Viewing the last 30 years of history through the eyes of a corporate raider
One Foot in the Gravy
The last 30 years of US history through the eyes of a Corporate Raider
Corporate raiders are not all bad. They identify companies that could be doing a better job for their stockholders, employees and customers, and offer an alternative. None of them is completely altruistic; to discover which companies need to change significantly, they spend several million dollars of their own money. Then they put up a few million more in seed money to mount a credible threat to the current management, and expect to profit from their investment. Mostly, they profit by forcing boards of directors to accept genuine outside directors, at least one of which is named by the raiders, and to award significant advantages to the raider group.
Where that is not done, the raiders borrow money against the value of the company, and load it up with unaffordable debt. They use the money to purchase a controlling interest in the company, and begin peeling off the more valuable assets. One or more well-performing divisions may be retained; others are stripped to the bare walls and the money banked. Costs are reduced in those divisions, mostly by firing employees and skipping on maintenance, and the shell is sold off to an investor. The easiest investor to interest is always non-U.S., because it provides the foreigner with a claim to legitimacy as a U.S. company.
The dismantling proceeds from there. Often with the resources of a nation-state behind it, the new-found American person (remember, corporations are people, too), the corruption begins. Initially it includes simply overpaying for supplies and services. That’s hardly nefarious, is it? It can be. When I was actively consulting to other businesses, I recommended that they never accept business from a customer they could not afford to walk away from. My rule of thumb was any business than provided more than 15% of your revenue isn’t a supplier, it’s an owner. Over the years I was contacted repeatedly by small-to-medium businesses that had violated this rule, most-often with the world’s second-largest retailer.
For those who believe that this cannot happen to an entire nation, especially one as wealthy and sophisticated as the U.S., I point you to the history of Poland. The Polish-Lithuanian Commonwealth was one of the largest, most powerful and prosperous nations in Europe. By 1795 the country has disappeared off the map. There had been a democracy of the nobility with the King an elective office. Foreign powers competed to gain influence over the electors, each of whom sold out the country in exchange for prestige and power. Little has changed since then in the world. The great powers repeatedly carved up Poland until Germany and Russia jointly invaded and completed the destruction of what little was left. Until then, Poland was probably the single most liberal and sophisticated country in Europe. The elites destroyed it from within.
Hardly unexpected, Poland was the first East Bloc country to break free from Soviet Eastern Europe. In1939 the British and French had accepted Germany’s assurances that it would only fight a defensive war against Poland, which international treaties among the great powers had reduced to a defenseless target. Restored in 1918 at the end of World War II, Poland had been robbed from within and without ceaselessly until the German-Soviet invasion.
The great tradition of liberal Western democracy ended in the United States in 2016. The Resistance was born the day following the presidential election, and vowed to make it impossible for Trump to govern. It succeeded beyond anyone’s imagination. On balance, there was little difference among Bush, Obama and Trump, except that Trump offended sensibilities with his rude and crude demeanor. The other difference was that Trump fought back, and, unforgiveably, interrupted the coronation of Hillary Clinton.
By the middle of June, 2019, foreign investors owned 23 million acres of US farmland, a area equal in size to Ohio. In 2012, both Vaseline and Ben and Jerry’s Ice Cream were owned by Unilever, a British-Dutch firm. Gerber baby food, which controls 80% of the US baby food market, is owned by Swiss firm Novartis. Purina is owned by Nestle, and even John Hancock Life Insurance is owned by a Canadian firm.
The mistaken belief that we are secure from foreign threats due to our debt level is quaint. Other countries have already used their dollars to buy up much of the U.S. Four countries’ sovereign wealth funds each holds about a trillion US dollars in debt: Japan, China, Kuwait and Abu Dhabi. Craven U.S. politicians of all stripes are willing to sell their votes to foreigners for a few dollars. We are no longer an independent nation and should stop pretending we are.
The U.S. is already taking the first, least effective, measures to fight foreign ownership. We are attempting to monetize the debt by printing and borrowing trillions of dollars, which makes each individual dollar worth less, including dollars in bonds and other debts held by other countries. Ultimately, we can monetize the debt by making the money supply five to ten times what it was yesterday. This is what Germany did after being assessed ruinous fines and repayments to pay for World War I. People eventually started carrying cash in wheelbarrows, and being required to pay for meals before eating them, because they would cost more before they were consumed.
In Zimbabwe, a similar effort resulted in eventually printing the one hundred trillion Zimbabwe Dollar bill, now worth about $US5 as an oddity.
Viewing the last 30 years of history through the eyes of a corporate raider
I actually have one of those bills--got it for free in Zambia.