God is a Capitalist

Friday, November 1, 2013

A Monkey with two bananas - Why the Obamacare web site cratered

The Obamacare web site fiasco has proven to be a gold mine for the late night comedians. The failure has been so massive that even the left listing mainstream media has to acknowledge it. No one should be surprised that socialists can’t manage projects well because they have a notorious contempt for the profession of management. 

I have heard managers tell good employees that they could give a monkey two bananas and the monkey could do the employee’s job. That’s a lousy manager. One of the manager’s most important jobs is to motivate employees and the monkey with two bananas story only demoralizes them. 

The left think the same thing of managers and the profession of management, so they never bother to study it or imitate good managers. Recall President Obama’s contempt for management during the financial crisis and ridicule of them for using corporate jets. Obama would never consider taking a trip of any distance in any vehicle other than Air Force One because his time is so valuable. But he considers the CEO’s time to be worth so little that he can ridicule them for doing the same thing he does. 

The left loves to trash CEO’s for the high salaries because they think CEO's don't earn them. People on the left have told me that the CEO does nothing important; the people under him do all of the work while the CEO gets the credit and the salary. What could be more unfair? 

Most managers are bad managers. That’s why 90% of all companies in any industry just barely survive. Mainstream academic economics/finance/management say the 10% who dominate their industries are just lucky. No skill is involved. No one can anticipate the market; managers merely submit their business models and the market randomly rewards a small number of them. They know this because they can generate random output with a computer  that looks very much like the outcomes in real life. 

Of course, if what the left says about CEO’s and management is true, then they are right. Nothing could be more unfair than CEO pay. But it’s not true. It’s nothing but an extension of Marx’s nonsense that laborers produce all of the value in any product they make and deserve all of the income from sales. Management and the capital invested play no important role. 

The left needs to consider that CEO’s don’t set their own wages; the boards of directors to that. Boards recruit top managers in the same way that owners of NFL team recruit top coaches. And no one forces boards to pay the salaries they offer CEO's. If there is fault in CEO pay, it lies with the boards of directors.  The left must think board members are pretty dumb and/or gullible.

There are a lot of similarities between the roles of coaches and CEO’s. Few NFL fans would claim that coaches contribute nothing to the value of a team. Clearly, the players do all of the work on the field; referees will throw the coach off the field and penalize the team if the coach tries to tackle the ball carrier of an opposing team. So why do coaches make such enormous salaries when the players do all of the work?
Coaches get paid for their ability to see the big picture; for knowing what makes good players at each position and recruiting them; for strategy; for knowing the game better than other coaches; for making individuals play as a team and for many other contributions.

CEO’s get paid for the similar reasons. Top CEO’s make the big bucks because they are as rare as top NFL talent and coaches. Their skills lie in knowing how to make marketing, research and development, engineering, manufacturing, finance, human resources and other functions work together as a team toward a common goal. 

The left understands none of that, and that is why Obamacare will be a disaster and why the web site has been a nightmare experience. Leftist politicians and bureaucrats will never improve their management skills until they learn respect for the role of manager and CEO.

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