Angry Geoff Writes About Economics

To me it is a prime example of what is wrong with the economic policies in this country. It’s part of why we’re in the mess we’re in.

I was reading the Times a few mornings ago. I got really upset. There was an article in the Business Section that described a deal in the making. To me it is a prime example of what is wrong with the economic policies in this country. It’s part of why we’re in the mess we’re in.

The latest — and biggest push so far this year — came on Monday, when the hedge fund Jana Partners, along with a Canadian pension plan, announced a combined 5.2 percent stake in McGraw-Hill. The investment could build pressure for a breakup of the conglomerate.

Jana Partners’ website is among the most beautifully cryptic I’ve ever seen. There’s a place to login, a place to register and a contact form. There’s no “About Us” or names or photos or address or phone number. The page is a little shy in the info category.

Luckily, you really don’t need to know anything about Jana because of the last four words in the Times’ story, “breakup of the conglomerate.”

McGraw Hill has a website too. Its “Corporate Responsibility” tab has ten submenus! I sense a difference in corporate cultures.

The McGraw-Hill Companies is driving the financial services, education and business information markets through leading brands such as Standard & Poor’s, McGraw-Hill Education and J.D. Power and Associates.

If you work for McGraw Hill this is at best bad news for you. It’s possibly terrible news.

By splitting the company into bite sized chunks you’ll basically be chum in the water as Jana looks for buyers. In many cases those buyers are currently your competitors. When they buy you they might already have someone who does what you do.

Your entire business entity could just disappear. Poof. The valuable stuff will be sold, but without you.

I guess it’s a free market, so Jana or anyone should be able to buy and sell businesses as they please. I just want to make sure the tax implications match the actual circumstances.

This may be good for Jana, but it’s bad for the nation. Jobs will surely be lost. Businesses will be swallowed whole. There will be less competition.

We shouldn’t have tax laws that encourage this. This is only a good deal if you define good in a very selfish way!

And yet…

From Forbes: After tense moments in the great tax debates of 2010, two important tax breaks for hedge funds and investment managers survived repeal efforts from Congress and the White House. Although Democrats tried hard

Seriously, why would we make this a favored economic pursuit? Why subsidize this pillage? We’re pissing in the well.

10 thoughts on “Angry Geoff Writes About Economics”

  1. That’s the way of things today. More and more consolidation, less and less competition, fewer sources for locally produced jobs or media outlets. It’s bad for the country, it’s bad for lives. I was told growing up in school that the market created choices, but it’s no longer true. They used to teach us that monopolies were bad things. It’s certainly true that every time there is further consolidation fewer employees are needed.

  2. Unfortunately, instead of govt of the people by the people for the people, we now have govt of the people by the rich for the richer. And a raging case of false consciousness that leads so many of the poor bastards to vote precisely against their own (*our* own) interests and cheer on the policies that will destroy us all in the end.

  3. Geoff,

    The tax code and stock-trade regulations are skewed to encourage profit, not growth. We need to look at alternatives where GROWING a company and not just “maximizing shareholder value” are encouraged. Further, our tax laws need to encourage growth and maintenance of jobs in the US. Why is there not a reward for adding jobs to a business, instead of outsourcing those same spots to a minimal-cost third world nation?

    Companies need to be penalized so there is no advantage in cutting staff, decimating head counts and closing facilities. A company’s products and services are what is sold. We need the laws to reflect the value of the American worker and turning “outsourcing” into an expensive and less-desirable alternative.

    And we need political leaders to advocate this strongly. People working abd being productive boost the economy. Those who destroyed good companies through leveraged buyouts and mountains of unnecessary debt caused the near-crash of the late-’80s — and those factors still inhibit growth today.

  4. This morning I saw our governor – “Danel” on the news. He has set aside 15 mil to encourage businesses to come to CT. He was at Foxwoods or Mohegan (can’t remember) touting CT – Really Danel??? You just laid off 3,000 workers and raised taxes…really???

  5. I recently went to a wedding and had a heated exchange with a Hedge Fund guy at my table. I told him that he and speculators were ruining America. I think they sat us both at the wrong table.

  6. The thing that surprises me the most is how forgetful the the public is. We bitch and complain but when voting time comes along we put the same idiots back into office! Don’t let the tea party do it to use again! Why is it that only the democrats have to compromise?

  7. This reminds me of the wave of takeovers in times past when these companies or groups would buy up companies specifically to break them up, sell off the pieces, and make a quick profit. This really sucks!

  8. This is why I support Ron Paul, Open Competion with businesses, Lower taxes, and free markets and trade with all counties. Our bombing other nations due to the actions of a few that hide among them is doing NOTHING but enlarging their numbers, we got to let them drill for oil here. and start worring about this country. Government is too big. Our Businesses are to regulated. We need to start paying on the princaple of our debt, or we will be Burried.

  9. And why aren’t we offering tax incentives for companies like Carbonite which recently “on-shored” their customer service operations? They should be getting all kinds of press about this so others can sit up and take notice. Those are the companies who deserve a financial reward for good behavior!

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