CEPR - Center for Economic and Policy Research

Multimedia

En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press Thomas Friedman, Bard of the 1 Percent, Reports on the Problem of Incompetent CEOs

Thomas Friedman, Bard of the 1 Percent, Reports on the Problem of Incompetent CEOs

Print
Saturday, 15 October 2011 19:34

After referring to David Brooks as the "Bard of the 1 Percent," I was assaulted with a barrage of threatening letters and phone calls from representatives of Thomas Friedman who insisted that he holds this title. I will let the two NYT columnists slug it out between themselves and deal with the substance. 

In Sunday's column Mr. Friedman inadvertently warns us about the potential economic risks this country suffers from being run by incompetent CEOs. Friedman recounted a conversation he had with Chicago's new mayor, and former Obama chief of staff, Rahm Emanual. Emanual reportedly told him:

"I had two young C.E.O.’s in the health care software business in the other day, sitting at this table. I asked them: ‘What can I do to help you?’ They said, ‘We have 50 job openings today, and we can’t find people.’ ”

Friedman then goes on to add:

"Doug Oberhelman, the C.E.O. of Caterpillar, which is based in Illinois, was quoted in Crain’s Chicago Business on Sept. 13 as saying: 'We cannot find qualified hourly production people, and, for that matter, many technical, engineering service technicians, and even welders, and it is hurting our manufacturing base in the United States. The education system in the United States basically has failed them, and we have to retrain every person we hire.'"

While Friedman favorably quotes Emanual describing this as, "staring right into the whites of the eyes of the skills shortage," the most obvious shortage of skills in this story is with the CEOs. Competent CEOs know that in a market economy you attract good workers by offering higher wages.

This is known as the principle of "supply and demand." If the demand exceeds the supply, then the price of the item in question is supposed to rise. In this case the item in question is labor. If these companies were run by competent CEOs then they would be offering higher wages in order to attract the workers that they say they need. If they offered high enough wages people would leave competitors to work for their companies. They would also move from other parts of the country or even other countries to accept their job offers. In the long-run more people would train to get the skills needed to fill the positions these employers are offering.

However, there are no major occupational categories that show large wage gains at present. This means that if employers really are having trouble attracting good workers then it must be due to the fact that they don't understand the basics of a market economy. Unfortunately nothing in Friedman's column indicates that Emanual or anyone else is educating CEOs on how they can raise wages in order to attract the workers they need.

It is also worth noting that Friedman implies that the Chicago school system is desperately in need of the reform that Emanuel plans to give it. Emanuel's predecessor as mayor, Richard Daley, also placed an emphasis on reforming Chicago's schools. From 2001 to 2009 he installed Arne Duncan, currently President Obama's Secretary of Education, as head of the Chicago school system. If Friedman and Emanual's complaints about the current state of Chicago's schools are accurate, this would imply that Duncan must not have been very successful in his tenure even though he was widely acclaimed as a reformer at the time. 

Comments (23)Add Comment
...
written by bobbyp, October 16, 2011 9:54
Nay. It is better to snivel to your bought and paid for politicians so the government will undertake the task of providing underpaid worker fodder, and if you can finagle a tax cut-BONUS!
...
written by jamzo, October 16, 2011 10:00
importing "skilled" (ha ha ) labor into the united states has been a game that has been going on since the pilgrims landed
CEOs lie to lower cost.
written by Ted, October 16, 2011 10:02
Ceos lie about shortage to open up greencard laws to lower their labor cost.

Baker Advances Predator Model: Employers Should Raid Each Other , Low-rated comment [Show]
Projection involving inversion of needs of self with external world.
written by diesel, October 16, 2011 11:14
"Doug Oberhelman, the C.E.O. of Caterpillar, which is based in Illinois, was quoted in Crain’s Chicago Business on Sept. 13 as saying: 'We cannot find qualified hourly production people, and, for that matter, many technical, engineering service technicians, and even welders, and it is hurting our manufacturing base in the United States. The education system in the United States basically has failed them, and we have to retrain every person we hire.'"

What a sad failure of education that it didn't train young people to fit seamlessly into Caterpillar Tractor's manufacturing line vacancies. How shortsighted of our teachers and curriculum planners not to have foreseen the type of skills Caterpillar would need twenty years down the road.

And doesn't he really mean "The education system in the United States basically has failed us...."?
...
written by MarkJ, October 16, 2011 11:15
The old ruse journalists used was that one worker may make two or three times the wage of other workers. The journalist would then abandon the who, what, when, where and why of good journalism and fail to report a real example of someone earning the much superior wage. Did you ever interview anyone making $100,000 per year repairing heavy equipment?
...
written by bmz, October 16, 2011 11:18
izzatzo--the sophomore strikes again!
...
written by jumpinjezebel, October 16, 2011 1:33
I think most of the "shortage" is self inflicted. Most companies have an overblown HR department that has nothing to do but produce inflated job position qualifications. If the supervisors could do the selections and interviewing there would be more workers. MOST JOBS DON'T NEED A COLLEGE DEGREE AT ALL. HOW MUCH OF WHAT YOU LEARNED DID YOU ACTUALLY USE AT YOUR FIRST JOB??????
CEO skill shortage
written by Sandwichman, October 16, 2011 2:26
Rahm and Tom are on to something. There is indeed a skill shortage -- a shortage of trained CEOs who will work for reasonable pay. Here's the solution: cap weekly CEO pay at the equivalent of the median annual income per earner -- say about $33,000 a week. CEOs could pay themselves as much per hour as they felt they were worth but they would have to stop working (or stop get paid) as soon as they reached the cap. For example, Lloyd Blankfein could work (for pay) 15 minutes a week, max.
duet
written by Peter K., October 16, 2011 2:45
"After referring to David Brooks as the "Bard of the 1 Percent," I was assaulted with a barrage of threatening letters and phone calls..."

Maybe they could team up like Simon and Garfunkel or Flight of the Concords?
The "Obvious" solution
written by gary fitz, October 16, 2011 3:26
How long do you think it will be before Friedman supports or proposes the idea that the government should match (or some portion of the wages paid) the employer wages in order to attract the needed employees. Obviously, this is the perfect solution because it provides further welfare for the 1% behind the guise of lowering unemployment. It does have a small drawback in that it increases the deficit but that can be handled by cutting unemployment benefits. More government welfare for the 1% is always the perfect solution.
Aren't they doing something like that in Georgia?
written by Kat, October 16, 2011 4:15
Gary,
Isn't there some program called GeorgiaWorks where the state government is paying the wages of workers so that workers may be trained and eventually land gainful employment at the participating sites. I believe these are not high skill jobs nor do that many of the workers end up with full time employment. It acts mainly as a cheap source of temp employees. Obama wants to scale it up!
...
written by Ian W, October 16, 2011 9:48
I largely agree, but if the company has six technician positions and five are filled with employees making $100k, the company cannot offer $200k to fill the remaining spot without creating dissent among the other technicians.
Friedman is a big douche
written by Watt DeFark, October 17, 2011 10:39
This is such a straw man. You can't tell me there aren't laid off people with factory experience who could be trained, relatively easily, to fill these positions. I call BS.

And second, 50 jobs are an ATOM in the bucket. You can't go nuts retraining thousands of people for a potential 50 jobs. Employers have a right to expect basic math and reading skills, but need to assume they will train for their own needs and not, like those welfare people they hate, wait for the government to help them.
wages and economics
written by scott moore, October 17, 2011 11:17
ooooh good one- hit them right between the eyes. This is not about training its about wages. And not only wages but also productivity. If you have higher productively you can pay higher wages. If you can't hire the 5th person for 100K then better get rid of two, and hire one that can get the job done for 200K! The old saying "you can pay them whatever you want, just not more! Manufacturing 101!
..., Low-rated comment [Show]
...
written by cackalacka, October 18, 2011 12:42
JohnG, apparently you didn't read the article.

The thrust is to raise wages to attract skilled workers and to highlight Bobo/Mustache's penchant for waving a red cape of nonsense when the solution is quite clearly in front of the hack/CEO's eyes.

Please let us know if your company is publicly traded. There are those of us who take are hard-earned wages to invest/save, and I, for one, would be reluctant to invest in a company run by someone so obtuse.
...
written by Bo Regard, October 18, 2011 3:58
Hey, JohnG, as one business owner to another...we work the long hours and give up vacations because it's our investment at risk. That's why we get the bigger bucks, so stop whining. If you think you can succeed without your employees, go do it.

And to Caterpillar's Oberhelman...public schools were established to make good citizens of us (see Adams, John), not skilled employees. Train your own people ya cheapskate! That's how I get just exactly the high-quality product that helps me out-compete the rest.
...
written by JohnG, October 18, 2011 8:53
Hey Bo, not sure how you got that I was whining about my employees. Guess you missed the equity piece and the fact that we interviewed another person today that is a referral from a current employee.

What I love is the fact that some clowns on here voted my post down. They can't handle the truth. Would love to meet these fools in the real world, oh that's right I spoke with 3 of them today at the SEC. Talk about Stupid !!! So we wonder why college grads can't get jobs, let's see - Dean and the majority of the people on this blog have probably not interviewed anyone for a job in the last 3 years. But they know everything - have all the answers. Well I have interviewed over 200 people in the last 3 years and most of the young people have no common sense. The entitled generation is in trouble.
...
written by JohnG, October 18, 2011 9:01
Hey cackalacka,

You confirmed my point exactly - you never have created a job in your life. Your hard earned wages ? Government job I presume, or tenured professor teaching in a building that a capitalist donated.
Yes I am publicly traded, and my investors continue to invest their hard earned money with me in my next secondary that is pending. You wouldn't like my stock because you won't get it in your mutual fund..........

Your right, I don't spend hours writing my blogs but the facts are the same. But then again, the facts are never in the way of the intellectual crowd with the big themes and little results.
In my experience
written by Tim, October 19, 2011 10:48
...most business owners aren't as out of touch with reality and as weirdly angry as JohnG. Certainly I hope he's an outlier, or this country really is doomed.
...
written by JohnG, October 19, 2011 8:04
Another irrelevant post by Tim. What exactly is your point. How exactly, am I out of touch with reality ? And no I am not angry when someone spews crap at me, I just laugh because most times there is no debate, just moronic posts like yours. Tell me how I am wrong, love to debate it. Most here don't debate they just roll on with themes and theories that have no basis in the real world.
Well...
written by Tim, October 21, 2011 9:21
One way you're out of touch with reality is that there are no other comments by me...which suggests you're fighting imaginary demons in your head. Another way is your belief that you're not obviously overflowing with bizarre rage and would "love to debate" other people...even as you talk about what they say being "irrelevant" "moronic" "crap."

As I say, I sure hope there aren't many others out there like you, or this country is in real trouble.

Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.

busy
 

CEPR.net
Support this blog, donate
Combined Federal Campaign #79613

About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

Archives