restructuring. USA Today reports a Who’s Who of industry giants involved in this latest outbreak of management mayhem, including Burlington Industries, Circuit City, JC Penney, Quest Communications, WestPoint Stevens, and Xerox.
What’s up? Greed’s up — mixed with lousy management. The merger mania of the past several years produced some poor corporate combinations, leaving the merged companies in sad shape. These mergers happen largely because the CEOs, corporate lawyers, and Wall Street advisors who engineer them make a killing on the deals, not because the deals make any economic sense. When a merger is a mess, someone has to pay, and that’s what the current restructuring rage is about. As a University of Virginia business professor told USA Today: “Management is starting to rein in spending, clean out the patently bad and mediocre investments they’ve made, and tighten up.” Of course, none of this reining in, cleaning out, and tightening up comes at the expense of the CEOs who made the bad decisions. They keep their fat paychecks, golden benefits, and platinum perks, while thousands of employees are offed.
For example, after last year’s $36 billion takeover of U.S. West, Quest Communications just recently announced that 11,000 employees will be cut. “We’re doing this because we need a streamlined company,” says CEO Joseph Nacchio. Meanwhile, Joe enjoys a very unstreamlined $19 million annual paycheck, which keeps going up. As the business professor noted cheerfully: “It’s the process of creative destruction at work.”
No, professor, it’s the process of corporate greed at work.
Poor People Don’t Vote
An important political anniversary just passed. It’s been a year now since Bill Clinton’s big, four-day, six-state “Presidential Poverty Tour Across America.” Remember all the hoopla, the media blitz, the poignant stories, the moving photographs … and, of course, the political promises? From Clarksville, Mississippi, to South Dakota’s Pine Ridge Reservation, from Hazard, Kentucky, to the barrios of Los Angeles, the president was shown compassionately commiserating with some of our nation’s most impoverished families.
The New York Times reports that the people of Clarksville, 40% of whom live in poverty, were real excited to have a president stroll through their hard-hit town: “He passed the boarded Roxy Theater, the closed-down Pac-Man lounge, and the falling-down wooden houses,” the Times reported, and he stopped at the Ooo So Pretty gift shop to talk with owner Shirley Fair and other folks about the injustice of such poverty in a nation blessed with such conspicuous wealth. “It was a great Kodak moment,” said Ms. Fair.
But, a year later, despite Clinton’s pledge that help was on the way, nothing’s changed. “It’s like the president never came,” said a Clarksville businessman. “Here,” said another resident, “things just get worser.”
The president had come. It was not a mirage. It was a hoax. He used the poor people to get on TV and look like he gave a damn. Then he went back to the White House and did nothing. Oh, yeah, he sent a bill up to Congress asking for tax breaks for any corporation that would build a factory in Clarksville, but he hasn’t spent a penny’s worth of political capital to get even this pitiful, trickle-down action enacted. Meanwhile, neither Al Gore nor George W. Bush have proposed doing anything for America’s millions of poor people — except urge them to pray more.
When Wall Street wanted NAFTA, the WTO, or its job-sucking China bill, Clinton went all out to deliver for them, but when poor people need a president, Clinton delivers a photo op. And they wonder why most Americans aren’t voting.
This article appears in October 13 • 2000.