I sent the reply letter below to this article by Philip Stephens of the Financial Times on the need to resist those who oppose globalization in the advanced economies.

To the editor,

Mr. Stephens in “Truths for a new world of them and us” (May 29, 2008) overstates his case. I challenge him to support his claim that “[I]n this world of them and us, ‘they’ are accused by Democratic contenders in the US presidential contest of stealing ‘our’ jobs.” I have never seen or heard this claim from any of the U.S. presidential candidates.

Rather than positing a world of “them” and “us,” the argument against globalization is that it represents the efforts of an alliance of global multinational capital and repressive regimes like that of China, joined now sadly by labor leaders such as Andy Stern of the Service Employees International Union who attempt to welcome state controlled labor organizations into the global community, to shape a new world order that relies on the trampling of the rule of law and democratic decision making, weaker labor standards, and rapidly deteriorating environmental conditions to regenerate stagnating rates of profit.

Initially globalization helped accelerate the hollowing out and weakening of western economies. The United States is now seeing the short sightedness of this process, where production of goods and services that people need and want is replaced by the engineering and manipulation of paper claims to imagined future cash flows. However, the unsustainability of the model is also beginning to tell on the development of China and other developing world partners in the process, as darkly hinted at by the recent collapse of stock prices on Asian markets together with the collapse of shoddily engineered school buildings in the recent earthquake.

The global rules that need to be written, and then enforced, must be based on both universally recognized human rights, such as the freedom of association and speech, and on equally universally recognized first best standards of engineering quality and environmental safety.

Sincerely,

Stephen Diamond

We’ll see if it gets printed.

PE Digest has reprinted my paper on private equity on their website here.

Will Hillary run as an independent in the fall?  Check out the post below and this video with the late great Nina Simone providing the lyrics.

Now that Yahoo blew it in their negotiations to sell to Microsoft, they are going to be prey to all sorts of predators. And the Valley now gets to witness the kind of corporate warfare that is usually reserved for the “old” economy – a takeover battle via a proxy contest. I recently advised an ousted CEO recently in an attempt at a proxy contest to take over a public Valley company and it can be a challenging process. But corporate America has very few other mechanisms to bring in new leadership when management hides behind the various defenses that corporate law allows them. 

While I think that Yahoo needs new leadership, I am pretty taken aback by the nominees chosen by Icahn. Lucian Bebchuk, of course, is a very widely respected law professor (and justly so) but how much does he know about the gritty day to day operations of a public company – does he want to pour over corporate financial statements every quarter in order to ask management meaningful questions?? I doubt it.  And, of course, he knows even less about the internet as far as I know. 

The other nominees seem like “marquee” names (Mark Cuban??) aimed at garnering publicity for the proxy contest (which is, indeed, critical for its success) but do any of these people want to put in the time and effort it is going to take to turn Yahoo around? The CEO search alone could take months. So once the research groups and proxy advisory firms get to it I think there is likely to be only a lukewarm reaction to this alternative.

Sit back and enjoy the fight – if you own Yahoo stock it likely is going to be a bit of a roller coaster ride as shares rise and fall on the backs of speculation on the outcome.

A leading figure on executive compensation, Graef Crystal, sees problems with the implementation of CalPERS’ corporate governance reforms as detailed in this Bloomberg opinion piece.  It would appear that the disconnect between the board of the giant pension fund – which is known widely to push hard for progressive reforms in corporate America – and its staff is wider than is well understood.  

That means, of course, that the departure (ouster?) of both the the CEO and CIO of the fund represents an excellent opportunity for the fund to align its values with its policies by picking, first, the right CEO and then working with that CEO to pick the right CIO.  

Unfortunately, CalPERS does not seem to have been well prepared for the departure of their two top officers and have now named an “interim” CEO while a search continues.  Not a good sign that there is clear understanding on the board of what it will take to “right the ship.”  Unfortunately for the board public scrutiny is on the rise and it may not be long before the legislature gets involved. Strange that an entity of this size and sophistication did not have a succession plan in place for its C-level execs…that’s SOP in corporate America today, but it is something I have seen on several occasions is missing in the non profit world – at the Getty and Gates Foundations, for example, and at the Screen Actors Guild.

My article on private equity funds in Dissent magazine (Winter 2008) is now available on line.  I argue that PE funds are an important part of the institutional changes underway in modern capitalism.  I believe the critique that some in labor and on the left make of PE funds is misconceived.  Many argue that PE funds are part of something that is called “financialization,” which I think over emphasizes the role of the fictitious, or paper, side of the role of PE funds at the expense of understanding that PE funds reorganize the creation and appropriation of value.