Economics: Advent of the Generic CEO

“Financialization”, a process characterized by stakeholders in a business activity mixing up the metric of success (money) with metrics of performance (operational standards), has manifested some bizarre outcomes over the last few decades. These effects have come to dominate the economic landscape as money has become less and less representative of reality and government involvement in the economy has quietly and insidiously taken over all aspects of market function and decision making. The timeline for this transition has been longer than most individual careers, several decades, and so has crept up on us with few having a “wait, what?” moment and really noticing.

The advent of the Generic CEO is an illustrative example of one of these weird outcomes.

What is a Generic CEO? He (or more often than not specifically forbidden to be a “he” as of late) is a person who has no idea how the business he is being hired to run actually works, no knowledge of its background, no experience in whatever industry is it involved in, and no good place to get started. He is the shoe company CEO who was brought in from a construction firm, or the new “turnaround” executive brought in to fix the bottom line of a failing tech company after having spent years working in the auto industry, or the lawyer-turned-executive anywhere.

WTF? Yeah… wtf indeed.

How does this work? Continue on, dear reader, and I’ll explain with an example.

Let’s say you have an airline. It’s doing OK. It’s “big”. You’re focused on making it be a successful airline despite the insane ways in which every government on the face of the Earth blocks you from being a fair, successful, not cheating business on the actual market. Then hire a rabid pack of MBAs. The MBAs realize that your collateral fund to cover fuel price spikes can easily make more money than your business’s primary operations if you put it into junk bonds issued by fake CCP real estate companies than if you use it as fuel collateral. So you do that and leave your fuel contracts open and uncovered.

Viola! Your primary business is now speculation in fake CCP assets rather than being an airline.

Sure, you still fly planes around and sell tickets and send people’s baggage to destinations that bear no relationship whatsoever to wherever you flew their owners, but your real business is fake business speculation, not being an airline — which is a good thing, as government regulation and IATA rules long ago forbade any airline from being profitable [cue audio sting].

The only reason you continue to fly planes at this point is to guarantee that when the frothy mesh of bubbles that is the fake economy inevitably pops and blows away you’ll come out smelling like a rose because the government will bail you out after you file bankruptcy for the 17th time. I mean, you’re an airline for jeebussake! You’re essential to the fake economy that nobody is doing any real work in anymore, don’t you see? The politicians are obligated to pay you for keeping the skies angry, come what may — especially since you remembered to use your CCP and public funds from the last bailout to buy all those nice gifts and donate to their campaigns and park their crack addict children and cousins in sinecure’s on your do-nothing board and so on.

These kinds of CEOs are not in business and they know nothing about operations. That’s “the old model”. The new model followed by these leeches is to know the right people and position themselves at the mouth of the ill and nauseatingly bloated corpse of what once was the economy and suckle down all the vomitus they can while they can because they and the politicians they have in their pocket no longer believe in consequences or actual human action (not to mention human greatness).

Note that this is not capitalism. This is how fascist economics works. Fascist economics is most simply defined as a structural formalization of crony capitalism, and of course predicts the exact same tyrannical outcomes. It is the slow-moving version of a socialist authoritarian power grab — the power grab part just comes later in the progression after everyone is totally demoralized and exhausted and the market participants have been bled for all they are worth instead of before.

As Victor Davis Hanson, Thomas Sowell and other wise men have so often tried to remind us: Things that can’t go on forever eventually stop.

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