Cisco Systems Inc.

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Tim Bishop continually bashes his opponent on the topic of outsourcing jobs.  One of Mr. Bishop’s brilliant solutions, brilliant because it was conceived of in the halls of academia and Congress rather than at the helm of a company, is to raise taxes on companies foreign operations.

At the same time Mr. Bishop and his fellow travelers rail against businesses that are sitting on piles of cash rather than hiring and investing.  Since he probably doesn’t know how to read a balance sheet, I will enlist the aid of John Chambers, CEO of Cisco Systems and Safra Catz, President of Oracle who spell it out in the Wall Street Journal.

  [click to continue…]

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Pretty Weak Tea

by Bill O'Connell on September 3, 2010

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There is an increasingly nasty battle brewing in the Republican race for the nomination to run against Democrat incumbent Tim Bishop in the First Congressional District in New York.  With jobs and the economy the number one issue across the nation, the petty personal attacks may result in potential Republican voters staying home in disgust.

In an excellent article in the Wall Street Journal titled, “New York’s GOP Never Learns,” Kim Strassel concludes her article by saying, “The effect has been to enrage and divide a New York party that should have bigger things on its mind. Say, winning this fall.” 

Chris Cox is trying to play catch-up to the front runner Randy Altschuler who has been actively campaigning for more than a year.  The difficulty for Mr. Cox is that his positions are not that different than those of Mr. Altschuler.  So, while Mr. Altschuler has been taking on the Democratic incumbent Tim Bishop and Bishop’s lockstep voting with Nancy Pelosi, Mr. Cox has resorted to attacking Mr. Altschuler.  Not to leave his flank unprotected, Mr. Altschuler has been forced to respond and now the race, with two weeks to go before the primary on September 14th, has degenerated into a mudslinging contest.  There is a third candidate, George Demos, who is lobbing attacks from the rear with little effect.

Each candidate is calling themselves the “true conservative,” and Mr. Cox has garnered the support of the Suffolk County 9-12 Project the self-proclaimed “Largest Tea Party organization in Suffolk County.”  Mr. Cox’s father, Ed Cox, is the head of the New York State GOP.  Ms. Strassel reports that the senior Mr. Cox, backed Steve Levy over Rick Lazio for governor to curry favor with the Suffolk County GOP chairman to back his son.  It is all the kind of backroom political dealing that have attracted a rush of newcomer candidates and put incumbents of both parties on the endangered species list.

The Tea Party Endorsement

 

What caught my eye was the endorsement of the Suffolk County 9-12 Project and the announcement by Bob Meyer, co-founder.  He gave as one of his primary reasons that, Randy Altschuler was one of those people, “getting rich off the backs of hardworking Americans by outsourcing their jobs.”  That sounds more like Jimmy Hoffa, Andy Stern, or Barack Obama’s class warfare than any Tea Partier I know.  A commenter on the 9-12 Project’s site, Judyann Joyner added, “Randy is credited with the creation of ‘white collar sweatshops in India.’”  Pretty strong stuff.  I don’t know if Ms. Joyner or Mr. Meyer visited the company that Mr. Altschuler co-founded in India, but Business Week magazine did.

“The lights burn day and night in the gleaming glass-and-chrome building that towers over a leafy street in the southern Indian city of Madras. Here at OfficeTiger, 1,500 young men and women peer into computers 24 hours a day, analyzing and processing U.S. Securities & Exchange Commission reports and other documents drawn up by lawyers and bankers on Wall Street. Walking the floor, sometimes even at 3 a.m., is 34-year-old co-founder and co-Chief Executive Joseph Sigelman.”

Just because the office operates 24 hours per day, don’t be conned into thinking the same people are at their desks 24 hours a day.  “Gleaming glass-and-chrome building that towers over a leafy street,” yup, sounds like a hellhole to me.  Business Week added, “Indeed, OfficeTiger is the only successful startup in India’s $5 billion outsourcing industry that is owned and managed by a U.S. entrepreneur.”  So we have an American company making money in India, in what seems to be a rather large and competitive field, and this is a bad thing?  Since when did conservatives turn into protectionists?  But what about the jobs they replaced?  Okay, let’s examine that. 

You have some Wall Street firms that are in a competitive business.  A young entrepreneur comes up with an idea to reduce operating expenses by having an external company handle routine clerical tasks that are not one of the firm’s key competencies, that is, people don’t buy that firm’s services because of their typing skills.  The company outsources and reduces costs.  By reducing costs, they prosper and grow; by growing they create more high skill jobs like lawyers, accountants, financial analysts, IT people, etc.  Perhaps even some of the former typists, because of their computer skills can move up the ladder to spreadsheets, and databases.  Do some people lose their jobs, yes, just as buggy whip makers lost their jobs when the automobile came on the scene.  Okay, let’s shift to India.

In India white collar jobs are created; their standard of living improves; they buy consumer goods like iPods and iPhones and their offices need sophisticated IT equipment from companies like Cisco Systems which grow companies like Apple and Cisco creating jobs in the U.S. We live in a global economy and if we want prosperity and peace, the best way to get there is through free markets.  Even Mr. Cox in the policy section of his website blames government policies for companies outsourcing jobs overseas.  If it is the government’s policies that make these jobs uncompetitive here and Mr. Cox knows it, why is Mr. Altschuler wrong for reacting to it and helping American companies that use these services remain competitive?

After selling Office Tiger to RR Donnelly, Mr. Altschuler started another company in the U.S., CloudBlue, that recycles old IT equipment.  So we have an entrepreneur that has started a couple of companies that have created jobs around the world and that makes him a villain?  Perhaps Mr. Meyer should go back and read some of the quotes on his own website:

“You cannot legislate the poor into freedom by legislating the wealthy out of freedom.” – Dr. Adrian Rogers

“I have a right to life, liberty, and the pursuit of happiness.” – Thomas Jefferson

Mr. Meyer’s key criticism of Mr. Altschuler smacks of the government picking winners and losers.  This business is okay, but not that one.  If your business creates jobs overseas that is bad, but if it creates jobs here it is okay.  Well, Mr. Altschuler has done both and he has firsthand experience doing so, which is what we sorely lack in Washington.  If the strategy of Mr. Cox continues, including creating another party, the TaxPayer party, to run on and split the vote further, Mr. Cox might as well mail his strategy over to the Bishop campaign as I am sure they will find it very useful in the general election.  Not my cup of tea.

The focus should be on defeating the out of control spenders in Congress who got us into this mess, not fighting each other to the death and let the incumbent waltz back into office.  The time is now.  Mr. Cox should focus on what he would do as a Congressman that is better than Tim Bishop and Mr. Altschuler.  If he can’t articulate that, he should drop out.  He is not going to win a lot of support by throwing mud at his fellow Republicans.

Note: In the spirit of full disclosure I have done some volunteer work for the Altschuler campaign

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Taxpayers to GM — Get Yourselves Out of This Mess

by Bill O'Connell on November 18, 2008

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It’s hard to read the news about the auto industry and not clench your fists at the outrage.  GM and to a lesser extent, Ford and Chrysler, are asking the American taxpayer to bail them out, but what is their position?

  • The unions say they are not going to negotiate anything to help the situation
  • The CEO of GM says that they are not filing for Chapter 11 and not preparing to file, despite that they may run out of cash by the end of December.  Not even as a contingency, Mr. Wagoner?
  • Wagoner refused to consider resigning, even if it would help them get aid
  • GM’s board is supportive of Wagoner

This company negotiated an agreement with its union that pays them almost full pay if they are laid off.  Let me get this straight.  You lay people off, as painful as that may be, to cut costs.  GM negotiates an agreement that keeps the costs, but sends the people away.  From their perspective, it’s free labor, they pay for it either way so put them to work!  But no, I’m sure there are union restrictions about what you can put them to work doing.

Remember the Dot.com Bubble?

In 2000 we saw the Dot.com bubble.  What was the fallout?  Millions were lost on Wall Street.  Companies by the bushel basket went out of business.  Thousands were thrown out of work.  How much did taxpayers cough up to bail them out?  Nothing.  The market dealt with it.  The strong companies re-grouped, the weak fell by the wayside.  John Chambers, CEO of Cisco Systems, changed his own salary to $1 per year until he righted his ship.  Today Cisco has $26 billion in the bank and Chambers is still at the helm.  Nice work, John.  It wasn’t done with arrogance and going hat in hand to Washington looking for a hand out.

Deja Vu

In the 1970s and 1980s in the UK, British Leyland, maker of the Triumph, MG, Rover, Jaguar, Austin and five others, was in need of a bailout to keep going.  The British government complied eventually pumping in $16.5 billion in taxpayer money to the company.  It limped along for another few years and then went out of business.  It sold its Jaguar and Land Rover brands to Ford, which then poured $10 billion into Jaguar.  It recently sold both brands to Tata of India, getting back about half of what it paid for the brands.

Did the British economy go under?  Is the British military without tanks?  Let’s not forget that the Jeep was made by American Motors.  Where is American Motors today?  A company named AM General makes the military Hummer.  Guess what the “AM” stands for?  GM, Ford and Chrysler combined made about 17 million vehicles in 2007.  Does anyone think this demand will vanish if GM, Ford and Chrysler vanish?  Of course not.  Either GM, Ford, and Chrysler will re-make themselves, new companies will emerge, or U.S. based foreign companies will grow to take up the slack.  The jobs will move around.  The demand is there, the supply will emerge to satisfy it.

The Way Out

The way out of this mess is to go Chapter 11, reorganize, renegotiate onerous labor contracts, sell off properties no longer needed but tied up in commitments to bonds that were sold to attract a factory, etc.  The government should do their part and dump the CAFE standards.  Americans will still want high mileage cars and companies will build them.  It may not be GM, Ford and Chrysler who build them, but if they trim down, maybe they will.  But they do make a profit on their premium models and light trucks.  Let them.

But keep your hand out of my wallet.

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