Reading news about the bailout of Bear Stearns makes me remember how little use
I have for the stock market.
They say Main Street would suffer if the government
did not intervene but then the people who are saying that are not the ones who
have ever cared about mom and pop businesses. From reading the way quotes are
phrased in the
news it strikes to me that the wealthiest are just not used to running out of cash flow, a problem small businesses and the
other half, if not 95%, of America are intimately familiar with.
Author David Sirota calls it Feed-the-Beast-ism, "pumping taxpayer money into a
crisis, rather than demanding reforms" but it also shows just how closely linked
large corporations are with the government and how much control they have over
the economy. Not to mention the people running these companies are the ones most
upper middle class Americans are putting their economic trust into.
To me, it always seemed the stock market was just a way of making money without
getting dirty. Kind of like eating bacon without having to slaughter the pig.
There is the obvious example of when a company lays people off, it's usually a
good thing for stocks. But television news also seems to be skewed toward what
affect a crisis has from, say a company found using child labor in some Third World country
or a looming war, on the market rather than what is right or wrong. Long-term
sustainability, wasted resources or threats to the eco-system have no place in a
view where all that matters is whether the stock goes up and down, a
pastime now played out far more frequently in the corporately-owned media than
it was years ago. The media may play the objective game most of the time but
when it comes to the stock market, coverage is almost an advertisement for
corporations, subliminally suggesting "invest in us."
Few who play the Wall Street numbers game have much concern about how the
companies they hold stock in are making their money. Yet many of these same
people (call them Democrats for now) then complain when their country makes bad
decisions. It isn't making bad decisions. It's making good ones. For the
corporations. The same ones they are investing their savings in. When you leave
your morals at the door, they are not going to follow you back in when you need
them.
Personally, if I had money to invest, I would look local, find a hardworking spirit and take a chance.
Or I would do something valuable with it, like give patronage to the arts. I understand that making even more dollars is a responsible way to
increase one's savings and, of course, the stock market is a good long term bet for that, but successfully placing wagers on unknowns shows considerably more talent.
My antipathy for the stock market, however, probably goes much deeper. For at a young age, I worked for the most hallowed of money institutions, Fidelity Investments.
How to destroy a newspaper
In 1991, Fidelity Capital purchased a newspaper I worked at. From 1986 to 2001,
in fact, they purchased up to 119 newspapers, mostly weeklies, cornering the Boston Metro community from Maine to Rhode Island. The company was called Community Newspapers, although ultimately decisions were made outside
those communities in an office on Massachusetts' South Shore.
Community Newspapers struggled from the onset and may have been Fidelity Capital President Bill Elfers' worst move financially. Fidelity, in turned out, knew nothing about the newspaper business.
It was not long before it became desperate to squeeze as much money as
it could out of the papers, money that, despite
most advertisers being local, was not staying in those localities.
While some argued the company saved poor performing publications, some
eventually shut down anyway, and many had been quite successful previously. The one I worked for, The Cape Codder,
was one of the latter, at one time employing two of the top five ad salespeople in the entire chain.
I was coasting along as the Sports Editor, hired in mid-1991, and by 1992 had
facilitated a merger, from overseeing sections in two newspapers to 13. By 1993, I
had won an award for Best Sports Section from the New England Press Association
and an in-house honor for a supplement I produced. For a while I was working well
over 50 hours a week. I also had a Monday morning deadline. For the effort, I
was pulling in a mere $350 per week before taxes, the same salary I began
at. It turned out, however, that by 2003, I was one of the highest paid
reporters on staff as those hired after me were brought on for even less.
It was late spring on a Friday when I received something that stung deeply - a "final warning" notice,
notifying me that if my work did not improve I would be fired. I was stunned, in
part because I had received no previous warnings and had been told
the publisher had recently commented the sports pages looked so good he was
wondering if the paper could afford it. That was just before my assistant had
been laid off and my freelance budget cut in half.
The notice was
accompanied by a private meeting in the publisher's office where he proceeded to
rip into me in a way I had never been spoken to before. I later realized the speech had been a charade, company memos
obtained later indicating that there was an effort to get people to quit without having to have further layoffs and thus pay unemployment. I didn't quit. Instead I went home and did something I had not done even when I'd been struck in the face by a baseball as a 10-year old. I cried.
It turned out I was not alone. Three other men had received near identical
"final warning" letters the same day, none recalling previous notification. Over
the next couple months, a female reporter who had been there longer than me, and
paid slightly more, would claim a managing editor had become consistently critical of her work. There had been no notice with her - the company likely
fearing that women have more avenues to work with when harassment is alleged and
thus did not want to leave a paper trail.
One has to understand that, at the impressionable age of 28, this was essentially my introduction into the American work place. It had been only my second 'real' job and my first full-time in journalism.
I promised myself afterward it would be my last. While I have worked for other
newspapers in a regular freelance capacity and offered work by two competitors
of The Cape Codder, for years I was too distrustful to work for any company
full time.
But I did not go down without a fight. The mistake the company made with me was that my girlfriend at the time was a rising legal scholar who, at 26, had already impacted state-wide politics and today
is listed on Wikipedia
among Boston University's most notable law school alumni. That, and the fact,
that, fearless and crazy, I almost never back down, we drew up a plan of action
that included 10 possible steps of escalation, the final being fired for union
organizing, something that could result in triple damages. The expectation was
that it would never get that far, the company either backing off or offering
some
reasonable settlement to make me go away.
Fidelity's corporate lawyers, however, proved to be hacks and were clearly
outclassed by my
young law school grad girlfriend. They went
from step two to step 10 in just a few weeks, the methods of harassment over that
time took such unbelievable forms it would not be worth my effort to try to even claim they happened. But to give one example, I once signed off on my pages and sent them to the
printery only to have them pulled at the last minute unbeknownst to me. The next
day, I got a notice saying I had not worked hard enough based on the lack of
material in the paper. Upon reaching step 9, my attorney informed me, "Call the union."
I was not the first to use the union word. It had been raised, as nothing more than an offhand remark at a meeting over a pay snafu that did not involve me a month before the final warning notices were drawn up. A woman had said, "This is how unions start." It was not a serious threat but after I invited the Newspaper Guild to give a presentation two months later, it became one. Within three days of handing out union cards, 74 of 100 employees signed them. I was fired the day before cards were to be distributed, the company spy having done his job as signing the card, for those who are unaware, guarantees protection under labor laws.
Still, I threatened the company with up to three lawsuits, all having to wait until the National Labor Relations Board conducted their own investigation. That was not likely to end in my favor as I was told by several people, including the investigator himself, that the judge who would hear the case, a Reagan appointee, was not a fan of unions and would ignore the law unless there was evidence that could not be overlooked, that evidence being that Fidelity or its local management team knew that union organizing was taking place.
The Cape Codder's office was located in a town of 6,000 people. As with any town
that size, gossip spread like wildfire. Union meetings had been held at a
supermarket, the basement of a bank and in people's homes. We had been denied
use of the library, an employee telling us they did not allow labor meetings even though we never told them it was such. People on the street often asked me if I was management or not. Still, the judge ignored common sense that the publisher of the newspaper would know and dropped the case. Mind you, I played by the rules. If what I did had not been protected by law, it is likely I would not have done it. The system failed me, installing a deep mistrust that permeates
today. It was the only time a President had a direct impact on my life.
Enter Bill Elfers
Fidelity, of course, did know. Some months later I would discover that Bill Elfers,
president of Fidelity Capital, spoke about me at a company dinner, the subject
of the union upsetting the tone of the event and dominating conversation. While
I do not have the exact quote, a very good source who was present and married to
one of Elfers' closest associates, relayed his ranting went something like this:
"I'm worth $600 million. Who is this punk kid from Cape Cod who dares take me
on" and went on and on.
Well, it turned out I'm not just some punk from Cape Cod. In fact, my immediate connections
were just one person removed from him, no six degrees of separation here.
The best revolutions throughout history, however, are often the ones that fail. In the end, after a company campaign that included fresh paint, planting of flowers and the firing of two unpopular managing editors (and later the squeezing out of the local publisher) only 25
of the 74 voted in favor of the union. The vice-president of Fidelity Investments also came to the newspaper to deliver a speech in the printery,
which a few years later would be shut down, the workers laid off. The Newspaper
Guild were represented by a talented organizer,
but otherwise dragged its feet and provided little monetary support for the cause (and while the history of labor unions and the history of newspapers in the early 20th Century are virtually synonymous, it is no surprise the Guild has become mostly irrelevant over the past two decades).
The NLRB decision did not prevent me from filing my own lawsuits but I decided
to drop the idea. I was confident I could win and had another lawyer willing to take
it on a contingency basis but in the end Fidelity had spent more than $100,000
fighting me, mostly paying to bring in professional strikebreakers, and I had
yet to spend a dime. Crazily enough, I would have gladly walked away with
$5,000, which, at age 28, would have been the biggest check I had ever seen.
This was not a company that was going to go down without a fight even if no one
was left standing, which is what happened. My girlfriend also had moved to
California and I followed her, figuring it best to put it behind us.
Which brings us back to the stock market. Bill Elfers is a man hailed as a role
model in the financial world despite the ineptitude he displayed in running
Community Newspapers. When Fidelity sold the chain to the Boston Herald in 2001, it had at best broke even, which in actual terms for Fidelity over a 15-year period translates into a substantial loss. Other
estimates, including
one by Boston Phoenix columnist Dan Kennedy, who interviewed Elfers,
had them losing millions.
One Cape Cod town board even voted a resolution of "no confidence" after seeing
what Fidelity had done to their local newspaper. Advertisers often
expressed disgust at having to deal with the company and some would later put
up money on competitors that would rise up. On Cape Cod everywhere Fidelity had
competition it lost the newspaper war. Interesting enough, the Herald, which does know the newspaper business, reported a $20 million profit from the chain just a few years later before selling it to GateHouse Media.
It is understandable then to see why, to me, the idea of someone turning their dollars over to a company run so poorly seems absurd, if not morally bankrupt.
In Bill Elfers' obituary in the Boston Globe after he died in 2005, one of his rich friends, fellow venture capitalist Peter Brooke, said of him, ''He was a man who had very high standards for himself, and he held everyone else to those same standards. We all owe a lot to him."
God I hope not. But then they'll always have their friends in government to bail them out.
