Free Who Stole the American Dream? by Hedrick Smith Page B

said, beaming, “Dom Pérignon!”
    Dunlap’s office at Sunbeam and the company’s executive suites, like his home, were decorated with portraits, statues, and hunting lodge mountings of lions, tigers, and sharks, the Darwinian kings of the jungle and the sea.
    “I’m a great believer in predators,” Dunlap said, “because a predator has to go get its own lunch. It can never call for room service. So I think anybody that has the ability to provide for themselves, it’s a good thing. So you’ll see predators throughout the office.”

CHAPTER 5

THE NEW ECONOMY OF THE 1990S

THE WEDGE ECONOMICS THAT SPLIT AMERICA
    There’s class warfare, all right … but it’s my class, the rich class, that’s making war, and we’re winning.
    — WARREN BUFFETT ,
CEO, Berkshire Hathaway
    If I were to describe the new rules of the ’90s, it would really probably start and finish with the power of the financial markets … to really control the destiny, the strategy of the corporation…. Shareholders get rewarded beyond their wildest dreams, but there’s a cost—through stagnant wages, through downsizing and layoffs, through widening inequalities. Capital wins but at a cost.
    — STEPHEN ROACH ,
former chief economist, Morgan Stanley
    AL DUNLAP PRACTICED what some economists call “predatory capitalism.” Like many other American CEOs in the New Economy of the 1990s and 2000s, Dunlap made a personal fortune worth hundredsof millions of dollars with a corporate formula of cut-cut-cut—cut costs, cut plants, cut jobs.
    Moretraditional CEOs such as Bob Galvin, who ran Motorola from 1959 to 1990 as CEO or chairman, rejected predatory strategies. Galvin believed the best way to achieve efficiency and market dominance was through the relentless pursuit of high quality. That approach, Galvin told me, would produce better products, bring down costs, and generate higher earnings on a much more solid basis.
    But Dunlap’s more Darwinian formula was a favorite on Wall Street, and it won financial backing from big investors such as Mutual Series Fund owner Michael Price, whose financial syndicate bought Sunbeam, the appliance/consumer products manufacturer, out of bankruptcy. The syndicate paid $60 million in 1990 to buy Sunbeam, and within five years, Price and Mutual Series Fund made a $1 billion profit by selling off half its ownership in Sunbeam on the market.Price made all that profit, he told me, by installing new bosses to shrink Sunbeam by sharply cutting costs and getting the company growing again. But still holding another half ownership in Sunbeam, Price was eager for more profits. He became impatient with Sunbeam’s slow growth, so he called in Dunlap as Sunbeam’s new CEO to slash costs even further to help Price make another financial killing.
    Galvin was a different kind of owner and CEO. At Motorola, which was once largely owned by his family, he saw employees as a cherished asset who should be trained, not fired—trained and retrained and retrained throughout lifetime employment, as Motorola adopted one new technology after another.
    Galvin fought to keep jobs in America. Facing aggressive Japanese competition in 1986, he decided to build Motorola’s new cellular phone plant in Arlington Heights, Illinois, rather than in Malaysia, as some senior Motorola executives recommended. When Galvin discovered that half of Motorola’s existing workers could not read well enough or do the relatively simple math required in the new plant, he established Motorola University and spent $200 milliona year on retraining all Motorola employees, from the janitors to himself.
    But by the mid-1990s, CEOs like Galvin were a dwindling minority. After he retired, his successors at Motorola began shutting down the company’s plants in the United States and in 2010 sold their wireless networks division to Nokia Siemens, a joint Finnish-German firm.
The CEO Sea Change
    Through the 1980s, the model of the American CEO was changing. Wall