Get with the Program

WASHINGTON, DC. —Did you miss me? Well, I guess that’s a silly question. The circumstantial evidence is certainly suggestive. Let’s face it, you’ve made something of a botch of the political economy these past few years. So let’s get with the program, you post-Reagan revolutionaries . . .

Step 1—Leave that poor Mr. Icahn alone. Yes, that Mr. Icahn and that Mr. Pickens and those guys at Drexel Burnham, the folks who generate clouds of squid-like bad ink whenever they launch “hostile” takeovers against the corporate gentry. (Kindly note that the question before us is: What is best for the economy? not: Would you want your sister to marry one?) Take a look at the numbers. Of every one hundred business combinations in this country, perhaps two could fairly be called hostile. And of that 2 per cent, in almost every case the raider succeeds only because management has been blatantly and persistently inept. In other words, the raider is doing precisely what the putative owners of the enterprise, the shareholders, should be doing were they not ill-equipped to do so. He is upgrading management and reallocating resources to more productive use. From a macroeconomic perspective—and this is the critical point—the raiders are giving us a second chance in the global economy by forcing the pace of restructuring faster than Gorbachev and Deng can impose it and faster even than the Japanese and Germans can inspire it. (We blew our first chance at economic leadership by borrowing to finance consumption for a generation.)

BF

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B. Freeman

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WASHINGTON, DC. —Did you miss me? Well, I guess that’s a silly question. The circumstantial evidence is certainly suggestive. Let’s face it, you’ve made something of a botch of the political economy these past few years. So let’s get with the program, you post-Reagan revolutionaries . . .

Step 1—Leave that poor Mr. Icahn alone. Yes, that Mr. Icahn and that Mr. Pickens and those guys at Drexel Burnham, the folks who generate clouds of squid-like bad ink whenever they launch “hostile” takeovers against the corporate gentry. (Kindly note that the question before us is: What is best for the economy? not: Would you want your sister to marry one?) Take a look at the numbers. Of every one hundred business combinations in this country, perhaps two could fairly be called hostile. And of that 2 per cent, in almost every case the raider succeeds only because management has been blatantly and persistently inept. In other words, the raider is doing precisely what the putative owners of the enterprise, the shareholders, should be doing were they not ill-equipped to do so. He is upgrading management and reallocating resources to more productive use. From a macroeconomic perspective—and this is the critical point—the raiders are giving us a second chance in the global economy by forcing the pace of restructuring faster than Gorbachev and Deng can impose it and faster even than the Japanese and Germans can inspire it. (We blew our first chance at economic leadership by borrowing to finance consumption for a generation.)