Jack Welch has died(wsj.com) |
Jack Welch has died(wsj.com) |
Yeah, levering up, firing people, deindustrialization and financialization about sums up the dude's career. "Business guru decides burning the furniture more efficient than heating with coal."
Well, it's they themselves that should have thought of their families. It's not our fault when we say exactly what they were.
It’s important to be kind to all, but it’s also important to give people space to grieve.
https://news.ycombinator.com/item?id=13041886
I guess as long as you're a Republican you're free game, even in death.
But then again - "I think what religion and politics have in common is that they become part of people's identity, and people can never have a fruitful argument about something that's part of their identity. By definition they're partisan."
Anyone conservative you people dance on their grave.
Anyone socialist, including brutal dictators, you praise them.
It's as simple as that. I can find you many examples of this. Common theme between them all is their political ideology.
It's morbid and unenlightening. There is a large demographic that is reaching mortality age. HN is going to be filled with nothing but daily "has died" items for the next several years.
GP took a cheap quip at a dead man, for laughs and karma.
And just because he was (by all accounts) an asshole, that flies? And doesn't just fly, but inspires righteous indignation that anyone would feel it's disrespectful?
Be the change you want in the world.
Well, according to a comment upthread:
> In upstate New York he held back for over a decade any effort to mitigate legacy PCB pollution from GE’s mostly closed factories there. He funded AstroTurf organizations and downplayed research showing connections between PCB pollution and health problems.
But yes, it's called Right to work.
> A Right To Work law guarantees that no person can be compelled, as a condition of employment, to join or not to join, nor to pay dues to a labor union.
This results in less powers to unions, which means employers have more freedom of discretion to fire employers, but also means employees are not forced into massive corrupt labor unions that halt efficiency.
Right to work states are mostly red states.
The funny thing is that labor unions in Germany work great, and that country leads the world in exports. Labor unions in the US, however, seem to frequently become corrupt. The problem isn't unions.
https://news.ycombinator.com/item?id=13042003
Somehow over the years, HN has become an echo chamber of very specific ideals and non-tolerant of anything else.
> 10k over 50 years? Wow, that's a lot less than I imagined from how he is described as a mindless killer, and the dictatorship as drenched in blood.
Wow, the responses there.
Yes, the freedom to fire workers for what others might consider "stupid reasons" is a core conservative value, stack ranking included.
Tighten your speech if you want specific responses.
What I don't seem to get is how a business tactic is worse than mass-murdering 10,000+ people. Hacker News has a strange moral compass.
During the 2000s and early 2010s Microsoft's stack-rank reviews were infamous for the internal politics created. Didn't matter if you had a full team of top-tier engineers, the bottom 15% WAS going to get managed out. Savvy managers would hire low-tier performers to protect the productive ones.
That's the only lens through which I have to view Mr. Welch's contributions unfortunately.
https://en.wikipedia.org/wiki/Vitality_curve
https://money.cnn.com/2013/11/13/technology/enterprise/micro...
https://en.wikipedia.org/wiki/W._Edwards_Deming#Seven_Deadly...
Years ago in an effort at self improvement I did a postgrad course on software quality. Studying what Deming has to say was a big part of it. Turns out it is not so easy to apply it to engineering (as opposed to manufacturing what the engineers designed), and the ham fisted approaches the postgrad course was promoting at the time (like CMM) didn't look promising, and with the benefit of 20 years hindsight now look farcical.
Nonetheless, his dogma of extracting statistically valid measures of processes, propagating those through the organisation so harvesting everyone's ideas on how to improve them struck a deep cord, and it's something that I've tried to apply ever since. I've been exposed to other MBA related ideas, but that is the only one that ever made sense to me.
It's a pity it's so damned hard to apply to software engineering. It has one one notable effect - I'm now seen by my co-workers as near obsessive about collecting and monitoring failure rates - whether they be bugs or things like people reporting software being difficult to use.
And somehow that got cargo-culted into "we should continuously get rid of the bottom X% of people all the time".
his book maybe?
He was still defending the practice in 2005: https://usatoday30.usatoday.com/educate/college/careers/Advi...
In my first year there I had 3 different managers, so by the time my review came around, nobody really knew me very well. At least not well enough to fight for me in the ranking meetings.
So ultimately, I received the lowest ranking. What made it most annoying is that it was prefaced with a speech about how I was doing a good job, but someone had to get that ranking. This was just me.
About the only good advice that manager gave me was that if this happened again, I should leave the company because it was going to be an endless spiral that I couldn't get out of.
It was actually the last time they did the stack ranking and I left before finding out if things got any better. The whole project I was on got canceled a few weeks after I left anyway.
In my experience this turns out be a huge scam. Worse a legally sanctioned scam.
Say she had 11 members in her team. She will give $90 to her pet, and $1 each to the remaining 10. That is how this works on the longer run. The definition of a 'high performer' is often hazy here, and a case can be built up to justify giving the money to whom she wants.
Eventually it turns out there are enormous cartel like structures, you have to be in them to get paid up well. Or you slog like a donkey and quit eventually.
Welch more than quintupled GE during his time. None of his successors could manage the company so what he built is slowly being dismantled. What I never understood is why they didn't just split the company in half which would have returned more value to the shareholders.
Or GE Financial was hiding a ton of bad debts while he was in charge.
"Tell me about a time when..."
"I want to see how you think."
"What your greatest..."
95% of my philosophy is don't be an asshole, work hard, know my stuff, and don't let the turkeys get me down. I spend no time dwelling on mistakes, as I internalize the lessons and throw out the reason I learned those lessons.
So does Jeff Bezos. 10% forced "least effective" is still implemented here at Amazon and is truly destructive. The quota often gets passed down to small teams. The worst part is that performance evaluations have almost nothing to do with performance.
Juking the stats! I'm shocked there isn't a middle management bible dedicated to this.
Where is the hackers guide to middle management?
Under Mr. Welch, GE became known for consistent profit performance and a surging stock price. Much of those gains came from GE Capital, the finance arm that ballooned under Mr. Welch and would almost destroy the company during the 2008 financial crisis.
GE’s profit has plunged in recent years, dragged down by hidden costs in the company’s Capital unit and losses in the core Power business. The troubles have prompted the company to break itself apart, overhaul its leadership and slash its once-generous dividend. GE’s share price tumbled roughly 75% in 2017 and 2018, erasing $200 billion of wealth for millions of investors.
In his later years, Mr. Welch witnessed the GE he built get dismantled. The decline of the company pained him, according to friends, and he sometimes said he gave himself an A for his execution of its operations, and an F for his choice of successor.
Jack was known as a sharp negotiator and a master of project management and contracts. His marriage failed one month after his wife of many years became "vested" in the pre-nuptial agreement. Suzie Welch was unavailable for comment at the time of publication. Welch demanded full commitment and high levels of performance from his employees. He trained all in the religion of Six Sigma, all the better to remove "waste" and "unnecessary costs" from GE products. He also trained all managers in "ethics" as a means for them to know and understand the limits of ethical behaviour, to know where the gray zone was in relation to those limits, and then to be able to "cluelessly" operate beyond the gray zone limits.
He is survived by countless GE customers who cheer the ongoing demise of the company, by arrogant former employees and managers who remain unemployed due to their catchphrase "this is how we did it at GE", and by many retirees doomed to eat catfood since their no-decision investment in GE stock has left them in penury.
He turned around GE for the short term, but undermined the fundamental model of a conglomerate (there are good arguments for and against conglomerates, but GE was an is one). The metrics used were ultimately all short term ones and allowed the business to become lopsided, a disaster from which it has still not recovered.
The analogy of "cutting the fat" (nicely timed for the era of the Jane Fonda workout)* was stupid. Actual healthy humans have body fat in the teens, with a few elite athletes (who do nothing but train) at the very low end. Instead the mantra was to consider anything not immediately useful -- drive the "body fat" to 0%.
It's like a community madness, and it spread to corporate America and to some extent governments as well which has resulted in the current parlous state of the economy: a Potemkin economy that looks great only because the metrics used all face the "painted side".
Good riddance to this blood sucker.
* no insult intended for the Jane Fonda Workout
Really? You don't agree with his corporate style / strategy / books and that justifies saying something like that?
First: he's been fundamentally destructive to the global economy, which has had a particularly brutal effect on, IMHO, the majority of people who live in countries that were industrial economies in the 1980s. The hollowing out of the middle class and precarious economic position of younger GenXers and millennials can be laid in a large part at the unthinking adoption of the bullshit he promoted and demonstrated. (note that I am at the beginning of GenX and my child as younger than a millennial so I am not bitter from some personal hurt here).
(BTW although GE outsourced during this period, so did many companies, and I do not lay that at his feet. And the result of outsourcing is much more of a mixed bag than it is often described, and in the balance is likely even positive, though the way it was implemented in the US was a combination of this "strip to the bone" which yes has been destructive.)
Second: true, he's dead and that's a tragedy to his family and close friends which I don't downplay. But also he was an asset stripping parasite whose model has ultimately been destructive and he was a lauded champion of such behavior. His death is an opportunity for people to reflect on his immoral behavior the consequences of which we are still suffering from.
Can someone speak to his lasting major contributions? I guess he also deserves the credit/blame for the ubiquity of Six Sigma.
The tragedy wasn't Jack Welch, the tragedy was a financial and economic system that actively rewarded his bizarre beliefs and actions.
GE was a mess internally, all the way down to the shop floor, before Welch took over. His impact cannot be understated.
We were big Jack Welch fans - if he hadn't grown GE the way he did, my hometown - where it was the largest employer for decades - would have been a lot poorer.
In my culture we're taught to never speak badly of the deceased so I'll say nothing about Jack Welch.
3M also have been trying to cover up their responsibility for these health-damaging outcomes for decades.
https://theintercept.com/2018/07/31/3m-pfas-minnesota-pfoa-p...
...Welch - known as “Neutron Jack” for cutting thousands of jobs - bought and sold scores of businesses, expanding the industrial giant into financial services and consulting. Under him, GE’s market value grew from $12 billion to $410 billion, making Welch one of the most iconic chief executives of his era.
But his push to build out the GE Capital financing business nearly proved the undoing of the entire enterprise during the global financial crisis more than a decade ago, and GE now trades at a fraction of its peak value....
https://www.reuters.com/article/us-people-jackwelch/neutron-...
Jack Welch was the child of a railroad conductor, born and raised outside Boston. He worked as a golf caddie, newspaper delivery boy, shoe salesman, and drill press operator, throughout middle school and high school.
Welch joined GE in 1960 as a junior engineer after his PhD in Chemical Engineering. He was frustrated with the bureaucracy, and planned on leaving, but decided to stay after an executive insisted he'd work on creating a small-company atmosphere.
In 1981 at the age of 45, he became the youngest-ever chairman & CEO of General Electric. He dismantled many layers of management, finally fulfilling his wish that nearly led to him leaving GE to begin with.
In his 20 years as CEO, he grew the company from $12 billion to $410 billion in market cap. Fortune magazine named him "Manager of the Century."
He fiercely believed in free markets. Even despite the comments in this thread on his anti-Climate Change perspective, he believed that "every business must embrace green products and green ways of doing business", as that's what the people, and thus the markets, wanted.
Another interesting note: "Regarding shareholder value, Welch said in a Financial Times interview on the global financial crisis of 2008–2009, "On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy...your main constituencies are your employees, your customers and your products".
THE death of Stalin, like the death of Lenin 29 years ago, marks an epoch in Russian history. Rarely have two successive rulers of a great country responded so absolutely to its changing needs and piloted it so successfully through periods of crisis. Lenin was at the helm through five years of revolution, civil war, and precarious recovery. Stalin, coming to power in the aftermath of revolution, took up the task of organizing and disciplining the revolutionary state, and putting into execution the revolutionary programmes of planned industry and collectivized agriculture. He thus equipped the country to meet the gravest external peril which had threatened it since Napoleon, and brought it triumphantly through a four years’ ordeal of invasion and devastation.
That's from the Times obituary.
> EVERYONE FIRED
> Wall Street Reacts Favorably
http://www.angelfire.com/hi3/ideology/fired.html
Michael Moore used it as the introduction to his '90s-era book "Downsize This!".
Welch is quoted in the article:
> Jack Welch, chairman of General Electric, had more concrete advice for the downsized workers.
> "We've got 40 openings at our Tijuana facility right now," beamed a jubilant Welch. "I'd be more than happy to accept applications from any of our US workers who would like to relocate there. Just give our personnel department a call - and it will definitely help if you can speak Spanish!"
I can see a lot of negativity for the man in the comments here but I agree with him on the culture issue. I can understand the negative feeling people get with some of Welch's personal cultural choices. However, it does seem he was successful at articulating a culture and bringing in a team that believed in that culture.
I think it is wise to try to learn from people even when you dislike them, maybe especially when you dislike them. Even if you don't like what he did, you can change your view to respect how he did it.
However I am very sad he died because I subsequently got a raise and met my wife at my next company.
I stuck around at one company for way too long too, earlier in my career. I finally got pushed out because of a bunch of layoffs. I got a huge raise at my next company, plus a more interesting job too, and better coworkers. I should have looked around earlier, but I was comfortable at that job and afraid of leaving. (That next job ended up not lasting too, again due to mismanagement resulting in laying off my whole team, but the job after also came with another big raise...)
I think the moral here is to not ever get too comfortable at any one job, and don't take things personally if you get laid off: the company is probably being stupid and losing a great asset.
> Stack ranking is harmful because it creates an environment which encourages unproductive behavior. Instead of teamwork, it tacitly rewards backstabbing. The fear of losing one’s job makes people unlikely to speak their mind, leading to a closed environment, in which innovation suffers. Finally, it leads to the emergence of “brilliant jerks,” who don’t recognize or care that running a successful business is more than just hitting quarterly targets.
I'm also reading some books and articles about the root of modern US corporate management, which went back to the second World War and the 10 Whiz Kids. Very fascinating reads.
However after the '08 financial crisis a lot of people took a different, more critique view and I think we have a lot to learn from those guys, positive and negative.
I worked for Westinghouse starting in 1986. Westinghouse went through the same issues investing in real estate loans in the 90s and did not survive.
I remember my manager telling me in the late 80s that the Financial Services division was making more money than the rest of the company combined. This did not make a lot of sense.
It ended up taking the entire company down a few years later.
>> He stated that global warming is "the attack on capitalism that socialism couldn't bring", and that it is a form of "mass neurosis". Yet, he said that every business must embrace green products and green ways of doing business, "whether you believe in global warming or not...because the world wants these products".
From [2]:
>> A vitality curve is a performance management practice that calls for individuals to be ranked or rated against their coworkers ... Pioneered by GE's Jack Welch in the 1980s, it has long been a controversial practice due to its negative effects on employee morale and potential for bias and discrimination. Many companies have abandoned the system in recent years
All said and done, RIP.
[1] https://en.wikipedia.org/wiki/Jack_Welch#Personal_opinions
[2] https://en.wikipedia.org/wiki/Vitality_curve
edit: added [2] link
Indeed, if you think that 10% of your employees must be fired every year then, to me, it is a sign that something is horribly wrong and you should really focus on that, not to mention the horrible effect this practice has on company culture and atmosphere.
The issue is that you will always have "worst performers". There needs to be a minimally acceptable performance level. And you also need enough slack so that the churn isn't affecting overall performance.
That alone disqualifies him as a leader “I did everything right but others screwed it up”.
Well Welch started the insurance business in GE and took on a lot of these liabilities.
And while Immelt certainly had his problems, his mistakes were basically in the fact that he continued the Welch strategy rather than make new types of mistakes.
If you're going to disqualify someone as a leader, Jack Welch is not that guy.
>GE’s profit has plunged in recent years, dragged down by hidden costs in the company’s Capital unit
>he gave himself an A for his execution of its operations, and an F for his choice of successor
Am I reading it right that the reason GE Capital was so successful during his time was because there were hidden costs, making it appear more profitable than it was, that didn't come out until later? Or did this hidden costs actually not exist until choices that were made after he left?
The Wall Street Journal published a massive article on GE's problems back in 2018.[0] Well worth your time, if you want to understand how big companies game their earnings.
https://www.wsj.com/articles/ge-powered-the-american-century...
The best way to describe the management style of the 80's onward would be a financially engineered pump-and-dump characterized by putting workers through the meat grinder, and shirking any social responsibility that could be conceivably avoided by any means possible. Those are the basis of the hidden costs. Each person that got sacked took more institutional knowledge with them, and each responsibility shirked was just a matter of time before it came back around to bite the company on the balance sheets.
Once 2008 hit, seeing as most of the value the Capital part of the company had was found to be a house of cards, nearly taking the company out with it.
When the price of growth is to be an absolute bastard; one should wonder whether the price is too high. Note also that Reich's management style basically required the Reagan era deregulation to thrive. He was far more reserved when Unions actually had teeth.
Really a shining example of what not to emulate in my book. If you have to sacrifice long-term stability for short-term growth, you're misreading the landscape.
Yes.
As Michael Scott would say "My biggest flaw is working too hard"
Jack is upset that his successor did not turn out to be person of questionable moral values and shady accounting genius.
Worth noting: The only reason GE did not go bankrupt in 2008 was because the government bailed out GE Capital. It's doubtful that GE Capital's risks were being properly accounted for when Jack was in charge, and it was a large fraction of Jack's balance sheet.
We can all thank him for pioneering stack ranking and Vitality curve performance management that called for firing of bottom 10 percent each year.
A Japanese head of company once said, "there's no point firing bottom 20 percent because given time, there will be new bottom 20 percent formed to take its place.
Very, very few companies really want to hire the bottom 20% anyway.
Obvious he was a very powerful and capable man but he used his powers only for his own gain and overall made a negative contribution.
He's one of two people in the management chain I've met in my career that they working at a company (not even in my management chain, but there at all) is mutually exclusive with me working there.
Inflicting "stack ranking" upon the world, for one.
Not all contributions are positive.
During the stack ranking heyday there was a manager who spent his year compiling a list of mistakes by other teams. When it came to year end reviews anyone asking about the ranking of this manager's people ended up deflected with questions about their own team members. People learned to just leave this manager's rankings alone and work around him. He was wildly successful, getting promoted early and often before leaving the company to go start a recruiting firm which allegedly applies some sort of AI principles to picking good candidates.
The real failure of stack ranking is it never ends, so at some point you are firing good employees.
The ideas of outsourcing your core businesses, of fire-selling everything you couldn't exploit (any business GE was not #1 or #2, regardless how profitable), and top to bottom accounting fraud.
I wouldn't consider Apple moving into phones as lucky. Would you?
They also were sitting on a ton of real estate (and invested capital from their pension fund), so the comparison with Apple isn't totally on point. Apple didn't get into the market because they already had a warehouse filled with phones.
However, it seems like a lot of his financial results came from "shaping" the quarterly earnings and various unsustainable practices. And for whatever reason his the culture he brought to the company has left his successors overseeing a company that has performed as one of the worst in the whole S&P over the last 15 years. Even if you take a pure industrial company like US Steel, which I don't think anyone would point to as being on the vanguard of management or product, GE is not doing all that well. I dunno. My pet theory is that "leaning" an organization is really a one-time thing, and that it's very challenging to do so without also removing the "seed corn" of research and even development of the next big thing. Though, to be fair, Edison himself had a wildly inconsistent financial record.
I'm not a historian of management theory so I don't know if the ideas are original, or even of how well Welch followed his own advice, but plenty of the things in his books are straight-talking common sense:
* You should know your business well enough you don't need management consultants to tell you what to do
* HR and hiring are important and should be represented in your senior team accordingly
* If you want candour (which you do) you need to reward and praise it, not punish it
* When there's a crisis, don't deny there's a problem
He's not the first person to come up with every idea in his books, but even 40 years later there are companies that need to learn these things.
List of ideas:
1) Oracle fired me to save money, or something? But then replaced me with x number of fresh grad employees who have to be onboarded to my level of productivity?
2) My salary went up and I am much more productive at my new company, which is also a big corp... so theoretically I am more "efficiently allocated" and literally everything was a win/win?
3) But also like others said, it could all be luck and randomness and there are others who get very depressed and/or can't find any work at all?
It's very tough to say, there's no way to predict the future, so it's wise not to attach lots of meaning to anecdotes :)
> You've got a bad take on it. It's letting the bottom 10% know where they are and then giving them a chance to move on. About 70% (of the bottom 10%) leave on their own. Who wants to be on the bottom once they know it? You don't fire them. That's being mean.
Though of course firing is always an option especially in the USA.
From that article the key point I found was that he would rather expend company resources nurturing top performers instead of salvaging the bottom performers. He believes it's a much better investment.
For details on the daily workings of stack ranking at Microsoft, the venerated Mini Microsoft is still up and available in all it's 15 year old glory. It's one of the true documents of contemporary tech work, and I'm glad it isn't just buried in archive.org (long live archive.org).
Go back to the first couple years and you'll be soaking in it.
People who are supposed to approve, audit and verify are a part of the same system playing with the same incentives.
ie you risk ending up with an internal hunger games when in reality you should all be working together against the external opposition.
If you want to get rid of the 'dead wood' then there are much better ways that don't create such negative effects on both the company and the people.
A smarter way to do this, is to have a probationary period on initial recruitment to check either of you haven't made a mistake, and the occasional reorg to which gives the opportunity for managers to remove consistently poor performers over a longer time period - ideally into a better suited role in the same org.
Finally, if his method worked, you'd expect the distribution of performance to narrow over time to the point where you reach steady state where who is in the bottom 10% is essentially random noise on a tight distribution.
Assuming he wasn't that dim, then he could of only intentionally created it to create a climate of fear because he believed that was the best way to motivate people.
It's certainly the easiest.
You don't want to remove the worst performers. You want to remove those don't do their jobs or don't fit in the company. This is very different.
It passes the "gut check". It "feels right".
And that's because it's vaguely in the right direction of a good idea.
The obvious answer is that it doesn't work. One is that inevitably you get done in by cost disease, the other is that LTC insurance has a narrow market of people that can afford it but are not rich enough that they don't need it.
There’s no nice nursing home or homecare. You just need enough money to get in, and the provider can’t kick you out. If you have a good support network, the only “enhanced” level of care is hiring people off the books with cash.
So his legacy is not only a management style that imploded and dismantled a collosal corporation but also him being the kind of person that throws people under the bus, including his closest associates and hand-picked successors.
Stack ranking is stupid, heartless and unscientific. Just like the man who invented it.
He consistently increased earnings via Windows and Office during his tenure as CEO. He was a very good businessman.
He was not, however, a product guy. Witness their failures with the Zune, mobile, search, and early cloud computing. His problem was that he always tried to do what would be best for Microsoft first and not the customer. You can get away with this if you already have an entrenched install base (windows/office), but with net new products people will look at what's best for them first. Even with developers developers developers he tried too hard to get people to use pure MS tech and made developing for the web on MS ugly if you are using anything other than .NET. He didn't see the geeks learning to program in their basement or dorm rooms who ended up using free software instead of going through any "free" channels that may have been available to them (were they?). The result is a generation of developers on Macs and to a lesser extent linux. MS is only now catering to them.
Funny enough, thinking of the customer is what MS did with the xbox and it worked out well enough.
This is why the sensible thing to do is to save up a cushion of 6 months. You can continue with your employer health care with COBRA for 6 months or a year.
1. Cutting cost will always yield a quick gain
2. It's a lot more difficult to turn it around and win in the long term
3. Even if the banker wants a long term picture, cutting cost is not necessarily a bad idea.
Uh...no. He was a trained chemical engineer, and understood products, manufacturing, and operations perfectly well.
In his own words, here's why he emphasized finance:
"My gut told me that compared to the industrial operations I did know, this business [GE Capital] seemed an easy way to make money. You didn't have to invest heavily in R&D, build factories, and bend metal day after day. You didn't have to build scale to be competitive. The business was all about intellectual capital - finding smart and creative people and then using GE's strong balance sheet. This thing looked like a 'gold mine' to me." (emphasis mine)
A good MBA finance curriculum might kick off with the Modigliani-Miller theorem (M&M), which basically says:
1. Theoretically, you can't create value through your mix of financing. It doesn't matter whether you use 100% equity, 100% debt, or 50/50, your mix of financing won't create value (unlike good R&D for example).
2. #1 above is predicated on the absence of tax incentives, bankruptcy costs, agency costs, and asymmetric information, and the market being efficient.
The creators of M&M believed that the assumptions in #2 are mostly false most of the time. The beauty of the theory is in the assumptions themselves. Prescriptively, it basically says that your mix of financing matters only insofar as the assumptions in #2 are false for your project at your company in your country. If you start a division like GE Finance, and you start using complicated financial derivatives, you have several things to prove. You have to show which M&M assumptions are false for your company, to what degree they are false, that your suggested method of financing will take advantage of the M&M violations, and that the magnitude of financing matches the magnitude of M&M assumption violation (this last bit is important, GE really went hog wild with derivatives in a way that was completely not justified). GE Capital never passed the M&M sniff test.
Modigliani-Miller refers to the financial structure of your corporation, GE in this case: it refers to the mix of capital that GE raises from investors (debt + equity). To give a simple example to illustrate, the value of your lemonade stand as a business is based on your revenue minus your costs, it's based on your "business". You need to raise money to buy your raw materials and equipment to get started or expand? Whether you borrow that money or sell shares in your lemonade stand does not change the value of your business. The bit about absence of tax incentives is because you can write off the interest on debt from the income taxes, but the dividends you pay actually get taxed, so there is an incentive for the equity holders to raise some money via debt rather than equity; but the point that M&M makes remains true.
GE Capital did not fund GE, so M&M doesn't apply.
M&M would apply to GE's ownership of GE Capital, but if all the debt and equity is owned by one entity there really isn't a difference between them (see Humpty Dumpty, back together again).
It's quite common for large industrial companies to have large credit arms: oil companies extend credit to gas stations to buy their gas, just like automobile manufacturers finance car purchases. GE was no different. Leveraging their expertise in finance was a natural extension of the business, and financial firms sometimes fail like any other business, whether they are standalone or wholly owned subsidiaries.
Or eyeing your bonus pot and the golf course / opera house.
Shareholders are holding for 3-6mths, executive incentive is aligned to those time spans.
But regardless there are many kinds of investors. The bottom feeders interested in 3-6month time spans are just one of them.
Another trait of a real leader is to be able to grow another leader who can do the same. By his own statements he failed.
Finding a leader who can replace you is a miniscule piece of being a leader. Also, that's ultimately the Board's responsibility. The CEO reports to them.
https://www.nytimes.com/2017/06/15/business/ge-jack-welch-im...
Is this view based on the way Seneca Systems was terminated?
There are numerous Americans and American institutions whose work specifically involves pushing the interests of insurers, pharma and hospitals on Capitol Hill, against those of average people who work minimum wage jobs and can't afford basic coverage.
> a) people fool themselves in the meantime that bad things aren't bad, and
> b) in the aftermath, when the consequences do start to appear, the temporal offset from the real root cause is so large, and they have so many other things to attribute failures to, that they can (and probably will) go the intellectually dishonest route
https://www.colbyrussell.com/2018/10/11/mozilla-and-feedback...
Our system is messed up.
For example, I know a fellow who told me he could not handle the slightest disruption in his paycheck. He was driving a new car, living in new house, wore expensive clothes, and was starting a family.
A friend of mine living in an apartment told me he was unable to pay his bills. I asked him what the payment was on his new car. I suggested he sell the car, and buy a car he could pay cash for. He surprised me by following my advice and was able to reduce his stress about his finances.
My father, an officer in the AF, was once tasked with counseling the privates on their finances, as many were unable to pay their bills on the local economy. (The AF really tries to be a good citizen in the community where the base is located.)
The privates were paid every two weeks. Half of them drank their paycheck away and ate steak for the first week, and begged/borrowed/stiffed others for money the second. They received the same paychecks, but half could not manage their finances. My father would counsel them, work up budgets for them, all for naught.
Apart from the upfront restaurant bills, also you can save money health wise on the longer run.
Or, another scenario, the 'poverty line' is arbitrary and hardly an indicator of universal financial power.
In other words : the poverty salary 'line' tells you nothing of burden, it's just a magic number. If an individual has multiple unknown burdens, their 'poverty line' is at a much different , unknown, level.
I live in California, mostly. I know of families that live (far) below the 'Poverty Line', but because they send everything they can back to their home country for the rest of their family to live on.
Suddenly an individual at the poverty line is supporting 3-7 people in another country; and has no real legal way to justify or exemplify the practice in any legal financial way that would signify their increased burden - they become essentially a lost statistic and generally lie on their taxes due to fear of losing the arrangement.
Individuals that lead this style of life tend to go back home periodically simply because the burden of living in the US with a sub-poverty income isn't realistic.
tl;dr : The poverty income line alone means next to nothing in personal context. Don't assume that you can dwindle every persons' life down to fitting within it, that's not realistic. Saving money is absolutely important, I agree, but let's not just assume that that kind of financial flexibility exists for every individual. It'd be nice, but it's fantasy.
I said "a majority of people". Not every individual.
For some other people, if they'd drop the "keeping up with the Joneses" mentality even just a little bit, they could develop significant savings.
Yes, there are many people in the US who are just barely getting by, and can't meaningfully save without making cuts to essential spending, but that certainly doesn't describe everyone who currently lives paycheck-to-paycheck.
Signed, a homeowner who sees a lot of his less well off neighbors making much more extrvagant purchases than he does.
Braces for downvoting
If you're a democrat, it's because the economic deck is stacked against people.
I thought that a very large majority of credit card debt was healthcare costs and other structural life costs, so that is score one for the democrat view, although we are a very unhealthy population (so back to the republican view a bit)
Then again, the real estate bubble showed that people were getting way too much house (republican view)... of course enabled by almost no oversight of the lending and financials underling it (democrat view).
As a non-cook myself, I can fry some eggs in 3 minutes or so, and a steak a bit longer. Sometimes I'll dump a bowl of frozen veggies into a bowl, put a pat of butter on top, microwave for a couple minutes, and it's ready to eat. A can of beans takes a couple minutes.
The idea that to eat decent food requires much prep time in the kitchen isn't true.
Did you even read my post? I specifically noted this doesn't apply to poor people (the ones the right-wingers will claim are only poor because of bad choices), I'm addressing middle-class and up people.