Thursday, July 22, 2010

Bouillabaisse

1. Family companies represent 60% of the nation's employment and almost 80% of all new jobs. Family businesses control roughly 50% of the country's GDP and some 35% of the Fortune 500 are family businesses.

2. There is a real hunger in consumers for customized, personalized products, and a new wave of entrepreneur is capitalizing on this trend to bring "customization to commerce" for chocolate, men’s dress shirts, and a whole lot more.

3. Maywood, a city in California now outsources everything.  Sky hasn't fallen.

4. Another California city, Bell (population of 38,000), one of the poorest municipalities in Los Angeles County, is paying its city manager an annual salary of $800,000 and its police chief is making $457,000 per year. Outsourcing anyone?

5. Books sold on the Kindle are now outpacing the hardcover books Amazon sells. In the past month, for every 100 hardcover books sold, there have been 180 Kindle books sold through Amazon.

6. Wi-Fi service is now offered on more than one-third of the nation's passenger planes.

13 Comments:

At 7/22/2010 3:24 PM, Blogger jeremy h. said...

3 and 4 are related. Some of Maywood's services have been outsourced to Bell.

 
At 7/22/2010 3:33 PM, Blogger morganovich said...

i was thinking about the family business issue the other day when reading about the death of steinbrenner.

clearly, his purchase of the yankees for about $9 million has been a huge success with the franchise currently valued around $1.3 bn.

what's interesting, is that had he not dies this year, his death would almost certainly caused his family to lose control of the team.

consider: inheritance tax is 55% starting next year. the steinbrenner family has nothing like enough other assets to offset the team. they would have had to sell a controlling stake just to pay the taxes.

this is true of any family business where the founder has not already managed to transfer control prior to his death.

i have no statistics on the topic, but i cannot help but wonder how many successful family businesses have been broken up or lost to outsiders due to an inheritance tax the all but guarantees that a majority stake must be sold upon the founder's death. to get around it would take a great deal of long term planning. an unexpected death results in functional confiscation of the business.

leaving aside for a moment the bizarre ethics implicit in an inheritance or death tax (and i think it's preposterous to make death taxable - what is more american or perhaps even human than to seek to provide for your offspring? why should wealth revert to the state upon your death?), it's an economic disaster.

55% is an outlandish amount of wealth to take. it takes the hard work of a family and pays it out to the government. to make matters worse, it forces the timing of the transaction and may result in horrid fire sales. this inheritance law takes away companies from the families who built them. it's long past time to repeal it. it's as harmful as it is ghoulish.

 
At 7/22/2010 3:37 PM, Blogger morganovich said...

worst, such a tax is iterative. even if you manage to keep control of your company through one generation of transition, it'll happen again every 30 years or so. how many ties can any business holding survive a 55% sale before loss of control occurs?

sure, you can try to get around it with supervoting stock etc, but such things depress overall value and are not possible in many kinds of corporate structure.

 
At 7/22/2010 3:50 PM, Blogger sethstorm said...

Not going to California anytime soon, and certainly diverting around Maywood if my path takes me through there.

 
At 7/22/2010 9:35 PM, Blogger bix1951 said...

Bell is just a metaphor for what goes on everywhere all the time. It is an interesting story of power and corruption. And why shouldn't people who get to the top give themselves big paychecks?

 
At 7/23/2010 3:41 AM, Blogger randian said...

i have no statistics on the topic, but i cannot help but wonder how many successful family businesses have been broken up or lost to outsiders due to an inheritance tax the all but guarantees that a majority stake must be sold upon the founder's death.

Why else do you think Warren Buffet says we should keep estate taxes? He makes money selling life insurance to cover estate tax bills, and he makes more money buying companies that need to sell as part of an estate plan.

 
At 7/23/2010 8:35 AM, Blogger Cabodog said...

Regarding Bell, California, what is encouraging is that the citizens forced the ouster and change. People are finally saying enough is enough.

This is only a town of 40,000 people, but I suspect (hope) that the attitude is indicative of the outrage that is building over growth of government and will be properly channeled on November 2nd and effect the REAL change this country needs.

 
At 7/23/2010 10:13 AM, Blogger juandos said...

"this is true of any family business where the founder has not already managed to transfer control prior to his death"...

Maybe, just maybe there is a faint ray of hope out there for this bit of extortion...

Dems may keep Bush tax cuts

 
At 7/23/2010 10:28 AM, Blogger Benjamin said...

Bell is like the US military--the problem of the commons.

City of Bell salaries, and military outlays and benefits, are the commons. They are not owned by anyone or small group.

That's how you get huge lard and parasitic behavior.

 
At 7/23/2010 12:58 PM, Blogger KauaiMark said...

“...They had a lot of bureaucracy, and they lost. Maywood was like that. Now people know if they don’t work, they will be laid off. Much better this way.”

Might be a warning for other city employees like San Francisco bus drivers?

 
At 7/23/2010 9:12 PM, Blogger Jet Beagle said...

Most Dallas suburban cities have municipal golf courses. All but a few have outsourced operation and maintenance to national private golf course management companies. But a few have retained their municipal golf course employees. The difference in customer service attitudes is striking. The routine arrogance of entitled municipal employees is nowhere to be found at the outsourced courses.

 
At 7/25/2010 11:36 AM, Blogger juandos said...

"Regarding Bell, California, what is encouraging is that the citizens forced the ouster and change. People are finally saying enough is enough"...

Apparently there's a fly in the ointment according to the Washington Examiner:

Angry public hounds obscenely overpaid city offical out of job -- he still gets $1 million annual public pension

 
At 7/26/2010 4:17 AM, Blogger OBloodyHell said...

> 5. Books sold on the Kindle are now outpacing the hardcover books Amazon sells. In the past month, for every 100 hardcover books sold, there have been 180 Kindle books sold through Amazon.

Geez. WTF is wrong with people?

Do you really, really want to support a book platform which allows the operator the Orwellian power to ALTER not just the books you have on it, but the ACTUAL CONTENT of the books, with you none the wiser?

Yeesh. I'll own a POS Kindle when someone hands me one for free and seriously threatens to kill me if I sell it.

> 6. Wi-Fi service is now offered on more than one-third of the nation's passenger planes.

LOL.
Louis C.K. -- Everything Is Amazing and Nobody's Happy

Watch it, you'll get the ref.

 

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