The Goosekillers, part 1 of ? or, What The Rich Man Does Is Always Smart
Earlier this week I overheard two Republican small businessmen bewailing the state of the national economy - these were the same two I reported earlier as having lamented how they'd have to "hold their noses" and vote for John McCain, as he was not a real conservative either, what with his past support for campaign finance reform, but still better than any Democrat could ever be, what with Democrats always raising taxes to support their programs [sic] - and the stupidity of the "economic stimulus package," how it wasn't really giving any money back but just your own tax returns and look at all the money they were spending to send out letters and so on, what a waste and useless handwaving it was...
...and at the end of this mutual gripe session, the one guy says to the other, over and over again, "It's all the Democrats - it's all the Democrats' fault!"
Eight years of Bushco and "unitary executive", a rerun of Bush's earlier economic stimulus/tax rebate/"go out and spend, it's your patriotic duty" message - and somehow, despite the fact that Democrats have a bare and recent majority and have only lately developed any will to fight the administration at all with the combined force of an increasingly-frustrated and vocal base, it's all the Democrats' fault.
To make this even more ironic, just before starting to criticize the economic stimulus package, the other guy had been going on a tear about how awful the FAA was, what with the revelation of all the unsafe planes out there, and how they were falling down on their regulatory job, and how the government needed to make them do their inspections properly and not just take the airlines' word for it that everything was okay, all the while cutting corners. Of course, his business requires that he and his employees fly a great deal, so it isn't a case of rationalism on his part, it's just a matter of his own ox getting gored. Remember, just a couple weeks before, he'd been condemning the idea of trying to rein in corporate corruption of government (trebly ironic in that McCain only jumped on board that to try to wash out the stain of his association with Charles Keating, and quadruply in that he's breaking the rules he pushed for in the first place.)
I tell this story, as part of my ongoing campaign to awaken a healthy skepticism in the public which is sadly lacking, as to the superior savvy of those who are well-off and especially those who have managed to get rich in business, when it comes to any kind of big picture - and the smaller picture, often enough, no less. These guys, both of whom have made enough to own multiple homes, even though they're not really wealthy, at least one of whom is college educated, who complain bitterly about the state of government-managed affairs on which they depend, nevertheless cannot put together in their heads how this ties in to their paying taxes, or how the absence of regulation can be a bad thing even in cases which don't impact their own affairs directly.
They're just as stupid as the dimbulb woman at the bus stop who gabbled at me and the other stranger waiting about how property taxes mean "live free or die" (the state motto) wasn't true and after all you didn't have to pay again for things you bought in the store and didn't see any problems with claiming that there should be no taxes here, and taking the bus (and also that sex ed in schools was responsible for the teenage prostitute she'd heard about on Good Morning America that morning, and how the Union Leader had just reported that 90% of all priests were gay, and...) They may be cannier, as well as luckier, like Becky Sharp, in that they have managed to profit, and sometimes they may be good managers, making a whole company profitable - but that may well be an illusion, just as with Enron, or Cabletron, whether the agents of ruin go down in flames or sail away on their golden or silver parachutes (most often the case) giving the lie to the notion that CEOs will make better political leaders because they understand budgets better.
And yet, this faith - and that's what it is, a blind faith unfixed in evidence - that somehow what the rich do, whatever business policies they pursue, are necessarily prudent and good in the long haul, even when the policies are radically opposed, simply because the agents are wealthy, Q.E.D., persists. One of my personally-eye-opening experiences - which has proven to be eye-opening on several levels now - was watching a billionaire waste a couple hundred dollars (at least) wrangling with my then-employer over less than $10 in shipping on a free sample.
That is to say, he had a senior executive spend at least an hour on the phone over the course of several days, at senior executive salary, because he felt that he was being dissed by being charged shipping, even though this was standard policy - we give you the stuff for free, but you pay S&H. At the time, this assholery on the part of this much-larger corporation was a clear sign to me (there had been earlier warnings as well, but I was the only one hearing them, much good it did me) that we should steer far clear of any partnership with this outfit, but my superiors only saw the lure of the billionaire's gold until it was too late (I started joking about changing my name legally to "Cassandra".)
But even then, they did get a little twitchy about the folly and apparent lack of fiscal sense on the part of this outfit, which all hung on one man's personality - the disproportionate willingness to lose 10X out of a sense of injured pride/feeling that we, the little folks, needed to be kept in our place. --We couldn't afford the hassle; we gave in very quickly and ate the seven bucks, in spite of our resentment that this billion-dollar-company could easily afford it AND had nothing to be gained by stepping on us like this, seeing as they were seeking out our expertise in a new field they were trying to move into - which was a sign of things to come in this partnership relationship. And, as a rule - and this is a rule for most large corporations, too, not just small ones - very small losses like that get written off, because you lose more money chasing people for tiny sums than you ever make back - do that long enough, and you end up in arrears. Like the song says, You gotta know when to hold 'em, Know when to fold 'em, Know when to walk away And know when to run-- But at the time I was the only one there saying "RUN!!!"
Anyway. Fast-forward to the present, or near-present, and every time I tell this story, the first, instinctive, reflexive, unconsidered response by whoever my audience is, is "That's why he was a billionaire! Because he was willing to pursue every last dollar!" There is an assumption that Whatever The Rich Man Does Is Smart that kicks in, no matter how illogical it is.
"Oh, really?" I say. "Could you afford to lose $10 to get $1, and for how long?"
And invariably, when I put it that way, and ask them to think how long their own, tiny companies for which they work could afford to spend $10 (or more) for a $1 return, they shake their heads and agree with my next statement:
"The only reason they could afford to do that is because they were billionaires - if they didn't have a vast surplus to waste, they'd be in the red real quick, wouldn't they?"
But the gut reaction is, A rich man is doing it - it must be the smart thing to do, because he must have been smart to get rich, round and round. Likewise, w/r/t advertising: I know, from reading insider industry journals, from having read books on the history of advertising, and especially from having worked in print media behind the scenes, that there is a tremendous amount of stupidity and waste and squandered opportunity going on, in the big agencies and by their clients no less than among small outfits. And yet every time I express surprise or bafflement at an ad campaign IRL, particularly a really unbelievably expensive one by some huge corporation, someone will leap to tell me that I'm naive and out of touch and that it must be a good idea or else Coke or McDonalds or BMW wouldn't be spending money on it, since their goal is to make money.
And yet, advertising history, the history of results from media buys, is FULL of the corpses of failed campaigns, or worse yet, campaigns that nobody KNOWS if they failed, succeeded, or somewhere in between, because no effective tracking of results was ever done. Just throw gobs of money at Saatchi and Saatchi and trust that our sales will go up, cause they're such a big-name firm - oh, hey, our profits went up, it must ahve been because of Saatchi and Saatchi's brilliant campaign! Here's more money! --Oh, dear, our profits went down this year, bad S&S! No $$$ for you, we'll go give it to one of your rivals--
When I first read about this kind of thing in Advertising Age, where I had been involved in carefully tracking sales responses and which advertising areas were most profitable, I was dumbfounded. No sense of whether it was the agencies, or in spite of them? No idea if people were responding to the ads, or to other factors? If their rivals' flubs, for example, or their own products' quality or lack thereof, or word-of-mouth, were making any key differences?
And yet, when I remarked on this to my very employer who was having us spend so much time carefully tracking sources of sales, his instinctive response was to say "It must make sense, it must be the case that it would be too wasteful for them to tracks sales" - even when I pointed to historical examples of other big corporations using polls to determine which ads were working and tweaking their campaigns successfully in the past. Same thing happened during the tech bubble of the '90s, with the bizarro-world ads during the Superbowl, the most expensive video real estate anywhere, for websites that had not a snowflake's chance of making back enough to pay for the investment (but were sustained on believers' faith, aka venture capital, for a little while) and my incredulity at the time disdained; or the double-variable introduction campaign for the short-lived Arch Deluxe sandwich, which had one of the stupidest ad series I've seen, but combined it with a 2-for-1 offer and was a pretty decent sandwich for a McDonalds' burger - so it seemed like a roaring success, and my claims that the media campaign itself was a turn-off were laughed at - until some mainstream authority figures revealed that I had been right all along, in the financial press.
It didn't matter; my common-sense sense that this was a bad policy might have been validated later on by reports of losses, of frantic efforts to reshape image, of upper-level floundering and stockholder loss of confidence in these mega-corporations, but the knee-jerk reflex of defending any and all corporate policies is still strong, both in the people I was talking to then, and in the media generally. Maybe sometimes the people I know IRL will concede that I'm right about a particular small business having stupid advertising policies, or making other bad business decisions, liable to shrink not grow their business, but when it comes to large companies, the glow of all that money blinds them, until they come crashing down in Enronesque ruins.
What the rich folks do is always smart.
There doesn't seem to be any ability, by and large, in the American public, to discern the difference between a businessman being able to make his own little concern go, and having a sense of how things work outside his field - I'm watching my current boss flounder around, knowing very very little about the business he thought he could just buy and run without any experience, and not willing to be advised by those of us with decades of experience (and fielding a worrying number of dunning calls every week!) - or to acknowledge that a man (or woman) may be good at making a profit for themselves personally (and maybe their family members) but NOT good for the whole company (despite the long chronicle of fiascos and bailouts in this country in the last ten years, Bear Stearns not being the first nor will it be the last) - OR to admit that even if a CEO is good for his/her company as a whole - and this is a very long sight different from being good for shareholders, mind you, Wall Street being all about the short-term, and not the long-term) - this does not mean that they are good for the country.
--This wouldn't be such a huge problem, more along the lines of fans arguing about sports teams and coaches, if there weren't such life-ruining powers being granted to big business, if the magical thinking and mana of power worshipping didn't extend to the political realm. This is why - or at least, how - we get in such a state where Reaganomics is accepted without question, even by people who have never seen a penny of prosperity "trickle down" to them; this is why the notion that property owners should have more legal rights, because they will somehow magically be better and more responsible citizens, has such a strong hold to this day; I've heard authoritarian conservatives insist, in the teeth of all evidence, that the barons at Chrysler (and US Airways earlier) could not have been expected to do anything different and thus should NOT be blamed for their losses - how could they have known that Toyota would come out with the Prius and it would be such a big hit? or that gas would go so high? that the economy would make a business model based on selling a few high-end models a bad idea--
--Um, gee, maybe the 1970s should have been a warning? Maybe all the people talking about the problems in the industry (name your industry) for the past ten years should have been a clue? Maybe because that's their fucking JOB, to have the foresight and the leadership wisdom to see what's coming and to adapt, isn't that after all the reason you've claimed they DESERVE those 400X salaries and billions of bonus dollars, for all these years?
And it's not just the rank-and-file who are willing to give them a pass based on this circular-argument of wealth=smarts=wealth - Bear Stearns and all the others who are likely to end up needing to be bailed out by the US taxpayer ultimately, just like we bailed out private industry in the case of the airlines not so very long ago, got into the hole they were in because the banks and stockholders were blinded by the aura of their wealth, no matter it was fairy gold, and turned to oak leaves when the daylight finally struck it, and continued to take the leaders' assurances that all was well, right up until the day that they said it wasn't, and, oh, um, oops, your shares aren't worth the paper they're printed on...
And Enron did much to get Corporate Lackey Arnold in power - the man was marketed as a fiscal conservative who would rescue the budget, but a "social moderate," remember (Look, he's married to a Kennedy! He's part of liberal Hollywood! He's not a theocratic crazy!) - and caused immeasurable harm to the ordinary citizens of California in the process, and thus the damage they did lasts long after that barony fell in disgrace.
And yet - and it's partly our human inclination to venerate power, and partly the fact that to Americans maybe especially, outward displays of wealth are taken at surface value - way too many of my compatriots, including many who call themselves liberals, even yet think that all business should be unregulated, that CEOs and their top minions "deserve" their lions' shares of the fruits of their laborers' labor, and that anything business leaders (large or small) choose to do is, ipse facto both the best thing for their company and the best thing for society/the nation/the world at large.
Democracies get the governments we deserve...
(In the next installment of "The Goosekillers," I'm going to go into this issue of Willful Obsolescence in more detail, with several case histories, some witnessed up-close and personal, and look at how it overlaps with the penny-wise/pound-foolish mentality - and why it's disastrous on the macro level as well as the micro level. If your competitors are eating your lunch, maybe you shouldn't be leaving it out on the table while you leave the room, eh?)
...and at the end of this mutual gripe session, the one guy says to the other, over and over again, "It's all the Democrats - it's all the Democrats' fault!"
Eight years of Bushco and "unitary executive", a rerun of Bush's earlier economic stimulus/tax rebate/"go out and spend, it's your patriotic duty" message - and somehow, despite the fact that Democrats have a bare and recent majority and have only lately developed any will to fight the administration at all with the combined force of an increasingly-frustrated and vocal base, it's all the Democrats' fault.
To make this even more ironic, just before starting to criticize the economic stimulus package, the other guy had been going on a tear about how awful the FAA was, what with the revelation of all the unsafe planes out there, and how they were falling down on their regulatory job, and how the government needed to make them do their inspections properly and not just take the airlines' word for it that everything was okay, all the while cutting corners. Of course, his business requires that he and his employees fly a great deal, so it isn't a case of rationalism on his part, it's just a matter of his own ox getting gored. Remember, just a couple weeks before, he'd been condemning the idea of trying to rein in corporate corruption of government (trebly ironic in that McCain only jumped on board that to try to wash out the stain of his association with Charles Keating, and quadruply in that he's breaking the rules he pushed for in the first place.)
I tell this story, as part of my ongoing campaign to awaken a healthy skepticism in the public which is sadly lacking, as to the superior savvy of those who are well-off and especially those who have managed to get rich in business, when it comes to any kind of big picture - and the smaller picture, often enough, no less. These guys, both of whom have made enough to own multiple homes, even though they're not really wealthy, at least one of whom is college educated, who complain bitterly about the state of government-managed affairs on which they depend, nevertheless cannot put together in their heads how this ties in to their paying taxes, or how the absence of regulation can be a bad thing even in cases which don't impact their own affairs directly.
They're just as stupid as the dimbulb woman at the bus stop who gabbled at me and the other stranger waiting about how property taxes mean "live free or die" (the state motto) wasn't true and after all you didn't have to pay again for things you bought in the store and didn't see any problems with claiming that there should be no taxes here, and taking the bus (and also that sex ed in schools was responsible for the teenage prostitute she'd heard about on Good Morning America that morning, and how the Union Leader had just reported that 90% of all priests were gay, and...) They may be cannier, as well as luckier, like Becky Sharp, in that they have managed to profit, and sometimes they may be good managers, making a whole company profitable - but that may well be an illusion, just as with Enron, or Cabletron, whether the agents of ruin go down in flames or sail away on their golden or silver parachutes (most often the case) giving the lie to the notion that CEOs will make better political leaders because they understand budgets better.
And yet, this faith - and that's what it is, a blind faith unfixed in evidence - that somehow what the rich do, whatever business policies they pursue, are necessarily prudent and good in the long haul, even when the policies are radically opposed, simply because the agents are wealthy, Q.E.D., persists. One of my personally-eye-opening experiences - which has proven to be eye-opening on several levels now - was watching a billionaire waste a couple hundred dollars (at least) wrangling with my then-employer over less than $10 in shipping on a free sample.
That is to say, he had a senior executive spend at least an hour on the phone over the course of several days, at senior executive salary, because he felt that he was being dissed by being charged shipping, even though this was standard policy - we give you the stuff for free, but you pay S&H. At the time, this assholery on the part of this much-larger corporation was a clear sign to me (there had been earlier warnings as well, but I was the only one hearing them, much good it did me) that we should steer far clear of any partnership with this outfit, but my superiors only saw the lure of the billionaire's gold until it was too late (I started joking about changing my name legally to "Cassandra".)
But even then, they did get a little twitchy about the folly and apparent lack of fiscal sense on the part of this outfit, which all hung on one man's personality - the disproportionate willingness to lose 10X out of a sense of injured pride/feeling that we, the little folks, needed to be kept in our place. --We couldn't afford the hassle; we gave in very quickly and ate the seven bucks, in spite of our resentment that this billion-dollar-company could easily afford it AND had nothing to be gained by stepping on us like this, seeing as they were seeking out our expertise in a new field they were trying to move into - which was a sign of things to come in this partnership relationship. And, as a rule - and this is a rule for most large corporations, too, not just small ones - very small losses like that get written off, because you lose more money chasing people for tiny sums than you ever make back - do that long enough, and you end up in arrears. Like the song says, You gotta know when to hold 'em, Know when to fold 'em, Know when to walk away And know when to run-- But at the time I was the only one there saying "RUN!!!"
Anyway. Fast-forward to the present, or near-present, and every time I tell this story, the first, instinctive, reflexive, unconsidered response by whoever my audience is, is "That's why he was a billionaire! Because he was willing to pursue every last dollar!" There is an assumption that Whatever The Rich Man Does Is Smart that kicks in, no matter how illogical it is.
"Oh, really?" I say. "Could you afford to lose $10 to get $1, and for how long?"
And invariably, when I put it that way, and ask them to think how long their own, tiny companies for which they work could afford to spend $10 (or more) for a $1 return, they shake their heads and agree with my next statement:
"The only reason they could afford to do that is because they were billionaires - if they didn't have a vast surplus to waste, they'd be in the red real quick, wouldn't they?"
But the gut reaction is, A rich man is doing it - it must be the smart thing to do, because he must have been smart to get rich, round and round. Likewise, w/r/t advertising: I know, from reading insider industry journals, from having read books on the history of advertising, and especially from having worked in print media behind the scenes, that there is a tremendous amount of stupidity and waste and squandered opportunity going on, in the big agencies and by their clients no less than among small outfits. And yet every time I express surprise or bafflement at an ad campaign IRL, particularly a really unbelievably expensive one by some huge corporation, someone will leap to tell me that I'm naive and out of touch and that it must be a good idea or else Coke or McDonalds or BMW wouldn't be spending money on it, since their goal is to make money.
And yet, advertising history, the history of results from media buys, is FULL of the corpses of failed campaigns, or worse yet, campaigns that nobody KNOWS if they failed, succeeded, or somewhere in between, because no effective tracking of results was ever done. Just throw gobs of money at Saatchi and Saatchi and trust that our sales will go up, cause they're such a big-name firm - oh, hey, our profits went up, it must ahve been because of Saatchi and Saatchi's brilliant campaign! Here's more money! --Oh, dear, our profits went down this year, bad S&S! No $$$ for you, we'll go give it to one of your rivals--
When I first read about this kind of thing in Advertising Age, where I had been involved in carefully tracking sales responses and which advertising areas were most profitable, I was dumbfounded. No sense of whether it was the agencies, or in spite of them? No idea if people were responding to the ads, or to other factors? If their rivals' flubs, for example, or their own products' quality or lack thereof, or word-of-mouth, were making any key differences?
And yet, when I remarked on this to my very employer who was having us spend so much time carefully tracking sources of sales, his instinctive response was to say "It must make sense, it must be the case that it would be too wasteful for them to tracks sales" - even when I pointed to historical examples of other big corporations using polls to determine which ads were working and tweaking their campaigns successfully in the past. Same thing happened during the tech bubble of the '90s, with the bizarro-world ads during the Superbowl, the most expensive video real estate anywhere, for websites that had not a snowflake's chance of making back enough to pay for the investment (but were sustained on believers' faith, aka venture capital, for a little while) and my incredulity at the time disdained; or the double-variable introduction campaign for the short-lived Arch Deluxe sandwich, which had one of the stupidest ad series I've seen, but combined it with a 2-for-1 offer and was a pretty decent sandwich for a McDonalds' burger - so it seemed like a roaring success, and my claims that the media campaign itself was a turn-off were laughed at - until some mainstream authority figures revealed that I had been right all along, in the financial press.
It didn't matter; my common-sense sense that this was a bad policy might have been validated later on by reports of losses, of frantic efforts to reshape image, of upper-level floundering and stockholder loss of confidence in these mega-corporations, but the knee-jerk reflex of defending any and all corporate policies is still strong, both in the people I was talking to then, and in the media generally. Maybe sometimes the people I know IRL will concede that I'm right about a particular small business having stupid advertising policies, or making other bad business decisions, liable to shrink not grow their business, but when it comes to large companies, the glow of all that money blinds them, until they come crashing down in Enronesque ruins.
What the rich folks do is always smart.
There doesn't seem to be any ability, by and large, in the American public, to discern the difference between a businessman being able to make his own little concern go, and having a sense of how things work outside his field - I'm watching my current boss flounder around, knowing very very little about the business he thought he could just buy and run without any experience, and not willing to be advised by those of us with decades of experience (and fielding a worrying number of dunning calls every week!) - or to acknowledge that a man (or woman) may be good at making a profit for themselves personally (and maybe their family members) but NOT good for the whole company (despite the long chronicle of fiascos and bailouts in this country in the last ten years, Bear Stearns not being the first nor will it be the last) - OR to admit that even if a CEO is good for his/her company as a whole - and this is a very long sight different from being good for shareholders, mind you, Wall Street being all about the short-term, and not the long-term) - this does not mean that they are good for the country.
--This wouldn't be such a huge problem, more along the lines of fans arguing about sports teams and coaches, if there weren't such life-ruining powers being granted to big business, if the magical thinking and mana of power worshipping didn't extend to the political realm. This is why - or at least, how - we get in such a state where Reaganomics is accepted without question, even by people who have never seen a penny of prosperity "trickle down" to them; this is why the notion that property owners should have more legal rights, because they will somehow magically be better and more responsible citizens, has such a strong hold to this day; I've heard authoritarian conservatives insist, in the teeth of all evidence, that the barons at Chrysler (and US Airways earlier) could not have been expected to do anything different and thus should NOT be blamed for their losses - how could they have known that Toyota would come out with the Prius and it would be such a big hit? or that gas would go so high? that the economy would make a business model based on selling a few high-end models a bad idea--
--Um, gee, maybe the 1970s should have been a warning? Maybe all the people talking about the problems in the industry (name your industry) for the past ten years should have been a clue? Maybe because that's their fucking JOB, to have the foresight and the leadership wisdom to see what's coming and to adapt, isn't that after all the reason you've claimed they DESERVE those 400X salaries and billions of bonus dollars, for all these years?
And it's not just the rank-and-file who are willing to give them a pass based on this circular-argument of wealth=smarts=wealth - Bear Stearns and all the others who are likely to end up needing to be bailed out by the US taxpayer ultimately, just like we bailed out private industry in the case of the airlines not so very long ago, got into the hole they were in because the banks and stockholders were blinded by the aura of their wealth, no matter it was fairy gold, and turned to oak leaves when the daylight finally struck it, and continued to take the leaders' assurances that all was well, right up until the day that they said it wasn't, and, oh, um, oops, your shares aren't worth the paper they're printed on...
And Enron did much to get Corporate Lackey Arnold in power - the man was marketed as a fiscal conservative who would rescue the budget, but a "social moderate," remember (Look, he's married to a Kennedy! He's part of liberal Hollywood! He's not a theocratic crazy!) - and caused immeasurable harm to the ordinary citizens of California in the process, and thus the damage they did lasts long after that barony fell in disgrace.
And yet - and it's partly our human inclination to venerate power, and partly the fact that to Americans maybe especially, outward displays of wealth are taken at surface value - way too many of my compatriots, including many who call themselves liberals, even yet think that all business should be unregulated, that CEOs and their top minions "deserve" their lions' shares of the fruits of their laborers' labor, and that anything business leaders (large or small) choose to do is, ipse facto both the best thing for their company and the best thing for society/the nation/the world at large.
Democracies get the governments we deserve...
(In the next installment of "The Goosekillers," I'm going to go into this issue of Willful Obsolescence in more detail, with several case histories, some witnessed up-close and personal, and look at how it overlaps with the penny-wise/pound-foolish mentality - and why it's disastrous on the macro level as well as the micro level. If your competitors are eating your lunch, maybe you shouldn't be leaving it out on the table while you leave the room, eh?)