2/3 HBS = BS

When I first came to the US in 1991, the valley was still a place where people made things. Cool things, like SGI workstations and satellites, and the corporate ethos was dominated by engineers. The competition was simple: the companies that built the best products, won. And it was a straightforward activity, because the guys who designed and built the products also used them.

In that rarefied time, those innovative tech companies did well: well qualified engineers did the work, and were paid well. Management saw its role as that of being an enabler or facilitator, in a collective context. The only people who did spectacularly better, financially, were the founders of these companies, and that's as it should be given they were the ones with the cojones to walk the walk.

But that all changed. Silicon Valley became infused with Business School graduates and people with marketing degrees, and the focus changed from the team/collective journey to the deification of individual accomplishment, reinforced by a trend to spreadsheet driven management. Individuals in a company were being judged, and compensated, by the completion of their individual goals and how much they had individually contributed. If you saved the company $500K this quarter, that was good for you, no matter what the consequence of that 1 year down the line. From a corporate culture, point of view, we had given ourselves an acute case of ADD.

In addition, the focus at the top end of the company centered around two concepts: shareholder value and corporate leadership/vision. Companies were now being run to maximize shareholder return, rather than to increase market share and customer satisfaction. In fact, as the MBAs figured out they could outsource many essential functions, and hide the true cost in the balance sheet while taking credit for payroll and other savings, customers became less and less satisfied. Meanwhile, those savings didn't go to the customer, but ended up in the pockets of executive management. And as executive leadership metamorphosed into a cult of personality, more and more of a company's' revenue and value was diverted to satisfy those compensation needs.

What is happening in Wall St, is just the chickens coming home to roost. It is the direct consequence of letting people with paper qualifications, but no real world experience, make corporate decisions that primarily benefit themselves, in the short term. Letting newly minted MBAs run around proclaiming that the world had moved on, and the rest of us didn't get it.

And this isn't going to be easy to fix. The country owes more money than it can pay back, and we still have a corporate class that insists on pursuing the trust-fund economics that this administration and those since Reagan have foisted upon us. But there is a solution, and it does have a simple overall structure:

1. End the war in Iraq and Afghanistan.
   
2. Cut all corporate subsidies to large corporations including Oil & Gas, and large Agriculture.
3. Eliminate tax loopholes and other evasion/avoidance schemes.
4. Force entities who issue credit to be able to back those loans.
   
5. Treat dividends as income.
6. Reduce outsourcing: penalize companies that do outsource abroad and VCs that encourage it.
7. Vigorously prosecute corporate malfeasance.
   
8. Fix and regulate stock option and other compensation for management and executives.
9. Redact laws that force companies to put shareholder concerns above others: customers first, employees next, and *then* shareholders.
   
10. Raise taxes if necessary, but do it at the high end first.
11. Invest in new energy: power and transport
    
12. Invest in infrastructure: transport and energy distribution and storage.
    
13. Reduce dependence on foreign energy: this one act will alter our balance of payments in a favorable way.
    
14. Universal health insurance: remove this burden from companies.
    
15. Universal access to all levels of education.

The key here is to try and revitalize spending at the consumer & corporate level, by freeing more money at the lower end of the income scale, and stimulate the economy by spending money at home, specifically with infrastructure projects such as construction. Bubble up economics, if you like.

However, part of the problem is that we have become decadent and corrupt, and have lost the creative spirit and can-do attitude of the 50s. Our new President, needs to show us the way back to a more honest way of life.