"Economists said there was no longer any doubt that the country was in recession and warned that it could be deep and long" -Associated Press

This is really getting nasty. The experts are suprised that the terrorists attacks effected the economy in such a broad way. Businesses have cut 2.2 million jobs since October. And there predicting Christmas to be a disaster. Retailers who normally would hire for the upcoming holiday season have allready cut 81,000 jobs. I can't see how an economic revival package that the President put together is going to stimulate growth in America.

Has anyone here been effected yet by the economic slowdown? Since the majority of people that visit this site work in the gaming industry I can imagine that you guys must be effected in some way. I live in NJ and I've just started to see the effects. For sale signs on houses ($500,000 and up) are more common nowadays. I met someone just 2 days ago who told me that he was just let go from his job. He worked on computers at his job for over 15 years and he never thought that he would be unemployed. He has a huge mortage, car payment and 2 children. How sad =(

Also, for people graduating college this must be a very scary time. I'll be graduating in less than 2 years and I'm a little nervous. Hopefully the economy will rebound by then.

Any thoughts?

We've got our $600 tax-cut check from Bush to tide us over! Four thumbs up on that one!

Cutting taxes might help, but won't help immediately, IMO. I'd rather see that money go into programs to create jobs.

It's too bad there was such a rush to cut taxes. I wish we had waited and used the excess to attack the national debt, etc.

No fear. We've got a war brewing. Remember what pulled us out of the depression?

Once I heard this democratic congressman complaining that the US armed forces were just a gigantic, federally funded jobs program. Since when are democrats opposed to employment programs?

Brad Grenz

'Since when are democrats opposed to employment programs?'

Since when are Republicans in favor of them? ;0

Technically, we're still not in a recession; we've only had one quarters of negative growth, and the definition of a recession is two.

Also technically, if the government just blows the money on construction projects there's more bang-per-buck for demand-stimulation recession fighting than tax cuts, if I remember my macro class correctly. Of course, since the current bill slogging through the system has virtually no demand-stimulation components anyway (it's mostly corporate handouts), it's irrelevant.

I don't think this war, unless it escalates into a West vs. Islam conflict, will pull the country out of the recession.

I'd love to see the government spend to create jobs rather than counting on tax incentives to help private industry create jobs. We need something done quickly.

>"Since when are Republicans in favor of them? ;0"

Looks like we've got a couple exceptions that prove the rule.

My FWIW - here at our company (large Fortune 50) we're tightening the hatches - it could be a very tough 3 quarters. However, I've never seen the government be very effective at creating jobs. Jobs created by the government tend to be fairly "artificial" by nature and not very sustainable. Economic history has shown that jobs from American companies, created due to real needs, are the only ones that actually help the economy and then it all becomes autocatalytic. That's even the approach JFK took to put some oomph back in the economy.

What's interesting is how non-rational the economy seems to be so often. The underlying reasons for much of the economic downturn just don't appear to be fundamental.

Here's a fun question to throw at people, you can even flumox the occasional economics professor if he isn't real sharp: why pay down the national debt? Where is the national debt? Isn't most of the national debt owed to citizens who own, say, savings bonds and other government investments?

"Has anyone here been effected yet by the economic slowdown?"

I've been laid off twice this year. Hopefully it won't be thrice.

Asher:
"Cutting taxes might help, but won't help immediately, IMO. I'd rather see that money go into programs to create jobs."

Cutting taxes is creating jobs. Not immediately, no, but it's a damned sight better than filling make-work jobs that have no purpose.

And how would you create jobs? Why, give businesses a reason to hire people. How do you do that? Give them enough money to hire people. And how do you do that?

Cut their taxes so they have that money to spend.

They hire more people that create more product or service that other people--who are now working in other jobs--buy/consume. It's a cycle.

If you create jobs to fill to create products or services that no one has the money to buy, you're not solving the problem. You're only delaying the inevitable. Because one of the reasons make-work or artificial jobs don't stimulate the economy is that consumer confidence is a huge part of the economy itself.

To put it another way, why isn't anyone spending any money right now? Because they're afraid of wasting it in case they lose their jobs. So businesses make less money because people are spending less, and that forces them to cut costs, and that means (because they're painfully short-sighted) cutting jobs. Self-fulfilling prophecy.

Jobs have to be created, I agree, but with the carrot, not the stick--because people will still see the stick, and know what it means.

Jeff Lackey:
"What's interesting is how non-rational the economy seems to be so often."

Makes perfect sense to me. Economics is more psychology than accounting, for the most part. Had an economics prof one time that described economic movement in terms of the herd mentality and psychological fears and stuff--rather than money and markets and taxes--and it actually made more sense that way.

My company has let go about 60% of its workforce (maybe 1200 people cut) since July. Ouch. I'm still employed, but it's looking grim in this neck of the woods.

A lot of the immediate unemployment after the attacks will spring back. Americans are back in the skies, and Las Vegas is once more doing good business. Aitlines and Vegas accounted for a LOT of layoffs since September. Any recovery for them will be a quick hit to help unemployment numbers.

That's the problem with economics. It's all psychological. If you want a good economy you can make it a good economy by spending. A bunch of idiots on Wall street lose their shirts, making a bunch of dumbass investments in companies that consist of little more than a $70.00 domain registration. They all panic and start selling not just their worthless dot com stocks, but anything tech. Internet = tech, right? Suddenly the stock of solid companies like MS, nVidia, Intel, AMD all take dives. Hysterical media coverage ensues and all of a sudden we're in actual trouble. It makes you want to hunt down the college dropouts who started worthless dot coms, companies with webpages, but that had no actual business plans, and smack 'em around. "Pet's.com? What are you, retarded?" *Whop*

Brad Grenz

What get's me is that people actually thought the good times were going to last forever. They bought $500,000 houses they couldn't afford, multiple cars and other luxury items that would strain anyone's bank account. I've noticed for sale signs in front of a lot of Mc Mansions than ever before (Mc mansions are houses that go for $500,000 and up) The American public spent like crazy and it finally caught up to us. Let's not even go into credit card debt...

Maybe I'm a pessimistic person, but I see the American economy getting worse (much worse) before it begins to recover.

How can government create jobs? I'd like to see money spent to revitalize the infrastructure in a lot of old cities, just for one example. Here in St. Louis, for example, we could stand to have our water system updated.

"Here in St. Louis, for example, we could stand to have our water system updated."

So the government gives a tax break to plumbers to work on the project. Less taxes = more money you have on hand to hire more plumbers or related services = money flowing into the economy from newly hired people and the money they spend.

Do that with construction, and electricians, and the like, and you get your jobs and your economic stimulus and your services repaired all at the same time. :)

Tulip mania? Nah...

Um, not to be insulting, but have any of you taken any economics classes? Tax cuts are roughly half as effective on a dollar-per-dollar basis at increasing the temporary demand shortfall that causes recessions as, oh, dropping the money out of airplanes over cities. Assuming you're a Keynesian, at least, that's the way it is; who isn't, though?

Overly unreadable multiplier explanation:
http://www.chau.com.hk/economics/ttoid2.htm

It's all a bit moot, though, as the economic consensus in the academy for a good while has been that short-term economic management should be done soley through monetary policy (Greenspan managing interest rates), as this minimizes lag-related issues, while long-term policy should be set fiscally. The Democrats were more-or-less converted to this by Clinton's term in office, but the GOP has been fighting it since 1980. If the GOP is insistent that the elected branches have to do *something*, though, it should work; permanent tax cuts (as the House bill currently contains) have virtually no short-term demand stimulus effect.

'Here's a fun question to throw at people, you can even flumox the occasional economics professor if he isn't real sharp: why pay down the national debt? Where is the national debt? Isn't most of the national debt owed to citizens who own, say, savings bonds and other government investments?'

It lowers the prime rate, for one thing, as government borrowing crowds out private. Also, bonds aren't loans; at the end of a thirty year bond, the government either has to pay the entire face value of the bond back to the holder or roll over the bond into a new one. If you pay a bond off seven years early, for example, you save 7 years of interest payments.

Obviously, you shouldn't pay off any early that have penalties for that, and you should leave enough in the market to provide a baseline safe investment. The US debt is far beyond that level, though. If you operate by the golden rule investment/consumption assumption (each generation should invest/consume the same percentage of their income) then we're basically buying today's governmental services with debt that the next generation will pay for. Borrowing from your kids, if you will.

'Cutting taxes is creating jobs. Not immediately, no, but it's a damned sight better than filling make-work jobs that have no purpose.'

Cutting taxes over the long term, without a corresponding cut in spending, has absolutely no effect on the economy whatsoever. It's just robbing Peter to pay Paul. There might be some efficiency issues between financing government through debt vs. taxes, but there's not a consensus on that yet.

There's also absolutely zero desire by the public to cut government spending.

>Do that with construction, and electricians, and the like, and you get your jobs and your economic stimulus and your services repaired all at the same time.

Maybe, maybe not. Cutting taxes might encourage job creation, or, companies that are already strapped for cash and not meeting the profit margins set by their investors might just take the tax cut and pocket the money.

The same goes for small business folks. My brother is an independent contractor (construction) and in the past two months he's gone from his phone ringing off the hook to not having any jobs lined up. If he gets tax cuts he's not going to run out and hire people, he's going to save that money to help pay his electric bill, his mortgage, etc.

There's only one sure-fire way out of this mess--CNN shows infrared video tape of our commandos putting about 20 bullets into bin Laden's head. Right now there is so much fear that people aren't going to do anything.

As for being affected by the crappy economy, I was laid off nine months ago from Gamecenter. (As was Crash.) My wife works for one of the Hyatts in SF and they've been decimated since 9-11; her hours were cut and we feared she was going to be laid off, which, thankfully, never happened.

Business may be picking up in Vegas but it sure ain't in SF.

I was being facetious about the tax cut thing. Personally I thought it was political grandstanding of the absolute worst kind. There's only a hair's breadth difference between "tax rebate check" and "paying people to vote for you". And if we must do this, why not just cut our taxes $600 next year instead of incurring the massive expenses of actually CUTTING CHECKS?

But who knows. Maybe things will pick up for the holidays.

In all seriousness, I beseech everyone to please please please not debate economics/politics here. Let this be one haven.

Apologies for the cut and paste, but I can't resist the need to comment:

Benjamin-
"The experts are suprised that the terrorists attacks effected the economy in such a broad way"

Consensus among economists and finance professionals is that the economy was going here, with or without Sep 11. Sep 11 worsened the problem for Airlines, Finance, Hospitality, and so forth, but spending was way down and defaults were way up. Finance journalists claimed that potentially thousands of folks were going to be fired on wall street due to the recession, but that Sep 11 made that seem insensitive. Expect it to happen gradually over the coming months.

War pulling economy out of recession topic -- Even if prolonged, this isn't a major production effort like WWII. Think Gulf war or Vietnam.

Jason
"Technically, we're still not in a recession; we've only had one quarters of negative growth, and the definition of a recession is two." -- While true, this is only one definition of a recession. Pretty much everyone agrees growth ain't gonna be positive in the next quarter (2 of 2). People like Jack Welch (ex-GE fellow) have been going on record saying this is a recession. Not much doubt here. Frankly, there wasn't much doubt pre Sep-11. You just had to look at indicators like income statements and bond default rates.

Bill
"I've been laid off twice this year. Hopefully it won't be thrice." Ouch. Sympathies to you. It's not much consolation, but this has been happening to a lot of folks, so you are by no means alone.

Brad
"Suddenly the stock of solid companies like MS, nVidia, Intel, AMD all take dives."
Keep in mind these are all overvalued by most historical measures (e.g. P/E, P/S), and not many people believe there is a reason for old measures to no longer apply.

Davey
"In all seriousness, I beseech everyone to please please please not debate economics/politics here. Let this be one haven"
If, as in many of the Q23 discussions, this topic avoids flaming, it can be useful. Especially as many of the folks on this board are more directly impacted by recession than other occupations. In other words: Freelancers paid more when advertising is good, in a recession advertising is usually one of the first budgets to be cut, so folks around here have good reason to be concerned about the state of the economy, and the amount of time it will take to turn around. This is just my opinion, but I think the answer is - not soon. Some folks are predicting a Q1 2002 recovery, but these are the same folks that push back their recovery estimates every quarter. I place more faith in the 2003 guesses, and they are just guesses.

Until then, many of us are taking Morgan's advice (J.P., not SMAC) and doing our best to live beneath our means.

I'm enjoying reading this thread. Very insightful.

'Not much doubt here. Frankly, there wasn't much doubt pre Sep-11.'

Oh, I agree, it just drives me up the wall how both the media and certain elements in Washington have been hyping "the recession" since, oh, February.

'Until then, many of us are taking Morgan's advice (J.P., not SMAC) and doing our best to live beneath our means.'

Ironically, this is what causes recessions! Individual rational choices leading to a giant irrational choice is pretty wierd.

I don't think that rational savings leads us to recession. Rational savings only leads to recession when it follows a long period of irrational and irresponsible spending. Too many folks have taken on more debt than they had income, counting on a continually increasing stock market or constant raises. If the whole population had been spending responsibly, we would have an economy that grows much more slowly (no 1997-1999 boom), but might still be growing.

What are forum boards, if not a place to speculate?

"Um, not to be insulting, but have any of you taken any economics classes?"

Not insulted at all. And yes, some of us have taken economics classes, some of us at a graduate school level, and some of us have taught some classes.

I disagree with several of your points, but economists better than you and I argue those exact points. Tax cuts that benefit industry have a significant effect on the economy, as numerous papers have described, but I agree with you that the effect has always had about a 3 quarter lag - it's not at all a short term effect.

You answered a part of the answer to the half joking trick question on the national debt. As for the statement that there is no desire from the public for the government to cut spending, that's the result, IMO, of a public that has become too lazy to think beyond what they are fed in political sound bites. About eight years ago the American people were disgusted at the amount of wasteful Washington spending that a big part of their paycheck was spent on. Today people have been conned into thinking that every penny that Washington spends is effective, useful, and going to feed the poor and house the homeless. The spin is that if you cut anything being spent by Washington, someone will go hungry and a child will be thrown into the snow. Most rational people know that Washington throws billions of dollars into wasteful pits. Heck, let's just revamp the budget - give every family in America a million dollars. Direct. No more social security fears, no more hunger, no more fears of medical costs, no need for welfare support, etc. Yeah - I know why it isn't practical, but frankly it would probably be far more effective than how we spend the money today.

Here in AussieLand the net effect of the recession has resulted in some 100,000 IT jobs lost in the last 12 months.

The people I really feel sorry for are all the university graduates who specialized in IT courses because they were told that is the way of the future. There are almost no worthwhile jobs out there at the moment except for dime-a-dozen helpdesk phone support jobs which pay below the minimum average national wage.

Sure there is still a need for IT specialists but if you place all your eggs in the one basket and don't diversify you are making life really tough on yourself in the current job market.

I have been working since I left school back in '84 and I have never been without a job. The secret to my success (in my humble opinion) was diversification. I have an accounting certificate, system admin, programming, engineering drawing (back in the days before Autocad), professional trainer, and technical document writer. I also spent time in the army as an engineer, crew commander, and qualified weapons trainer. I am not adverse to performing blue collar jobs nor do I turn my nose up at people who do such jobs.

I also live in a modest townhouse that I did not pay the earth for and would not have to immediately sell if times get tough.

Kids these days are brought up in a world of computers where manual labour is beyond them and job elitism is the norm. They are setting themselves up for a hard fall and basically most of these kids will spend the rest of their lives living with their parents because they will bounce from one temporary job to the next.

There is only one constant in life and that is change. People are learning some hard lessons at the moment (although through no fault of their own in some cases).

Lastly, I can't see why people should expect the government to step in and bail them out. Employees need to start looking at the real reasons they have lost their job. Look at that company director who is protecting his yearly bonus or the shareholders who indirectly are ultimately responsible for job losses. Since most of us are shareholders then really we all have ourselves to blame.

'You answered a part of the answer to the half joking trick question on the national debt. As for the statement that there is no desire from the public for the government to cut spending, that's the result, IMO, of a public that has become too lazy to think beyond what they are fed in political sound bites.'

That's a valid argument. However, I'd assume the honest way to deal with it would be to work on convincing the public to cut spending, not David-Stockman style intentional running of defecits.

Crassly put, the current methodology on the tax-cutting right is that the public is to dumb to cut the spending that they don't *really* want, but think they do. Therefore, the "solution" is to trick them into cutting spending (unpopular) by cutting taxes (popular), and then just throwing up your hands in shock when there's no money left over after debt servicing. "Why, I know how much you want a prescription drug benefit, but there just isn't any money. What? Taxes? We can't raise those!"

This is what mostly what elected Clinton and gave Perot such strong support in 1991, although the recession helped. Well, that and the movement of the tax burden down the income scale in the 1980s (raise SS taxes, lower income taxes, roll SS into the general fund to make up the shortfall).

'The spin is that if you cut anything being spent by Washington, someone will go hungry and a child will be thrown into the snow.'

That's an absurd exaggeration, tue, but there's also not much government "waste" left. What does exist is the locally-popular pork that congress-critters get re-elected for the trillioneth year on (road-building, community centers).

http://www.fms.treas.gov/annualreport/annrpt00.pdf

Good luck finding anything "wasteful" to cut on there. I suppose Commerce/Housing, general science funding, most of international affairs, and community development (?) could be zeroed out with little public outcry, and they're pretty wasteful. That's 3% of the budget, though; even if you drop agriculture support payments (economically a pretty good idea), that makes it about 4%. Where's the money going to come from?

'Kids these days are brought up in a world of computers where manual labour is beyond them and job elitism is the norm. They are setting themselves up for a hard fall and basically most of these kids will spend the rest of their lives living with their parents because they will bounce from one temporary job to the next.'

Ah, every generation says that about their kids. I'm sure when they invented the plow old men were sitting around grousing about how the lazy kids didn't need to use their hands anymore.

Jason:
"There's also absolutely zero desire by the public to cut government spending."

I'd disagree, with a qualifier: There's plenty of desire by the public to cut government spending--just not on my programs, dammit! Agricultural interests would love to cut spending on "corporate welfare", single taxpayers (or married w/o children) could live seeing WIC and most welfare go away, and etc. Problem is everyone's chiming in with, "Cut their programs not mine!" and, well, nothing gets done. :)

Trickle-down economist Bill McClendon writes:

"And how would you create jobs? Why, give businesses a reason to hire people. How do you do that? Give them enough money to hire people. And how do you do that? Cut their taxes so they have that money to spend."

"They hire more people that create more product or service that other people--who are now working in other jobs--buy/consume. It's a cycle."

BULL-SHITE! Publicly held corporations are constantly under pressure from Wall Street to cut expenses (i.e. employees) so as to raise the amount of money raked in. The more money a corporation can earn with the fewest employees and brick-and-mortar investments, the better under Wall Street's anti-human philosophy. When given a massive tax break (such as the Republican manaiacal abolition of the Alternative Minumum Tax), these companies use this money to show greater profits to boost stock price and reward fickle, spoiled CEOs and VPs, not to invest in the general workforce.

Trickle-down economics was discredited in the Reagan-Bush era; the cutting of taxes on the rich resulted in money staying at the top, and the consolidation of wealth. Rich people invest in stock and real estate. Once you have a certain amount of money, cuts in your capital gains tax and other taxes are not going to encourage spending, because you already have everything you could possibly want. So, the money just gets reinvested. That's why those buggers want the capital gains and inhertance taxes cut so badly. They're protecting their massive, ever-growing dung-balls of unspent cash.

I'm sure rich folks and corporate CEOs would thank you for your desire to further line their wallets, though.

'There's plenty of desire by the public to cut government spending--just not on my programs, dammit!'

Well, that's what I meant, but yeah.

---

Quote:

Ah, every generation says that about their kids. I'm sure when they invented the plow old men were sitting around grousing about how the lazy kids didn't need to use their hands anymore.

---

"BULL-SHITE! Publicly held corporations are constantly under pressure from Wall Street to cut expenses (i.e. employees) so as to raise the amount of money raked in. The more money a corporation can earn with the fewest employees and brick-and-mortar investments, the better under Wall Street's anti-human philosophy. When given a massive tax break (such as the Republican manaiacal abolition of the Alternative Minumum Tax), these companies use this money to show greater profits to boost stock price and reward fickle, spoiled CEOs and VPs, not to invest in the general workforce."

You don't have a clue. I work for one of those big companies that you're talking about. Here's real data (which I know people who want to preach, hate): when we received the tax breaks that you disdain, we went from hiring about 200 people per year to a couple of years in which we hired over 1000 people per year. We hate having to let people go for a couple of reasons: one, no one likes telling someone they no longer have a job. Two, as our CEO said in a speech to the company, no one ever cut their way into prosperity. CEO's make a lot of money when the company does very well, and most companies are seeking growth - even in these terrible months of a down economy, we're investing millions of dollars in trying to find ways to grow the company, not cut it. In fact, all of our management (myself included) all the way up to the CEO have their variable pay tied to how well we achieve that growth.

It's popular blather to say that trickle down economics were "discredited" but the data is that during those times hiring at almost all major companies went up by huge amounts. It was a great time to be looking for a job.

Doctor AntiWumpus must be a democrat.

Whine whine whine... boohoo... damn republicans... they cut our taxes and are now trying to fire the people... boohoo... line the pockets of the rich with more riches... boohoo...

Oh, shit, I'm going to start a political war.

'It's popular blather to say that trickle down economics were "discredited" but the data is that during those times hiring at almost all major companies went up by huge amounts. It was a great time to be looking for a job.'

I think he's incoherently referring to the current house bill that eliminates the AMT, retroactively. This will make more projects profitable in the future, as you no longer have to pay the tax, and therefore increase business investment going forward, but how on earth will removing it in the past provide incentives for the future? It's just a windfall for shareholders.

On top of that, the AMT was invented to deal with the fact that companies in certain industries (energy production, for example) have so many special tax breaks that it's incredibly easy for them to pay no corporate taxes whatsoever. If we're going to eliminate corporate taxes, fine, but some sectors shouldn't have tax advantages over others.

But does it all really matter?

Weapons of amazing power can now fall into the hands of small groups or even *individuals.*

Most of the fear in this country isn't actually over what happened on 9/11... Despite the much smaller number of people affected, it's actually the *Anthrax* that has America in a panic. When it can come in your own mailbox, you freak out.

So one idiot -- or a small group of idiots -- is helping paralyze our country.

So what happens when some extremist blows up a "dirty bomb" (conventional weapon with radioactive material in it; lots of talk about Bin Ladin having access to that in the UK press) in New York or San Francisco? Or someone gets a nice smallpox epidemic going?

I mean, think about it... How are they EVER going to catch the anthrax idiots when all they have to do is drive to a mailbox 20 miles away and drop the letters in?

With the power for destruction and chaos so easily falling into the hands of individuals, the idiotic "democrats are stupid" "republicans are callous" arguments are going to look REALLY pointless in retrospect.

Our entire infrastructure could be wiped out by plague or constant terrorist acts. The only way around it is to establish a total police state with checkpoints, ID cards, searches of homes, etc.

Boy, both of THOSE are appealing alternatives.

Or do you guys somehow think that we'll go back to the easy lives of the 20th century?

I'll just say this about corporations. They routinely cut jobs when profits are down, and the key word there is profits. They are still making money, but they cut jobs anyway. To me they seem ruthless and driven to appease shareholders rather than exhibiting any concern over workers. Corporations nowadays lay off at the drop of a hat, and more often than not it's an attempt to boost share price.

If corporations were more concerned about workers instead of maximizing profits, there'd be fewer layoffs, pension plans might still be around, there wouldn't be a move to dodge having to pay benefits by hiring consultants, etc.

Did you know that the CEO who was on all the networks crying after losing 700 of his employees in the WTC tragedy only paid the families of the deceased for a half-day's pay for September 11th? Not only did he not give them a full paycheck for the current pay period, which I'm guessing would have only extended to the middle of September, he didn't even pay them for a full day. To me that's the attitude corporate America has towards its rank and file workers.

"I'll just say this about corporations. They routinely cut jobs when profits are down, and the key word there is profits. They are still making money, but they cut jobs anyway. To me they seem ruthless and driven to appease shareholders rather than exhibiting any concern over workers. Corporations nowadays lay off at the drop of a hat, and more often than not it's an attempt to boost share price.

If corporations were more concerned about workers instead of maximizing profits, there'd be fewer layoffs, pension plans might still be around, there wouldn't be a move to dodge having to pay benefits by hiring consultants, etc."

Hi Mark. Guess what? You're putting the blame on corporations for being inhuman to boost stock price and appease their shareholders. If shareholders weren't happy with these activities, they wouldn't happen, would they? If layoffs would stop sending the stock price up, why, I wonder what would happen...

Metaphor/analogy: Games are shipped more broken than ever, yet gamers continue to preorder and buy on day one. Who's fault is that, again?

I agree it sucks. I disagree that blame is so easy to place, and I disagree that it can be dumped in just one spot so quickly and completely. It's a system and a cycle, not an in-and-out sort of thing.

And mmmm... In-and-Out. Could use a cheeseburger right about now.

"Publicly held corporations are constantly under pressure from Wall Street to cut expenses (i.e. employees) so as to raise the amount of money raked in. The more money a corporation can earn with the fewest employees and brick-and-mortar investments, the better under Wall Street's anti-human philosophy."

And who's paying Wall Street's bills? A big ol' mass of faceless people called SHAREHOLDERS. In your haste to demonize, you didn't bother to examine the situation much past your preconceptions--once you found an answer you liked, that fit your theory, you simply stopped thinking. You must be a hell of a scientist. "The earth IS flat because dammit, I can't see beyond the horizon!" I'd like to say it's typical, but, sadly, it's not.

Now, please tell me who's inhuman again. This time, try and think it all the way through.

"I'm sure rich folks and corporate CEOs would thank you for your desire to further line their wallets, though."

Ask your grandparents if they own stock. See if those companies have laid people off. If they have, slap your gramma for me because she's an inhuman heartless beast for supporting that to line her wallet--and your inheritance.

DO IT FOR THE CHILDREN.

Please. The children will all be dead of bioengineered disease or starvation (how many people know how to cultivate food in today's world?) after the infrastructure collapses.

The fundamentalist idiots have the power to end the world. Corporations are going to be a laughable memory within a decade or so.

Peter Olfason should go back to playing games. Have fun while you can.

'Hi Mark. Guess what? You're putting the blame on corporations for being inhuman to boost stock price and appease their shareholders. If shareholders weren't happy with these activities, they wouldn't happen, would they? If layoffs would stop sending the stock price up, why, I wonder what would happen...'

Partly this is because corporate boards have become rather insulated from stockholder pressure, I think. Executive compensation is ludicrously out of control (try finding a stockholder who thinks his CEO is paid what he's worth), but boards are such an incestous iron triangle that all anyone can manage to do is fire-and-hire a new set of bastards.

When layoff payroll is *less* than some individual CEO's compensation, then I don't think the problem is with the "fat" of too many employees. Companies can't lay people off every year and stay profitable, unless this is just the new way of keeping good talent.

"Let's just fire half the company and see if that improves our labor force."

"I'll just say this about corporations. They routinely cut jobs when profits are down, and the key word there is profits. They are still making money, but they cut jobs anyway. To me they seem ruthless and driven to appease shareholders rather than exhibiting any concern over workers. Corporations nowadays lay off at the drop of a hat, and more often than not it's an attempt to boost share price."

I suppose it's as dangerous to cover all "corporations" with a broad generalization brush, good or bad, as it is anything else. A lot of companies have discovered that cutting people to boost share prices doesn't work very well. As lean as most companies are these days, people realize that when you cut people, it means that some things are not going to get done that were getting done.

However, your anecdote about the CEO of a company giving such meager compensation points out that companies are no better or worse than the people in them (and who run them.) Some CEO's are probably heartless bastards. The problem they run into is that talented people usually don't want to work for them. Some CEO's are pretty people oriented. We recently had a merger with another large company. The result was that a number of people did lose their jobs, due to job duplication (you don't need two of everything.) The CEO said that it wasn't these folks' faults that they were losing their jobs - they got the equivilent of three years pay and kept their medical coverage until they found a new job (up to two years, I believe.) A lot of us were raising our hands and saying "Oooh! Ooh! Fire me, fire me!" ;)

Some companies are great people companies; some are OK; and some suck. The ones that suck tend to go out of business eventually. But they are out there.

Yeah, you just don't hear much about the good ones. I do think there's some larger problem at the macro level causing ludicrous upper-level executive salaries, though.

WRT CEO salaries: everyone likes to make fun or or deride your CEO's compensation, we all do it. But I wonder how you properly valuate a company CEO's salary? If you are responsible for leading a company with $20 Billion in sales, is $15 Million in salary and options outrageous? It's sure a lot more than I make. But relative to the job responsibilities, and what I get paid for the piece of the company for which I'm responsible, I'm not sure it's out of line.

There are a lot of places where you can find the compensation of just about every CEO. When you compare the size and responsibility of the role to the comp, I see some that seem relatively low, a lot that seem reasonable to the job, and some that are indeed incedibly high relative to the role. Was Jack Welch worth a few hundred million a year to GE? There are a lot of people who would argue that he was. I personally can't comprehend anyone being worth that much to any company, but I also can't comprehend baseball or basketball players being worth a hundred million dollars.

Of course, someone in my group made the comment: "I want our CEO to make a few million. Because I know the person under him will make less than he does, and so on down to me. If he only made $100K, I wouldn't make anything!" ;)

Obviously executives should have higher pay than the people lower down; I just can't figure out why it's gotten so high recently. According to Krugman, who references some management consultant named Graef Crystal, from 1975 to 1990 the CEO/worker wage ratio tripled. Structural changes making executive decisions a lot more important (I doubt a steel executive mattered as much as Intel's) explains some of that, but 300%? Hmm.

A side note, only vaguely related to the topic at hand: The CEO of American Airlines, in light of all events and the massive layoffs, etc., has refused any form of compensation -- no salary, no flying on anything less than a fully purchased ticket, no medical coverage drawing from the company's cash-flow -- for the remainder of the year. He announced this shorty after the Sept 11 attacks, before a single worker was laid off.

So, yes, good CEO's are out there.

>I just can't figure out why it's gotten so high recently

Pretty simple explanation -- that's what the market is willing to pay for capable individuals in that position. In the same way that it costs a baseball team a lot of money to get a capable pitcher, it costs a lot of money to get, and retain, people capable of effectively running large corporations.

I don't understand why people are offended by a CEO managing a significant public company -- someone who is in a high pressure job and constantly in the spotlight and under scrutiny, managing operations worth billions of dollars -- earning a few million bucks in annual salary, and yet accept baseball players, actors and musicians making 10 times that amount.

Heh, it's o.k. for someone to earn a lot of money if they can carry a tune, jump really high, or imitate Superman's father, but not to earn a lot of money if you're intelligent and a capable biz guy?

It's not the few million as much as the tens of millions they get in stock options and other bonuses that I find hard to swallow.

It would be interesting to see what would result if stockholders could actually set the executive salaries, rather than an insulated board doing it. I think there's definitely a lot of cronyism that goes on at the high levels, with CEOs serving on each other's boards and approving the sweetheart compensation deals for one another.

'I don't understand why people are offended by a CEO managing a significant public company -- someone who is in a high pressure job and constantly in the spotlight and under scrutiny, managing operations worth billions of dollars -- earning a few million bucks in annual salary, and yet accept baseball players, actors and musicians making 10 times that amount.'

In star occupations like that, they're the non-interchangable components that produce all the value. It's not like I'm personally offended by high CEO salaries, I'm just completely unaware of anything they do that earns those salaries on economic utility. There's exceptions, obviously; Gates is probably worth every penny.

Check out GE, for example. Jack Welch, at GE, earned his salary by.....what? Can he even tell you? By comparision, I can probably name a dozen things that were almost entirely Bill that made MS enormous piles of cash.

Obligatory link supporting my argument:

http://slate.msn.com/?id=106248

>It's not the few million as much as the tens of millions they get in stock options and other bonuses that I find hard to swallow

Stock options, when issued, are valueless. They just give the employee the right to buy shares at the current market price (which anyone could do, in the public market place). Options only become valuable if the company gains in value - as objectively reflected by the public market's assessment of the value of the company - while the employee is contributing to the company.

If a company is worth three times as much as it was prior to an employee's tenure, why shouldn't that employee share a very small percentage of that gain (and notwithstanding the dollar amounts, the percentage is very small)? Those awards have just turned out to be worth a lot of money recently because of the ridiculous public valuations companies were getting over the past few years.

Stefan

"Check out GE, for example. Jack Welch, at GE, earned his salary by.....what? Can he even tell you?"

That's not a good one to pick on. Welch has an incredible amount of documented leadership and tough decisions that made GE one of the top performing companies in the world, good time and bad. As someone who has competed directly with GE in a number of areas, I can tell you that they would not be where they are today without his policies and leadership. He's bucked the trend many, many times. One of my favorite lines from Jack: when he was questioned by a group of securities analysts about a move that he made with the company, he gave an answer that many of the analysts openly disagreed with. The next day he was asked if he wasn't worried about the analysts opinions of what he was doing. Welch said that as soon as he found a securities analyst that had successfully run a multi-billion dollar company, he'd care about their opinion. ;)

More company CEOs should have such cajones - many are so driven by Wall Street opinions that they do incredibly stupid short term things.

>In star occupations like that, they're the non-interchangable components that produce all the value

They're completely the same thing. For every "non-interchangeable" sports star like Michael Jordan, there's a non-interchangeable superstar CEO, like Bill Gates. The bulk of CEOs, and sports stars, however, aren't as non-interchangeable -- the market reflect how easy it is, or isn't, to replace them. There's also wacky examples of sports stars paid more than it turned out that they were worth -- but, in general, how much it costs to hire someone determines how "interchangeable" he/she is. Nobody wants to pay more then they have to - or is going to pay unless they think they're getting fair value.

Stefan

I should have used "superstar" instead of non-interchangable. MS probably wouldn't have gotten to where it is without the superstar running in (Gates), I imagine, but I don't think the GE CEO position is a superstar position anymore.

Judged in terms of profitability and growth, Welch is just a middling CEO compared to GE's other executives in the past. Maybe GE's just had an incredible run of CEOs, or maybe the guy at the top doesn't matter to this specific company.

'Welch has an incredible amount of documented leadership and tough decisions that made GE one of the top performing companies in the world, good time and bad.'

Again, I have no idea what these ballsy moves are, even for Welch. Check out this article, linked from GE's own page:

http://www.ge.com/news/welch/articles/bw0698.htm

Six Sigma, the nice salary structure (up to a 25% single-year raise without promotions), and a rational options approach are only the only macro-level things of note in there. The stories about him going apeshit on people four levels down in the organization (the CAT-scan thing) are great, but are these what CEOs are supposed to do? Does it make for great stories, or great profits?

I think GE's secret is right here:

'While many companies profess to run as meritocracies, in reality, they are often conscious of both class and credentials. At GE, however, many of the company's most successful executives were, like Welch, the first in their families to earn college degrees and rarely boast Ivy League diplomas. They are promoted without regard to titles or seniority. When it came time to pick a new CFO, for instance--a key position with some 7,800 finance people reporting to it--Welch passed over several candidates in line for the job in favor of then 38-year-old Dennis D. Dammerman two layers down in the ranks because he was impressed with how he had handled other tough assignments. ''What counts is what you deliver,'' insists Welch.'

Is that Welch, or GE?

It's the GE that Welch built. Everyone went through ten years of hurt before GE accepted a lot of what he wanted it to be. His nickname, "neutron Jack," came from how many people he laid off in those early years. But you really can't argue with his results. GE went from a dog to a star performer, and the culture there now is such that if you are a business, you probably don't want to try going toe-to-toe with them. For such a big company, they are fairly agile, and relentlessly capitalist.

I think a lot of people resent CEO salaries because they can't see what that salary gets them. A sports figure plays a game right in front of you. The value, and activity, is plain. A CEO works largely in secret, with information that can't be publicly revealed for legal of business reasons. They can have a great time of it in a boom economy, or have to be the one that pulls the plunger on thousands of jobs when times are bad. Are they worth it? I dunno. I wouldn't mind a year at their salary to find out, though...

http://www.tnr.com/061801/walker061801.html

According to this, GE's performance was just as good before he took over as it is now.

'I think a lot of people resent CEO salaries because they can't see what that salary gets them. A sports figure plays a game right in front of you. The value, and activity, is plain. A CEO works largely in secret, with information that can't be publicly revealed for legal of business reasons.'

Yep.

Jason -
"According to Krugman, who references some management consultant named Graef Crystal, from 1975 to 1990 the CEO/worker wage ratio tripled"

Graef Crystal writes for many major newspapers and magazines, but you can find him most easily in his regular column for Bloomberg. From reading his verious columns, he is supportive of CEOs who link pay to performance. His attitude seems to be that if the company is doing well, the CEO should be compensated well for leading the company there. If the company is doing badly, the guy should be paid like a normal human being.

Mark -
"It's not the few million as much as the tens of millions they get in stock options and other bonuses that I find hard to swallow"

The above point really gets to your comment. If these guys start with options that are tied to long-term success of the company, that's not so bad. What really bothers a lot of people is when a company starts to go down the drain, and companies reprice options or add extra incentives to pay CEOs anyway.

'What really bothers a lot of people is when a company starts to go down the drain, and companies reprice options or add extra incentives to pay CEOs anyway.'

Yeah; that guy who's getting paid a salary of 300k+ for the rest of his *life* after getting canned from Webvan is Case #1.

My general annoyance with this is as so: if the CEO/worker wage tripled across the board, that means that the guy at the top, in *general*, became three times more valuable to publicly traded companies than their average worker. I'm inclined more to think something has happened to the criteria executives are judged on, or to the boards that pay their salary, then to think there's some fundamental change in the economy out there that explains it. Unless there was a reason executive compensation used to be artifically low, but I can't figure out anything there either.

And with that, I'm going back to Civ 3. Ye-ha.

Jason -
"Unless there was a reason executive compensation used to be artifically low, but I can't figure out anything there either. "

Sure. Corporations have finally figured out how much it helps to get a leader with 'Famous' and 'Megawealth' early in the game.

"I don't understand why people are offended by a CEO managing a significant public company -- someone who is in a high pressure job and constantly in the spotlight and under scrutiny, managing operations worth billions of dollars -- earning a few million bucks in annual salary, and yet accept baseball players, actors and musicians making 10 times that amount."

Well, people are somewhat offended by Tom Cruise and associates making $25 million a picture, too, Stefan. Though it doesn't bother the average Joe as much as CEO's raking in hundreds of millions, mostly because they don't see Tom Cruise laying off thousands of people to satisfy a bottom line that has more to do with profitability forecasts than actual earnings and losses.

Also, people see why movie stars, rock stars, and pro athletes make the big bucks. A movie opens with $60 million in the opening weekend and the star is known to be getting $10 million plus some of the gross. Same with a musician with a multi-platinum album and an athlete who had a big season that helped his team go deep into the playoffs. That stuff is tangible and seems fair. Jack Welch earning hundreds of millions of dollars for figuring out how to downsize GE and make rich people richer just seems arbitrary and cruel.

>CEO's raking in hundreds of millions, mostly because they don't see Tom Cruise laying off thousands of people to satisfy a bottom line that has more to do with profitability forecasts than actual earnings and losses.

That's a fair point.
But it's also a misperception. CEOs, whether they fire a bunch of people or hire a bunch of people - or make any other business decision - are acting to maximize the value of the company's owners' investment -- they're obligated to act in the "best interests of the corporation" -- that phrase, has been construed by U.S. courts, to mean increasing share value for shareholders (the owners of the business). Increasing the value of the corporation.

There's competent CEOs and incompetent ones; liars and straight-shooters; assholes and altruistic people - like in all jobs or professions - but all CEOs are required to act in the best interest of their corporation. Sometimes their judgment is flawed, or they make short-sighted decisions, but firing people in times when they're not needed for the corporation to produce the goods, or supply the services, that are its business, is generally in the "best interests of the corporation". Even though those decisions naturally don't make them any fans among the affected people.

Being a CEO at a large public corporation is an incredibly tough, demanding, high pressure, "100 hours a week" job. A job, I suspect, that most people (including myself) wouldn't want -- while almost everyone, at some point in his/her life, dreams about being a famous actor, musician or sports star. Coffee drinking Jeff Green still dreams of taking his lute on the road, and musically entertaining the masses. But you won't see him through his hat into the Ziff-Davis CEO search.

Stefan

"Jack Welch earning hundreds of millions of dollars for figuring out how to downsize GE and make rich people richer just seems arbitrary and cruel."

Over the last decade, with more and more households investing heavily in stocks, this focus on earnings has had a significant impact on the finances of more than just "the rich getting richer." The "bests interests of the corporation" means the best interests of the stockholders. So throwing out this kind of populist argument might have been a lot more appropriate in, say, 1980.

>Over the last decade, with more and more households investing heavily in stocks, this focus on earnings has had a significant impact on the finances of more than just "the rich getting richer."

It's true that more "average" people are investing in the stock market, but let's not lose sight of the fact that the people that really benefit from a CEO's actions are the large institutional investors and they're also the ones that exact the most control over corporations. My dad might own 1000 shares of GE, but they couldn't care less about what he has to say about how they should run the company.

What I find reprehensible is the sequence of events that often occurs: CEO lays off thousands, and within a year cashes in lucrative stock options for millions.

Even when CEOs get ousted, like that Jill whatever at Mattel, they often walk away with tens of millions. It's galling to us everyday joes in the street.

>that the people that really benefit from a CEO's actions are the large institutional investors

All shareholders benefit equally. Shareholders with more shares gain, or lose, a proportionately equal value per share depending upon the company's performance.

>and they're also the ones that exact the most control over corporations.

They have more votes, and they're more organized, and far more likely to want and be able to organize other shareholder votes -- so yep, corporations are more interested in how those shareholders are going to vote than someone who doesn't exercise meaningful voting rights. The biggest owners of the business (and the only ones that can meaningfully exercise votes) are usually insitutional shareholders.

Institutional Investors (often pension/mutual funds, banks and other financial institutions) act as watchdogs on behalf of the shareholders, and hold management of the corporation responsible to the owners of the corporation. The benefits (increase in share value) are shared equally by all investors. Institutional Investors usually have their own stakeholders that hold them accountable as well.

Stefan

>Institutional Investors (often pension/mutual funds, banks and other financial institutions) act as watchdogs on behalf of the shareholders,

I seriously doubt that CitiCorp gives a rip about the value of my shares of GE; they care about their bottom line and that's it. (Which is often compounded by the fact that the large investors are themselves public companies, which creates a big ball of fun.)

That's just the way things work and I understand that. However, I do take issue when people try to present that part of our economy as one big happy family where everyone is backslapping and looking out for each other's best interests, because that just isn't the way things work.

>and within a year cashes in lucrative stock options for millions.

Yep. Even if you suck and ruin people's lives because you can't manage your way out of a wet bag you still make out like a bandit.

>CEO lays off thousands, and within a year cashes in lucrative stock options for millions.

Again, that could only occur if they made many millions for the owners of the business (since options are only valuable if share value increases during their tenure)

>Even when CEOs get ousted, they often walk away with tens of millions.

That's because it's expensive to hire people that (at least appear) qualified for that job. There's few people who can do it, so those that can go with the highest bidder. The market determines the price paid to hire those employees (at least at widely held corporations), just like it determines the price paid to hire "ordinary joes".

>It's galling to us everyday joes in the street.

It's galling that untalented schmoes like Keanu Reeves and Helen Hunt get paid far more than almost all CEOs, in spite of the talent disparity. It's galling that my sports teams constantly overpay prospects who never deliver (c'mon, Toronto is the biggest Hockey city in the world, and we can't get a winner in my lifetime) in spite of the fact that it costs a few hundred bucks to take a family to any game. It's galling that people pay millions to boy band "musicians" that are created by marketers.

Jobs where people make a lot of money are always going to piss off other people, since invariably some untalented or incapable people end up in those extremely high paying jobs. But most public company CEOs I've met are far more impressive, intelligent and capable than the people I've met in the film industry, who usually just seem like naive snobs.

Stefan

>I seriously doubt that CitiCorp gives a rip about the value of my shares of GE; they care about their bottom line and that's it.

Exactly. They care about the value of their shares of GE. Since you also have shares of GE, you benefit as much as CitiCorp does from actions that CitiCorp takes to influence management to take actions that increase share value.

Stefan

I'm assuming the numbers here are correct. Not to get all socialist, but investing is still something for the rich.

http://165.230.26.130/projects/S.Cagan/radio/Stockownership.html

'And then, since all this mythical stock ownership is supposed to be an indicator of the democratizing of capitalism, we should think about distribution. It turns out that as of '95, the top 1 percent of the population owned, directly and indirectly, 51.4 percent of stocks. That one merits repeating- one percent of the population owned more than half of all the stocks. The next 9 percent owned 37 percent. That leaves 11.6 percent for the bottom 90 percent of the population. Now that's an interesting concept of "everyone."'

'For '95, the median stock holding-not income- was valued at $18,000.'

>They care about the value of their shares of GE. Since you also have shares of GE, you benefit as much as CitiCorp does from actions that CitiCorp takes to influence management to take actions that increase share value.

I wish I lived in your la-la land where mega-corps look out for the little man.

Large investors can take a number of steps that benefit them without benefiting the average stockholder. They can buy up tons of shares in an effort to initiate a hostile takeover; they can dump large number of shares onto the market; they can engage in IPOs (which is forbidden territory for the average joe-schmoe) and none of those things will necessarily help me. In fact, some of those actions could hurt me.

And now there's a semi that's on fire driving through Dallas. See what you've done! :-)

>Large investors can .. buy up tons of shares in an effort to initiate a hostile takeover; dump large number of shares onto the market; engage in IPOs and none of those things will necessarily help me.

You're making a completely separate point (or several, since you're including actions that relate to the corporate financing options of a business, as opposed to the conduct of insitutional investors in other businesses) -- the actions you list are things that someone can take in connection with their own financial planning or their own corporate finance needs -- and they're all extraordinary actions, which aren't the actions of a normal insitutional investor that just wants to make sure it isn't ripped off because management of the company they invested in isn't acting in the best interest of its owners.

Institutional Investors are risk adverse -- they don't look at their investments in the stock market as part of some comprehensive mergers & acquisitions strategy -- they just invest in shares because they can earn more money than then can by putting their cash in term deposits or bank accounts. Almost no insitutional investors could even take the extraordinary actions in your list in connection with their investments (because their own stakeholders wouldn't let them).

>I wish I lived in your la-la land where mega-corps look out for the little man

I wish I lived in that la-la land too, but that's not what I stated (because it's not true). Mega-corps look after their own best interests, which means increasing their share value so that their owners make money. I you happen to be a shareholder, you get the same benefits as any other owner.

>And now there's a semi that's on fire driving through Dallas. See what you've done! :-)

Yeah, I was watching that too. Weird.

"What I find reprehensible is the sequence of events that often occurs: CEO lays off thousands, and within a year cashes in lucrative stock options for millions. "

That usually only happens when something turns around. Most companies don't profit from layoffs. If they didn't think they needed the people for a purpose, they'd have never hired them in the first place. When you see scenarios like the one above, it's usually because of a sudden (and brief) economic slump with an equally fast recovery, or some new technique or technology suddenly making a big number of jobs obsolete. In the first case, the company rebounds and the price goes up. In the second case the company has a choice of either going with the new process or being outmaneuvered by competitors.

Layoffs suck. I'm sure there are some people who can make them without any remorse. I do hope that they are few and far between.

So far as the dragged-out arguement about corporations not caring about the little guy: William, what's your point? They don't even know who you are, sure. But if they have the same stock you have, all their pressure (which you have already confessed YOU cannot bring to bear) will be placed on the company to increase the value of their investment. Corporations need to make money. They won't purposefully bollox an investment just for the notion of messing with some "little guys." Don't be bitter, just because that 1000 shares of GE stock you keep mentioning is worth about 60% of a year ago. (I only know that 'cause I'm in the same boat, ugh.)

I agree, this is a sucky time. But Americans have been very pro-big business all through the 90's when times were good. Now we have what we asked for, by giving them all of our investment money for that ten years. And now that things are slowing down, we are going to see the flip side of that approach.

">And now there's a semi that's on fire driving through Dallas. See what you've done! :-)

Yeah, I was watching that too. Weird."

Cable news channels spent, what, 2 hours covering that yesterday? Can Gary Condit be far behind?

It may be true, Desslock, that now that a majority of Americans are shareholders in some sense, that their interests are often in line with those of the global corporate entities. In is not at all clear, however, that this is a good thing. Having American shareholders as customers didn't seem to make a difference to Ford when it came time to release the Pinto. The slave child labor many of our largest apparel manufacturers and retailers build their businesses on, alas, are not "lucky" enough to be shareholders.

>Having American shareholders as customers didn't seem to make a difference to Ford when it came time to release the Pinto.

Just to be clear, I am not stating that corporations will act in the interests of people (whether they're shareholders or not) -- in other words, that corporations will act nicely (or even in compliance with applicable law). All I'm stating is that corporations will act to increase their share value, since that's what the courts have held is in the "best interest" of their owners (the shareholders), and therefore the corporation. If you happen to be a shareholder, your investment will get the same appreciation as a result of decisions that raise share value as any shareholder, even larger institutional investors.

I'm also not stating that all CEOs are great guys, or that their decisions are justified -- I was just criticizing the general statements that CEOs are overpaid, and suggestions that firing people while the CEO is getting paid is wrong, or that "suits are bad".

There's lots of examples of offensive, or inane, corporate actions taken by CEOs, and I've consistently written editorials critizing them in the gaming industry. EA's conduct over the past few years (especially relating to EA.com) has been both unfairly harmful to both its employees and, arguably, its shareholders. Putting the Wing Commander licence on ice? Cancelling UO2?

Similarly, Brian Fargo may be a great creative developer, but he's not a qualified CEO, in my opinion, and Interplay shareholders and employees have suffered as a result of his failure to recruit a more professional corporate officer. Trip Hawkins may have been a founder of EA, but I'm skeptical that he can make The 3DO Company a viable ongoing operation. Hasbro made a bone-head move by selling the D&D licence to Infogrames for 15 years and bungling Microprose; Mattel/The Learning Company mismanaged SSI's properties, etc.

Stefan