Again, in a list (borrowed from other scholars' definitions) of what makes a NGO or Non-Governmental Organization, she specifies that an NGO is "not mainly aimed at generating profits for the CEOs" (96). Strictly speaking, the profits earned by a corporation do not go to the CEO, who is a manager, not an owner; profits are supposed to go to the shareholders. In practice, of course, many CEOs receive stocks as part of their compensation and in some corporations the CEO is a founder and major stockholder (think Steve Jobs and Mark Zuckerberg), but their role as stockholders is theoretically separate from their role as managers. This isn't just a technical quibble, because many people think that managers are owners and entrepreneurs, which is only true some of the time.
So, for example, you get people like Eddie Lampert, a hedge-fund manager and Ayn Rand fan who took over K-Mart and later Sears, driving them both into the ground while enriching himself. I guess he owns those companies, but he didn't build them and has effectively destroyed them.
Some refer to Lampert as a corporate raider. He prefers the term “active investor.” It must be admitted that Lampert wasn’t only interested in stripping the assets of his retail giant to make a fortune off it right away. He thought he could increase profits, too. After making a nice wad of cash from Kmart by selling off the valuable real estate sitting under dozens of stores, shutting down 600 stores and laying off tens of thousands of workers in the name of cost-cutting and thereby jacking up the stock price, he got bigger ideas. He would use Kmart to take over another ginormous retailer, Sears.
What background did Lampert have in retail? None at all. But never mind that. He was a Wall Street genius, and he would make this thing work by harnessing the power of data and numbers and letting the invisible hand of the market guide his Franken-company to glory. He even hired Paul DePodesta, the statistician of “Moneyball” fame, to advise him. When Kmart acquired Sears, the new company, Sears Holdings, became one of the largest retailers in the U.S., and Lampert became its CEO. He took on the Herculean task of integrating two vastly complex companies. And he brought on a guy that knew all about restaurants and nothing about retail to help him, Aylwin Lewis, former president of YUM! Brands.
Reactions ranged from surprise to predictions of doom. Mark Tatge at Forbes called him “Crazy Eddie” and decided that he must be planning to liquidate the whole shebang, perhaps slowly, by dumping stores (Sears owns a ton of valuable real estate) and using the money to do stock buybacks (more on that later) that would further enrich him.
It turns out that contrary to Lampert’s notion, you actually do need to know something about a business in order to manage it well. There’s really no substitute for industry-specific experience. And bigger is not always better — a gigantic corporation can be too unwieldy and complex to thrive, especially when your management philosophy is derived from a writer of bad novels.
... Sears has lost half its value in five years.I like that bit about preferring to be known as an "active investor." (You're not a corporate raider, Eddie, you're just big-boned!) As an investor, he has made out like gangbusters, as a result of the detachment of finance from production enabled by the deregulation "reforms" of the post-Reagan period. So he's a very good investor, but a very bad manager.
Still, The Politics of Volunteering has a lot of good stuff in it. (To avoid any confusion, I should point out that the material about Sears and Eddie Lampert that I just quoted comes not from The Politics of Volunteering but from an article by Lynn Stuart Parramore at Salon.) For example:
"Community visioning," "strategic planning process," "asset mapping," "community forums," "training programs," these are some hints that a great deal of empowerment talk is in play. From these phrases, it is hard to know what participants actually did. Clearly, pamphlets with information were circulated, and indeed, if a person has enough money to buy healthful food or enough time to grow it, then such information could be a lifesaver. Making ordinary citizens responsible for their own health can help them "make healthy choices." But if a person is pregnant or has diabetes, information would not be enough. At one such "health fair" in Los Angeles, I obtained a great deal of information, including a poster listing "One Hundred Ways to Praise Your Child" from the Los Angeles Child Guidance Clinic. It is nice to praise one's child, but it made me think that they were being offered praise when what they needed was health care, food, places to get clean, fresh air and exercise, and child care [104-105].Or this:
A famous case that seems, on the face of it, to illustrate the potential of a little seed money plus a little voluntarism too add up to a fully self-sustaining organization is Homeboys Industries. A priest got former gang members in an impoverished East Angeles neighborhood to learn to bake and to sell their muffins, bread, cupcakes and croissants. The program seemed to show clear as day that if only ghetto people got the entrepreneurial spirit and a small financial jumpstart, they would spring out of poverty. The organization added on a gardening business, silk-screening company, tattoo-removal, day care, and other businesses. By 2010, the NGO generated about $3.5 million a year, according to its founder ... But when donations started drying up after the financial crisis of 2008, it became clear that the Homeboys Industries depended on donations. It still needed another seven million dollars a year from donors to continue to operate. Various government and private donors kicked in, to make this organization continue its valuable work. It was not a profit-making enterprise. It was not a good poster child for self-help -- unless, that is, we include as a "self-help" the fact that Homeboys Industries successfully marketed its worthiness, attracting donors to give money to it instead of to another potentially worthy cause [105-106].There are a number of ways to interpret this story. (That bit about "the entrepreneurial spirit" is, I hope, meant ironically. Poor people are generally more entrepreneurial than the better-off.) After all, profit-making companies also look for "donations" to keep them going, by selling stock. Before you object that investors expect to get a return on the shares they buy, remember that they don't always get them. Amazon, for example, has done remarkably well at selling stock although, "for more than a decade, Amazon has teetered between minimal profits and no profits. In 2012, it said Tuesday [January 29, 2013], it lost money." Further, for-profit companies expect and often get various kinds of government subsidies ranging from tax breaks to grants and other direct payments: Apple, to cite a notorious example, relies on the Chinese government to subsidize its supply chains there. Without that socialist assistance, Apple might have to charge a few dollars more for their iPhones and perhaps take in a few dollars' less profit. Economic unfreedom suits them just fine. It would appear that Homeboy* Industries is just functioning like a normal American company.
*I'm not sure where Eliasoph got the extra "s" she put on "Homeboy"; their website doesn't have it. Oh well; I've made such mistakes myself.
