Saturday, November 17, 2012

Really Silly Bits

I had a couple of things that I was debating in writing about for a weekend rant and some of them seemed very serious indeed.  While they may be important, I now clearly recognize that most of them are clearly in fact, quite silly.  Besides, I was having a great deal of difficulty in deciding which of them to choose, and by treating them as they deserve, I don't need to choose at all.  So here they are in no specific order.  All by the way, relate to fairly simple ma mathematical computations.


Now I may not be an economist and I've never played one on TV, but even I can figure out that the approaching Fiscal Cliff is a big deal for this country.  Since the last couple of the Bush Administration, the federal government has been pursuing the policy of a reduction of taxes and an increase in spending; and when the Obama Administration took the reins of power, they accelerated the process (at least on the spending side).  Now it doesn't take a degree in advanced mathematics to see that neither the trends for revenue generation or spending add up very well for the American people and that they never will.  

What also doesn't add up is that a bunch of people who make a very good living were sent to Washington DC to address situations exactly like this, and seem to have no interest in taking on this problem, though they've been perfectly willing to kick the can down the road before going on to talk about how important addressing it is on cable news networks.  The President is in fact pulling down $400K, the Speaker and Majority Leader earn $223K, Cabinet members are at $200K, and Senators and Congressman see $174K in annual salary.  Now normally when people get paid that much, it's because they have the ability to solve problems or steer companies away from them.  All of these high priced politicians however seem to think that solving this problem means putting off til next year, what you shouldn't have put off til tomorrow.

At the invitation of the President, Representatives of this august group met this week in the White House on Friday to talk about this very serious situation for an hour.  REALLY?  A WHOLE HOUR!  Why that's 1/4 of the time that it would take the President to play a round of golf. That's less time that it would take Speaker Boehner to fly back from Washington to his home in Ohio.  And not only did they spend less time in this doomed effort of national importance than Jerry Springer spends on the average day talking about brothers who cheat with each other's wives, but they did it late enough on a Friday so that their all but planned failure to make any real progress could come light barely in time to make it into the Friday 'take out the trash' news cycle and go all but unnoticed.

Speaking of modern math, the next time I hear from a Democrat about big business pouring too much money into political campaigns, I'm going to (as they say in Python's 'Holy Grail'), "fart in their general direction".  Labor unions poured $400 million into the President's re-election, and still had enough money to pour hundreds of millions more in state and local initiatives.  According to the Wall Street Journal, in the case of California's Prop 32, an initiative which would have banned using automatically deducted dues for political purposes, in fact "Labor contributed about 90% of the $62 million spent to defeat Prop 32, including $21 million from the California Teacher's Association and $13 million from SEIU." 

They successfully bankrolled a school collective bargaining reform initiative in Idaho with $3.4 million, a South Dakota initiative to overturn a law installing merit pay for teachers by outspending them 5 to 1, and set aside $2 million to roll back an emergency financial manager's law in Michigan because it allowed contracts to be restructured in troubled cities like Detroit.  

So for all of you standing on your tired soapboxes complaining that the Supreme Court's 'Citizen's United' decision has handed politics over to rich white guys and major corporation, maybe you should take a closer look at who is actually giving and to what ends.  The numbers don't seem to add up.

Most of you not living in a cave this week are now well aware that Hostess bakeries has all but shut down and that it plans to liquidate its assets.  Most of you have likewise heard the story that the tasty snack treats this company manufactures have fallen on hard times due to the changing eating habits in this country, multiple bankruptcies, and in the fine print, a strike from their bakers union.

It's true that Hostess is going through it's second recent bankruptcy in a decade and that eating habits in this country are changing. (Though to hear politicians speak, they're getting worse; which should have been good for Hostess.)  Some are now instead trying to get the message out that the Hostess demise comes not from the way it operated, but because greedy management and private equity funds were draining it of profits.  I guess the fact that Hostess did $2.5 billion in sales, but lost $341 million last year is equally lost on anyone attempting to define the concept of profits.  Apparently a company that just lost $341 million asking its employees for pay cuts (also for the second time this decade) is likewise unreasonable under the circumstances.  

According to a Wall Street Journal article from the November 16th however, what you haven't heard is,  "The snack giant endured $52 million in workers' comp claims in 2011, according to its bankruptcy filing this January. Hostess's 372 collective-bargaining agreements required the company to maintain 80 different health and benefit plans, 40 pension plans and mandated a $31 million increase in wages and health care and other benefits for 2012."  On top of which, existing collective bargaining agreements prevented bread products (like Wonder Bread) and cake products (like Twinkies) from being delivered to the same location by the same truck, nor could the guys who loaded cake products into trucks also load bread products.  It should go without saying therefore (but won't) that the drivers of neither the cake or the bread product trucks could have anything to do with loading their own vehicles.

I should stop here and also point out that a company management that is constantly seeking bankruptcy protection is as bad as a Union constantly seeking more from a company that doesn't have it.  Teamsters had already settled, and perhaps this Union might have sought a greater stake in the company's future than a bigger piece of a pie that was long gone, but they didn't.   And for those of you who might be wondering about Hostess's biggest competitor, Little Debbie....   Well, they're actually able to offer similar products in larger portion sizes than Hostess while still managing to remain profitable.  Of course Little Debbie's is a company consisting of  non-union bakeries.

Fortunately however, the 18,500 layoffs that will be caused by this layoff and liquidation did not happen before the election, and will not therefore be counted until long after any recall ballots already have.  From the sounds of things, Hostess will probably not have much of an impact on unemployment numbers anyway, since so many firms are likewise sending people home in the wake (pun intended) of the election.


No comments: