Guest Post: Productive Vs. Unproductive: Manufacturing Vs. Financialization

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

Productive Vs. Unproductive: Manufacturing Vs. Financialization  

The Status Quo heavily rewards financialized profiteering and resource extraction while penalizing productive capital investments in manufacturing.

There is so much ideological, quasi-religious fanaticism around "free trade" (there is no such thing as "free trade," there are only various permutations of managed trade) and "industrial policy" (every nation has one, explicit or implicit) that it is difficult to make any sense of the many intertwined issues.

Ideological purity is not a substitute for knowledge, any more than a superficial admiration of machines equals actually knowing how to assemble, maintain and repair them.

As a background context, we might start by noting that Marx outlined how finance capital comes to dominate industrial capital, as industry comes to depend on the credit extended by the banks/finance capital.

The key takeaway: if you don't control the banks, then they will end up dominating industrial capital. In the U.S., we have the worst of both worlds: a dominant financial Elite and various cartels (military-industrial, sickcare, agribusiness, etc.) that have captured what little of the Central State that isn't already beholden to financial capital.

Moving production around the world to exploit cheap labor--also knowns as "wage arbitrage"-- is not free trade: it is merely the consequence of free capital flows, and an extension of capital's dominance of labor. If capital can reap higher returns by flowing elsewhere and abandoning domestic labor, then it will do so, and "lowering the cost to consumers" is the marketing propaganda issued to placate the captive home markets.

Consumers, after all, are not free to travel the globe seeking "higher returns," i.e. lower prices--that privilege is reserved for capital.

When China sold silk to the Roman Empire in 100 C.E., the cost of capital to produce the silk and the cost of labor was set in China. Traders took the risks of transport and reaped the gigantic profits. The same was true when China sold porcelain made for export to America in the 1800s.

That is "free trade." Moving capital to China to exploit cheap labor there, then closing the factory and moving production to Vietnam, and so on, is simply free-flowing capital exploiting labor on a global scale.

As further context, we should note the dominance of short-term profiteering as the motivator of management in Corporate America. "Beating quarterly estimates" is basically the only metric of "success" in America, because a corporate management that fails to "beat estimates" won't last long enough to pursue any long-term capital investments.

The financialization of compensation is also a critical factor: if compensation is mostly stock options, then that creates a huge incentive to boost the stock price and then exercise the options--"pump and dump" on a vast, systemic scale.

This obsessive addiction to boosting short-term profits also leads management to view labor as the "enemy" which is sucking off profits, rather than the partner in the company's long-term success. Thus relentless cost-cutting and downsizing is heavily incentivized as the one sure way to boost short-term profits, even as the company is being hollowed out.

Management isn't being rewarded to think about the long-term, any more than a member of the House of Representatives is rewarded for thinking ahead more than two years. Some problems cannot be solved, or even addressed, in short-term thinking. This is one reason why the nation is heading to heck in a handbasket--nothing can be discussed that can't be "resolved" in 18 months (the election cycle starts six months before every congressional election). Management might only last 18 months, so there is every reason to stripmine the company of assets and know-how, boost the stock price, cash in the millions of dollars in options and hightail it on to the next "opportunity."

An emphasis on housing as a bedrock of wealth and lending has completely distorted the U.S. economy. The incentives in real estate are massive, and massively perverse: the unlimited mortgage deduction for interest incentivizes borrowing vast sums and "moving up" to ever-larger, ever more wasteful homes, to name just two, and policies aimed at expanding suburbs effectively gutted central cities while heaping subsidies on sprawl and distant exurbs.

The U.S. has a distinct industrial policy: benign neglect, ignorance, favoritism towards real estate development and financialization, and a fanatic devotion to short-term profits and cost-cutting.

What makes any discussion of "free trade" so impossible is the vast ignorance of free trade proponents about our industrial competitors and the history of trade. If you know essentially nothing about industry and industrial policy in China, Japan and Germany, and nothing about the long history of trade in a capitalist framework, then exactly what are you bringing to the discussion other than religious fanaticism to a concept that begs for deep knowledge of other nations and nuanced understanding?

I have studied Japan and China for almost 40 years, both formally in university studies and via visits, research and discussions with my many Japanese and Chinese friends. I have toured many Chinese factories and discussed trade with entrepreneurs and marketing reps, and received inside information from local government sources.

Japan, Germany and China have trade policies which support and encourage specific industrial and export models. For context, please read these two related articles: Outsourcing manufacturing hurts U.S. and a factory that costs $11 million in California costs $5 million in Germany, after tax credits.

If you watched any Japanese television (NHK) after the tsunami and earthquake, and you are a careful observer, you had a rare chance to see industrial Japan from the inside. Japan, Inc, is not just a Toyota factory filled with industrial robots: it's thousands of small factories producing parts for the global corporations.

For example, one factory affected by the tsunami manufactured special components for satellites. The workers were shown hand-polishing the complex castings by hand.

Let me repeat that, for those who mistakenly think everything can be made by robots or in some Chinese factory by low-skilled workers: by hand, by highly skilled workers.

Industrial robots are costly to buy and maintain; they make no sense on small production runs, or highly skilled, complex tasks. No robot could duplicate the delicate hand-eye coordination required to hand-polish these complex parts.

This is not some outlier, this is standard in Japan, Inc., and also in Germany, Inc. There is a critical need within any broad-based industrial supply chain for skilled labor.

As for automation: yes, it works in producing mass-produced goods, but skilled labor is required to reprogram the robots, maintain them, assemble them, etc. Though the factory floor may have few people present, there is a long supply chain behind the automation that supports multiple levels of value-added labor and manufacturing.

It's not just moving the assembly offshore, it's moving the entire value-added chain that feeds it.

As my friend G.F.B. recently noted, the initial invention that is the obsession of America and supposedly its great advantage in the global marketplace leaves off the real value-added proposition, which is the development of the later models and iterations.

Place the production elsewhere and keep the design staff in the home nation is an excellent way to lose the design of the actual parts and workflow--the real value added. Apple has been able to keep ahead of competitors by integrating software that is difficult to copy into hardware, but it not the typical case, it is the outlier, hence its outsized value.

As I repeatedly point out, Apple, Google, Facebook and Twitter together have relatively few domestic employees. As production is overseas, then that's where the design jobs go, too, eventually.

You have to understand the entire value chain, not just the assembly costs.

The U.S. culture denigrates skilled labor and glorifies the C.E.O. and innovator as god-like heroes. Other nations, notably Germany, maintain a value and education system which recognizes and nurtures technical skills. In the U.S., we fawn over social media companies that generate billions in new wealth for Wall Street and a handful of founders and venture capitalists, and drill into every student's head the value not of tradecraft skills but of a four-year business degree.

For those not suited for an MBA--sorry, there are few other choices of learning.

In America, we are addicted to the drama of startling, big "innovations," and we are enamoured with the romance of "instant wealth" from the "hot investment" of the moment.

Extraction is not the same as value-added production. There is temporary value in the equipment set up, but once the resource has been depleted, the wealth is gone and the "gold rush town" dries up and blows away.

The problem with financialization is that it is the gold rush dynamic on steroids. To reap the big gains from financializing, you need ever-greater amounts of credit, leverage, risk and churn--all the elements we saw in the housing bubble and in every stock bubble.

Once the financialization bubble bursts, there is nothing left to extract or leverage. Since productive investments were disincentivized at every turn, then the implosion of the unproductive investments leaves a hollowed-out shell of an economy with a very wealthy layer of managers and financial "winners" and the 90% below them with few prospects in what amounts to a corporate-colonial economy ruled by financial oligarchies and their minions in the Central State.

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dcb's picture

time to think about banning this bozo

PaperBear's picture

"captured what little of the Central State that isn't already beholden to financial capital" ?

If you guys can't wake up the sheeple to this fact then there is no hope of having a peaceful revolution at the ballot box.

midtowng's picture

It's too bad that so many are dedicated to the "free market" ideology that they won't even hear what is spoken so obviously in this article. Even on ZH there are some that won't hear it.

caconhma's picture

Things are quite simple: America is not a sovereign state any more. It is a colony that is owned and controlled by the City of London.

Let me explain.

  • The City of London the historic central core of London is an independent entity about a mile square. Britain's financial services industry and central bank (Bank of England) are located in the City of London. 
  • Today, the City of London is the epicenter of central banking worldwide. It belongs to the Rothschild, Warburg, Oppenheimer, and Schiff  jewish financial families. These families own and control most of the world central banks including the FED and ECB among others,
  • These central banks control money printing presses. Consequently, they have unlimited resources to buy any politicians and any businesses.

For the City of London rulers, the USA is just another colony. So, they don't give a shit about America and its people. For them, America is not much different than Morocco, Ireland, Portugal, Greece, etc., Since the USA is a colony, it is treated accordingly. These masters are very good in lying, stealing, creating totalitarian regimes, and various civil unrests and wars. But they can not run real and viable businesses. They always preferred Saddam Hussein and Mubarak to people like Jefferson and even Kennedy.

At the same time, Israel is a totally different story. Remember how US presidential candidates were/are going to Israel for a "job interview" or how US congressmen were kissing ass to the Israeli PM?


So people, get used to the reality of being Rothschild subjects. In a case of being stupid enough and behaving inappropriately, there are always CIA, FBI, the Home Land Security Agencies, etc., to enforce "the law and order" of the real colonial masters.

Oh regional Indian's picture

I had the same arguement with a well known Indian Economist (newspaper,krugman style) about how oxymoronish the phrase Financial Innovation was and what terrible things it had wrought us. Also, India's famous Infosys man, siad that India's innovation was getting shampoos to poor villagers in rupee sachets..

Does not matter anymore actually. Both sides, financial and industrial are gone into UI land, only the look matters. All form, no function. To even call it "production" seems a joke.

DoChenRollingBearing's picture

There is not much that we can do about this as individuals.

Except to protect ourselves.  By buying gold.


ORI!  If you would like to see my new blog, drop me a gmail at my name.

Prometheus418's picture

That's not only fatalistic, but incorrect.

As one of the skilled laborers (tool and die maker before working up to mechanical engineer.) I can assure you that if you are interested in becoming a part of the real produtive economy, there are not only jobs availible, but there is a shortage of qualified people to fill them.

While they do not pay as well as, for instance, a CEO, they *do* pay far more than the average cubicle-dweller's salary.  What I earn in rural Wisconsin is roughly the equivilent of $125k a year in New York or LA in terms of real local purchasing power.  For example- I paid $79,000 for my home- a four bedroom, two bath Cape Cod with 2000 sq. ft of space, and attached garage on a 1/2 acre lot that looks like a park.  We're hurting a little right now because of gas prices, but overall, the standard of living is far higher than that of an average city-dweller.  

To get into these jobs, and move into more productive fields, all a person needs for entry level is a high school diploma.  For a jump start, a two year degree at a technical college doubles your hourly pay.  At this point, it should be noted that I am talking about "job shops" that produce small runs of product directly for customers- not factories, though that is an option for those who are actually not mechanically inclined and are able to handle monotony.

Even if you don't want to move, there is nothing stopping anyone from being "handy."  Even simple projects like fixing an old vaccuum cleaner or repairing a leaky faucet develop the skills and reasoning processes needed to engage in production work.  And while you may *not* want to engage in production work right now, it does not hurt to be ready for that.  After all, if the USD continues to decline, along with the horrors that can cause, it also makes importing durable goods from the US more attractive to foreign investors.

I remember back in high school, all of my teachers pushed the University like it was the only game in town.  They'd taunt students who were interested in trades by saying "Do you want to dig ditches for a living?"  

Knowing what I know now, I wish I could have told them "Hell yes- do you have any idea how much a heavy equipment operator makes?"


TorchFire's picture

In a true "free trade" environment, US manufacturing would be considerably healthier.  "Free trade!" when proclaimed by the establishment as a sort of call for liberty and all that is good is merely another form of flag waving, feel good bullshit.  Wage arbitrage, environmental regulatory, taxation and other differences turn the whole concept on its' head.  Free trade can exist in isolated cases where it has been sheltered via a business ecosystem that has developed organically, however this is an exceedly rare circumstance and when it thrives it resides in a very small footprint. The less localized it is, the more subject to gross manipulation by TPTB.

ibjamming's picture

Yes...the government priced American labor out of the market.

I fear we've used up the available cheap there anywhere left to exploit the people?

falak pema's picture

This article addresses all the bedrock issues raised by the current financial crisis of globalized capitalism : aka "the international labor arbitrage" of outsourcing.

You may or may not agree with the analysis but it hits many nails on the head. A lot of ZH posters should read this and then try and sieve away their prejudices from stark economic logic. "There is no such thing as a free trade"... As there is no such thing as a "free market" a good point where to begin on this...Eratosthenes type sieving.

Sieve away... and lets give and take in debate about whats on our "free" plate.
About where and how industrial capitalism should innovate and why national industrial policy cannot just be "free trade" oriented.

Unless of course we do away with the concept of "nation state" and move to world governance...which I am sure most will agree is a pipe dream in the current state of the world. So unless you be a rabid "nationalist" uber alles who sings 'USA USA' or some other hubristic song ...where is the dividing line between legitimate national goals and international peace and human progress; if such things even exist in the real world and are not considered "utopic" and therefore irrelevant to geo-politics?

Big question, small answer?

The ZH crowd is not an audience for this type of debate. I understand that as this is a financial site. But I will state my case for debate as the article is the starting point from my perspective, not the relative imperviousness of ZH readers to this subject, which is alien to the Americano-American, self focussed tradition : "we didn't invent it, our founding fathers never taught us this, so this is socialistic, european junk dressed up as geo-political philosophy..."

Sorry for my own "prejudiced" rant...but then I'm not American although I like peanut butter and baseball. So bash away...

falak pema's picture

Ori , I respect profoundly your original thinking. I understand your concerns, as this GLOBALIZATION and incidental outsourcing, to feed the Oligarchy gravy train, is not a true model to satisfy human aspirations by bringing people closer to each other. Having said that, I know that now we are on a road where our own human intelligence will make the world smaller..this is inevitable. But to what aim... is the ISSUE. Gandhi, was a great believer in autarky, in his day and age...but today, I feel we must pursue the road to more international exchange...But not for the SOLE benefit of the Oligarchs; instead for those of the people. Its a pipe dream...but at least its a dream...not the Oligarchical nightmare!

Oh regional Indian's picture

I hear you Falak. Autarky? Did not get that.

And I think exchange across cultures should be of culture in  the main and goods only in the prized, the few, the rare and the special (like a rare Japanese Katana as an example). So, I think caravans were enough. Modern logistics kind of ate it's own tail and is now now feeding on it's own bulk.



falak pema's picture

autarky = self sufficient, self sustaining system. Like Sparta of old...nobody from outside was allowed into the boundaries of the city. Gandhi and the spindle wheel...image.

newworldorder's picture

Under our current global debt based monetary system, labor has become a commodity. Large, populous Nation states (India, China, Indonesia, etc.,) through their labor policies have been seduced into "partnering" with large multinationals to provide the lowest labor costs possible. After all low cost labor payments are better than no labor payments at all.

Low cost of materials, including oil as allowed for the cheap transportation of goods to world markets.

The US as the worlds policeman has guaranteed the safety of world commerce. The FED has guaranteed the safety of capital to move unencumbered to wherever it will earn the most by co opting the most. National identities and what average people want - be damned.

Industrial policy - The US has one, its called benign neglect and acquiescence to the needs of the multinational banking and corporate entities.

Caviar Emptor's picture

You're forgetting about the Prison-Industrial Complex, America's new for-profit growth industry. Outsourcing jails makes sense for the government, but is a bonanza for the private sector. It's well financed too! And it's absolutely insulated from "Free-trade" and wage-arbitrage. That is, unless the trend toward secret offshore CIA prisons takes off. That's the main source of competition and the boyz are working on plugging that hole. SInce 1980, the US prison population has skyrocketed from under 500K to nearly 2.5 million (with nearly 7 million on probation or parole). The future looks extremely bright: an economic depression (pardon me, "soft-patch") and crime and drugs on the rise, a bevy of friendly judges and politicians and a supply of really cheap labor as far as the eye can see of anxious job seekers....all ensure that times will keep booming for the super-max, ultra-max and maxie-max for a long time to come....booo_Yah!

Bob's picture

Blue collar crime rates virtually flat for the last 30 years, prison populations quintupled over the same period. 

Yet we're spending billions to maintain this sickness . . .

The fiscal responsibility/Liberty crowd is strangely quiet on this one, though.  WTF?  How can you pretend to have any real interest whatsoever in either fiscal responsibility or Liberty when that is the case?

Caviar Emptor's picture

Hehe everything's coming up roses lately: Patriot Act renewed, suspension of Habeus Corpus upheld, new spy technology and politicians ready to label things as "right or wrong, good or bad". Oh and a booming drug trade! The good times will keep rolling for a long long time!

Bob's picture

Too many deeply entrenched self-serving ideologues running The Show.  The two party scam is deadly . . . it's pretty bad when only Sanders, Kusinich, Paul and Paul can agree about anything so fundamentally clear on genuine ideological or common sense grounds as the Patriot Act and drugs. 

serotonindumptruck's picture

"...a supply of really cheap labor as far as the eye can see of anxious job seekers..."

Yeah, those labor input costs are no doubt negligible. I wonder how many young people hold out hope for one of those unionized prison guard...err...I mean Correctional Officer jobs.

You too can be a correctional officer for the great entry-level pay of $10 an hour!

huahine's picture

Can somebody pls explain to me why Ireland, Spain (in regional elections) and now Portugal (National presidential elections) are electing governments supporting austerity, bank bailouts???

I dont understand how the average worker/voter can say, "Yes, I will gladly reduce my standard of living to support Europe, The EU, The Bankers.."

Whatta's picture

They are "throwing the bums out" that caused the problems (the socialists), but refusing the "fix". Quite a cog dis mindset. Coming soon to a nation near you.

Bam_Man's picture

Only after the "mainstream" political parties have had their chance at bat and are completely discredited will the ultra-nationalist revolutionaries have their turn.

That is when things will really get interesting.

RobotTrader's picture

The Fed and the Obama Administration are on the verge of announcing:

"The Employment Stabilization Act"

"The Small Business Stimulization Act"

"The Shovel Ready Jobs Act"

centerline's picture

Otherwise known as "the Bailout for Main Street" or QE3.0.  Not yet though.  But soon.

Printfaster's picture

All of these acts will benefit only one group:  The big financial institutions.

Great, in the name of doing good, more evil.

I did it by Occident's picture

"in the name of doing good, more evil" 

That sounds like it should be on a T-shirt or something. 


Azannoth's picture

Makes you think of the times when bloodletting and drinking quicksilver was considered medical treatment

Trundle's picture

It still is.  Just get a flu shot.

Kayman's picture

Too bad Obama and Bernanke don't announce the " I fire myself for failing the country Act."

poydras's picture

While many of the points are spot on, one is perhaps left with the inaccurate impression that the US has no remaining advantages except for a few companies.

The critical mass in the US has to first understand what happened.  That alone may take several years.  A good place to begin studying is no later than 1975.

Inspector Bird's picture

Interesting viewpoint, particularly since it used Marx as the basis of discussion.  Suppose we'd used Ricardo?  What about Malthus?  Marshall?


Point is this - while some key aspects of this are correct (there is no "free trade" is ostensibly correct), others are not.  The intrinsic basis of discussion is that outsourcing has been "bad" for the US.  But had we not outsourced, would India, China or Japan have grown the way they have?  No.  They'd have grown, but not as quickly.

Has their growth been beneficial for the US?  YES.  At this point, however, the question shifts.  It is no longer "has outsourcing been bad" it's "IS outsourcing bad?"  Fact is, up until fairly recently everyone involved in the outsourcing game has seen massive benefits.

But now the nations which have seen great growth from Outsourcing are trying to keep that engine of growth alive by ostensibly rigging the market.  All these nations are at or near self-sustaining levels of economic activity.  They no longer NEED to take US jobs - they can create these same jobs by growing their own internal markets.  All thanks to the benefits the US and THEY have seen from outsourcing.  Indeed, future theft of US manufacturing may actually inhibit their growth because they will continue to focus on the wrong aspects of economic growth.


Another "wrong" fact is the industrial policy concept.  MITI is hardly a bastion of effective and amazing policy.  Japan is in the midst of a 15 year stagnation that is still nowhere near over.  A good portion of this can be placed on MITI's shoulders.  This doesn't mean that the US's lack of policy making is "benign" "neglectful" or "ignorant" at all.  Misguided frequently - yes.  But allowing the markets, rather than fashion and hip thinking, to guide our investments would be a good way to work our discussion on policy.  Today, we invest in odd things.  Tech start ups in social media?  Please.  I'd much rather invest in a firm that has developed a means of creating tools for alternative energy at a vastly reduced cost basis.  I don't want to engage in a POLICY that is government mandated to do this - I want to find the entrepreneurs who are in this field and have Wall Street seed them.  How can we do this without a government policy?  I really don't know - perhaps we should review the Vanderbilts of the past and see how they made and managed these investments.  Government policy was often designed at thwarting them, not assisting them. 

I do agree that our overarching reliance on housing as a "market" is absurd.  There should be a cap on mortgage deductions - if they weren't to be removed altogether.  Fact is, a $500,000 mortgage will get you a great house in almost every portion of the US.  I'd prefer to limit it and lower the tax rate altogether, but rates can always go's hard to push back against a specific deduction. 


End of the day - the government needs to develop tax policies that benefit big thinkers, entrepreneurs.  We need to develop policies that tax luxury expenditures.  We shouldn't tax the fruits of labor as much as we do.  We should engage "free trade" concepts, but engage "fair trade" thinking.


falak pema's picture

This current economic paradigm does not fit the bill anymore... Marx was the first to see this right from the beginning. He also saw the main problem with capitalism's "original sin" : its natural tendency to concentrate wealth in the uber class and to do it at the expense of human labor, the under class. This has been proven correct by "Reaganomics" and the alarming concentration of financial riches which has resulted.
We need to find a new paradigm. Ricardo and others don't have the answer as they bought into the classical paradigm lock stock and barrel.

"The beat goes on..." But after the demise of Reaganomics it won't be that beat no more that will make the world go round.

Kayman's picture


"IS outsourcing bad?" 

Has their growth been beneficial for the US?  YES ??

This country has gutted out its manufacturing base and its middle class.  Of course that is BAD.

Cheap shit from China does not benefit the USA.  Cancerous growth of debt to buy this shit, does not benefit the USA.

I wonder if Walmart has ever tried to connect the dots, as to why U.S. same store sales are falling off a cliff.

China is no friend of the USA.

Djirk's picture

Meanwhile in a country that continues to remain bouyant despite the financial economy meltdown......US should give tax incentives to companies like these...

Germany's Mittelstand companies (SME) are a very important part of the country's economy. In 2003, these companies employed 70.2% of all employees in private business, according to the Institut für Mittelstandsforschung. Many Mittelstand companies are export-oriented. They focus on innovative and high value manufactured products and occupy worldwide niche market leadership positions in numerous B2B segments.[1] They are typically privately owned and based in small rural communities. Many of the successful Mittelstand companies combine a cautious and long-term oriented approach to business with the adoption of modern management practices, like employing outside professional management and the implementation of lean manufacturing practices and total quality management.[1]


falak pema's picture

Good point... We don't have a small business act for strategic development by encouraging seed investment in small start-ups in promising new sectors in most european countries, unlike germany. They got that very right and its amazing how the big German multi-nationals pull along their small regional subs when they go international. Pretty impressive.

As per Inspector Bird's post above this industrial planning need not be "top down" à la MITI but "bottom up" à la German model which is regional and small company fed to bring innovation. It is a well known fact in industry that the giants have little momentum in house to move fast and innovate, like the small sharp start ups..

Alcoholic Native American's picture

I said this a while back,  A big corp named Synovus moved here in our downtown area,  Not sure what the hell they did but they sure did have a parking lot packed full of SUVz.  I said I bet all those consumerist cattle spending their paychecks and helping the local economy out by spending did more than whatever the fuck their actual function of the company was.  Still not sure what the fuck they do, but apparently they went belly up and now we have a big empty building smack downtown, and I doubt any other company that doesnt resort to outright financial fraud could afford the real estate.


That my friends, is our economy in a nutshell.  

Use of Weapons's picture

Multi-billion dollar, multi-financial services company with 34 Southeastern banks, trust, brokerage and mortgage companies and a card processing company. So no, your local economy won't be seeing anyone else able to rent that space, I suggest turning it into a community space immediately.


Caught up in the financial crisis

In mid-August 2009 the bank was named as one of the biggest of more than 150 U.S. lenders which own nonperforming loans that equal 5 percent or more of their holdings. 5 percent is a threshold that former regulators have stated can wipe out a bank’s equity and threaten its survival.[1]

As a result of their financial troubles, Synovus laid off 850 employees and closed multiple bank branches in early 2011.[2]

[edit] Charter Consolidation

In early 2010, Synovus consolidated their thirty separate state charters into one Georgia state banking charter and is transitioning to operate as a more centralized single bank.


Search engines are you friend - in an interesting aside, I'm left wondering why no-one in the USA has noticed (cough - building society scandals of the Reagan administration point the way here boys) that one of the real aims of this game is to make your banking industry into something less... hmm... independent and variant. Something a bit more like the European model, where there literally are only 4-5 banks in the EU.

Jimmy_86's picture

So just as the welfare state is unjust with free movement of labour, free trade is unjust without the free movement of labour. 

I did it by Occident's picture

I can't seem to find the reference, but some guy wrote a book on how the economy is like the NFL.  The game is the "real" economy whereas the stock market is the sports book where bettors are betting on the outcome of the game.  But in the NFL the team is focusing on the game (production, product innovation, etc.) with not playing to the point spread.  The analogy goes to the quarterly earnings estimates and essentially managers are playing to the point spread (i.e. the stock market), not focusing on the game (i.e. real economic output, and productivity, etc.).  and the compensation such as stock options which was meant to solve the priniple-agent problem actually got worse.  Why?  Because it incentivizes short-term thinking to get the stock price up (the casino) vs. long-term thinking to make the company actually better and more productive. 

falak pema's picture

amazing what a sports analogy can enthuse in us... quarterback of the day!

Stuck on Zero's picture

+10.  Huzza.  Huzza. 

chet's picture

I love this guy.  It's like he knows what I'm thinking in my half-formed, poorly defined way, and just comes in and fills in all the details.

I did it by Occident's picture

Also, to your point about free trade.  I agree that there is no such thing as "free" trade nor can there ever be practically speaking.  When one is dealling with multiple tax regimes, subsidies, different regulatory regimes in each jurisdiction, currency manipulation, government-backed entities, how can that ever be a evenly competitive playing field (and thus essentially free trade)? 

and the US does have a industrial policy, it's called the IRS/EPA/and myriad alphabet soup government.  It is completely incoherent and at cross-odds many times, but it is the best industrial policy lobby money can buy, apparently.