US Business and Economy

Because the world really needs yet another amusement park, Twentieth Century Fox is now getting into the game. They just announced their plans to unveil “Twentieth Century Fox World.” They will open it in 2016 as part of Malaysia’s Resorts World Genting. This is a leisure and entertainment complex an hour outside of Kuala Lumpur.

The 25 acre park is supposed to have 25 rides and attractions that will be based on Fox films like “Rio,” “Ice Age,” and “Planet of the Apes” among others. As Jeffrey Godsick, president of Twentieth Century Fox Consumer Products said,

Although many American small businesses report that they are nervous as a result of the government shutdown, they are, nonetheless, hiring. The National Federation of Independent Business has reported that small business owners have added an average of .11 workers per firm in the past month. This is in contrast to the downsizing seen in September.

Many small businesses were hit by the government shutdown, with an estimate that the 16 day shutdown could have taken as much as .6% points from the fourth quarter GDP growth.

Friday the government is expected to release a comprehensive employment report for October. It is predicted that the report will show that the shutdown held back hiring. Approximately 9% of businesses, which is the smallest share since 2006, reported that they laid off an average of 2.8 workers. The NFIB said, “Reports of workforce reductions have reached sub-normal levels. But owners report sub-par levels of hiring, so job growth remains anemic.”

At Christie’s in London is a never-before auctioned piece of art that has everyone abuzz. It’s a Francis Bacon piece of British artist Lucien Freud and it’s expected to sell for a shocking 100 million US dollars.  Bacon’s last painting sold, “Triptych” sold in 2008 for 86 million dollars. This one, Bacon’s 1969 “Three Studies of Lucien Freud” was one of Bacon’s most important pieces.

Auctioneer Francis Outred is sure that it will break the last record. As he said, “That was a later painting, from the late ’70’s and it wasn’t of a very iconic subject, like Lucien Freud, so for many reasons I think this is a much more commercial and better painting, so I would confidently hope that this would break the 86 million dollars that was achieved for that painting.”

Francis Outred, head of Post-War and Contemporary Art at Christie’s Europe continued, “Each head is sliced in half and we see a movement of the head, a shift of the foot, a fidget of the hands, all created by the flick of the brush, so it is really a masterpiece by Bacon in terms of the way, the technique that he has used to portray his great friend.”

Interestingly, the three panels were actually separated for close to 15 years and were only reunited in the late 1980s. The auction for this work will take place on November 12.

It is hard to define one issue as being the greatest problem American businesses face today. According to Henry Blodget, “the real problem is that American corporations, which are richer and more profitable than they have ever been in history, have become so obsessed with ‘maximizing short-term profits’ that they are no longer investing in their future, their people, and their country.” This is what he wrote in Business Insider earlier this month.

However, a year ago, Blodget believed American companies were plagued by a variety of problems (not just one).  In an article in the same journal, he argued that problems that have been plaguing the economy have been the same for more than ten years.  These include:  the economy has been suffering from globalization; technology; no increase in average hourly earnings for five decades; tax policies that have benefited investors and high-wage earners and shareholder value obsession (diminishing the value of stakeholders).

Today Blodget sees that really the biggest problem American corporations face is how they view their employees vis-à-vis their profits.  He points to a Tweet from a man called Daryl Tremblay who, on the subject of workers at McDonalds argued, “they are costs. Full stop. They don’t have a stake, they hold nothing. They trade their labor for money.”

Blodget’s issue with this concept is that the only issue businesses or managers are concerned with is “maximized earnings” (similar to the concept he discussed a year ago that is ruining US businesses, namely shareholder value obsession).  If employees are merely seen as “costs” to be minimized, Blodget points out, is “destroying America’s middle class, robbing American consumers (a.k.a., "employees") of spending power, and, ironically, hurting the growth of the same corporations that are making this choice. If your customers are strapped, your company can't grow. And, right now, American companies are choosing to impoverish their customers (employees), while skimming off as much wealth as possible for themselves.”

Thus his solution is for managers to “choose” to share the corporation’s wealth with their employees, reduce their revenue (still making “reasonable” profits) and simultaneously generate “compelling financial returns.”  Further, rather than view their employees as “costs” they can pay their “colleagues” real wages.

Blodget’s arguments are perhaps worth a try before encountering a total crumble of the economy.