Of Arrogance and Ignorance

The Declines of The New York Times, United States Steel and other American Giants
I want to place the New York Times in the context of other American businesses which became complacent and arrogant, and suffered prolonged, mostly irreversible, declines as a result. It’s a list with a lot of famous names: United States Steel, AT&T, General Motors, Boeing, at their peaks the pinnacles of their industries, but through the arrogance of their senior executives, and the inertia bred from this arrogance, they created market opportunities for new competitors who ate their lunches. A few examples:

The United States steel industry had its peak production year in 1959, and has been in a long decline ever since. It did not have to be this way, because there were technologies available to the major steel producers in the 1960′s and 70′s to lower their costs significantly, by moving production to electric “mini-mills” and continuous process steelmaking instead of integrated steel facilities, with their coke ovens, blast furnaces, separate rolling and coating facilities, etc. The big steel producers like United Sates Steel, Bethlehem, Armco, Republic, Jones & Laughlin, National, and others shunned the mini-mills, in what seemed to me at the time an illogical, macho demonstration of how real men make steel. Well, all they ended up showing is how real men go bankrupt (including almost all the above companies). They left it to the mini-mill companies they despised and ignored, like Nucor, to become the profitable players in the industry.

If Boeing had decided to introduce the B767 in the late 1970’s, Airbus would not exist. Boeing’s arrogance in trying to milk existing models provided the market opportunity for Airbus to introduce the A300, which filled a niche market. Airbus leveraged its first model to ultimately produce a broader range of aircraft than the American giant, and currently Airbus is poised to become the dominant commercial aircraft company over the next twenty years.

The entire American automobile industry, General Motors, Ford, Chrysler and American Motors, in its arrogance, decided to try to use legal and political means, instead of producing higher quality products, to prevent Japanese auto producers from taking a large share of the US domestic market. The Japanese had two percent market share in 1970, and have 40% today. The “voluntary import restrictions” the Japanese agreed to were meaningless to them in the context of achieving their long-term strategy, but protected union and management salaries over a period of time. You will recall Ross Perot bristling in the 80′s at how out-of-touch his fellow GM board members were: they were given specially prepared new cars so often that they had no appreciation for the poor quality of the average sales model.

I could go on for hours. The stories are always approximately the same. Arrogance results in producing a poorer quality product, typically at a higher cost, than the marketplace demands. Arrogance is always characterized by denial at the senior management level of what is happening, and a resorting to contorted explanations and non-economic solutions, such as government regulation or legislation. The declines can go on for decades. Most amazingly, in example after example, the cultural inertia remains intact: the companies do not change much, despite their declining fortunes. These companies continue blaming others for their problems, often calling for the banning of the more successful products of competitors.
The New York Times fits well on this list of great institutions with declining fortunes. Its circulation is down 10% or so to 1.1 million in the last decade, during a period in which its geographic distribution increased mightlily, so the picture is even worse than it appears. Further possible evidence that the situation is getting worse may come from its announcement that it will be reporting its results in the future in a way that combines the Times with other publications, possibly obscuring the data.
Based on the track records of hard hat American companies that can’t change, we would expect change to come even harder to the Times. After all, the arrogance of the elite media is somewhat greater than that of the average executive, since they consider themselves princes of wisdom even more than princes of commerce.
Is there any possibility that the New York Times could change? I think not. As Powerline says of the Star-Tribune editorial board’s treatment of the Swiftboatvets, and it is applicable to the NYT: “I was struck by their lack of knowledge regarding most of the issues they opined about, their lack of interest in the coherence of their own arguments from one day to the next, their lack of intellectual integrity, their willingness to convert today’s Democratic Party talking points into tomorrow’s editorial, their refusal ever to articulate fairly a serious argument contrary to their own position, their sheer bullying use of their bully pulpit…. and their refusal to admit a contrary voice to their numbers.”
Do you think I am being too harsh? Then consider the opinions of a man who rose to the highest editorial position in the Times, Howell Raines, as he expressed himself in the Guardian recently:

Now for the hard part of the performance challenge – the economy. Two and a quarter centuries into its history as a nation, America has the most unfair tax system ever and the greatest gap ever between rich and poor. Even a real populist, however, would have trouble taking on these issues frontally. As Al From of the Democratic Leadership Council noted, Americans aren’t antagonistic toward the rules that protect the rich because they think that in the great crap-shoot of economic life in America, they might wind up rich themselves. It’s a mass delusion, of course, but one that has worked ever since Ronald Reagan got Republicans to start flaunting their wealth instead of apologising for it. Obama has to understand that when a cure is impossible, the doctor must enter the world of the deluded.

What does this mean in terms of campaign message? It means that he must appeal to the same emotions that attract voters to Republicans – ie greed and the desire to fix the crap-shoot in their favour. That means that instead of talking about “fixing” social security, you talk about building a retirement system that makes middle-class voters believe they will be semi-rich someday. 

That’s actually a good start. Using that promise as disinformation, he must now figure out a creative way to become a redistributionist Democrat. As a corporation-bashing populist, I’d like to think he could do that by promising to make every person’s retirement as secure as Cheney’s investment in Halliburton. But that won’t sell with the sun-belt suburbanites. Not being a trained economist like, say, Arthur Laffer, I can’t figure out the exact legerdemain that Obama ought to endorse. But greed will make folks vote for Democrats if it’s properly packaged, just as it now makes them vote Republican, and in terms of the kind of voters Obama must win away from GOP, I think the pot-of-gold retirement strategy is a way to work. Forget a chicken in every pot. It’s time for a Winnebago in every driveway.

Howell Raines understands almost nothing about America. Deluded hayseeds stuck in a crap-shoot economy who must be tricked to further the higher goal of a redistributionist country: that’s his vision of you and me.
Of course the arrogance of elitist socialist Howell Raines bowls me over, but maybe even more than that, his ignorance is staggering. Raines somehow believes that government is the answer, at least government guided by him, if people are to have good lives. But consider the evidence of the last century or so:

Here is the signal fact of our progress in the last century. If you were born in 1900, your life expectancy was in the forties, and GNP per capita was about $4000. If you are born today, your life expectancy in about eighty, and statistically, as an average American, you are ten times richer. In reality you are a hundred or a thousand times richer, if you factor in your ability to be in Paris tomorrow for $500, your ability to watch events from fifty years ago as they actually happened, etc. – not to mention that your toddler’s severe pneumonia can be reliably cured in 48 hours or so.
Only a little of this has to do with government.

Mostly it is because far more than 50% of everything ever invented in the history of humanity was invented in the last 130 years, and over 50% of that was invented by Americans. Milton Hershey invented the candy bar, Carrier invented the air conditioner for a tire plant, Sears invented catalogue distribution, Henry Ford invented cheap cars, some guys from Texas Instruments invented the transistor. It is almost impossible to overstate the importance of the invention and wide use of brand names, which communicate the quality and dependability of every product we buy. This alone deserves the Nobel Prize. And it was a large and growing market, the availability of risk capital, and protection of intellectual and personal property by the courts that made this possible.

I’ve met a number of people like Raines, who think that American prosperity arose magically because of Samuel Gompers, the Sherman Act, muckrakers, and the alphabet programs of the New Deal. It bothers him not that he understands almost nothing about the US economy.
As long as the culture is in place that gave rise to Raines’ success at the NYT, it is foolish to expect change. Expect louder and even shriller denunciations of the Republican attack machine, in place of meaningful anaysis of Obamas truthfulness. Expect a once-great American institution to continue in the path of decline, well worn from the US Steel’s and GM’s that have preceded the Times.