government is crazy? try the corporate world

[MBS]

It's about time that someone said this!! This is a column by Steve Pearlstein from the business section of the Washington Post.

http://www.washingtonpost.com/business/economy/ah-the-efficient-private-sector-take-the-soap-opera-at-hp-for-instance/2011/09/20/gIQAXzj6tK_story.html

Here are a few excerpts. I wish I could post the whole thing. Pearlstein NAILS it, IMHO.

It’s been another bad week for government. Another budget impasse. . . Don’t you wish government could get its act together and perform with the efficiency and competence of the private sector?

Hewlett-Packard, for example. It’s hard to imagine how, in the space of a decade, a group of executives and directors managed to take one of the world’s most respected and profitable companies, the very heart and soul of Silicon Valley’s innovation culture, and turn it into a real-life corporate soap opera, complete with sex, revenge, betrayal, behind-the-scenes back-stabbing, press leaks, illegal snooping and dynastic intrigue.
A decade ago, when HP’s hot new chief executive, Carly Fiorina, announced the purchase of Compaq Computer, Hewlett’s shares traded at $23. Today, after Internet growth literally exploded around the world and other tech firms’ values have soared, HP shares sell for $22, and the company has become a business school case study in inept corporate governance.
In just the past five months, HP managed to destroy $60 billion in market value for long-term shareholders. Nothing the Department of Energy has done regarding solar loan guarantees even comes close to that.
. . ..

Some of the best reporting about this latest chapter in the HP saga came from New York Times columnist James Stewart, who uncovered the embarrassing fact that only four members of the HP board had bothered to meet and talk with Apotheker before he was named chief executive.
“I admit it was highly unusual,” one board member who hadn’t met Apotheker told Stewart. “But we were just too exhausted from all the infighting.”
Who needs Sarbanes-Oxley when we have corporate boards like this?

. . ..

I have no idea whether Meg Whitman will be able to turn things around at Hewlett-Packard. But the manner of her selection, both as a director and chief executive, is a pretty good indication that the HP board has learned very little from the embarrassing and costly screw-ups of the past decade.

[rfranklin]

1. Oh, but business is so efficient and logical and there is never any waste...

and their allegiance is to the shareholders, et cetera. (Anyone who has worked in the corporate world knows that this is a pants load.)

[bemildred]

2. Corporations, the new Feudalism, at best, or just tin-pot dictatorships, at worst. nt

[givemebackmycountry]

3. Too many regulations. That's what's holding them back. Unshackle them!

Goddamn Obama, screws everything up!

:sarcasm:

[Cool Logic]

4. The is one significant distinction...

When HP "screws-up" voluntarily invested private sector $$$ are lost.

On the other hand, the fedgov is playing with the People's $$$ and when they waste it on the Solyndras of the world, it is the People who are harmed.

[bemildred]

5. Yeah, but Solyndra is peanuts compared to what was pissed away on banks, and "defense". nt

[Cool Logic]

12. I agree, but corruption is still corruption, the magnitude is irrelevant.

[unblock]

6. sounds great in theory. too bad it's completely wrong in reality.

employees, supplies, and other business relationships are also affected.

horizontal industries are also affected (if hp sells fewer products, companies selling paper, ink, and so on are affected).

neighborhood industries are also affected (those supplying food and cleaning for the company and its employees).

real estate values near their buildings are affected.

governments are affected to the extent this hp's taxes are lost.

other companies and investors re-evaluate business models realizing that inept corporate governance is a greater risk than previously thought, affecting everyone's view of how risky all businesses are, stifling entrepreneurship.

and of course, it affects the economy, which in turn affects politics and public policy, which affects all of us.



so yes, the investors voluntarily signed up for the risk.
except that everyone gets screwed because the economy isn't just a bunch of completely unrelated entities that are completely unaffected by anything any other entity does.

note that while the story focused on hp, it's not the only company ineptly run. the POINT is that the private sector is hardly immune from incompetence and insanity.

[Cool Logic]

10. "...the private sector is hardly immune from incompetence and insanity."

Indeed; however, incompetence in the private sector results in people being fired. On the other hand, incompetent people in the government are so difficult to get rid of, they are simply transferred to another department to become someone else's problem.

As for the lost money--no big deal; for they have a never ending line of credit.

[snagglepuss]

7. Sounds like RW logic to me. A portion of that private sector cash are 401Ks.

[Cool Logic]

11. Actually, it would appear that the right AND left support corporate welfare...

[RussBLib]

8. Finally watched "Too Big to Fail"

...the movie HBO did on the financial collapse. Practically everyone in positions of power during that time were from the "bidniss world" and they fucked things up quite badly.

As if we needed any more evidence that government should NOT be run like a business.

[Bill USA]

9. after the banking industry sponsored (and written) Commodities Futures Modernization Act was passed

Wall Street banks went wild selling, and buying for their own account, Collateralized Debt Obligations (CDOs) composed of mortgages with AAA ratings from Standard and Poors. The banks thought by 'covering' themselves from risk of default by buying Credit Default Swaps on the CDOs that they owned they would safe from loss and make a 'killing'. When it became apparent that the ratings were worthless and so were the CDOs, the shit hit the fan. Banks survived only because we the tax-payers (through the incompetent government) saved their asses. Such is the expertise and brains of the business-world.

[Hoyt]

13. I've worked for both, and private-companies are surprisingly disorganized and bureaucratic.

One of the problems is everyone is trying to figure out how to make bigger bonuses, and rake a percentage off the top of every transaction. Cutting quality and people is one route to a bigger bonus, salary, office, etc.