Thursday, February 02, 2006
Business News and the Publishing Business
And it's got one of the best, most cynical, opening paragraphs I have read in a long time:
Going out to walk the dog a few days ago, I grabbed one of those plastic newspaper-delivery sacks that make such a fine canine-cleanup tool, and had a sad thought: If newspapers ever disappear, I'll sure miss these bags.
Read it at http://nationaljournal.com/powers.htm (it's the 1/27/06 article-- get it soon-- the link is likely to expire within days).
An undercurrent of the article is how because the publishing business is bad, so must the rest of the economy must be bad, too.
Nothing illustrates this more than today's reporting about Q4 productivity. Can't people read past the third paragraph? The report is actually pretty impressive! http://www.bls.gov/news.release/prod2.nr0.htm
Q4 productivity in durable manufacturing was +8.2%! Compared to Q4-2005, business productivity was +2.2% and manufacturing productivity was +4.1%. Even compared to the supposedly super-strong "goldilocks" economy of 1996-2000 the report was good. At +2.7%, 2005 business productivity was just -0.1 below the average for all of those years. The average for business productivity for 2001-2006 has been 3.3%, which is +0.5 higher than 1996-2000.
Another thing that demonstrates "context-free" journalism is the reports of Exxon's profits. Exxon's profit margins put it in the bottom half of the Dow Jones average, well below many other famous companies. If I was an Exxon stockholder, I'd be pretty ticked at their mediocre performance. I looked up all of the margins of the other Dow 30 companies using wsj.com:
Hewlett Packard 19.7%
Johnson & Johnson 17.3%
General Electric 14.2%
Procter & Gamble 13.9%
JP Morgan Chase 12.0%
American Express 11.7%
Home Depot 7.4%
United Technologies 7.0%
General Motors -9.6%
What's really funny? A media darling like Pixar has profit percentages on sales of 59.8%! They're taking money from defenseless and impressionable little kids, forcing them to go to movies through manipulative advertising on Saturday morning television! Why, that makes them an evil company, just like McDonalds! Many of Pixar's products are sold by Wal-Mart, which Pixar must keep secret because we know Wal-Mart is a shady company, undermining American values. Adobe, responsible for the loss of thousands upon thousands of jobs in the printing and prepress industry, and union jobs at that, has a 30.6% profit margin on revenues. Yet, nary a word in the press about these "evil" capitalists.
This is all really silly. Profits are profits. They go up and the go down. Rates of profits change depending on market conditions. There is no such thing as an "obscene" profit, just like there is no such thing as a "good" or "beneficial" loss. Basic economics seems to be beyond the reach of many, even the business press.
Peter Drucker wrote about this more than 30 years ago http://www.opinionjournal.com/extra/?id=110003570