Cutting Jobs, For Good

Tuesday, February 08, 2011

Andy Kessler, hedge fund manager who cofounded Velocity Capital Management and the author of Eat People: And Other Unapologetic Rules for Game-Changing Entrepreneurs, says entrepreneurs who eliminate jobs in the short term help workers and the economy in the long term.


Andy Kessler

Comments [41]

Milan Moravec from California

Loyalty cuts employability. As businesses, universities, states, counties, cities worldwide stumble through the recession some find themselves in a phase of creative disassembly. Hundreds of thousands of jobs are shed. World class University of California Berkeley Chancellor Birgeneau ($500,000 salary) and his $3 million outside consultants is firing employees via his “Operational Excellence (OE)”: 2,000 axed by end 2011. Yet many cling to an old assumption: the implied, unwritten management-employee contract.

Management promised work, upward progress for employees fitting in, employees accepted lower wages, performing in prescribed ways, sticking around. Longevity was good employer-employee relations; turnover a dysfunction. None of these assumptions apply in the 21 century economy. Businesses, universities, public institutions can no longer guarantee careers, even if they want to. Managements paralyzed themselves with a strategy of “success brings successes” rather than “successes brings failure’ and are now forced to break implied contract with employees – a contract nurtured by management that future can be controlled.

Jettisoned employees are discovering that hard won knowledge earned while loyal is no longer desired in employment markets. What contract can employers, employees make with each other?

The central idea is simple, powerful: job is a shared partnership.
• Employers, employees face financial conditions together; longevity of partnership depends on how well customers, constituencies needs are met.
• Neither management nor employee has future obligation to the other.
• Organizations train people.
• Employees create security they really need – skills, knowledge that creates employability in 21st century economies
• The management-employee loyalty partnership can be dissolved without either party considering the other a traitor.

Sustained employability in the 21st century economy for management and employees.

Apr. 15 2011 12:43 PM

Mr. Kessler is actually correct in what he says. Many of the posts decrying him are assuming that the people who occupy the jobs that are to be destroyed will not find more productive work as a result of improved technology. This more productive work will lead to a higher standard of living for all involved. Mr. Kessler is certainly not advocating destroying for the sake of unemployment.

Feb. 12 2011 03:38 PM

Listened to this while walking from a temp job at 7am in the extreme cold. Wanted to scream. He's a hedge fund manager, for goodness sake. Complete idiot who doesn't have a clue about the real world.

How is it good to get rid of jobs? Good for who? This is a big loss for society and for many of us this has ruined our lives.

Feb. 11 2011 03:19 AM
The Last Leaf Gardener from New York City

If we "eat people," as Kessler suggests,then who will be around to read his book? As for Kessler, perhaps, he should read Shirley Jackson's "The Lottery" if he wants a wake-up a call. Doesn't sound like he wants one.

Feb. 10 2011 07:19 AM
chris lee from Teaneck

Brian, I almost turned you off as well. It is important to have guests with opposing points of view but you cannot give them a free pass. You have to delve in an expose his background that formed his ideas. Help us undertsand how he got that way. How his model will help deliver a civil, just and fair society for the benefit of all. No more free passes.

Feb. 09 2011 09:20 AM

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Feb. 09 2011 04:04 AM

This guest also infuriated me (boorishness, ignorance), but I don't think Brian is to blame; one of the things I admire most about his show is his ability to calmly moderate debate, even when a donkey-of-a-guest like this guy slips on. What many of you are calling "softball" questions are actually part of Brian's technique: he allows the guest to articulate fully what he or she came to say--often allowing, by the way, the guest to make a fool out of him/herself--and then gently but clearly asks follow up questions that tug at the loose ends of the articulation. In this case, there were a lot of things the guest hadn't bothered to consider, and Brian's questions went right to those areas. A free pass? If anything, Brian ran out of time and had to squeeze the formalities of the interview in before the end of the show.

Brian Lehrer doesn't invite people on his show for the purpose of ripping them apart. It's not an opinion show, it's a forum. That forum is often one of debate, but between guests, not between the guest and the host.

Feb. 08 2011 04:45 PM

This is the first time I've turned you off in a long time, and I did when your guest denied that the income gap was growing in the US and claimed that the middle class standard living has been increasing. All we've done is re-definte poverty.

This guy is a total schmuck.

Feb. 08 2011 02:40 PM

I wholehartedly agree with Robert K. This guest got a gold easy pass.

He made his money as hedge fund guy, so what productive value did he bring to society.
He's got a big stage now because he made money doing and producing nothing and betting against democratic capitalism

By nature H fund investors all exhibit closed environment, software algorithim, inside deals and dealers manipulation of our economy and average "joe " 401k investments.

Brtian, you need to "Reset" that show. It was just painly not fair.

Feb. 08 2011 12:11 PM
Robert Matlock from Staten Island

Lehrer asked Kessler whether the middle class was in decline and gave him a complete pass on his response (no, we have stints in heart surgery! [shown by the way to be of dubious medical benefit], etc.). In addition, no call-ins were allowed to challenge this nonsense because, as usual, "we're out of time." It's Lehrer's duty to be INFORMED and to not hand out get-out-of-jail-free cards to his guests. This is the rule rather than the exception with Lehrer (perhaps he should seek a career in softball?).

Here's a beginning at an appropriate response to Kessler's propaganda:

In the US between 2000 and 2006 the annual income of the top 0.01% increased by 22% while the bottom 90% (90%!) decreased by 4% (source Thomas Piketty, Paris School of Economics and Emmanuel Saez, UC Berkeley). Note that this does NOT INCLUDE the financial crisis.

In addition, several stories this week have reported that the new jobs created in the "recovery" are LOWER PAYING JOBS.

Also, see today's Daily Kos for this quote from Bernanke:

"Income inequality has increased in the United States over the last three decades, Bernanke said. Income at the 90th percentile of wage earners -- those close to the top -- rose 34 percent between 1979 and 2006, while the wage at the 10th percentile rose a scant 4 percent in that period."

Feb. 08 2011 11:37 AM
Varick from NYC

The jobs he's talking about are jobs that only a fraction of society can perform. Developing microprocessors, silicon tech, drug development, Intel? These take a certain amount of training and education that most people can't and don't have. Walmart, a good thing? The same person that would have been making a decent living making products that are sold at a place like a Walmart now works there making nothing. Ok, yes, somethings can and will get replaced, but touting these as being some sort of messiah for America is absurd. Sure, we need medicine and technology, we need drugs, smartphones, laptops, etc. But, how do these industries help average Americans when most products are made overseas, that's fact. It's like believing the myth of trickle down economic. That didn't help anyone either.

Feb. 08 2011 11:09 AM

What Mr. Kessler said is true, but there is social consequences to economic changes. Unfortunately business people like Mr. Kessler just don't really care about that - its always about profit - until it effects them.

Feb. 08 2011 11:08 AM
Mary from new york city new york

What is the benefit of new drugs to prolong life if one has no money to live?

Feb. 08 2011 11:05 AM
Phil Henshaw from way uptown

Considering how abruptly Brian cut off the rather articulate caller, pointing to the way our use of natural resources is undermining our economic future... I'm starting to think Brian has a kind of moral aversion to the subject.

I've been wondering for years why he and other seemingly open minded people shun the subject. It's clearly not a lack of intelligence, nor of efforts by other insightful people to bring it up. Could it be that he's a man of faith?, and has an aversion to considering that nature might have worth of its own, and might not have been put here by our spirit guides for our exclusive use as a disposable resource? Is that what's in the way of our having a civil conversation about it???

Feb. 08 2011 11:05 AM
mp from NYC

Hedge fund managers are just number people, they see world in numbers only; they will earn enough money to feel secure in the world where people are jobless and getting poor. The rules are not defined. Calling Kessler into the show was a waste, this guy knows nothing nor cares about problems of transition and poverty; he is all in the technology revolution and development ...yes but what can we do with those who abuse the system and people; it is all about money ...people are not needed and they do not matter.

Feb. 08 2011 11:05 AM
ml from Inwood

I think you have hit an all-time low for uninformed guests. I don't recall ever hearing a guest on this show know so little about society, the economy, and the "reality-based world" in general. Did anyone screen this guy before booking him?

Feb. 08 2011 11:03 AM
Bob from New York

This guy Kessler is an idiot. When he answered Brian's question on employing 300 million people with high paying jobs and he said it was possible, I stopped listening. Our economic system is designed to make a small group wealthy and the majority working to make them wealthy, and the least fortunate don't even have the chance to work. DON'T BUY HIS DAMN BOOK! Doing so will just transfer more money of your hard-earned money into his pocket.

Feb. 08 2011 11:02 AM
Theresa from Brooklyn

What has happened that so many people no longer question this dogma that society exists to support business, rather than that business exists to support society? Even the same people who have been eaten up and crapped off a cliff by this economy?

Feb. 08 2011 11:02 AM

Whoa! whoa! Did this guy just qualify the distribution of wealth in this country? Only a former Hedge fund manger could maintain that having an iphone makes up for the fact that something like 40% of the wealth in this country is concentrated in the top 1% of the population. that's screwed up. I hope his plumber NEVER comes.

Feb. 08 2011 11:01 AM
Fafa from Harlemworld

An iPhone? Who can really afford an iPhone on shrinking middle class wages these days? Sure, they can put it on credit...Talk all you want about stints, tech, etc., but what about the ability to pay the bills, and save, and feel economically secure? Hasn't addressed these issues.

Feb. 08 2011 11:01 AM
Todd Blankenship from Brooklyn

Your guest is clearly ideologically driven, and making up his own reality. The middle class is under pressure like never before, the wealth in our society has been transferred to the richest few, and it sounds to me like this person is quite happy with that situation.

Feb. 08 2011 11:00 AM
Andrew Robinson

It is exactly this type of self-absorbed, short-sighted, materialistic ignorance trhat will cause our demise.

Feb. 08 2011 11:00 AM
Nicole from Brooklyn

Is the economy the most important thing, or are people?
This notion just doesn't pan out. We keep eliminating and exporting jobs, and there are many fewer jobs to come in to replace that. Technology will allow us to continually get rid of jobs, and continue to move more and more jobs oversees. Until there is a balance of wages across the world, jobs will continue to move more and more quickly as technology continues to allow us to do so, and the external costs of moving jobs oversees remain unaccounted for.

Feb. 08 2011 10:59 AM
Robert from NYC

it IS a bad thing. this guy's confused. The shareholder should be aware he/she has to take losses too

Feb. 08 2011 10:59 AM
antonio from park slope

AMEN DAVE!!! I wanted to comment but you did it for me!

Feb. 08 2011 10:59 AM

Does Mr. Kessler have children? Parents? Are they in perfect physical and mental health? Does he hope to have well-educated carers and therapists for them? Excellent teachers to train the carers, therapist, children? What role in wealth creation do those professions play?

Feb. 08 2011 10:59 AM
RLewis from the bowery


Feb. 08 2011 10:59 AM
Jose from Queens

This is the most pathetic attempt at rehashing Ayn Rand failed ideas that I have seen in a long time.
Of course it comes froma hedge fund manager, someone who has no idea whatsoever about production.
I wish I had 10 minutes of airtime to randomly select limited, self-serving examples to justify my little book of non-sense.

Feb. 08 2011 10:58 AM
Inquisigal from Brooklyn

Brian, ask your guest how people are supposed to afford ever-increasing tuition costs to learn tech and engineering skills?

Also ask him how we're all going to feel when we live in a society where the only viable employment is in technology? Millions of people do not all have the affinity to live this way.

Feb. 08 2011 10:57 AM
jgarbuz from Queens

At one time, nations rated how wealthy they were by how much gold their had in their coffers.
Today, we can measure a countries wealth by how many patents their companies hold. IBM no longer manufactures computers or anything, but their 7,000 engineers and scientists worldwide produces more patents and innovations that others have to pay royalties on to make use of.
Today, patents per capita is the true measure of a society's wealth production capabilities.

Feb. 08 2011 10:56 AM
dave from brooklyn

Wow, this guy is absolutely delusional. He has no clue as to why shipping manufacturing jobs overseas is really tearing our economy apart.
This is the insight of a hedge fund moron...

Feb. 08 2011 10:56 AM
Steve from Brooklyn

Can the guest cite any statistics or does he just argue by anecdote and thought experiment.

Feb. 08 2011 10:56 AM
David from West Hempstead

Mr. Kessler isn't really addressing the question of what happens to the people who lose out when what sociologists call 'skill-biased technological change' happens. Technology is a great thing, and no one denies this, but I don't really think he (or anyone) has a good answer happens to the displaced.

Feb. 08 2011 10:56 AM
MichaelB from Morningside Heights

Waste? What about the HUGE waste of time of people just sitting transfixed in front of their computers?

What about the destructive effect to communities where Walmart has descended? Easy to quantify saving a few dollars by buying at the Walmarts, but more difficult to quantify the damage to the fabric of our towns & society at large.

Feb. 08 2011 10:56 AM
michael from brooklyn

the devil called. he wants to give this man his soul back. he just called walmart a wonderful thing. this is what is wrong with the world.

Feb. 08 2011 10:55 AM
Deborah Emin from Kew Gardens, Queens

I wonder why you had this fellow on the show. It seems that his ideas about the economy are quite unreliable. His whole focus is rather capitalistic for my taste and he praises wealth over quality of life via one's job. He is really caught in the past in a way that most don't approve of anymore.

Feb. 08 2011 10:54 AM
Karen from NYC

The tilt toward wealth is another issue; we need a progressive tax code.

Yet the middle-class cannot survive by looking for jobs that no longer exist. Technology creates jobs. You aren't going anywhere in a horse and buggy; you need to think forward.

Feb. 08 2011 10:53 AM
Robert from NYC

If people are expensive and technology gets cheaper and cheaper then explain why consumers pay more for the use of technology, e.g., ATM fees? We never paid Teller fees!!!
Bull crap it's all a bunch of bull crap and Americans, who are stupid by choice buy the double talk. Americans are masochistically destroying and killing themselves off.
Not enough time and space to explain, but think about it.

Feb. 08 2011 10:52 AM
moo from nyc

is this guy a secret koch brother? someone replace him with a robot, please, he has no soul anyway. what a *X!@.

Feb. 08 2011 10:52 AM
Karen from NYC

When was the last time you used a blacksmith or had the iceman cometh?

Moreover, at the time of the American Revolution, everyone was a farmer.

We have to retool.

Feb. 08 2011 10:51 AM
MichaelB from Morningside Heights

Then why has the employment rate and even more particularly the real wages of so many Americans been declining for decades (whilst the rewards for an ever-narrowing slice has been increasing exponentially)?

Feb. 08 2011 10:51 AM

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