Monday night, AT&T and TMO announced their $39B merger was dead. The only surprise was that they did it so quickly; as I've written before, there was a real danger that egos would prevail and AT&T would distract itself by fighting a losing battle with the regulators rather than turning its attention to competing with Verizon.
I went on CNBC's Squawk Box Tuesday morning (sorry; no video link) to offer my thoughts on whether AT&T had made a bad bet. I'll repeat and expand what I said there: It was a risky bet - which is why TMO, advised by my former counsel at Wachtell, insisted on the mother of all break-up fees. But it was a bet worth taking.
The good news for AT&T is that they aren't chasing here. They can now turn to other options, whether it's acquiring DISH, buying spectrum or capacity from Clearwire, or doubling down on a wi-fi offload strategy. None are ideal, but they've got to play the cards they were dealt.
Another topic that came up in my interview yesterday was whether scuttling this deal was good for consumers. It's easy to see why it would be; TMO gets to keep playing to the low end, and there should be more price competition. But that's also a facile and short-sighted point of view.
This timely WSJ article today touches on, at a high level, some of the fundamental economic headwinds that face U.S. wireless carriers. It's a vast country, and providing the coverage, capacity and data speeds that consumers want is incredibly costly. Carriers spent $25 billion on their networks last year. Only AT&T and Verizon got a return on capital. Think about that, and what it means over time for consumers. We're paying for marginal price competition today with hobbled companies and under-investment tomorrow. A cash-losing Sprint or T-Mobile can't innovate, can't bridge the "last mile" or the "digital divide", and will ultimately fail - leaving the monopoly or duopoly DC is so fearful of - if they can't afford to invest capital in their network.
So no, the FCC and DOJ did consumers no favors long-term in preventing this deal. It's time they updated the tools in their "preserving competition" toolbox for the reality of today's wireless industry.
Wednesday, December 21, 2011
Monday, December 12, 2011
AT&T & T-Mobile Reaching the Final Act
There was a terrific piece in the Washington Post at the end of last week, detailing AT&T's lobbying strategy and approach to win approval of its $39B acquisition of T-Mobile. It's well worth a read, detailing as it does the combination of hubris and overreach that may have sunk the deal's chances.
The acquisition was a risky bet to begin with, but one takeaway for would-be acquirers must be this: If you're going to tout social benefits (in this case, the creation of 100,000 new jobs) in your lobbying efforts, be prepared to back up your claim with the solidest of solid analysis.
Because if you can't, then the rest of your arguments - and make no mistake, AT&T had several good ones re the benefits of this merger - are going to suffer badly by association. You'll have just handed those opposing your deal the club with which to smash your head in.
And today, AT&T has joined the DOJ in asking for a stay of the antitrust trial it had been so ardently pushing forward. This no doubt foretells the deal being scuttled or significantly re-arranged.
Here's one vote for the former - I'd much rather see AT&T in full-throated competition with Verizon than distracting itself trying to put together a less-than-optimal deal.
The acquisition was a risky bet to begin with, but one takeaway for would-be acquirers must be this: If you're going to tout social benefits (in this case, the creation of 100,000 new jobs) in your lobbying efforts, be prepared to back up your claim with the solidest of solid analysis.
Because if you can't, then the rest of your arguments - and make no mistake, AT&T had several good ones re the benefits of this merger - are going to suffer badly by association. You'll have just handed those opposing your deal the club with which to smash your head in.
And today, AT&T has joined the DOJ in asking for a stay of the antitrust trial it had been so ardently pushing forward. This no doubt foretells the deal being scuttled or significantly re-arranged.
Here's one vote for the former - I'd much rather see AT&T in full-throated competition with Verizon than distracting itself trying to put together a less-than-optimal deal.
Friday, November 25, 2011
AT&T, T-Mobile & Opportunity Cost
AT&T's acquisition of T-mobile is on the rocks, and
it looks like things are going to get uglier before everything settles
out. As I mentioned in this CNN article,
I'm convinced the deal is dead. My belief isn't driven by any particular
dislike for this deal; in fact, I think it makes a lot of sense. But it was a big gamble that regulatory
approval would come through, and sometimes things don't work out.
The problem here is moving on crisply. A major consolidating transaction is
distracting enough; but trying to push one through the regulatory bog AT&T
is facing? The DOJ has sued to block the
merger. The FCC has referred the matter
to an administrative hearing - a near-unheard of event. AT&T has responded by taking its ball and going home,
pulling back its transfer application in the hopes that it can refile once it
works things out with DOJ. All of this
spells additional delay and uncertainty.
Neither AT&T or T-Mobile can move forward fully until the merger is
resolved, one way or the other. In the
meantime, Verizon can keep taking market share steadfastly, not burdened down by
distracting strategic considerations.
Thursday, October 27, 2011
Should Legal Report to PR?
OK, it sounds ridiculous, but consider: Any company of size employs a public relations staff. It's how you acquire, manage and - hopefully - shape earned media. Public relations is taken very seriously, and invested in accordingly. A savvy PR staff can generate an outsized return on an investment in relationships and managing the company's image in the press.
Why then, do companies - like Sony Ericcson - continue to allow their legal departments to undermine that PR work?
Imagine the conversation if the Sony Ericcson legal group reported to PR:
PR: Wait, you want to do what?
Legal: There's a guy running a blog that has the name of one of our products in it. And get this - the domain he's using has our product name in it! We can't have that. We're going to threaten him with a UDRP action unless he shutters the blog and hands the domain to us.
PR: Haven't we talked about this? If there's someone hating on us, it's usually best to just ignore them? You know, Streisand Effect?
Legal: Oh, he's not a hater. It's a fan site.
PR: You want to take down a fan site? Someone is writing nice things about us for free and you want to stop them?
. . . you do know that we spend nearly $1 billion a year on advertising, right?
. . . and that this blogger is giving us free advertising?
. . . and that when he's forced to shut down he, and the 4chans and TechDirts of the world, are going to start saying all sorts of nasty things about us and how heavy-handed we are?
. . . which is pretty much the exact opposite of this department's primary goal?
But you're the lawyer - there must be a very good reason for going after this fan. Is he confusing lots of our customers?
Legal: No, it's clearly a fan site. But he's got an affiliate link where people can buy our products.
PR: Uh . . . we're kind of in the product selling business. So his site must be messing with our SEO, outranking our sites on Google?
Legal: Not yet, but it's a .net domain.
PR: It's a .net domain? You do know that a .net domain is the internet equivalent of second-hand store on a back street, right?
Legal: Look, the issue is that there's a chance that this use of our product name could dilute our brand and cause us to lose the trademarked name of the product. We've got to defend our trademark!
PR: OK. So stacked against the 100% chance that your letter will cost us - at a minimum - hundreds of thousands of dollars in negative publicity, what's the risk that this site being out there causes us to lose our trademark?
Legal: Oh, that would never happen. But it sets a bad precedent.
PR: [facepalm]
Why then, do companies - like Sony Ericcson - continue to allow their legal departments to undermine that PR work?
Imagine the conversation if the Sony Ericcson legal group reported to PR:
PR: Wait, you want to do what?
Legal: There's a guy running a blog that has the name of one of our products in it. And get this - the domain he's using has our product name in it! We can't have that. We're going to threaten him with a UDRP action unless he shutters the blog and hands the domain to us.
PR: Haven't we talked about this? If there's someone hating on us, it's usually best to just ignore them? You know, Streisand Effect?
Legal: Oh, he's not a hater. It's a fan site.
PR: You want to take down a fan site? Someone is writing nice things about us for free and you want to stop them?
. . . you do know that we spend nearly $1 billion a year on advertising, right?
. . . and that this blogger is giving us free advertising?
. . . and that when he's forced to shut down he, and the 4chans and TechDirts of the world, are going to start saying all sorts of nasty things about us and how heavy-handed we are?
. . . which is pretty much the exact opposite of this department's primary goal?
But you're the lawyer - there must be a very good reason for going after this fan. Is he confusing lots of our customers?
Legal: No, it's clearly a fan site. But he's got an affiliate link where people can buy our products.
PR: Uh . . . we're kind of in the product selling business. So his site must be messing with our SEO, outranking our sites on Google?
Legal: Not yet, but it's a .net domain.
PR: It's a .net domain? You do know that a .net domain is the internet equivalent of second-hand store on a back street, right?
Legal: Look, the issue is that there's a chance that this use of our product name could dilute our brand and cause us to lose the trademarked name of the product. We've got to defend our trademark!
PR: OK. So stacked against the 100% chance that your letter will cost us - at a minimum - hundreds of thousands of dollars in negative publicity, what's the risk that this site being out there causes us to lose our trademark?
Legal: Oh, that would never happen. But it sets a bad precedent.
PR: [facepalm]
Monday, October 17, 2011
The Black Hole of Customer Complaints
The Bizzle writes about the role of corporate counsel in occasionally having to deal with real live customer complaints. I had to chuckle; there is much to recognize there.
When I was GC of a regional wireless company, I was deemed the "black hole" of customer complaints, the place that those too crazy or persistent for even our executive escalation team to handle would be sent. Like the guy who would send 27 page faxes to us every day, copying the regulatory agencies and every government official he could think of. Or the customer who sent in a package containing his bill (crumpled up into a tight little ball), a foot-long dowel and a tube of KY Jelly.
What I found was that - much like the Bizzle's experience - for the vast majority of these complaints it was a matter of listening. Listening, because there was nothing else I could offer. Any complaints amenable to resolution would have been dealt with long before they reached me. So I listened, tried not to argue too much, and told them "no". "No," over and over again. No, we would not fundamentally change our business processes. No, we would not pay them millions of dollars for a perceived slight. No, we would not humbly and abjectly go out of business.
And - most importantly - No, there is no one to escalate to beyond me.
These complaints were stuck beyond the event horizon of my "Office of the General Counsel" black hole. They could not go forward and vent their spleen to our CEO, nor backward to make another run at our customer care staff. All further communication would be to me, and me alone. Eventually, they would exhaust themselves and move on to whatever was next in their lives.
It was a clean process, if not always the best use of a GCs time. It required listening, but never for too long; the judicious use of calendar management and setting expectations that I only had time to talk for so long at a spell. But it was a far better process than having the CEO take these calls, and it provided some comfort that if one of these people had a legitimate claim, it would find the legal department while something short of a lawsuit could still make things right.
Unsurprisingly, this is a big part of my current role. Being in the business of publishing information, ratings and reviews of attorneys, we field a number of complaints from those we profile. This is not about paying customer escalations, but rather all about unhappiness and control from a handful of those we've published information about. Many of those have been interesting conversations, and some have even led to changes in our operations. But the vast bulk of them involve me listening and saying that oh-so-familiar word: "No." And because these are attorneys, I often must follow my "no" with an explanation of why suing us would be a bad idea. I have anecdotes and correspondence from these conversations that would fill a book. But that, readers, will have to wait for another day.
When I was GC of a regional wireless company, I was deemed the "black hole" of customer complaints, the place that those too crazy or persistent for even our executive escalation team to handle would be sent. Like the guy who would send 27 page faxes to us every day, copying the regulatory agencies and every government official he could think of. Or the customer who sent in a package containing his bill (crumpled up into a tight little ball), a foot-long dowel and a tube of KY Jelly.
What I found was that - much like the Bizzle's experience - for the vast majority of these complaints it was a matter of listening. Listening, because there was nothing else I could offer. Any complaints amenable to resolution would have been dealt with long before they reached me. So I listened, tried not to argue too much, and told them "no". "No," over and over again. No, we would not fundamentally change our business processes. No, we would not pay them millions of dollars for a perceived slight. No, we would not humbly and abjectly go out of business.
And - most importantly - No, there is no one to escalate to beyond me.
These complaints were stuck beyond the event horizon of my "Office of the General Counsel" black hole. They could not go forward and vent their spleen to our CEO, nor backward to make another run at our customer care staff. All further communication would be to me, and me alone. Eventually, they would exhaust themselves and move on to whatever was next in their lives.
It was a clean process, if not always the best use of a GCs time. It required listening, but never for too long; the judicious use of calendar management and setting expectations that I only had time to talk for so long at a spell. But it was a far better process than having the CEO take these calls, and it provided some comfort that if one of these people had a legitimate claim, it would find the legal department while something short of a lawsuit could still make things right.
Unsurprisingly, this is a big part of my current role. Being in the business of publishing information, ratings and reviews of attorneys, we field a number of complaints from those we profile. This is not about paying customer escalations, but rather all about unhappiness and control from a handful of those we've published information about. Many of those have been interesting conversations, and some have even led to changes in our operations. But the vast bulk of them involve me listening and saying that oh-so-familiar word: "No." And because these are attorneys, I often must follow my "no" with an explanation of why suing us would be a bad idea. I have anecdotes and correspondence from these conversations that would fill a book. But that, readers, will have to wait for another day.
Saturday, October 08, 2011
The Narcissism of Revolution
"Occupy Seattle", a thinly-attended offshoot of Occupy Wall Street, has been going on across the street from my office this last week. What do the "occupiers" want? If you view this rant narrated by Keith Olbermann (shredding whatever scraps of integrity he might have left), they want America to know that corporations are evil.
Don't get me wrong - I like a good protest. Lock yourself to the gates of nuclear plant, protest the war, demand equal rights, whatever. But here are the problems I have with this protest:
1. It's infantile and wrong.
Have corporations visited these evils upon us? Of course they have. But corporations have also generated jobs, enabled innovation and powered an unprecedented increase in the standard of living for Americans. Corporations have developed the tools used by the protestors, and employ most of their parents, making it possible for them to protest. And let's face it: if all you want to do is run out a one-sided diatribe, a similar litany could be employed against labor unions, public school teachers, religions - or the entire human race.
2. It's non-actionable.
What exactly would the occupiers do about the evil corporations? Regulate what they can pay their employees? How they can spend their money? How much profit they're entitled to earn?
Why yes, if you listen to many of the occupiers. They want public ownership of corporate assets. They want redistribution, Soviet-style. Never mind the experience of the last 80 years. Never mind the spectacular abuses and failures of centrally-planned economics.
3. It's narcissistic.
Many of the OWS protesters compare themselves to democracy activists in the middle east. America may have issues – we’ve got an overreaching security state, we waste tens of billions of dollars on a spectacularly failed war on drugs, we pay too much for middling health care outcomes, and we aren’t willing to tax ourselves enough to pay for all the goodies we want. But these issues are nothing - nothing - compared to what people in Egypt, Tunisia, Syria and Yemen faced or are facing.
It's embarrassing that the OWS crowd thinks getting jailed over a hippie campout is the moral equivalent of facing bullets while standing up for democracy in Cairo or Damascus.
4. It's entitled.
At the center of these complaints is a failure to take accountability. No one forced you to take out that over-leveraged mortgage, or go $100K in the hole to get a college degree. We all have choices, and we own the consequences of those choices. And don't forget that many of the problems plaguing our state and local governments stem from the rapacious appetite of government employee unions, and the failure of our leaders to protect taxpayers from the ruinous pension obligations they've signed up for.
Joe Biden said Occupy Wall Street is like the Tea Party. And he’s right. Just like the Tea Party – with its “keep your hands off my Social Security/but don’t tax us” message - OWS suffers from magical thinking in its muddled blend of tired lefty tropes.
Those of us in the reality-based community don't have patience for such indulgent, pointless crap.
Don't get me wrong - I like a good protest. Lock yourself to the gates of nuclear plant, protest the war, demand equal rights, whatever. But here are the problems I have with this protest:
1. It's infantile and wrong.
Have corporations visited these evils upon us? Of course they have. But corporations have also generated jobs, enabled innovation and powered an unprecedented increase in the standard of living for Americans. Corporations have developed the tools used by the protestors, and employ most of their parents, making it possible for them to protest. And let's face it: if all you want to do is run out a one-sided diatribe, a similar litany could be employed against labor unions, public school teachers, religions - or the entire human race.
2. It's non-actionable.
What exactly would the occupiers do about the evil corporations? Regulate what they can pay their employees? How they can spend their money? How much profit they're entitled to earn?
Why yes, if you listen to many of the occupiers. They want public ownership of corporate assets. They want redistribution, Soviet-style. Never mind the experience of the last 80 years. Never mind the spectacular abuses and failures of centrally-planned economics.
3. It's narcissistic.
Many of the OWS protesters compare themselves to democracy activists in the middle east. America may have issues – we’ve got an overreaching security state, we waste tens of billions of dollars on a spectacularly failed war on drugs, we pay too much for middling health care outcomes, and we aren’t willing to tax ourselves enough to pay for all the goodies we want. But these issues are nothing - nothing - compared to what people in Egypt, Tunisia, Syria and Yemen faced or are facing.
It's embarrassing that the OWS crowd thinks getting jailed over a hippie campout is the moral equivalent of facing bullets while standing up for democracy in Cairo or Damascus.
4. It's entitled.
At the center of these complaints is a failure to take accountability. No one forced you to take out that over-leveraged mortgage, or go $100K in the hole to get a college degree. We all have choices, and we own the consequences of those choices. And don't forget that many of the problems plaguing our state and local governments stem from the rapacious appetite of government employee unions, and the failure of our leaders to protect taxpayers from the ruinous pension obligations they've signed up for.
Joe Biden said Occupy Wall Street is like the Tea Party. And he’s right. Just like the Tea Party – with its “keep your hands off my Social Security/but don’t tax us” message - OWS suffers from magical thinking in its muddled blend of tired lefty tropes.
Those of us in the reality-based community don't have patience for such indulgent, pointless crap.
Tuesday, October 04, 2011
Do Female Lawyers Thrive In-House?
The ABA Journal asks the question of whether female attorneys are more successful in corporate jobs than in law firms due to corporations placing a higher value on female lawyers' "people skills."
The article then sloppily compares hard data (females comprising 15% of equity partners at large law firms) with anecdote ("some women lawyers are suggesting that female attorneys do better, overall, when working in-house").
Oh, but data's not hard to find. It turns out that of Fortune 500 General Counsel, women comprise (drum roll, please) . . .
18.8%
Huh. That's only slightly better than the equity partner rate.
Here's two things I know: First, people skills are important in corporations, far more so than in law firms. And second, there are plenty of attorneys with bad people skills. Lack of people skills is an equal-opportunity problem. It's why attorneys score in the 13th percentile for sociability (or as one managing partner at a large firm once told me, the 8th percentile if you control for rainmakers).
The data above would tell us that women lawyers have only marginally better people skills. And that margin could likely be explained away by the job style and hiring difference between equity partners and Fortune 500 GCs.
Can we stop falling back on counter-productive, fluffy gender stereotypes like "better people skills" - especially when the data doesn't bear them out?
The article then sloppily compares hard data (females comprising 15% of equity partners at large law firms) with anecdote ("some women lawyers are suggesting that female attorneys do better, overall, when working in-house").
Oh, but data's not hard to find. It turns out that of Fortune 500 General Counsel, women comprise (drum roll, please) . . .
18.8%
Huh. That's only slightly better than the equity partner rate.
Here's two things I know: First, people skills are important in corporations, far more so than in law firms. And second, there are plenty of attorneys with bad people skills. Lack of people skills is an equal-opportunity problem. It's why attorneys score in the 13th percentile for sociability (or as one managing partner at a large firm once told me, the 8th percentile if you control for rainmakers).
The data above would tell us that women lawyers have only marginally better people skills. And that margin could likely be explained away by the job style and hiring difference between equity partners and Fortune 500 GCs.
Can we stop falling back on counter-productive, fluffy gender stereotypes like "better people skills" - especially when the data doesn't bear them out?
Thursday, September 29, 2011
Bethesda vs. Minecraft
It's been a while since I've posted about trademark bullying, but Christ, it seems like it's everywhere. Proctor & Gamble is fighting with a Connecticut mom over the name she's chosen for her line of soap for tween girls ("Willa") because it sounds kinda like P&G's "Wella" brand. I've got some nimrod attorney demanding "one . . . MILLION . . . dollars" for using his name on our site (it's, uh, a legal directory. Of lawyers.).
But my new favorite for sheer cluelessness is Bethesda games going after Markus Persson, the creator of Minecraft. Bethesda worries that Persson's new game, Scrolls, might be confused with Bethesda's "Elder Scrolls" line of games. Never mind that no one would ever confuse one of Bethesda's games for one of Persson's. Or that the "Elder Scrolls" is a simply a postscript to the title of each Bethesda game.
What's really appalling here is how Bethesda is letting its lawyers crush them.
Despite possessing god-awful graphics, Minecraft is popular beyond belief. Offering up an open world with no structured gameplay, it provides a level of depth and creativity not found in any other game. Millions and millions and millions of people have flocked to it. My son and his friends are obsessed with it.
By going after Persson (who goes by "Notch"), Bethesda has aligned itself against all of these millions of ardent fans. It doesn't matter if they win the court battle and get Notch to change the name of the game; they've already lost the PR battle.
And of course, they didn't need to do this. Their lawyers may have told them that they need to "defend their intellectual property." That's bunk. Walking through all of the options and the PR implications of taking this action - particularly against a small or well-loved business - has got to factor into the equation.
I was talking to a video game journalist (!!) a few weeks back who told me that many of the gaming companies are known for being ineptly run. One sure-fire way to be run ineptly is to listen too uncritically to your lawyers. We'll see how much it costs Bethesda to learn that lesson.
Sunday, August 14, 2011
Politics and the Workplace
Several people wondered why I chose a political example for my post about negotiating with madmen. After all, conventional wisdom is that politics shouldn't be mixed with work, right?
And I think that point is correct - if your version of politics is the kind of single-issue advocacy, "principle-and-the-rest-be-damned" or magical thinking that seems to characterize so much of our political discourse. Best to keep it to yourself to avoid coming off as a crank, or someone with some gaping holes in their ability to reason.
But if you are someone who thinks about politics and policy, there's nothing like hashing those ideas out with others at work. Some of the most enjoyable and challenging political discussions I've had have come up this way. Why? Because in the workplace, you're more likely to run across smart people who are approaching these problems from a different perspective (as opposed to solving the world's problems for the umpteenth time with your like-minded college friends).
What's more, as our public political discourse has become more polarized, it's important that people call out the insanity. So to be clear: I don't consider the question of whether the Treasury needs to raise more revenue to be a political one. Rather, it's a self-evident proposition. Revenues are running at a level of GDP (15%) we haven't seen in 60 years. This low level of revenue is supporting a much greater swath of services than existed in the 1950's. While it is an equally self-evident proposition that entitlement spending needs to be cut, there's simply no way our modern industrial democracy can function the way Americans expect it to on a budget of 15% GDP. The political questions include how much revenue needs to be raised (and in what ratio to cuts in spending), in what form (higher taxes for the wealthy, comprehensive tax reform, etc.), and what the ultimate GDP target should look like (history and economics suggest 18-21%).
The grown-ups in the room know this and are asking these questions. There's a lot of work to be done to figure out what the ratio of revenue to cuts should be. My view is that it should be about a 1-2 or 1-3 ratio, but others I respect have suggested we could go as high as a 1-6 ratio.
So it was disappointing to see that every GOP candidate, when asked at last week's debate if they would support raising revenues at a 1-10 ratio of cuts, said they would not. That's not reality. It's not governing like an adult. We need to have a real discussion about how to change our tax code, raise more revenue, and make some fundamental changes (and cuts) to entitlement programs.
And there's no reason to rule out the workplace in having that discussion.
And I think that point is correct - if your version of politics is the kind of single-issue advocacy, "principle-and-the-rest-be-damned" or magical thinking that seems to characterize so much of our political discourse. Best to keep it to yourself to avoid coming off as a crank, or someone with some gaping holes in their ability to reason.
But if you are someone who thinks about politics and policy, there's nothing like hashing those ideas out with others at work. Some of the most enjoyable and challenging political discussions I've had have come up this way. Why? Because in the workplace, you're more likely to run across smart people who are approaching these problems from a different perspective (as opposed to solving the world's problems for the umpteenth time with your like-minded college friends).
What's more, as our public political discourse has become more polarized, it's important that people call out the insanity. So to be clear: I don't consider the question of whether the Treasury needs to raise more revenue to be a political one. Rather, it's a self-evident proposition. Revenues are running at a level of GDP (15%) we haven't seen in 60 years. This low level of revenue is supporting a much greater swath of services than existed in the 1950's. While it is an equally self-evident proposition that entitlement spending needs to be cut, there's simply no way our modern industrial democracy can function the way Americans expect it to on a budget of 15% GDP. The political questions include how much revenue needs to be raised (and in what ratio to cuts in spending), in what form (higher taxes for the wealthy, comprehensive tax reform, etc.), and what the ultimate GDP target should look like (history and economics suggest 18-21%).
The grown-ups in the room know this and are asking these questions. There's a lot of work to be done to figure out what the ratio of revenue to cuts should be. My view is that it should be about a 1-2 or 1-3 ratio, but others I respect have suggested we could go as high as a 1-6 ratio.
So it was disappointing to see that every GOP candidate, when asked at last week's debate if they would support raising revenues at a 1-10 ratio of cuts, said they would not. That's not reality. It's not governing like an adult. We need to have a real discussion about how to change our tax code, raise more revenue, and make some fundamental changes (and cuts) to entitlement programs.
And there's no reason to rule out the workplace in having that discussion.
Sunday, August 07, 2011
Negotiating with Madmen
Very few deals are truly "take it or leave it." And those that are require order-takers, not deal negotiators.
But every now and then, your counterparty to a negotiation will take this nutty "my way or the highway" position. Either because they misperceive their leverage, figure there's no cost in asking for the moon, or are just plain bonkers, they'll refuse to engage in the process of compromise that lies at the heart of every successful deal.
This isn't usually a very effective negotiating tactic. Experienced people will simply take the "highway" option, pack up and walk from the negotiation. And if you didn't really mean to give the ultimatum, and have to go crawling back to get talks going again, well . . . it's pretty obvious what that does to your negotiating leverage.
In order to do so, you've got to have an alternative - another competing deal, or a willingness to simply let a bad deal go by.
And this is what bothered me so much about the "debt limit deal" worked out between the White House and Congress. Obama assumed he was dealing with responsible counterparties, when he reality he had loonies on the other side of the table. Now, maybe the GOP wasn't really ready to let the US slip into default, but they certainly gave the impression of that - and in economic matters, impressions of what a government is capable of doing matter, a lot.
The first "my way or the highway" ultimatum was the GOP insistence that no deal for deficit reduction would involve increasing revenues. This should have been met with a response along the lines of "look - if you guys aren't going to take the business of governing seriously, these negotiations are over. I'm just going to ignore the debt limit and get back to work."
Messaging like that would have sparked outrage on the right of course, but it's a valid position both from a policy perspective (the debt limit conflicts with laws authorizing expenditures) and a strategic one (forcing the Republicans to choose between negotiating in good faith and going to court to force the US into default). But most importantly, it would have clarified the issues and let us know whether a meaningful deal could really be had.
Obama may have calculated that the threat of default was enough to restrain the right, and he may been correct, to a point. The problem is, all he could wring out with that weak piece of leverage was a face-saving mess of a deal that does little to address what's wrong with our economy. And we got it for the cost of undermining confidence in the United States.
It's an object lesson in the merits of sharpening the edges of a deal early on. But to do so, you've got to be willing to walk when the other side starts talking crazy.
But every now and then, your counterparty to a negotiation will take this nutty "my way or the highway" position. Either because they misperceive their leverage, figure there's no cost in asking for the moon, or are just plain bonkers, they'll refuse to engage in the process of compromise that lies at the heart of every successful deal.
This isn't usually a very effective negotiating tactic. Experienced people will simply take the "highway" option, pack up and walk from the negotiation. And if you didn't really mean to give the ultimatum, and have to go crawling back to get talks going again, well . . . it's pretty obvious what that does to your negotiating leverage.
In order to do so, you've got to have an alternative - another competing deal, or a willingness to simply let a bad deal go by.
And this is what bothered me so much about the "debt limit deal" worked out between the White House and Congress. Obama assumed he was dealing with responsible counterparties, when he reality he had loonies on the other side of the table. Now, maybe the GOP wasn't really ready to let the US slip into default, but they certainly gave the impression of that - and in economic matters, impressions of what a government is capable of doing matter, a lot.
The first "my way or the highway" ultimatum was the GOP insistence that no deal for deficit reduction would involve increasing revenues. This should have been met with a response along the lines of "look - if you guys aren't going to take the business of governing seriously, these negotiations are over. I'm just going to ignore the debt limit and get back to work."
Messaging like that would have sparked outrage on the right of course, but it's a valid position both from a policy perspective (the debt limit conflicts with laws authorizing expenditures) and a strategic one (forcing the Republicans to choose between negotiating in good faith and going to court to force the US into default). But most importantly, it would have clarified the issues and let us know whether a meaningful deal could really be had.
Obama may have calculated that the threat of default was enough to restrain the right, and he may been correct, to a point. The problem is, all he could wring out with that weak piece of leverage was a face-saving mess of a deal that does little to address what's wrong with our economy. And we got it for the cost of undermining confidence in the United States.
It's an object lesson in the merits of sharpening the edges of a deal early on. But to do so, you've got to be willing to walk when the other side starts talking crazy.
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