Category: Business Culture

The Core of American Capitalism

Human interaction is an overlooked part of capitalism defined

In the News

I see where Warner Bros. Discovery is giving the Paramount offer a second look at being acquired.  Paramount initiated this acquisition pursuit way back in September, 2025.  It has gotten much media attention, in the national news outlets as well as the business news.

If someone was not a student of economics and relied on the news media for his or her information, you may get the impression that this acquisition, and other big ones that get media attention, are the center of our economic system.  In addition to this acquisition, there is also the constant chatter of how Big Tech is investing umpteen dollars in artificial intelligence.  This sure has had an effect, both positive and negative on the stock market recently. 

Where is this Core?

In my opinion, it started with thousands of men and women throughout the decades who, with some material and financial resources combined with inspiration, went on to create great companies, both large and small,  throughout this country.

I remember reading how both Apple and Microsoft got started in garages.  There is also Walt Disney starting out creating a Mickey Mouse cartoon called “Steamboat Willie.” 

However, since 1980 there have been individuals and companies involved in directions that have shifted much of our economy away from innovation and more about domination.  We have been introduced to such things as investment banks, leveraged buyouts, corporate raiders, hostile takeovers, private equity, private credit, stock buybacks, Pac Man defense, activist investors.  In my opinion they have all immensely deviated from this basic core.

The people involved in these activities are far away, literally and figuratively, from many people found on Main Streets throughout this country.  family and friends may work for local or regional businesses, where upper management has regular face-to-face contact with both employees and customers. 

This personal, human interaction is, in my opinion, where you find the core of our capitalist system.  Laws and tax reform should be in place to help keep businesses independent who want to be independent.  Legislators should give primary attention to small business issues more than corporate campaign contributions. Large corporations are not inherently bad, but the distant relationship between management and employees and customers located hundreds of miles away or across oceans, reduces these people to being mere statistics on paper or a screen.  Decisions can thus be made without the decision makers having any personal interaction with those on the front line.  Decisions based on statistics is important but should also include the personal input from employees and customers.

Final Thoughts

I have written before wondering what is going through the minds of Warner employees with all this acquisition talk.  Customers are also faced with the thought of less entertainment choices and possibly higher costs.  This is high dollar negotiations with huge financial consequences for everyone involved.  Fees and profits are to be earned by some, maybe not all.  Careers may also be on the line.   It is all very important.

It makes for high drama and entertaining news headlines, but has consequences.  Such corporate wheeling and dealing is far removed from what occurs on Main Street America.  Some may call this capitalism, and they may find sources to back that up.  But, in my opinion, this corporate world contributes to the decline in some American’s belief in the capitalist system. 

What do you think?

Tariffs: That Giant Sucking Sound

Use tariffs to put pressure on companies to raise wages of their overseas workers.

The 1992 Presidential debate had three candidates on stage, President George Bush, Democratic challenger Bill Clinton, and independent Ross Perot.  In one debate questions were allowed from the audience.  At the time the Bush administration was negotiating with the leaders of Mexico and Canada with what came known as the North American Free Trade Agreement.  It was signed in 1992 and implemented in 1994.  Mr. Perot was personally asked about how he would keep jobs here in the United States.  He said, “We have got to stop sending jobs overseas.” 

“if you don’t care about anything but making money there will be a giant sucking sound going south.”

Ross Perot

Perot then presented a scenario of a domestic manufacturer facing paying $12-14 /hour, with health care versus the same job in Mexico paying $1 /hour with no benefits.  Click here to watch the clip.

He addressed business owners saying, “if you don’t care about anything but making money there will be a giant sucking sound going south.”

The Social Contract

The Wharton School of Business recently published an article by Stefano Puntoni titled “Outsourcing vs. Offshoring: Why Consumers Push Back on Jobs Sent Abroad.”

In it Puntoni states that employees had traditionally believed firms should support the ‘Social Contract.”

“When a company cuts domestic jobs and moves them overseas, consumers often view it as a betrayal of that norm — even if the move makes business sense on paper.”

He added that employees have a more negative view of layoffs due to offshoring than by consolidation, automation or internal restructuring.

“A U.S.-based firm laying off workers in Illinois and opening a facility in Vietnam will likely face more reputational fallout than a Swiss multinational doing the same — even if both decisions are rooted in the same logic of cost control.”

Analysis

Companies have closed shops here and located overseas primarily for one reason: cheap labor. Throughout the decades companies have sought out ways to reduce labor costs.

President Trump has stated his tariffs are in place mainly to pressure companies to relocate to the United States.  So far I have not read of any announcement from Apple or any other manufacturer planning to do this.  Have you? 

In addition, I have read of American companies with domestic operations being hurt by tariffs because parts or supplies coming from overseas.

Solution

What should be done is what Mr. Perot referenced in the 1992 debate:  raise the wages of overseas employees so they are at or closer to parity with American wages.  This also includes benefits.  Use tariffs just to put pressure on companies to improve the wages of their overseas workers.  Do not use the fact that they are technically employed by someone else there as a cover for not doing it.

This is especially with American companies with operations in China.  China is a communist country.  It is technically a worker’s state with doing what is best for the working class and peasants.  Where are the independent unions? What is a communist country doing with millionaires?  Whatever happened to the Marxist wing of the Chinese Communist Party?   Seems hypocritical, doesn’t it?  But these are questions to deal with another day.

SKYDANCE-PARAMOUNT Merger – More than Just News

A chess match with big players and high stakes, but employees may suffer.

The proposed acquisition between Skydance and National Amusements Inc., the parent company of Paramount, is a boardroom chess match with multiple players and multiple outcomes.

Paramount is owned by the parent company National Amusement, of which Sheri Redstone owns a majority percentage of voting stock.  They operate such networks as BET, MTV, Nickelodeon and Paramount Films.  It is also the parent of the CBS television network, which includes CBS News.  Skydance was founded in 2010 by David Ellison.  Its claims to fame have been producing “Top Gun: Maverick” and “Mission Impossible—Ghost Protocol.”

THE DEAL

According to Cord Cutters website, here are the details of the deal:

The Skydance-Paramount deal, with an enterprise value pegged at $28 billion, promises a major shakeup in the media landscape. Skydance Media, LLC, valued at $4.75 billion in the merger, brings its production heft—think Mission: Impossible—to Paramount’s storied assets, including CBS and the Paramount film studio. National Amusements Inc. (NAI) shareholders, led by Redstone, will pocket $1.75 billion plus the assumption of NAI’s $650 million debt, totaling a $2.4 billion enterprise value. Paramount’s Class B common shareholders are set to receive $15 per share. Funding comes largely from the Ellison family—Oracle founder Larry Ellison is contributing $6 billion—alongside $2 billion from RedBird Capital Partners. An October filing clarified that Skydance CEO David Ellison, not Larry, will hold 100% of the family’s voting interests in the merged entity.

This merger was first proposed in 2024.  Talks originated, then were apparently cancelled by National Amusements, Inc. They resumed shortly thereafter.  By July, 2024 the current deal was presented. 

ROADBLOCKS

There have been several hurdles to overcome.  In February 2025, Paramount Global and Skydance Media, LLC, received approval from the Securities and Exchange Commission.  The deal soon after received approval from the European Commission, saying it presented “no significant competition concerns within the European market.”

It also needs approval from the U.S. Federal Communications Commission, which is still in play.  Here is where it gets interesting.  The FCC is currently headed by Brendan Carr, a recent Trump employee.  Trump has been pressuring acquiring companies to back off/do away with Diversity, Equity and Inclusion (DEI) programs.  Paramount recently announced they were doing just that.  Mr. Trump had also filed a $20 Billion lawsuit against CBS News, claiming they edited an interview with Vice President Kamala Harris he claims was biased towards her and from him. 

To add to the drama, Bill Owens, Executive Producer of 60 Minutes abruptly resigned last week.  In The Last Minute segment of the April 27 broadcast of 60 Minutes, host Scott Pelley addressed his resignation.  Mr. Pelley summed up his message by saying, “Bill felt he lost the independence that honest journalism requires.”  There has been consolidation in the news media, along with the entertainment industry and the publishing industry.  This consolidation will be addressed in a later article.

ANALYSIS

Consolidation in the entertainment industry is not as “crucial” as it is, say, with health care, insurance, groceries, housing.  Indeed, there is competition with such companies as Netflix, Disney, Apple, Amazon, as well as network television, movies, theatre, concerts.  However, what all companies involved in consolidation have in common is that there are both employees and customers whose livelihood is impacted, in different ways.  Company working culture may significantly change for the worse.  Customers may be faced with poor/indifferent customer service or continually rising prices. 

SOLUTIONS

The proposed acquisition between Skydance and National Amusements Inc., the parent company of Paramount, is a boardroom chess match with multiple players and multiple outcomes.

Paramount seeks a buyer because it is hemorrhaging money, mainly due to cable cutters who are now streamers.  They were slow to adjust to changing market conditions.  They made some strategic mistakes.  If Paramount is sold, Shari Redstone will come out well, as do some owners in the aftermath of blunders.   If it is finally approved, the big continue to get bigger—in this case it would be Skydance Media, LLC.  If it fails, National Amusements Inc. may have to sell off assets or face bankruptcy sometime down the road. 

With all the drama, this would make for a good movie, wouldn’t it?  I doubt if people who lost their jobs or faced a negative company culture would ever see it.  What do you think?