.KEYWORD pplte0501
.FLYINGHEAD LETTERS TO THE EDITOR
.TITLE Opinions differ on economic situation
.DEPT
.SUMMARY We received a flood of reader feedback to Editor-in-Chief David Gewirtz’s April editorial on the state of the economy. Read this article to see how, again, David managed to stir up controversy, without even trying, in what he thought was a normal editorial.
.EDNOTE Editor-in-Chief David Gewirtz’s editorial, "The April Fool’s article that never was," in April’s issue of PalmPower (at http://www.palmpower.com/issues/issue200104/ppeditorial0401001.html) inspired a flood of reader feedback. Read on to see how, again, David managed to stir up controversy, without even trying, in what he thought was a normal editorial.
.H1 Real innovation, tangible value
Hi, David. Just want to compliment you on your editorial. Simply brilliant! I was mentioned in Dan Gillmor’s column about six weeks ago (at http://www.siliconvalley.com/docs/opinion/dgillmor/dg021801a.htm) in which he covered some of the same points you raise. I had to lay off people a number of years ago when I was at Apple and swore never to do it again. We have designed our company, Think Outside (at http://www.thinkoutside.com), to use outside resources to leverage its core group, which allows us to maintain stability in a fast growing company. Our first year’s revenues were $34 million, over a $1million per employee in a hardware business that everyone said could not be successful. We will continue be a major force in the handheld market, and there’s much more to follow our first product, the Stowaway Portable Keyboard.
Best regards,
Phil Baker
President, Think Outside, Inc.
.H2 Editor-in-Chief David Gewirtz responds
Phil, I just read Gillmor’s piece, and I agree. Thanks for your kind comments. I, of course, will be insufferable to my co-workers for days on the "simply brilliant" comment! I had no idea you folks had sold so many keyboards. We’ve written about the Palm OEM version numerous times, and it’s one of the biggest value adds to the Palm experience we’ve seen. But to do ten times the norm on revenue per employee is astounding.
See, this is what I’ve been talking about. Real innovation, providing tangible value, and good business management is still where it’s at when running a successful business. Very nice job.
.H1 Left of center
First let me congradulate you on the success of your magazine. I read it via AvantGo on a daily basis and couldn’t get by without it. However, your slight (ha, ha) left of center political leanings can be somewhat of a turnoff, especially when your insinuations are factually false. You said, "When I wrote my last book, The Flexible Enterprise, back in 1994 (right after the last Bush recession)…" The first insinuation is that the economic turnaround happened shortly before 1994, say maybe 1993 when Bill Clinton took office. Well that is factually false, because we were already in a state of economic growth for nearly 20 months before Clinton was in the oval office. Just because your Pagan god, Bill Clinton, said it was the worst economy in 30 years didn’t mean it was true (how soon we forget the Carter years!), and just because this Pagan god of yours took office (and gave us the largest tax increase in history) it didn’t turn the economy around.
The second insinuation is that this current economic slowdown or recession, is a Bush recession. How do you figure that? I seem to recall the warning signs of this were on the horizon over a year ago (the stock market drop in March 2000, for one), but it was the INACTION of your Pagan god, then that, in part, caused this to happen now. Finally, your swipe at Bush and Cheney for leaving it to Californians to deal with THEIR energy problems is laughable. I find it "Wacky" that a state that has seen its population nearly double in the past decade finds it more important to protect the Spotted Owl rather than build more power plants. I find it even "Wackier" that in the face of this crisis, there are those who want to dismantle existing hydroelectric plants and dams (which would cause a water crisis as well). The blame for this not only sits at the feet of the extreme environmentalists, but at the heads of some of the corporations that have fueled this economy. I believe I had read that those in charge at Cisco Systems defeated one proposed power plant that they would have benefited from because it would have disrupted the scenic view from their headquarters! Thank God there are other parts of the country that would gladly relocate these corporations and build enough power plants to supply them now and in the future. Not long ago, the head of Intel was asked about future expansion in the Golden State, to which he replied that he didn’t believe in building in Third World countries. AMEN to that!
Michael T. Peabody
.H2 Editor-in-Chief David Gewirtz responds
Wow, you’re quite wacky there yourself, Michael. Even so, buried somewhere in your bizarre rant are the germs of truth. There is certainly some disagreement among economists as to whether the recession in the early 90s was on the decline before Clinton was elected. However, it is clear that Clinton ran on an "It’s the economy, stupid" platform and won, while Bush ran on a platform stating the economy was fine, and lost. It is also true that some of California’s power problems are the fault of the residents, but when a major part of your country is in crisis (whether their fault or no), it’s just plain wrong for a president to tell them they’re on their own.
Now, as for your truly nutty "Pagan god Clinton" thing, man, that’s clearly pretty wacky all on its own, although certainly creative. First of all, I personally know many pagans, they’re all wonderful people, and I suspect that Clinton would be very far from their god since they’re usually talking about goddesses and such and have a very defined set of values which I think are in considerable divergence from those of Clinton.
I personally liked Clinton. I thought he was bright and certainly far more entertaining than your average president. He clearly made some enormous mistakes (including getting caught with his cigar in the cookie jar), but he also was pretty well versed in the domestic and world situation, and I personally enjoyed his eight years in office. I fully doubt that Al Gore would have been half as much fun.
As for our current Bush-league president, I sincerely hope he rises to the occasion. Truman didn’t show much promise before he became president and grew into the job magnificently. For all our sakes, I’m hoping the job is a profound growth experience for George Dubya.
Oh, and by the way, you spelled "congratulate" wrong.
.H1 Laying blame and bailing out
I have two comments.
First, as I recall, Mr. Clinton was the president in 1994, and had been for over a year. How does that make it the "Bush recession of 1994?" If you assign today’s slowdown to Bush, having been in office barely three months, you ought to be more consistent.
Second, regarding CA energy, since when is it the Federal Government’s task to bail out a state for poor decisions? Our country is a union of states (hence United States), which means that states must act responsibly, and the Federal government isn’t their babysitter.
Although I’m sure there is precedent (S&L bailouts), it still doesn’t mean that it was right for the Feds to do it.
Any Fed money spent is taken from me and you and everybody else. We don’t even get the benefit of paying it directly. It is automatically deducted for most of us, so we don’t get the tangible impression of how much is actually taken. Do you actually enjoy that the Fed takes 25% of your earnings from you?
To make it personal, it is not my responsibility to bail out my neighbor when he makes a poor decision. Pain and consequences are very effective teachers. Bailouts only enable similar poor behavior to continue. Do you think it right for a third party to take our money and give it to someone else to prevent the pain from poor decision making? Or would you delay the payment by the third party, pending more responsible behavior on the other party’s part first? Better yet, wouldn’t you like to eliminate the third party entirely for this transaction, allowing you to make your own decision on how to use your own property, your money?
Seth Smith
.H2 Editor-in-Chief David Gewirtz responds
Seth, there’s no question we had a recession as Bush left office and Clinton came in. Was it to Clinton’s credit that the recession of the early 90s ended on his watch? Honestly, I don’t think it is possible to tell. But that’s not the issue, and I’m honestly hoping as this Bush comes into office that we can avoid a full-out recession. I wish only the best for the incoming team, and I hope they turn out to be exceptional.
As for California, this issue is much more complex. If your neighbor’s failure could take you down, you might have to help out. If the California economy tanks and tanks hard, everything’s going to feel it and feel it hard. In this case, despite California’s own mismanagement (and it appears to have been such), the Feds are going to have to help out in some way if California can’t make it work. This country can ill afford to have that state fall into an ocean of powerlessness.
It’s certainly not right that our taxes may need to be used to fix the problem. And it’s certainly not right that our taxes might make some PG&E joker richer. But at the same time, we have a complex, interconnected economy, and when the state with the largest economy is threatened, we can’t sit back here in NJ and assume it won’t hurt us. It will. And it already is.
.H1 Boom and bust
Some comments on your April 2001 article on the business cycle: I think your statement that, "It’s just that no one had ever seen the opportunity to make that much money that quickly, and so everyone tried it," may be true only if you are talking about business history for the past generation. There’s nothing new here. There are plenty of examples in economic/business history of people becoming irrationally optimistic about business ventures. Take, for instance, the early days of the railroad’s expansion west or the automobile industry at the time of Henry Ford’s innovations in manufacturing. Although people’s confidence does have some impact on the economy, the business cycle is far more complicated than that.
Trying to talk people out of a recession is very similar to trying to talk people into making irrational investments in the dot-com industry.
Owen Flagel
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.H1 Slight correction
Long-time Palm device/Visor user here to say thanks for the pep talk on the economy in this months editorial. I agree with all the points you made about what people, especially those in the media, should do to help "get over it."
I would, however, like to point out one rather large violation of your own advice that appeared in the editorial in the form of a gross mathematical error, and I quote:
"…and hoping I’ve gotten my math right, we’re talking about $76 billion or so that’s not flowing into the economy."
As even you questioned your own calculations here, it hopefully comes as no surprise that they are indeed wrong. You see, the $76 billion figure is based on the dubious assumption that when each of the 76,529 people was layed off, they earned no income for a full 12 month period. Although I haven’t checked the statistics (and enough time hasn’t elapsed anyway), I’m sure that a rather large percentage of those people either will or already have been rehired elsewhere. So, the missing variable in your calculation is the average length of unemployment for these folks, which almost certainly is less than 12 months.
Just thought I’d take your advice and share the good news with you!
Regards,
Kevin Pettitt
Contractor/Notes Developer
Ernst & Young, http://www.ey.com
.H2 Editor-in-Chief David Gewirtz responds
Kevin, very valid point. That’s why I write editorials, and I’m neither an economist nor an accountant. Presumably, the right way to do this sort of estimate is figure out the average unemployment expectancy and factor that into the calculation. However, no matter how you rework, it, the numbers are moderately immoderate.
.H1 Off by 10
Good article, but 76 thousand (people laid off) x $100 thousand (salary each)= $7600 million (lost income) or $7.6 billion, not $76 billion.
As u can tell, I work for PriceWaterhouse, an accounting firm. I’m an economist, so I always "double check the numbers." Anyway, wish I got some of those $100 million stock options. I live in Washington DC, and MicroStrategy (at http://www.microstrategy.com) has been fun to watch ($330 to $5 in one year). Keep up the good work.
Steven R Williams
PriceWaterhouse, http://www.pwcglobal.com
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.H1 Product availability and resources
For David Gewirtz’s editorial, "The April Fool’s article that never was," in the April 2001 issue of PalmPower, visit http://www.palmpower.com/issues/issue200104/ppeditorial0401001.html.
For Dan Gillmor’s article, "Venture capitalists need to think long term," visit http://www.siliconvalley.com/docs/opinion/dgillmor/dg021801a.htm.
For more information on Think Outside, visit http://www.thinkoutside.com.
For more information on Ernst & Young, visit http://www.ey.com.
For more information on MicroStrategy, visit http://www.microstrategy.com.
For more information on PriceWaterhouse, visit http://www.pwcglobal.com.
For more information about Palm computers, visit http://www.palm.com.
.H1 Bulk reprints
Bulk reprints of this article (in quantities of 100 or more) are available for a fee from Reprint Services, a ZATZ business partner. Contact them at reprints@zatz.com or by calling 1-800-217-7874.
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.DISCUSS http://powerboards.zatz.com/cgi-bin/webx?50@@.ee6f3f1
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