March 2001

Q: How Do You Screw Up A Perfectly Great Economy?

A: Ask Alan Greenspan. 

BY NADJI TEHRANI

The assistance and research conducted by the editors of Customer Inter@ction Solutions magazine was instrumental in preparation for this Publisher's Outlook. My intention is to be brutally honest in expressing my views, as I believe that the U.S. economy deserves better leadership.

Dr. Alan Greenspan was appointed as the Chairman of the Board of Governors of the Federal Reserve System by Presidents Reagan, Bush and Clinton (his current four-year term as Chairman ends June 20, 2004). His re-appointment to the Board for a full 14-year term began February 1, 1992.

Indeed, in his career, Dr. Greenspan has been appointed chairman or board member to various Presidential economic policy advisory boards and boards of directors of various corporations. To say the least, Dr. Greenspan's resume is impressive. Reading through his resume, I discovered that he spent from 1954 to 1974 and from 1977 to 1987 as Chairman & President of Townsend-Greenspan & Co., Inc., an economic consulting firm in New York City. Dr. Greenspan's academic achievements in economics are indeed prominent. He graduated with a B.S. in economics (summa cum laude) in 1948, an M.A. in economics in 1950 and a Ph.D. in 1977, all from New York University. As you can see, from an academic standpoint, as well as serving on various advisory boards, Dr. Greenspan's record is perhaps second to none.

What I don't see in Dr. Greenspan's record is being on the firing line of a small or large entrepreneurial business, where the founder and/or the CEO learns the business inside and out by doing literally everything in the company and gaining practical, "real world" and "firsthand" experience about what business is really all about. Having come to this great country of ours with $50 in my pocket and a vocabulary of a grand total of four words in English (and those were yes, no, okay and Wednesday), I have a much different view of what the "REAL" world is all about. I have undergone many hardships, such as my first job, where I was responsible for high-quality plastic products at a young age. I worked 16-hour shifts for $1.50 an hour in a plastic manufacturing factory located in Patterson, New Jersey, where we toiled in horrible working conditions and the temperature in the factory reached 115 degrees in the summertime. I then worked my way up the corporate ladder and eventually started Technology Marketing Corporation (TMC) in 1972. TMC has since become the leading independent publishing/trade show company covering cutting-edge technologies in the high-tech communications fields. (Visit www.tmcnet.com.) So you see, I have a completely different background than that of Dr. Greenspan.

Academically, I cannot begin to compare to Dr. Greenspan's admirable and prestigious background in serving on so many prestigious boards. However, I have learned through many years of firsthand experience and hard work that theoretical knowledge does not run a company, a country or an economy successfully. Through my 30 years of business experience, which started as a research chemist at DuPont to the current Chairman & CEO of TMC, I have learned that members of the board of directors of companies often have no clue about the nature of the business for which they serve on the board.

I am reminded of a great advertisement, which I saw back in 1982, about a Japanese-made photo copier. The headline read, "Finally, we have invented a copier which is so easy to run, even members of the board of directors should be able to run it!" Those of us who have worked with members of several boards of directors know for a fact that except for a few rare cases, these people are simply on cloud nine and have no clue about how to run a business successfully!

The U.S. economy, as everyone knows, has economic cycles like the economy of any other country. In the past, we have had our ups and downs, recession followed by a great growth. However, the latest economic growth and prosperity of the United States, which began in the last few months of President George Bush Sr.'s presidency, has been by far the longest and most prosperous of any economic upswing in world history. While many politicians, including Bill Clinton, Al Gore and many Congressmen on both sides of the aisle, gave themselves credit for the prosperity, or gave credit to Dr. Greenspan or others, in reality, all savvy business people know that none of the above people had a damn thing to do with this prosperity. The number one reason the U.S. economy enjoyed so many years of unparalleled prosperity without interruption was the performance of America's brilliant high-technology scientists and engineers who developed the hardware, software and IT technology that increased workers' productivity at a phenomenally high rate on a sustained basis. Period. End of story. No one else deserves the credit more than the high-tech companies whose hard work was solely responsible for this phenomenal increase in productivity, which translated into many years of economic prosperity.

I am reminded of a statement President Ford once made in response to a treaty negotiation with the Soviets early in his presidency. President Ford had spent many hours, indeed many months, negotiating with the Soviets on the reduction of nuclear missiles, and he felt he had accomplished a significant win-win situation. Some individual in the administration or in the Congress was in total disagreement and was on the verge of breaking up what should have been in the country's best interest. In response to this individual's actions, President Ford stated, "It takes a carpenter, masons, electricians and many other construction people about a year to build a barn. It takes a jack-ass five minutes to kick it all down!" I used this phenomenally clever response by President Ford not to show any disrespect toward any of the aforementioned people, but to point out the fact that one can draw the conclusion that while none of the people who claimed credit for the unparalleled U.S. prosperity and economic growth are responsible for it, one must admit that any one of the above people could take an ill-advised action and destroy the prosperity altogether!

Robert Reich Deserves Enormous Credit
Former Secretary of Labor Robert Reich, in a commentary broadcast March 16, 2000 entitled "A Plea to Alan Greenspan," addressed the fact that Dr. Greenspan's economic assumptions are based on an old model and that raising interest rates yet again will be detrimental for the new economy:

Alan, Alan -- listen to me. You're about to make a big mistake. You and your Open Market Committee are almost sure to raise interest rates again when you meet next Tuesday. Alan, don't do it. You'll regret it. We'll all regret it.

You're worried about inflation. But, Alan, there's no inflation. The core Consumer Price Index is up less than 2 percent since a year ago. That's the lowest increase since 1991. Exclude food and energy, and consumer prices are actually down from a year ago. The producer price index is flat.

You think inflation is just around the corner, that the economy's growing too fast. But Alan, this is a new economy. Look at what companies are doing with computers and the Internet and business-to-business auction Websites. They're ripping out their entire cost structures. Demand is not outrunning supply because the productive capacity of the country is exploding. Meanwhile, competition is fierce. No company dares raise its prices.

Alan, get hold of yourself. Raise interest rates too much now, you're gonna create a recession. High oil prices are already hurting the economy. And look at what's happening to the stock market.

I trust you can see that indeed Mr. Reich was 100 percent right and Dr. Greenspan chose to ignore him and continued to raise interest rates 6 consecutive times for absolutely no reason and thereby he literally screwed up the economy and caused investors and corporations to lose trillions of dollars (not to mention an economic downturn, continued losses for everyone and massive layoffs of hundreds of thousands of people!). Who in their right mind can possibly call this man an economic genius? Forget his academics; look at his actions! And...we all know that actions speak louder than words.

Could This Be The Time For A New Federal Reserve Chairman?
We Mean Someone Who Understands "The New Economy." We Think So! And The Record Speaks For Itself!
In "Fish Or Cut Bait: Will Alan Greenspan Kill The New Economy?" (April 4, 2000, Redherring.com), Peter D. Henig expressed many of the same themes. After stating that, "Alan Greenspan doesn't get it," and explaining how "efficiencies now argue for higher multiples on high-growth stocks," Henig continued, "Can Mr. Greenspan adapt to an entirely new economy essentially in startup mode, letting growth run its course rather than fretting about inflation? The learning curve may be beyond him...." Henig points out that while Dr. Greenspan is a master of the old economy, by applying the principles of the old economy to the new, "The Fed chairman is trying to pour old wine into new bottles!"

The bottom line, about the only conclusion that one can make from all of the above, is that with all due respect to the many great accomplishments of the past by Dr. Greenspan, the new economy necessitates a new leader, one who clearly understands the new economy and simply does not prescribe old solutions for a totally new problem. We hope that Dr. Greenspan will give some thought to what is in the best interest of not only the U.S. economy, but also the best interest of the global economy, and resign. Also, at 76, he's 11 years past the retirement age!
May I recommend Robert Reich as a candidate who understands the new economy?

As always, I welcome any comments and suggestions from the valued readers of Customer Inter@ction Solutions magazine to this editorial opinion.

Sincerely,

Nadji Tehrani
Executive Group Publisher
Editor-in-Chief

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Congratulations To The 2001 Top 50 Outbound Teleservices Companies

I would like to take this opportunity to extend our sincere appreciation on behalf of the entire contact center industry as well as the entire staff of Technology Marketing Corporation, publisher of Customer Inter@ction Solutions magazine, to the 2001 winners of our industrys coveted Top 50 awards. Those of us who have followed the industry since its inception in the early 1980s and know the contact center industry inside and out, also know how difficult it is to become a member of this elite and prestigious group of companies.

Sixteen years ago, Customer Inter@ction Solutions magazine pioneered this great institution known as the Top 50 inbound and outbound teleservices award program primarily to give due recognition to a group of hard-working people whose primary function is creating sales and thereby protecting and/or creating hundreds of thousands of jobs in corporate America. We know how difficult it is to hire, train and retrain multitudes of people and help them develop great careers, and also how difficult it is to deal with many demanding customers in a highly competitive environment. Earning a Top 50 award year after year is indeed one of the most difficult accomplishments, if not the most difficult, within the teleservices area. You bring respect to our industry through your excellent quality, while generating job security for the thousands of Americans who work for the companies that benefit from the revenues you generate when they outsource their telesales and teleservices functions to you. We salute you for a job well done. We stand in awe of your well-deserved growth. It is a pleasure to work with you on a daily basis.

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