Discussion in 'Wall St. News' started by dealmaker, Sep 13, 2019 at 8:35 AM.
Gotta love the socialist-flavored "Whether his workers like it or not" headline. It's intended to provoke, so I guess it does what it's supposed to...
In the next decade, in my opinion, Florida will no longer be a retirement state. It's crains and construction from WPB to Miami. There will always be an element of retirees, but its not a cheap state anymore.
Not sure why that's "socialist"? I run a company that I started. I certainly can do whatever the hell I want to with my company, it's mine. Of course since it's not a one person company it's only successful because I'm able to keep a bunch of high quality folks happy working for me rather than someone else. If I decided to pick up and move to Miami tomorrow I'm guessing 50% or more wouldn't opt to completely disrupt their lives and their choice of places to live on my whim, despite a $50,000 relocation expense payment. They would, in a purely capitalist decision, opt to move on to another company, thus having a significant financial impact on my company and me. I can do whatever the F I want with my company and make completely unreasonable expectations of my employees; in short I can be a complete asshole. If I should or not is another question entirely, and framed in purely capitalist, practical terms it's a horrible idea to treat your employees in a "my way or the highway" manner in any case, let alone something as major as asking them to move a thousand miles away on my whim. And calling that for what it is, an asshole move is eminently reasonable.
It's a sad day when considering the disruption on your employees lives before making a move so that the founder can "enjoy a warmer climate and a more casual pace year-round" makes one "socialist" rather than making Icahn a dick!
Interesting article, dealmaker; most likely he got fed UP with to many taxes/regs. Carl Ichan is unusual in several respects; including but not limited to-when he announces a stock investment, it tends to be excellent + have plenty of room to run up. NOT a prediction.,
In NY 40,000 high income taxpayers foot over half the state income tax bill. Eventually people get tired of the high taxes and move out. Tepper moved from NJ to Florida a few years ago. The removal of the SALT deductions makes the decision to move out of these high tax blue states a lot easier.
When is the last time you consulted all, or even a majority of your workers about any key decision for your company? When has any company, for that matter, and since when has that become a requirement for operating one? I've owned several businesses, and while I also did my best to maintain cordial relationships with everyone involved, I also never lost track of the fact that these were ultimately professional - not personal - relationships. Nor did I try to foster any other impression, because it would be a gross lie.
It's very nice that you think well of your employees and want to keep them happy - but let's not pretend that this is anything special; any rational business owner does that. Let's also not pretend that they're anything but employees, or that you're running your company solely for their benefit. You would fire any one of them without a qualm or mercy if they threatened the functioning of your company (assuming you're a rational person, and you want your business to survive, that is.) If the business climate becomes such that moving the company is a large enough net positive, then the company will either move or become non (or less) competitive - which most likely means it will die. Tell me what happens to all of your employees opinions, feelings - or perhaps something that actually matters, their financial situations - then? In other words, is whatever fiduciary duty you feel toward them more or less important than being a people-pleaser who rushes to placate every one of their immediate desires?
It would be a much sadder day when the immense amount of effort that a business owner put into creating his company - the entity that pays those employees, and without which they'd be out on the streets looking for work - becomes subject to the whims of those who had nothing to do with that creation process. I, for one, would never start a business if those conditions actually existed.
It's interesting you have a "but for me my employees would be out on the streets" founder mentality while I have a "but for my employees I'd be out on the streets" founder mentality. That could be a factor of our industries. I'm in tech where finding and keeping A players is hard, every one of them has lots of options, and there's often a 10X difference between an A and a B or C player. If I was running an assembly line manufacturing operation, I can see that I might see my employees more as a commodity. I would advocate that a hedge fund is much more my world when it comes to that concept.
As far as consulting employees for strategic decisions, again I guess it's a difference of philosophy. If we were talking about a move to Miami because of a business decision based on competitiveness then I'd agree with you completely. We're not. The quote I listed was a literal quote from Icahn who said he was making the move to "enjoy a warmer climate and a more casual pace year-round" That's quite clearly saying to your employees, my desire for a warmer climate is worth all of you uprooting your families and moving 1000 miles away, or in other words, I'm the owner and I could give fuck-all about any of the rest of you. Which he's more than entitled to do. That doesn't make it any less of an asshole move, and calling it what it is doesn't make one "socialist"!
Icahn's employees all have lots of options, not a one will be "out on the street" without his largesse at employing them, and a big chunk of his talent is going to choose "highway" in his "my way or the highway" ultimatum. Sure some of his people will go, but we can be sure those are the one's with the fewest other options or who are the biggest yes men....in other words not his top employees. And sure he can get hedge fund employees in Miami, but pretty much everyone in the industry will tell you it's not NYC yet when it comes to that. Again if we were talking widget assemblers you'd be making a reasonable argument if you said that quality delta doesn't matter. If you're talking about one the world's leading hedge funds...I'd say it mattered a lot that you got and kept the very top people. If I was one of his LPs I'd pull my money, because at this point he clearly no longer believes in getting and retaining the best possible people to manage my money.
And by the way, yes, I'd absolutely consult all my employees before deciding to move 1000 miles away, and my headcount is similar to his. Not necessarily because I'm not an asshole, but because not treating employees as commodities who owe me something is a big part of the reason for my success so it's simply a no brainer business decision. And I try not to be an asshole. If that makes me "socialist" then I guess socialism is a damn good way to make lots of money!
You have a false perception of my mentality - much as, it seems to me, you also have of Icahn's. In fact, what I'm seeing is that you've already pre-judged him, and are seeking to support a confirmation bias based on a statement designed for public consumption. Do you seriously believe that he's moving his business to Miami for the climate?
You're making even more incorrect assumptions; in fact, most of my career has been in tech. But the key problem here has nothing to do with the industry sector: it's the virtue-signalling that requires a show of fake "caring" for your employees - which is actually nothing of the sort. It's obeisance paid to the public gods; mouth noises designed to show that you're on The Right Side of whatever is popular today. The realities of keeping a business running remain what they always have been.
It's also worth noting that you have a built-in conflict in your scenario. If all these fund managers will be able to so easily, instantly, and painlessly find another job in New York - as you claim they will, due to their high competence - then what harm is Icahn doing them by moving the company? Or, to take the other side of the argument, if he is doing them harm by moving, then - exactly how non-fungible are they?
The dilemma lies in the basic falsity of your premise: that Icahn's business decision must be absolutely binary, purely good or purely evil (but presumed evil by default.) The fact that it - like any large-scale business decision - is complex, influenced by many factors including impact on the employees (and the corresponding impact on the business), and trivially easy to mischaracterize and distort by people who have neither insight nor the slightest clue of the truth (and especially by journos looking for a soundbite title), never enters the equation.
I've already mentioned why I think you're wrong. I'll now add to it: your phrasing makes it clear that you have a serious problem with Icahn, because imputing that kind of viciousness to his (imaginary) motives does not come from thin air. That takes this discussion out of the realm of reasoning to discover anything like truth or accuracy and into emotional brangling - and I'll take a pass on that.
If I work for Icanh Hedge Fund, I would jump up and down in joy leaving high tax NYC. Yeh, I can now afford to buy a house, go on vacation and still have $ leftover.
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