Pages & Random Thoughts

Sunday, December 27, 2015

Big Biz Gets It Wrong

I am always fascinated by education articles in business publications. Today's article in Fortune was no less fascinating in its naivete and because of a particularly stupid (yes, stupid) statement by ExxonMobil CEO Rex Tillerson. 

Let me backtrack and share with you where I'm coming from when I read articles like this. I have a business degree from a private university in New York City, that produced some of the most sought after accountant and finance grads by the Big 8. We lived and breathed finance, asset management, accounting, international trade and marketing. 

I am also the granddaughter of an economist. If you had the great fortune to go to NYU in the 1960's and 1970's, he was the professor of banking and finance and the chair of banking and finance department for many years. He was a division chief for the Federal Reserve Bank of New York. He was a director for the Federal Home Loan Bank of New York. Wall Street titans would spend their Saturday afternoon picking Pop's brain about what he thought was going to happen long term - no one was particularly interested in short term. I was a kid who grew up talking about and learning economics, banking, and markets on the knee of a guru. 

So I'll just say, in my less than humble opinion, that Rex Tillerson is a fool. While this thought process is not new, and he is not the first to utter such nonsense, the timing is interesting. Common Core State Standards (CCSS) are finally under serious scrutiny. Here's Tillerson's statement.
“I’m not sure public schools understand that we’re their customer—that we, the business community, are your customer,” said Tillerson during the panel discussion. “What they don’t understand is they are producing a product at the end of that high school graduation.”
Just. No. 

No, Rex. You are not their customer. America's children are not products that are meant to go in one end a human being and out the other a product for corporate America to do with what they will.

I am blown away by the acute shortsightedness of that statement. Especially for a guy who is sitting at the head of a company that exists only as long as fossil fuels do. Rex. Buddy. You should be clamoring for innovation. TRUE innovation. For creativity. For vision. 

If no one has had the balls to tell you, I will. A standardized education (one which you and I did not have, nor did anyone pre-NCLB) will NOT get you what you should be looking for. And for someone who should be well trained at this point in his career to spot trends, which frankly, in education are as blaring as the lights in Times Square, the narrowing of curriculum is detrimental to all students. We've had 15 years of this crap. More isn't going to make it better. 

As for the rest of the article, I'd say it's worth a read, but be prepared for the usual extremes that have absolutely nothing to do with what's actually wrong with CCSS.

Then, in great contrast, was this article in the Boston Globe. It's not about education, but rather, about what some of the old school Who's Who of Wall Street are seeing as a really big problem. I have to say, I think my grandfather would have liked Morris Pearl - former managing director of BlackRock. He is part of a group called the Patriotic Millionaires. Terrible name, but I suppose it gets to the point. 

Their point is this (in admittedly simplistic terms). Wall Street used to be about raising capital for companies to grow. People could buy shares and therefore share in the wealth earned through that growth. Factories would be built. Wages would rise. People could afford to buy products, and so on. We are talking basics here. Econ 101. Remember macroeconomics? 

Now, companies are sitting on their cash. They are using it to pay dividends and for buybacks, not for reinvestment back into their own infrastructure, not for raising wages. The value of companies is now based (deemed) on their quarterly earnings, not on long term plans. The narrowing of the focus on Wall Street is hurting all of us, except the ones at the very tippy top of the pile. 

So why this article, which you should absolutely read? Simply, that there was a time, as the author put it, "When his father expanded his business by investing his profits in other clothing stores, he and others within the family benefited from the expansion. In the same way, large companies could raise the capital needed for growth on Wall Street and sell shares to the public, enabling anyone to own a piece of corporate America, and enrich countless stockholders.

In 1950, individuals owned 90 percent of all stock shares, and usually held them for the long term. This was the virtuous circle that had attracted Pearl and many others, as growing companies hired new workers, raised wages, and rewarded shareholders." 

The same idea holds true for education. There is a cycle in society, a social contract, of which my grandfather often spoke. We have a fundamental responsibility to those who come behind us. We do have a collective good to maintain and it crosses over into many sectors of American civilized societies. We all pay for public education. It is there for all of us. We stand on the shoulders of those who came before us, just as those coming up, count on us to maintain public education for all of them. Without it, we have the Tillersons and the Gates of the world thinking that being rich entitles them to destroy the system that has served most of us incredibly well for generations. 

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