BUSINESS DEVELOPMENT AUTHORITY
(BDA) ©
"Working Together For a Better Tomorrow
"
I.
INTRODUCTION: "Jobs are the core of the strong economy," stated
Ways and Means Committee
Chairman, Bill Thomas. On the other hand, the only thing that layoff has proven consistently over
time is: "Mass layoff is voodoo economics." Studies consistently show that downsizing had negligible
impact on firm profitability [1]. Nevertheless, 2 million people were laid off
so far this year
[2] and [21]. In October 2001, President George
W. Bush announced that "ANY AMERICAN OUT OF WORK
IS TOO MANY." With that commitment to stop unemployment, he pushes congress to pass the $1.3 Trillion
Economic Stimulus package (on top of the $1.35 Trillion in 2001) with the hope that it will improve
the economy. Unfortunately, history shows time and time again that every time the government gives
money away to the corporation in the name of "saving jobs," the same people that are meant to be
saved get slaughtered. Immediately after the airlines received the bailout in 2001, they laid
off 120,000 jobs. Similarly, after the bailout in 1979, Chrysler laid off 91,000 jobs.
This program doesn't work. The only way that the federal assistance program will work is by establishing
a Business Development Authority (BDA) ©.
II.
WHAT IS BUSINESS DEVELOPMENT AUTHORITY (BDA ©)?
It is consisted top business executives,
government officials, and labor union executives (if possible) to temporarily advise the corporate
executives on how to strengthen their corporations, recover our money, then leave. By targeting our
efforts, we can improve the economy quicker, with a much smaller amount, and get it back, too.
This way, we can make sure that our children won't bear the debt for our mistakes. We can also use
the recouped funds to ensure that we all will have our social security fund when we retire,
to pay off the national debts, to help our children's education, and to boost national defense, etc.
Let's form a BDA ©:
i) To manage their bailout funds (To make sure that they use the money properly)
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ii) To cut costs quickly and effectively (with little or no layoffs)
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iii) To pay back the bailout funds when the corporations are strong and profitable
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III.
BDA © vs. ECONOMIC STIMULUS:
Chief economist of Economist.com predicted that the $674 billion (7% of our national economy),
the first half of the 2003 plan, will improve the economy by 0.2%. This means that we get $1
for $33 that we spend [5].
Nobody knows if the remaining of the 2003 plan (or the $1.35 trillion
given away in 2001) would do any good. The combined $2.65 trillion plan means that we're throwing
away 9 years of Russia's national economy and 2 years of China's, which are considered as our biggest
threat! In fact, 1.5 billion people of all of the countries that are considered as our threat combined,
would have to work 2 years just to earn what we're throwing away in the name of "Economic Stimulus."
Tax cut is too broad, too expensive, and too slow. It is estimated that 42% of these tax savings
would go to the wealthiest 1% of taxpayers. Furthermore, taxpayers won't see this relief until next
year when they file their 2003 tax returns. Frankly, I'd rather be working in a real job for a roof
over my head and food on my table than to stand in the line for a year for unemployment handout and
an extra $1,000 tax refunds. I can only benefit from this if:
1. I have children
2. I have stocks which pays dividends and
3. I can survive that long without a job
Business Development Authority (BDA) © is, by far, a better solution.
Furthermore, as Senator John Kerry pointed out, the economic stimulus . . .
is targeted in the wrong place." He also says that "any stimulus package must
address the needs of workers, families, and businesses that require the most help today,
and who will put the money back into the economy by spending it immediately."
BDA © will
target to these goals. Don't patch it. Let's fix it.
IV.
BDA © vs. INTEREST MANAGEMENT:
When Nobel Prize Winner Milton Friedman gave his lecture in 1976,
the long-run relationship between inflation (i.e. interest rates) and unemployment was still under
debate. In the 1970s, many economies were experiencing rising inflation and unemployment
simultaneously . In 1995, Nobel Prize Winner Robert Lucas stated that it's the "Rational Expectation"
that drives the economy [3].
In the times of record high bankruptcy and high unemployment with
people getting laid off by the millions, what can we expect? Therefore, it is unfair for us to place
the burden of turning the economy entirely on Mr. Greenspan. While reduction of interest is an extremely
powerful tool, we cannot use it as a "one size fits all miracle." As Mr. Alan Greenspan, the Chairman
of Federal Reserves, warned: "Household spending is subject to restraint from job losses"
[4].
So true! Without jobs, people don't have any money to spend. Rep. Tom DeLay says "Time is running
out for unemployed Americans." Similarly, Rep. Gephardt says: "We need to take action in the highest
spirit of bipartisanship and unity because of what it means to the American people." Let's end mass
layoffs! Let's establish a BDA ©
to find the correct combination of solutions to improve our economy
quickly and effectively.
V.
BDA © VS. BAIL OUT: It seems that Economic Stimulus is just a fancy
name for "corporate
bailout in a national scale" and
that is fine, so long as it actually creates or save jobs.
Granted, government bailing out corporate giants such as Chrysler and the airlines makes America a
great country that it is today. Under the terms of the Chrysler bailout, a five-member Loan
Guaranty Board was set up to review corporate decisions and to supervise significant expenditures
by the company until the loans were repaid. In addition, workers were forced to take a $1.1 billion
concession. There are several problems with this.
i) Management did not have to provide any real solutions.
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ii) No assistance to management. We already know that the corporate executives would
prefer to shut down the corporation than to ask for managerial help.
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iii) How can you be sure that the executives will use the money to the best interests of
the corporation and not to fatten their pockets [6]?
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iv) How can you be sure that the bail out will help the people that it's intended to help
when history consistently shows that bailout funds don't save any jobs?
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v) How can we make sure that we will get this money back to the taxpayers?
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In fact, these are exactly the same problems with the $1.3 trillion economic stimulus package that
Senate passed last year. Ways and Means Committee Chairman, Bill Thomas, stated that "Business
generates jobs and jobs are the core of the strong economy." In this package, each corporation
will get up to $1.4 billion in tax refunds [7]! Democrats said that it was far too generous to the
companies and does little for the people. So who are we helping here? Where does it say that they
have to create or save jobs? The same problems exist with the 2003 economic stimulus package of
$674 billion. Dividend tax cuts alone will cost $364 billion (with the bulk of it going to the 1%
wealthiest taxpayers). If we recognize that "jobs are the core of the strong economy," then why don't
we do something about creating jobs? Better yet, why don't we do something about SAVING jobs? What's
wrong with the job that I have now? Why do I have to get laid off, and then run around for a year,
standing in the unemployment line for handouts while looking for a lesser job for a lower pay?
All this time, I could lose my house, my health, and my family due to hunger, sickness, stress!
The fact of the matter is: When a patient is so sick, giving him the money does not cure him.
He also needs good doctors and treatments. A case in point is the major airlines: Immediately
after receiving $5 billion federal funds, they lay off 120,000 employees, then announced that
"the carrier will go out of business sometimes next year" [8]. Sure enough, they followed through
with this promise and filed for bankruptcy protection the following year. Now, they're back asking
for more money again [9]. That sounds like a desperate cry for help and we must act quickly to
help them. BDA © is the answer. We'll give them the money that they so desperately need, but we also
help them manage through the crisis so that they will become strong again, and we'll get our money back,
too.
We must not lose focus:
Create and Save Jobs for a stronger economy!
VI.
BDA © vs. MASS LAYOFF:
Mass layoff is like a random amputation. A drastic economic change is like a poisonous
snakebite and a mass layoff may sound good in theory, but blindly chopping your leg off with
an ax in a moment of panic is probably not the best idea. How can you become strong by crippling
yourself while leaving the poison untreated? However, a recent poll shows that an overwhelming 88%
of the executives consider layoffs as their first choice [9]!
We can establish a BDA © to help the
corporations implement layoff alternative solutions if they:
i) Want government grants, loan guarantees, or bailout funds
ii) Have or seeking to get government contracts (city, state, or federal)
iii) Plan to lay off more than 10,000 employees
A/ WHY LAYOFF IS CEO'S FIRST CHOICE?
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1. PRIDE:
As mentioned before, due to pride, the corporate executives would rather shut down the corporation
than to ask for managerial help. Immediately after the 9-11 incidence, we've contacted several
Fortune 500 companies, many times. No one responded, yet they continued to lay off more employees
and filed for bankruptcy protection.
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2. POOR LEADERSHIP:
"Poor Leadership Leads to Layoffs," reported USA Today, which defines layoffs as:
Balance the Books on Workers' Backs." The Business Roundtable announced the results of a
survey of 150 chief executives of leading U.S. companies: 60% of these CEOs expect their total
employment to decline in 2003 [10]. HP alone furloughs 140,000 employees from December 23 to 29,
2002 [11].
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3. GREED:
New York Daily News reported that "Thousands Get Laid Off, but CEO's Still Make Millions."
For example, Lucent Technologies rewarded their Chairman $22 million for laying off 56,000 workers
while Merryll Lynch rewarded their CEO $152 million for axing 17,400 jobs. ("No Losses for Biggest
Bosses [12]. " Interestingly, we did offer our services to Meryll Lynch in lieu of layoffs, but all
went to deaf ears.
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B/ LAYOFF ALTERNATIVES:
While there are extensive studies to prove that mass layoff does not work, they offer very
little about what does work. Actually, there are many viable options, but nobody pays attention
to them. Besides, the results had been limited because people applied them incorrectly.
For example, the most common suggestion is corporate restructuring (or process re-engineering)
[13].
While everybody talks about it, nobody has any idea of what it is. A survey of 1,005 firms suggested
that most restructuring efforts fall far short of the objectives [14].
The 48-point Business Check-Up ©
the B-Complex ©Program will take the guesswork out of it, but that's later. In an emergency,B-911 ©
and 54 Layoff-Alternatives © work better [15].
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One of the best layoff alternatives is reduced work hours. "32 HOURS" released a report on Europe's
New Movement for Work Time Reduction, which cited France, Netherlands, Italy, Belgium, Denmark, Finland,
Portugal, Spain, Finland, and especially Germany where Volkswagen saved 30,000 jobs
[16]. However,
Volkswagen took 4 months to do it and most troubled corporations would go out of business by that time.
Moreover, they do it as a "permanent" solution. Most families cannot survive on 80% of their income
for a prolonged period.
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C/ THE BETTER ALTERNATIVES:
Corporate executives perform very well in normal situations, but they are not trained to handle an
extreme crisis. Only the government has the vast resources to help on a national scale. These include
the economic stimulus and the bail out funds. However, a dying patient needs more than a shot of
vitamins. Within a few weeks, "the nine major U.S. airlines have blown through most of Washington's
$5 billion cash bail out, and their bleeding continues [17]."
We propose that a team of Turnaround
Experts (the doctors) be established by the BDA ©
to help find and apply the cure. We have been
combining American and Asian management techniques with successful results since 1979. For example,
at a Fortune 500 corporation with 17% sales drops and a 5% wage hike, but its cost still was 9% lower,
using just some of the strategies in B-911 © and the Dyna-Flex
Budget Control Systems ©. BDA © can implement similar programs to stop
the layoffs.
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B-911 ©, a 4-step Business Emergency Improvement Plan, is the first and only program that can be
implemented within a few weeks, giving immediate reliefs like a mass layoff, without any of its side
effects. In addition, it will heal and strengthen the corporations so that order can be restored
within a year. No other program does that. Here is a graph of results from the application of
the B-911 ©, Dyna-Flex Budget Control ©, and 54 Layoff-Alternatives © as compared to others.
The BDA © can implement any of these alternatives.
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VII.
SAVE THE WHALES: We have Rescue Teams for the whales, so
why not for the corporations (and its employees)? In 1997, the General Accounting Office
conducted a survey and out of 416 corporations that embraced downsizing, more than half indicated
that they are now understaffed, 44% reported problems meeting deadlines, and 26% stated that business
growth was impeded [18]. As Rep. Paul Kanjorski said: "We don't want to end up
bailing out airlines
that are already dead." Similarly, Senate Commerce Committee Chairman Fritz Hollings, D-S.C., stated
that "before the attack the airlines were claiming insolvency." If the corporations are too weak, then
we must step in to help them.
VIII. PROS & CONS of FEDERAL INTERVENTION:
Ms. Lauren Lobrano at the Office of Management and Budget stated that "this
(BDA ©) program is
government intervention and we don't do that." In fact, we do, but case by case, not in an orderly
and systematic manner and certainly has little or no benefits to the employees that the corporations
claim to "save their jobs" in order to get the federal bailout. Actually, we do. First, let's
discuss why federal intervention is not good and why it failed before. Then, we'll discuss how we
can avoid previous problems and makes it a success this time.
A/ CONS:
In 1979, bankers and politicians, for the most part Republicans-including current Federal
Reserve Board Chairman Alan Greenspan and then-Wyoming congressman Richard Cheney-argued that
government intervention violated free market principles by subsidizing failing, noncompetitive
industries. They argued that Chrysler should be allowed to go bankrupt, knowing this meant the
decimation of the economic base of Detroit and other cities, as well as the destruction of 134,000
Chrysler jobs.
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This clearly is a valid concern. In 1979, Congress approved the Loan Guarantee Act, which included
the demand that the UAW give up $1.1 billion in concessions. By now it was clear that the effort to
"save" Chrysler had little to do with protecting the jobs and living standards of Chrysler workers.
Rather, the federal bailout was aimed at paying off the banks and other creditors with money extorted
from UAW members, while shutting down or selling off large sections of the company. By the time the
bailout bill was passed, 31,000 Chrysler workers were already on indefinite layoff. Chrysler went
on to lay off 61,000 more employees within the next few years [19].
Similarly, after receiving
the $5 billion bailout, the airlines immediately laid off 120,000 employees. So what's the point
of bailing them out? How many jobs did we save? In these cases, federal intervention cost a lot
of money and didn't save one single job because we did not have any provisions for saving jobs or
any way of helping the corporations. Similarly, the Economic Stimulus Package does not have any
provisions for saving jobs or any way of helping the corporations either.
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B/ PROS:
In time of crisis, there are 4 reasons why only the Federal Government
can implement a Business Development Authority (BDA ©):
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1. Only the Federal Government has the power to make corporate laws at the national level.
For example, making the CEO's stop layoffs and consider alternative cost-cutting measures first.
2. Only the Federal Government has the power to make labor laws at the national level.
For example, stop the labor unions from making unreasonable demands in times of crisis.
Judge Wedoff ordered pay cuts for 37,000 machinists at UAL [20].
3. Only the Federal Government has the financial resources to make business loans on a national level.
4. Only the Federal Government has the ability to utilize and shift resources (natural, human,
financial, etc.) around the country for maximum growth for the nation and for maximum benefits for
its citizens.
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IX.
A NATION IN CRISIS:
Ms. Lauren Lobrano at the Office of Management and Budget stated that "this (BDA ©)
program is not within my department."
When asked: "So whose department is it?" She responded: "I don't know, but please
don't call me again." Meanwhile, Corporations eliminated . . . nearly a million jobs
in three months, the fastest pace of reductions in more than 20 years [21].
House Democratic Leader Richard Gephardt says: "These Americans are hurting. Some are having
trouble paying the rent . . . paying their heating bills . . . and putting food on the kitchen table."
The worst is yet to come. Of all the CEO's surveyed, an overwhelming 60% plan to layoff employees in
2003 [22]! We must act quickly and swiftly. Mass layoff is hurting the U.S. citizens and is killing
our economy. 2001 marked the record number of bankruptcy filings of 1.5 million. Of those,
1.49 million were consumer filings [23]. This equates to 5.4 per thousand, which is
more than double Canadian bankruptcy rate of 2.6 [24]!
Here is the graph of U.S. bankruptcy [25].
In fact, "The Dollar Loses More Ground to Both the Euro-Dollar and the Yen [26]." Worse,
there is a high risk of double-dip recession. "Another year of middling growth is deeply
unsatisfying." [27]. "Unemployment Rate Jumps to 8 Year High" (and climbing) [28]. Thousands of
companies (not just the airlines) and millions of American people need help. In fact, from 9/11/01
to 12/31/02, approximately 3 million people have been laid off. Considering the fact that every job
affects 3.7 other jobs and every family has 2.5 children, 50 MILLION AMERICANS WERE HURT.
American citizens need food on the table. Corporate America needs help.
X.
CONCLUSION:
BDA © offers a Win-Win situation.
After we nurse the corporations back to health and recover
our bail out funds, we can "return them to the wild" (like releasing the whales). We can then use
our Experts and the funds to help other corporations or we can use it for Social Security, National
Defense, Education, Drug War, or reduce the Deficit. With BDA ©, we can keep the
workers on the
job and help the corporations become more productive. Therefore, both will have more income and pay
more tax. It also saves the taxpayers and the government so much money.
If we can bail out one company (Chrysler) with the HOPE to save 134,000 jobs, then why can't we bail
out the entire country and ACTUALLY benefit 290 million people? If we can throw away $2.65 trillion
[29], then why can't we spend only a tiny fraction of it to make sure that
it benefits us, the
corporations, the government, the citizens and our children for many generations to come?
In May 1988, former president George H.W. Bush said that "The United States is the best and fairest
and most decent nation on the face of the earth." Let's keep it that way.
LET'S WORK TOGETHER FOR A BETTER
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