Phil Town on Weak Management
Ayn Rand wrote this back in 1957 when General Motors was a very strong company but starting to be strongly influenced by the AFL-CIO Unions. When employees have a union and put a gun at the head of weak management, and weak management agrees to go along with demands that they reasonably know they shouldn’t be able to afford, you end up producing more and more bad automobiles. That is when you take the gold stamp of General Motors, the great brand and you ruin it. That wonderful American brand is destroyed now because the company is completely gone. But it took 40 years to destroy the best brand automobile in the world and it was basically done by weak managers that didn’t have the guts to stand up for what was right with the unions. The trade unions were not so interested in the survival of a company but just tend keep milking the cow, taking more than they could possibly afford. At that time, when they started this whole downward pressure on GM, there wasn’t any worldwide competition but competition ended up killing them. The capitalistic system cannot be screwed with. You can’t take more than it’s worth because somebody’s going to come along and take your business.
Japan took it this time and if they don’t continue developing better and better automobiles then China will take it away from Japan. So, Atlas Shrugged just got a whole section of the 20th century motor company which went down the tubes because of that sort of a situation, so it’s worth reading man. I like that book a lot. I feel like everything she says but I like — the general principles are very, very good. If you want to be a good investor long term, you should read Atlas Shrugged by Ayn Rand, written in 1957, very good stuff for Phil Town investing.