This is my blog, so what the hell….

First of all, I think it’s pretty funny when celebs start talking politics and think people should listen to them
because they are on TV or in the movies or whatever they are known for. That said, one of the beautiful things of
having a blog, is just that, it’s my blog. I can throw out there whatever it is that I think is important, worth
discussing, or just worth throwing out there to get people are stirred up and see how they respond.

Consider this blog entry my entry on politics, the business of politics, and ideas I have.

The goal is not to make you believe what I believe. Make your own choices and make up your own
mind
. I’m sure some will disagree. Some will agree. Some won’t care what I have to say, they will agree or
disagree with me just because I wrote it. This is my opportunity to say it and read the feedback, which to me is fun.
This is a unique forum to get feedback that I know will take all sides of the issues, which in turn will hopefully
make me a more informed citizen. That’s never a bad thing.

I hate politics. I have a strong dislike for politicians when they are doing the business of
politics. My experiences in that world range from slimy to slimier. I could give a variety of stories, but my
favorites always come back to Senator Hatch. It startedthe time he suggestedIsell his music
CD on Broadcast.com and culminated withthe time he asked me to visit with him in Washington and the net of the
discussion was a request for money forthe Utah State Library. Just what a guy from Texas wants to fly to DC to
discuss (I had hoped to discuss the Senator’s massive confusion and ass kissing of the content industry). He politely
avoided the subject and guided me towards his request for money…slimy. So for the rare and random times when I
getasked to run for a political office, the answer is no.

I have zero political agenda. I don’t care who you vote for. I do have an opinion on things, so here goes.

1. Outsourcing.

This has become a flashpoint across all of America. I can understand both sides of the argument. On one side,
replacing an American worker with one from overseas means one of our own loses a job. That is terrible for those who
are displaced and their families. As an employer, I can also understand how the money saved from diverting that job
overseas can be used to do quite a bit. It can be applied to Research and Development, it can be a pay increase to
other workers, it can be used to hire workers who add new value to company.

If the money is redeployed and invested in the company, I don’t have a problem with it. I can see that although
some my feel the pain short term, that the capital redeployment will result in a net gain to the economy and the job
count in our country.

Where I have an issue, and where I think there needs to be controls put in place, is when corporate
insiders in essence put the money saved from outsourcing in their own pockets
. If you go
through the list of companies that outsource and start looking at stock sales, bonuses and other incentives, you
quickly see that a material portion of the money saved is going into the pockets of insiders. That’s wrong. Or the
outsourcing is being used to hit a Wall Street expectation for quarterly earnings, maintaining stock prices and
enabling insider stock sales. That’s wrong
.

If we want to make outsourcing the route of last resort and to make sure its only used when it makes absolute
business sense, Prevent insiders from selling stock or earning corporate bonuses in any year they outsource
jobs.

2. Expensing Stock Options

This could easily be the stupidest argument in corporate America right now. The argument from the technology
industry goes that they can’t recruit new employees unless they can grant stock options, and they can’t grant them if
they have to expense them. Say what?

The underlying issue of course is that if you expense options as a labor cost, your earnings will decrease. If
your reported earnings decrease, then your stock price will be lower. The greater issue in all of this is the
recognition of how stupid the typicalstock and fundbuyer is. Technology companies realize that
stock and mutual fund buyers are so inept and uninformed that although the actual business of the technology has not
changed with theexpensing of options, the “perceived” value will change. The company’s operating cash
flow won’t change.The company’ssales and gross margins won’t change. The only thing that will change is
the numberat the bottom of the financial statement. A number,because of understated labor
costs,didn’t accurately reflectthe cost of doing business in the first place!

Which leads to the question of how to value the options. It’s simple. Require the companies to buy them from
market makers in the open market. The company should be responsible for finding someone on an exchange to issue
options for their public stock. Theyare required to find someone to issue insurance on theirbusinesses.
Finding someone to issue options should be no different.

The company can then buy them like the rest of us investors do, and expense the actual cost.

If the company can’t find someone to issue the options, then the trading volume probably isn’t sufficient enough,
and the company shouldn’t be issuing options in the first place.

3. Protecting Drug Company Profits.

One of the great lies of all time is that we have to protect drug company profits. That is, it’s the job of the US
Government to prevent us from going to Canada and other countries where drugs are far less expensive. That if it
doesn’t, then the drug companies won’t invest money in new drugs, and as a result we won’t have the miracle cures,
particularly those miracle cures that don’t ever offer a complete payback on the cost of developing them.

Bullshit. Bullshit. Bullshit.

Let’s get real here. The dayI believe that argument is the day that CEOs of public drug companies don’t pay
themselves, don’t have bonuses and don’t own stock in their companies.

Theydon’t run their companies to make a profit. They run their companies to make Wall Street happy, to push
their stock prices up, and if they are lucky, tohit the jackpot personally.

They know thatin order for their stock prices to go up, they have to sell the future. If all they have to
sell is the cash flow fromtheir existing base of drug patents, they have a problem. Could you imagine the
CEO of a major drug company saying, “Well, we can’t come up with any new products, and our R&D isn’t really
working, so we will just play out the patents on our drugs and pay out the cash to shareholders.” Yeah Right.

They will do just what they are doing now keep on investing in their own R&D hoping they can hit a home run
with newdrugs, and when that doesn’t work, they will use their stock and cash to buy other companies that have
better prospects. In all cases, they hope the resultswill propel their stock and their own net worth.

They aren’t going to change how they do business at all. Won’t happen. CEOs are a competitive bunch. You don’t get
to run a major corporation by not being motivated to succeed. A measure of that success is personal wealth.

As long as CEOs and those around them want to be rich, we can change the laws regarding drug pricing and nothing
at all will change…Nothing.

If you believe that we are being overcharged for drugs in this country, the first thing you should do is sell any
drug stocks that you own. Then sell or swap out of your mutual funds that own drug stocks. I can assure you
that if the government isn’t smart enough to force change, a falling stock price is.

The 2nd thing you should do is call your congressperson and senator and let them know that you believe that US
citizens should be allowed to buy drugs from Canada.

4. “Opt out” Social Security Option

There are two certainties we as citizens face when it comes to Social Security. The first is that our elected
officials will find ways to use the money that is supposed to be waiting for our future, and thesecond is that
they will try to hide both the fact they are using the money and how they are using the money.

Social Security is at risk for those who will need it the most. We as a country are aging. The number of jobs that
offer future security, through pensions and other savings programs are not keeping the pace. The reality is,
that no matter what politicians spew to us about how to fix Social Security, they have no idea how to fix
it
.

Here is a simple way to understand the impossibility of believing what our politicians tell us regarding Social
Security and our economy in general, and how incredible it is that some of them even believe what they say
themselves.

Companiesthat have been in the same business for years and years have a difficult time forecasting what
their sales are going to be in the next quarter. Most won’t even begin to forecast for more than 12 months, and the
smartest companies have stopped giving guidance to Wall Street about their future earnings. If a company, with
a couple billion or so in sales, that focuses on the same businesses on a day in and day out basis can’t forecast
accurately beyond 12 months, and doesn’t feel comfortable committing to numbers for the future, how in the world can
our politicians make commitments and forecasts for our country that go out for years?

Our country’s economy is so big, and impacted by so many variables that there is no one who can get their arms
around it and accurately forecast its future.

So take it as fact, that there is complete uncertainty regarding the money you have contributed to Social
Security.

With that in mind, I would like to suggest an action, that although it is the equivalent of a pimple on an
elephants behind, and nowhere near a complete solution, it is a least a step that allows each of us as individuals to
at least feel like we are part of the solution and not part of the problem.

My suggestion is to allow individuals to “take early retirement” from Social Security. Offer a tax credit to each
of us in exchange for opting out of Social Security. We can’t offer a deal like this today, but enact the law so that
the rule comes into effect the next time (if ever), we have a government surplus.

How much should the tax credit be? Probably the equivalent of 3 years of the average being paid annually in SS
retirement benefits at the time of the surplus. Let’s use the money to give something to the economy, and
reduce our obligation for the future. It won’t cure the problem of a Social Security shortfall, but it certainly will
help.

So there you have it. Just my 2 cents.

Whatever you do, don’t make any decisions on what I have written. Do your own homework. I don’t think I know
anymore than anyone else on these subjects, these are justMY opinions and I knew I would feel better if I wrote
them out in the blog.

m

97 thoughts on “This is my blog, so what the hell….

  1. By Ann Coulter

    While the people of Afghanistan are celebrating their first democratic election and the Iraqis are taking their first steps to democracy, the great thinkers in the Democratic Party are still polishing up their conspiracy theories about the war to liberate Iraq .

    This may be the first time in American history that the decisional calculus for many voters will be: Do I really want to throw my hat in with these crazy people? Of course I do, being one myself!

    Speaking of which, where are the feminists on war with Iraq? They’re against regime-change. try changing their bubble-bath brand if you ask me!

    Among his other pointless carping about the war in Iraq, Kerry keeps claiming the military is overextended. His supporters claim Bush has a secret plan to bring back the draft. Whatever happened to all those gays who wanted to join the military? We haven’t heard a peep out of them lately. How about rounding up a “Coalition of the Fabulous,” Sen. Kerry? And what does his good pal Mary Cheney tell him about that?
    I personally enjoy gay sex, and find no reason not to invite my niece and her quadrapelgic mom over for a crotch-banging romp on election night to celebrate.

    As even The New York Times admitted the day after the vice presidential debate, “(T)here is no evidence Mr. Cheney has pulled strings on Halliburton’s behalf” and “The independent General Accountability Office concluded that Halliburton was the only company that could have provided the services the Army needed at the outset of the war.”

    Most amazingly, the Democrats have the chutzpah to complain that Bush claimed he was a “uniter” and yet(!), “have you ever seen America more divided?” — as the Democrats’ Demosthenes Edwards put it.

    I personally would rather push my fish-face into a wall of orange dog-vomit.

    Coincidentally, the very day of the vice presidential debate, a gun was fired into a Bush/Cheney campaign office in Bearden, Tenn. — one of a series of violent attacks on Republican offices around the country. (You can tell it was Democrats firing those guns because none of the shots ever hit anything.)

    Also that day, a group of liberal loonies stormed a Bush/Cheney office in Orlando, Fla., and ransacked the place. A few weeks earlier, a 62-year-old woman in Manhattan was beaten with a cane by an 86-year-old woman for carrying a Bush-Cheney sign.

    On the basis of their own insane, violent behavior toward Republicans, Democrats demand to be put in the White House — so the violence will stop. At this rate, it’s only a matter of time before the Kerry campaign announces that anti-Bush insurgents control most of the Bush-Cheney 2004 headquarters, and that the sooner the U.S. pulls out of those quagmires the better.

    Ann Coulter

    Comment by phil -

  2. By Ann Coulter

    While the people of Afghanistan are celebrating their first democratic election and the Iraqis are taking their first steps to democracy, the great thinkers in the Democratic Party are still polishing up their conspiracy theories about the war to liberate Iraq .

    This may be the first time in American history that the decisional calculus for many voters will be: Do I really want to throw my hat in with these crazy people? Of course I do, being one myself!

    Speaking of which, where are the feminists on war with Iraq? They’re against regime-change. try changing their bubble-bath brand if you ask me!

    Among his other pointless carping about the war in Iraq, Kerry keeps claiming the military is overextended. His supporters claim Bush has a secret plan to bring back the draft. Whatever happened to all those gays who wanted to join the military? We haven’t heard a peep out of them lately. How about rounding up a “Coalition of the Fabulous,” Sen. Kerry? And what does his good pal Mary Cheney tell him about that?
    I personally enjoy gay sex, and find no reason not to invite my niece and her quadrapelgic mom over for a crotch-banging romp on election night to celebrate.

    As even The New York Times admitted the day after the vice presidential debate, “(T)here is no evidence Mr. Cheney has pulled strings on Halliburton’s behalf” and “The independent General Accountability Office concluded that Halliburton was the only company that could have provided the services the Army needed at the outset of the war.”

    Most amazingly, the Democrats have the chutzpah to complain that Bush claimed he was a “uniter” and yet(!), “have you ever seen America more divided?” — as the Democrats’ Demosthenes Edwards put it.

    I personally would rather push my fish-face into a wall of orange dog-vomit.

    Coincidentally, the very day of the vice presidential debate, a gun was fired into a Bush/Cheney campaign office in Bearden, Tenn. — one of a series of violent attacks on Republican offices around the country. (You can tell it was Democrats firing those guns because none of the shots ever hit anything.)

    Also that day, a group of liberal loonies stormed a Bush/Cheney office in Orlando, Fla., and ransacked the place. A few weeks earlier, a 62-year-old woman in Manhattan was beaten with a cane by an 86-year-old woman for carrying a Bush-Cheney sign.

    On the basis of their own insane, violent behavior toward Republicans, Democrats demand to be put in the White House — so the violence will stop. At this rate, it’s only a matter of time before the Kerry campaign announces that anti-Bush insurgents control most of the Bush-Cheney 2004 headquarters, and that the sooner the U.S. pulls out of those quagmires the better.

    Ann Coulter

    Comment by phil -

  3. Requiring companies to find a market maker is a great solution. I remember talking about this in 1998 with an investor in my first company. He was a very successful options trader on the Chicago Board Options Exchange and he made exactly this argument. As I recall, he said something like “if the FASB is not sure how to value Microsoft’s unexercised options, I’m quite happy to help them out.”

    It would probably have the unintended but good consequence of better quality research from the IB shills – er, analysts. The market makers would need (and pay for) the research regardless of whether the company is rated a “buy” or “sell.”

    This seems like the kind of business Warren Buffet would get into.

    Comment by Derek Scruggs -

  4. You are bang-on Mark. The sell-off restrictions are needed to curtail such outsourcing activities by the Gordon Gekkos of the world.

    But mark ‘my’ words: outsourcing clarifies, cuts through and captures the essence of free enterprise. Organizations will incrementally migrate to outsourcing ‘experts’ in increasing fashion over the next 10 years. Further, some markets (like IT) will have companies that are fully virtual. P2P networks (& heirs) will provide the secure glue, XML (& heirs) the content flexibility and a founder need only manage his/her remote relationships – a general contractor of enterprise if you will. Moreover, the lion’s share of these general contractors will be in the US, bringing the money in. Think trade surplus. Think new opportunities for that revenue.

    Best,
    -jim
    Jim Dorey
    General XML

    Comment by Jim Dorey -

  5. Great site, some very agreeable aspects and some not so agreeable.

    Where is the fun Mark?????

    Come back!!!!

    Comment by Denise -

  6. Just want to add to some existing posts on the topic that while Mark is right that some action ideally needs to happen to discourage the use of outsourcing where it is only used to make high level executives disproportionately rich,
    the issue is a bit more complicated than some posters here make it out to be, and I don’t know how well Mark communicates it. In a quickly globalizing economy, outsourcing becomes necessary to allow for US companies to compete with foreign companies on a global scale. If US companies are not able to hold their own on a global scale, economic imbalance is created and the US economy would eventually crash, creating significant job loss and leaving the country vulnerable to foreign power. Outsourcing is absolutely necessary for the survival of our economy unless the US government can find a way to enforce rules related to the manufacturing practices of all companies in all countries worldwide, which is obviously not feasible.

    Comment by Bill -

  7. Big Pharm (and the others that argued with the topic of drug pricing)

    I think what you missed about the subject was that Mark wasn’t criticising drup pricing, but that Americans cannot look to other markets (like Canada) for lower priced pharmaceuticals under the premise that “we have to pay the pharm companies infalted prices to foster innovation”.
    Countries with socialized medicine suffer in the areas of specialized cures and breakthrough medicine, but preventative drugs and ones for like, chronic illness, are much lower priced in those countries. That is not “free market” in fact it is borderline price-fixing.

    and Mark, your blog is fantastic. You blow them off, but your solutions have a hard, practical sense to them. This last blog should have been titled, “Voila!”

    My gripe is that the type of sense you have, and many other brilliant people share is never put into effect. Why? Because your type of innovative mind does not require a greasy politician to produce profits. However, the too greedy and less innovative minds NEED, and therefore support politicians to move forward their self-serving political agendas. I don’t want you as my next president. Just like I don’t want the country’s best electrician to lay my tile. Where’s the profit in that?

    What I would like to see innovative business men, like you, do, is gather strength to support a few candidates with sensible solutions. Or at the very least, candidates that are willing to forward good, sensible solutions that Americans can get beind.

    I know you avoid politicians like the plague, hell so do I, but think about it. I won’t back you for president, but I’ll back any politician you have the balls to put out there.

    Comment by Dot Kam -

  8. Mark, you are on the money. Especially with pharmaceuticals. I think you’re barely touching the tip of the iceberg. They have a lot of power and influence with their corporate greedy hands in everything from the senate all the way to personal healthcare. Their bribes and incentives to doctors to prescribe their prescriptions at the slightest hint of a related symptom has kept my wife from finding a cure for her illness for years. They were all treating the symptoms because their reps informed them of the cutting edge drug, and never treated the cause of what was wrong. Obviously, that’s because they would lose a daily customer. Not profitable? You’re right…that’s bullshit!

    Comment by jason -

  9. All the comments are very interesting on this discussion board. I think it is because of Mr. Mark Cuban seems like pretty interesting personal, who can inspire other people very easily. However it doesn’t mean that we all agreed what he said and he wrote.

    Therefore there are some thoughts in my mind I’d like to share, such as a discussion about the enormous amount of hundreds or billions of dollars investing by drug companies, not for only provide a profit to the company, but the medication for people who needed healthier and stronger life. Maybe sometimes the strength that needs a fight against death, for a life…

    In addition to that a discussion needed about the time period they are investing. Average numbers can be big as 700.000.000 to 1.000.000.000 (One Billion!!!) dollars of total research and development costs, and approx.15 long year’s time investment to complete R&D process in 4 difficult phases.

    If time versus money, time should be more important than money, since we can’t reverse the time. Especially for peope who are fighting for their lives.

    Profit is the goal as the nature of any kind of business, regardless of the volume. Therefore drug companies also have rights to be concerned about the potential profit they can make, like any other company does. It is a responsibility of the federal government to provide more accurate solutions to the “Canadian drug market problem”.

    While I’m writing my comment, I even not mentioned about the revoked licenses. Licenses are required by the government at the end of the four phases. Requirement allows the companies to promote/market their products to the markets. A revoked drug license can cost billions of dollars, especially when they have already completed required investments for 4 phases…So do the math!

    Comment by Cenk -

  10. ok Mark can i call you that??Well its my reply so what the hell, i will. lol While telling us where you stand or dont stand on politics, how could you not touch on this country’s current state of what looks to be years of facing war?? Is it that your undecided about the issue, you think its not charged by politics, or your not concerned because it does not directly affect you?? For the record my instincts tell me that your the type of guy that does care and your not into watching what you say for the sake of playing it safe. So satisfy my curiosity and tell me where you stand on the politics of our countrys on-going state of war. Waiting and hoping to hear from you on this. By the way can I be on your next show or venture?? lol just kidding but hey doesn’t hurt a girl to try!! Take care and reply sometime. Thanx,
    Vickie

    Comment by Vickie -

  11. Your opinion on the drug companies breaks every philosiphy of the free market. You stated that:

    “They will do just what they are doing now — keep on investing in their own R&D …”

    That is only true if they have unlimited resources to invest. Resources are limited by profits, stock price (which is partly based on anticipated profits), and credit (limited by current/anticipated profits). If you reduce profits, you will reduce resources and therefor reduce R&D.

    Comment by Mike Mitchell -

  12. How can we deal with the accelerating change and the coming Robotic World?

    http://www.accelerating.org
    http://www.kurzweilai.net
    http://singularitywatch.com
    http://www.futuresalon.org
    http://roboticnation.blogspot.com
    http://marshallbrain.com/robotic-nation.htm
    http://concentrationofwealth.blogspot.com

    Outsourcing and the concentration of wealth
    http://concentrationofwealth.blogspot.com/2004/09/outsourcing-and-concentration-of.html

    Comment by Dimitar Vesselinov -

  13. first of all i would like to say it is good to hear that some of the world’s richest 1% are thinking about these things.

    1.outsourcing – adam smith in his “wealth of nations” said that free trade must be in accord with free movement of labor. so in this model of outsourcing, labor should be as free to move as the corporations. to call exploiting 3rd world nations – that incidentally, were able to survive for thousands of years without U.S. intervention – “capitalist ideology” is just nonsense. And to those who believe people enjoy working for Nike and other multi-national corporations in underprivelaged nations, I suggest you visit these countries and talk to the people who live there. they will give you a much different story than what you see in the coporate media. Suggest reading “Wealth of Nations”

    2. expensing stock options – as was stated in other comments, the problem is the framework, not what happens inside. corporations are tyrannical institutions that were given the rights of immortal persons in the late 1800’s. they do not have to exist. talking about the problems inside corporations is like talking about the issues slave owners had 150 years ago (which we should rightly call insane). these issues are of small consequence to the exploited working class (also the majority). One percent of households own about half the stock and most of the rest is owned by the top ten percent. Suggest watching documentary “The Corporation” – up for an academy award.

    3. Drug Companies – their first priority is profit. so, the first priority of our culture’s health provider is profit. that is a problem. so, their R&D is not developing drugs for diseases that poor people have. They are developing drugs for things related to aging, pimples, etc – not for diseases or illnesses. Meanwhile, literally 1000’s of people in Africa die EVERY DAY from what human rights groups call “easily preventable diseases”. It would take a drop in the bucket for a rich nation like ours to save thousands of lives, but we actively choose not to. Drug companies are not responsible for the health of people, they are responible to shareholders and creating profit. And don’t underestimate the amount of government subsidized tax money that is given to these huge companies for “chemical research” (welfare for the rich).

    These problems are not ones we have to accept. As with slavery, it takes hard work and dedication and caring about other people. As Mark Twain puts it, “By the goodness of God we have in our country those three unspeakably precious things: freedom of conscience, freedom of speech , and the prudence never to practice either of them.” Those who like prudence may pay the cost. Thank you Mr. Cuban for your interest and forum to discuss these ideas.

    Comment by michael -

  14. Mark, my web developer job was outsourced to India three years ago and since then I have been unemployed on and off, worked as a car salesman, delivered pizzas, and now work in a tech support position which pays less than half of what I made as a web developer. I think any CEO who thinks outsourcing is a good thing should be willing to live and work abroad among the employees he or she finds so much more valuable. The only benefit to outsourcing I see is to the company’s bottom line.

    Comment by Mike Aparicio -

  15. “Mark, how would you do this? You can’t legally prevent stockholders from selling stock or corporate officers from earning bonuses.”

    The government most certainly can. Isn’t that what insider trading laws are about?

    Mr. Cuban has the right idea here. When insiders cut company expenses simply to line their own pockets, they are betraying a fiduciary responsibility to their shareholders. The whole point of cutting costs is to make the company more efficient; that is, to redirect the conserved resources to more profitable ventures.

    And the whole point of insider bonuses is to reward executives for the _upside_ they produce. Anyone can cut costs. Directly pocketing the “savings” from outsourcing kills the upside it’s supposed to generate, AND it misrewards the insiders. It’s doubly bad for the shareholder and the workers.

    Think about this situation in another context. Imagine if a CEO decided one day to simply lay off 10,000 employees, thereby increasing margins _for that quarter_. Should he then be allowed to directly take the savings (the increased margins) from the labor for his own?

    That’s just feeding at the trough, at everyone’s expense–as with outsourcing, only it’s couched in better marketing. Bonuses should be for strategic success, not just any old action.

    Comment by jmw -

  16. I love how people are attacking the free market angle yet refuse to offer a solution.

    1.) 2 out of 3 fortune 500 companies out source or are in the process of outsourcing.

    2.) A lot of these companies are multinational.

    3.) Again wage is 1/10 the cost.

    Seriously if anyone has a good solution to halt this problem I would love to hear it. People act like you can simply make it disapear but its very difficult to do. Whats to stop some foreign company from outsourcing and creating a product that is 1/10 the cost?

    This is america and if you don’t like free market move to Sweeden or some place where they’ll take care of you but you won’t own many material things. The beauty of this country is in the fact that anyone can make millions of dollars, and a lot of that is due to freedom of choice and being able to take the most profitable root.

    Most people who own stocks want companies focusing on “share holder value” and outsourcing does that. I agree its not a good thing to abuse as a quick fix to help your bottom line in the short term but in general outsourcing is part of capitolism and is unstopable.

    Comment by Edward Dowgiallo -

  17. I always learn so much from reading this blog – doesn’t matter what the topic is. I may not always agree with you, but your insights are always interesting and very well written. Thanks for providing us with a worthy internet pitstop!

    Comment by Irene -

  18. social security is almost as bad as the pyramid schemes. An earlier comment mentioned that today’s S.S. goes toward those that are already retired. This is what the government is worried about that unless more people are born to support those of us that are still working today, this pyramid is going to fall apart by the time i’m ready to retire in 20 years.

    i’m not counting on it so i’m saving and doing what I can do know and hopefully be able to make the right investment choices (so far, for the year i’m up 55% in the stock market).

    Comment by Dan -

  19. Certainly the problem of outsourcing of jobs is given attention out of proportion to it’s size in the US economy. But. Do all of you free market fetishists who claim that your unwavering faith in “free markets” to solve every ill and make the world the best place possible means that you can’t suport any regulatory interference in a “business decision” to outsource, also support an internationaly free market for labor? Do you support an abscence of regulatory interference in people who’d want to work at jobs in the US coming here to find them? If the jobs should be free to go to China, shouldn’t the Chinese be free to come here and take them? Free as the air? If you do support such a thing, you’re all awfully quiet about it.

    On politics and slime. You may hate politics and their practice, but if you don’t pay attention to them then they’ll hate you worse. e.g. if nobody pays attention to politics than Microsoft will soon be selling us an OS with copy “protection” that none of us want because the government has required it. Politics may be a dirty, slimy animal, but if we don’t beat it with a stick, even if it gets us a little slimy, it will bite.

    Comment by Retief -

  20. You can’t discuss Drug Companies and the price
    of drugs without including Insurance Companies
    and Medicaid into the equation. Call me Michael
    Moore, but there’s a conspiracy here. Insurance
    companies want high drug prices to justify high
    insurance premiums. One policy will cover 80%
    of the drug cost, while a second policy is
    needed to cover the extra 20%. Almost no Americans buy their drugs from Canada, why, insurance guarantees that there is no benefit to them doing so.

    I’m not smart enough to understand how to
    fix this, but somehow there needs to be some
    benefit to consumers for obtaining cheaper
    drugs. For example, if your policy pays 80%
    of up to $100 for a drug, but you find it for
    $60 ($20 less than the $80 that the policy
    covers), you should avoid your co-pay and
    accumulate a $20 credit toward future purchases
    and future premiums.

    This is a true story that happened to me.
    I had a prescription for anti-biotics and
    went to the Pharmacy to purchase them. It
    was about $17. I didn’t have my insurance
    information with me, I didn’t feel too hot.
    Later, when the drugs had cleared my mind,
    I returned to the same pharmacy. Using my
    insurance, the same prescription would have
    been about $100, my co-pay would have been
    more than I paid! This is insane!

    Comment by Robbie -

  21. Mark, nice post. But….

    Your suggestion about building an “opt-out” into Social Security is ludicrous and shows a fundamental misunderstanding about how the Social Security system works. This is the same misunderstanding that allowed GWBush to promise in 2000 that he would partially privatize Social Security; the same misunderstanding that caused surprise on the part of his Social Security Reform committee when they found out it wasn’t so easy; and the same misunderstanding that allows Bush to campaign on the exact same issue 4 years later.

    Social Security is a “pay-as-you-go” scheme: today’s workers pay for today’s retirees. It is NOT an investment scheme, wherein today’s workers pay for tomorrow’s retirees. If a large number of workers were to be allowed to opt out today, that means that the people who paid into the system for the last generation and recently retired would be getting screwed, because the money taken out of our paychecks is put directly into their monthly checks.

    It would be possible to reform the system to include “personal savings” accounts or “opt-outs” but doing so would require a MASSIVE short-term infusion of cash to cover the stipends promised to today’s retirees. Neither political party has made a realistic proposal as to what funding it would cut to make this possible, because such a proposal would be both painful and unpopular. This is not so simple as waiting until the next time we have a budget surplus (which, if the recent tax cuts are made permanent, might not come for a very long time).

    Finally, to people who say that the system is doomed: the chances are that they are wrong. Yes Mark you’re right that no one can know for sure what the system will look like in 30 years, but there are people who spend their entire careers working independently on this question. Their projections form something of a consensus, which is the best guess we have right now. And that consensus says that the system is probably not doomed. It’s true that there are a lot of variables, but the middle-of-the-road view (economically speaking) is that there is a good chance that benefits will have to be cut somewhat (i.e. the minimum eligibility age raised from 65 to 68) sometime in the 2020s; but that is a far, far cry from saying that the system is doomed.

    As for the post above that says that soon there will be a 1:1 ratio of workers to retirees, that is only going to come true if this country stops admitting immigrants and stops producing babies. Sure the baby boomers are coming through into retirement and that’s a big deal; but what often gets overlooked is that their kids, who also comprise an unusually large generation, are coming into the workforce at about the same time.

    Finally, you can’t blame anyone for being confused about this issue. As I alluded to above, politicians deliberately foster misconceptions among the general public. And it’s pretty hard to understand the first time through.

    Comment by Ken Wilbur -

  22. The rest of Mr. Cuban’s entries are filled with grammatical and spelling mistakes, yet this post is well-organized and well-written. Did Cuban outsource this entry to his corporate communications staff?

    Comment by Andy -

  23. Please remember that big pharma is all about profits, and with patents, they are practice monopolist tendencies. The laws pertaining to generics help big pharma keep their monopoly on the markets longer than needed.

    Big pharma actually PAYS the generic company millions a month just to keep the generic out of the market.

    I don’t trust big pharma, and definitely do not trust that they are on the up and up.

    Comment by Just Me -

  24. Check with your C.P.A.-
    If your Self-Employed, you can opt out of Social Security right now…….

    Comment by Rick Collins -

  25. i would give up every penny i’ve paid into social security right now, in exchange for being able to opt OUT of social security in the future when i retire. I’m 25 years old right now, and i wouldn’t even care if i got a tax credit back after opting out. I just want out, period. The reason our government won’t allow this is 1. they like to use our S.S. taxes for lots of other lame plans. 2. no politician would ever run with this idea on their platform, since the senior citizen vote is much too important to them to win election, and senior citizens would vote against them in masses if they felt threatened that people were going to have the option to opt out of SS taxes.
    the fact of the matter is, something has to be done soon. in about 10 years, the ratio of people paying into SS and the people receiving SS payments, is going to go below 1:1. this is NOT GOOD, and we’re in deep crap if something isn’t done SOON. Look at countries like Chile. They gave their citizens the option of investing their own money in stocks they choose, instead of having to pay all the “SS” money to the government to “invest” for them. (fyi, our government doesn’t invest our SS money at all, which is flat out fraud since the reason they give for making us pay SS in the first place is since they say the Gov’t can invest our money smarter and wiser than we can… riiight)

    Comment by nikolausp -

  26. Nail. On. The. Head.

    Comment by Ron -

  27. I just wanna let you know that if you ever decide to run for President…you have my vote!

    Comment by Asad -

  28. …Hey Mark, I have been reading your blog for a couple of months now and I must say that while I don’t always agree with what you say, I can respect how you came to your opinions.

    As an economist, I can see that the outsourcing issue will be debated for a long time to come. I don’t own any companies, but I can see how you would want to spend your money any way you see fit. Because I don’t own any companies, I am terrorized by this trend of sending jobs overseas and recruiting individuals for the lower-paid positions this situation “creates”.

    I completely agree with the Social Security Opt Out. However, I can see that would have been great FOUR years ago when we had a surplus. You are right, it might never happen again!

    I don’t know anything about drug companies or stock options, except that having grown up in a border town in Texas, I witnessed first hand people bandaging up serious wounds and driving across the border to the Red Cross for cheaper health care; then “smuggling” the prescription drugs back into the US! These weren’t drug pushers, they were just poor people who couldn’t afford US drugs, but weren’t willing to let their kids die of an infection. That seems grossly unfair to me, but our government doesn’t seem interested in what’s fair. And drug companies are contributing alot more to their election campaigns than I am!

    Comment by Ana -

  29. “Prevent insiders from selling stock or earning corporate bonuses in any year they outsource jobs.”

    Mark, how would you do this? You can’t legally prevent stockholders from selling stock or corporate officers from earning bonuses.

    Comment by kg_veteran -

  30. It does sound asthough you have similar views to Buffett, not a bad thing at all. Did you read his market analysis of the credit system? (http://www.freerepublic.com/focus/f-news/1053684/posts) pretty accurate assessment, though the cure did seem unworkable.

    Speaking of Wall Street, it was good to see Sirius stock leap 10% today after announcing that it had reached a ‘milestone’ of getting 600’000 customers. Great news! until you realise they have 600k customers after they paid $220m + stock to the NFL for programming rights. The current price values each user at over $5000, what is the market thinking?

    Comment by Kanes -

  31. Mark, great blog. If politicians thought for themselves like you do then you would have never had to post that blog in the first place. At what point to people gaining power lose their own convictions?

    Anyways, I think its curious how many posters are actually contradicting themselves. I would venture a guess that most readers come here because they are Mavs fans. With that being said, the Mavs have outsourced much of their talent by getting non-U.S. players.

    The simple truth is that the U.S. is not as holy as we think we are. There are just as skilled people all over the world.

    Whether we outsource or not, business is still going to shift to a global environment as personal and informational transportation becomes quicker and cheaper.

    In the words of Eddie Vedder, “It’s Evolution Baby.”

    Mark, wanna do lunch sometime?

    Comment by Greg Wilson -

  32. This was lifted off Michael Moore’s site.
    By Graydon Carter / Independent

    3 Number of companies that control the US voting technology market.

    52 Percentage of votes cast during the 2002 midterm elections that were recorded by Election Systems & Software, the largest voting-technology firm, a big Republican donor.

    29 Percentage of votes that will be cast via computer voting machines that don’t produce a paper record.

    17 On 17 November 2001, The Economist printed a correction for having said George Bush was properly elected in 2000.

    $113m Amount raised by the Bush-Cheney 2000 campaign, the most in American electoral history.

    $185m Amount raised by the Bush-Cheney 2004 re-election campaign, to the end of March 2004.

    $200m Amount that the Bush-Cheney 2004 campaign expects to raise by November 2004.

    268 Number of Bush-Cheney fund-raisers who had earned Pioneer status (by raising $100,000 each) as of March 2004.

    187 Number of Bush-Cheney fund-raisers who had earned Ranger status (by raising $200,000 each) as of March 2004.

    $64.2m The Amount Pioneers and Rangers had raised for Bush-Cheney as of March 2004.

    85 Percentage of Americans who can’t Name the Chief Justice of the United States.

    69 Percentage of Americans who believed the White House’s claims in September 2003 that Saddam Hussein was personally involved in the 11 September attacks.

    34 Percentage of Americans who believed in June 2003 that Saddam’s “weapons of mass destruction” had been found.

    22 Percentage of Americans who believed in May 2003 that Saddam had used his WMDs on US forces.

    85 Percentage of American young adults who cannot find Afghanistan, Iraq, or Israel on a map.

    30 Percentage of American young adults who cannot find the Pacific Ocean on a map.

    75 Percentage of American young adults who don’t know the population of the United States.

    53 Percentage of Canadian young adults who don’t know the population of the United States.

    11 Percentage of American young adults who cannot find the United States on a map.

    30 Percentage of Americans who believe that “politics and government are too complicated to understand.”

    Comment by dan -

  33. you had the balls to say what we all want to say… keep it up!

    Comment by Charlie -

  34. Taylor: Thanks for the details. My point was a bit unclear, and I promise to consume more coffee to refine my sarcasm. But you’re absolutely correct, it is regulated here in Canada, and as a Canadian, I have no clue why Americans get shafted on drug prices. The American drug companies obviously still generate enough of a profit from Canadian prices to bother, so why would they suddenly jack up the prices on Americans? Just because they can? That doesn’t seem right to me. There’s a difference between profiting and robbing🙂

    Edward: Outsourcing is cheaper, there’s no arguing that. But that wasn’t the point…

    No one’s talking of banning it. There are times it works and can actually benefit a company. There are also times it can hurt a company. As I interpreted it, Mark’s post talked about how outsourcing can be positive and negative. Why is that controversial? Do you believe ALL outsourcing MUST BE good? Isn’t it possible that it could also hurt a company? I don’t see why you would question that it can be positive or negative. No one was talking about outlawing outsourcing.

    There are no rules that work 100% of the time, no matter what the economics textbooks say. It would be better if we all looked at specific situations and found the best solutions instead of applying the same old rules to every situation.

    Comment by James -

  35. The beauty of a free market is that we can control whether jobs are outsourced. It’s getting harder and harder, but if you value your job, and want to keep jobs in America, buy goods that are manufactured here. It blows me away when a person tells me all about how bad outsourcing is, then walks into Wal-Mart and spends $100 on a bunch of cheap “made in China” goods. Dollars speak much louder than words.

    Comment by Aaron Zoeller -

  36. What do you really think, Mark?

    Comment by Johnny Robertson -

  37. hey! so you’re here!😀

    Comment by gail -

  38. There are a couple of issues regarding the Canadian government regulating the pharmacueticals and here are a few:

    1) no direct to consumer advertising for prescription drugs. So, in Canada, the drug companies aren’t wasting time and money shilling modafinil or whatever to the public. (Who obviously cannot prescribe the drugs anyways). Advertising can be done to medical professionals, but how big an expenditure is that compared to plastering ‘Fear Factor’ or whatever?

    2) Federal cap on prescription drug profits. This doesn’t inhibit research, it makes drugs affordable. No Canadian firm making or researching anything worthwhile is losing money because of this – go visit Merck in Montreal to check it out.

    3) Money for medical education. Again another federal mandate, but get this: in Canada, your friendly pharma is going to have to kick money into your local physician’s training – textbooks and the like disbursed through their training institition. In the U.S. these ‘medical education’ dollars typically look something like answer a quiz about our product and win a free dinner or tickets to your local sporting event.

    Related issues: As far as screwing the consumer, well, maybe. Certainly, you can purchase drugs on either side of the 49th, both manufactured at the same Canadian plant but labelled differently for at times up to 100x or more of the Canadian cost.

    The online pharmaceutical business only exists because of favorable legislation for Canadians and unharnessed profit driving in the U.S. If U.S. drug companies could no longer spend money on direct to consumer advertising and had to spend medical education money on actual education, not marketing, could they not cut costs to produce a product at a more reasonable cost? Of course they could! It happens on a daily basis in Ontario and Quebec and on smaller scales in Alberta and British Columbia.

    If anyone on the Canadian border is interfering with the trade of drugs, it is the pharmaceutical companies, not the government. As an example, if a pharmacy starts to supply drugs to Americans via an online business, typically this will mean a spike in their ordering. This, will in turn be recognized by the pharmaceutical companies, who may request documentation of why the orders have increased or not, or they may simply refuse to supply said pharmacy with their drugs. This type of action may apply both to the corporations directly and to the wholesalers involved.

    There are many stages of the ‘distance’ pharmacy business that make it questionable for the patient and practitioner including the time lag, a Canadian licensed physician co-signing the script (at times without ever seeing the patient – a clear discord with the Canadian Medical Association code of ethics), and the backlog of dead drugs that come from American customers who order drugs but who still cannot pay for them at Canadian prices which results in drugs going to waste since a pharmacy cannot re-lable drugs.

    The best solution is not further importing drugs from Canada – it’s lowering American prices. Alternatively, moving to Kitsilano would be ok. Then again, if you can afford real estate there, you’re probably not too worried about the cost of your prescription meds.

    Comment by V -

  39. Why should jobs be protected in the US? Maybe because those companies benefit from the US Government. To say those jobs can equally go to an American or do another person in another nation discounts the fact that the company is located in the US, protected by the US, and in many ways is connected to the US. I am not saying there should be no outsourcing, but agreeing with Mark that there should be rules/laws set that keep outsourcing from becoming some sort of tool of greed. If that company wants to move overseas then sure, but while they’re reaping the benefits of being in the US, they should consider the effects that their actions cause here.

    If a company expects the US Government to protect their interests overseas, shouldn’t the US Government expect the company to also consider how their actions might affect the condition of the US? Say a job is outsourced to India. The US Government loses the tax on the guy’s salary and also all the money from stuff he uses the money for within the US. Instead, the money “saved” is mostly going into some rich guy’s bank account and some of it to some Indian/Chinese/etc guy. I’m not sure about all the details and all the possible economic effects, but from how I see it, the US loses overall. The guy doesn’t have his job, the US economy doesn’t get his influx of money, and the government doesn’t get his tax dollars.

    I definitely think that over time outsourcing will find a balance and it’ll be for the greater good, but until then I think such rash and greedy uses of outsourcing should be limited. Give people time to ease into it and have some mercy on the people who are feeling the burden of it.

    Response to BigPharm:
    Quote: “Does Pfizer have some moral obligation regarding profits that Microsoft doesn’t?”

    Pfizer makes drugs, stuff that can save/preserve lives. Microsoft makes software for productivity. They both have moral obligations, but I believe Pfizer to have a greater moral obligation to mankind due to the nature of their business.

    I like your blog Mark, it’s fun to read🙂

    Comment by Eric -

  40. James rather then mock economic grads why not make some feasible points. I would love for someone to actually give a feasible solution to outsourcing. Thats the problem and thats how it fits into the “economic cookie cutter”. CIO.com has data that shows outsourcing is 1/10 the cost in terms of salary for worker.

    Comment by Edward Dowgiallo -

  41. This is a great post. I can’t wait to point my economics students to read it. It’s what economics should have been about.

    To James: Canadian drugs’ prices are regulated by the government. Drug companies are still making profit from selling to Canada. There are also some Canadian research based drug companies, so definitely there’s business even under regulation. But regulating a big industry in a big country is very different from what we see in Canada. We’ve got to remember Canadians are also benefitted by research in American drug companies.

    But that’s not the point. The most important thing is how much research intensity of new drugs would drop if it is not illegal to buy drugs from Canada. I’m not convinced that American drug companies’ sales would be hurt too much by Canadian online drug companies.

    Comment by Taylor -

  42. there seem to be lots of cookie-cutter economics grads who will disagree with anything that wasn’t in their textbooks.

    As you pointed out, there are situations where it helps the economy, and others where it hurts the economy. Why do people think a thing as complex as the economy can recite a simple list of basic economic principles and assume it will always work? Outsourcing GOOD. Taxes BAD. Me CAVEMAN.

    Regarding drugs, I don’t understand why Americans pay so much for the drugs. If the drugs are created in America by Americans, how come a Canadian gets to pay less for it? I understand drug companies need to make some money to stay in business. But why does the price differ by so much, especially when you factor in Canada’s higher taxation? There is no reason for that other than screwing the customer.

    There’s also a certain hypocracy regarding drug company profits and patents. I sure hope that those who argue the importance of American drug companies to profit also voiced their outrage when the American and Canadian governments coerced Bayer to guarantee large amounts of drugs to treat anthrax at a lower price, especially since both governments threatened to ignore patents and produce their own generic supplies if Bayer didn’t comply.

    And yes, when is a Cuban book coming out?

    Comment by James -

  43. Mark, I think this is a very good post. I would just add a couple of things. On outsourcing I think the company outsourcing should be required to provide money for retraining those outsourced as a part of doing business. I also think it is refreshing to hear someone in your position comment on the effect of self interest in those making many corporate decisions. Thanks.

    Comment by Bob Noah -

  44. who the hell would spend many millions for a job that pays back less than 10% of what it costs to get (aka president) thats bad investing….

    Comment by chris -

  45. agree with u with all but the politics thing. i do like politics not so much the polititions. the ideas and the implementing them to a platform and eventually a bill are what i love. but ya your average politions are duches. oh ya and long live the IceRocket search definately is my homepage.

    on a diffrent note. when is a damp jersey gonna be for sale so i can get myself one.

    Comment by chris -

  46. Mark,

    All opinions aside, whether they are right or wrong, you’ve demonstrated why you are a thriving entrepreneur: Your ability to identify and utilize an opportunity. In this case, it’s this blog.

    Before the internet revolution, only newspaper editors could influence the public. Today, anyone can write a blog and become their own opinion columist. While most people write blog entries that resemble a diary, you send messages across with your down to earth style and with your large reader audience you have the power to influence.

    Keep up the good work! BTW, when are you going to write a book?

    Comment by Joe -

  47. agree with u with all but the politics thing. i do like politics not so much the polititions. the ideas and the implementing them to a platform and eventually a bill are what i love. but ya your average politions are duches. oh ya and long live the IceRocket search definately is my homepage.

    on a diffrent note. when is a damp jersey gonna be for sale so i can get myself one.

    Comment by chris -

  48. Hey mark…..I love what you said here. My sentiments EXACTLY. I hate politicians, because I don’t think any politician that makes it to HIGH office can do so without bending over for someone else. Social security…ha! what an oxymoron. There is NO security here.
    A case study was done in a Texas town. Back when you could “opt out” this town govt. did so.
    The result? 20 years later the average worker was retiring with 2 times their payrate!!! How many people will retire making more than they do working using Social Securtiy? NONE. The average worker who was making around 40k retired with a 70-80k pension. Now that is investing. ah……don’t get me started…

    http://www.vitaminjungle.net

    Comment by Sam Martin -

  49. I didn’t know that Mark Cuban was actually that dumb. Your comments on drugs make no sense. Sure, individual executives are almost always motivated by personal success, but it’s just plain insane to leap from that to arguing that no matter what happens to profits, that the industry won’t change. Lower profits in the drug industry will lead to less investment there, and more companies going out of business. Sure, every executive will keep trying to succeed within the business, but profits do certainly have an impact on the possible size and scale of the industry.

    Comment by John Thacker -

  50. … for the double postings. I received two confirmation emails and didn’t check back here to see if it posted before clicking on the second one.

    Comment by Just a Guy -

  51. You raise a couple of interesting issues. Nothing too far out. You are fairly close to the middle on a lot of things (in my opinion anyway).
    Outsourcing is just an inevitability of doing business today. Workers today need to be flexible and roll with the punches … the days of laid back, Union protected jobs is over.
    Drug Companies have an extremely powerful (and I think the largest) lobby in Washington, D.C. This is the sole reason the government won’t budge on legalizing Canadian Drug purchases. Doctor’s are also at fault … they seem to be extremely quick with the perscription pad. Our pediatricians office is more like an assembly line than a true medical office. Doctor’s are relying way too heavily on drugs instead of using alternative treatment methods that could work just as well in some situations.
    Not a bad idea for Social Security … I also like Bush’s idea of putting me in charge of a portion of my money to invest. I’d like that flexibility.

    Comment by Robert -

  52. Re: Pharma…I’ve been in pharma R&D for nearly 38 years and watched as product after product has fallen by the way-side, often at the last minute. R&D isn’t cheap and the arguement can be made that the price we are paying is to offset the next 5-6 that fall to the side before a “hit” is made. I have also watched as goventment red tape has tripled even quadrupled the number of employees needed to file the required documents and supporting evidence. The constant indecisiveness of the FDA as to what is required only adds to the confusion (and cost). As for Canadian medicine remember, their government has their fingers in the pie, do you really want the gov’t making choices for us? BTW, I haven’t had a raise in 3 years and our stock options are worthless.
    As for SS, the way to fix it is to take away the Congressional retirement plan and place them under the governance of Social Security. It is my understanding that their “perks” are far beyond anything we poor peons could envision. Yet, they continue to determnine how much we will pay in (and get back) without ever being part of the system themselves. If this is true, it is no wonder the system is in the shape it is in. Make them reliant upon the same system and it WILL be secure. They will see to it.

    Comment by Bill -

  53. 1.) Outsourcing – We live in a capitolistic society and it is ridiculous that people think we should force jobs to stay in america. It doesn’t help anyone and just leads to inefficeny.
    Before we were outsourcing we were just stealing indias educated and having them employed here “the brain drain”. According to CIO.com an indian worker out of college makes about 2-4K, those estimates are about 2 years old versus the american worker who expects around 40K. How can you really stop that with out making it out right illegal. It would takes something equivalent to a 1000% tarriff?
    My father lost his job because oracle decided to move it overseas, he retooled and used a different skill set to get a different type of job. There will always be fluctuations in what is in demand in the US its up to the individual to position themselves to take advantage of it. Outsourcing is not the problem.

    2.) Is an interesting idea but options can be held for 20-30 years would anyone really want to deal with that. SOunds like an inprofitable venture for the seller of the options.

    3.) The marketing machine is a great point though. Look at how many dollars are uselessly spent on adds for drugs. Half of these adds don’t even tell what the drug actually does. You see these on tv and in magazines. When you compare advertising to other aspects it is very sizeable.

    4.) If we really wanted a quick fix for social security we should get rid of some of these subsidies we offer in the US. Cotton has to be the worst. we dish out about 400 billion a year in cotton subsidies. 70% of it goes to the richest 10% of the farmers which are mostly comercial growers, and not your stereo type poor farmer. This has effected places like affica where if cotton was at its world price around 45 cents would be able to export it. But the us has managed to raise cottons prices far beyond reason. There are a few crops like this and that would more then cover social security.
    I think Gen X and beyond doesn’t expect social security and we should start to phase it out. Reality is a lot of people are banking on it and we will have to pay out to the baby boomers which will be costly.

    Comment by Edward Dowgiallo -

  54. Mark:

    If the U.S. is a free as it claims to be, then it should be a company’s prerogative to utilize the best possible means to producs their product at the highest quality and the lowest cost. I have long felt everyone is entitled to a fair profit, otherwise companies close and lay off employees. Then nobody wins.

    Everyone wants something for nothing. People want to buy a car for what the dealer paid for it. If that were the case, how would that dealer stay in business and pay their employees? They have to make a profit or they can’t stay in business.

    I was self-employed until 9.11, ten months after which time I was forced to close my doors. I could have done better in hindsight, but it seems everyone wanted the ‘friendship’ discount or to barter services. That’s all fine and dandy, but pretty soon bartering doesn’t cut it. You have to have some cash flow to keep the lights on and make it worthwhile to have a show to run.

    I’ve had trouble finding anything more than temp projects since 2001, and even as one who may be suffering the brunt of outsourcing, I still contend companies should be allowed to determine their own course of action — with the disclaimer that all their actions be above the table.

    Forcing companies to spend more on producing their product only drives up the price, which makes it less affordable to the public. I say that through clenched teeth because I know there are companies that will abuse the privilege by using the dreaded sweatshops that third world countries are notorious for.

    I don’t know what to offer in the way of alternatives. The American lifestyle has driven the cost of labor higher, but it now seems that some of the jobs have become the sacrificial lamb as a trade off. I hate that it seems like we have reduced people to a mere number when we speak of a ‘small price to pay’ for everything I stated above and what you noted in your article, That one guy that loses his job would certainly take offense at being that number, even if you told him it was going to create more jobs [for other people] further down the line. That justification isn’t going to help him feed his family today.

    There are definitely two sides to this debate. Even as I personally struggle to stay afloat, I still say the companies should be allowed to make their own decisions on outsourcing.

    Comment by Just a Guy -

  55. Mark:

    If the U.S. is a free as it claims to be, then it should be a company’s prerogative to utilize the best possible means to producs their product at the highest quality and the lowest cost. I have long felt everyone is entitled to a fair profit, otherwise companies close and lay off employees. Then nobody wins.

    Everyone wants something for nothing. People want to buy a car for what the dealer paid for it. If that were the case, how would that dealer stay in business and pay their employees? They have to make a profit or they can’t stay in business.

    I was self-employed until 9.11, ten months after which time I was forced to close my doors. I could have done better in hindsight, but it seems everyone wanted the ‘friendship’ discount or to barter services. That’s all fine and dandy, but pretty soon bartering doesn’t cut it. You have to have some cash flow to keep the lights on and make it worthwhile to have a show to run.

    I’ve had trouble finding anything more than temp projects since 2001, and even as one who may be suffering the brunt of outsourcing, I still contend companies should be allowed to determine their own course of action — with the disclaimer that all their actions be above the table.

    Forcing companies to spend more on producing their product only drives up the price, which makes it less affordable to the public. I say that through clenched teeth because I know there are companies that will abuse the privilege by using the dreaded sweatshops that third world countries are notorious for.

    I don’t know what to offer in the way of alternatives. The American lifestyle has driven the cost of labor higher, but it now seems that some of the jobs have become the sacrificial lamb as a trade off. I hate that it seems like we have reduced people to a mere number when we speak of a ‘small price to pay’ for everything I stated above and what you noted in your article, That one guy that loses his job would certainly take offense at being that number, even if you told him it was going to create more jobs [for other people] further down the line. That justification isn’t going to help him feed his family today.

    There are definitely two sides to this debate. Even as I personally struggle to stay afloat, I still say the companies should be allowed to make their own decisions on outsourcing.

    Comment by Just a Guy -

  56. First.. Mark.. I have to say. I dont always agree with you.. but today I do ! Great remarks..

    To the Jackasses above that believes that outsourcing is good.. Your an idiot.. Outsourcing is being done in EVERY industry.. not just IT.. It doesnt create more jobs. Thats just insane. It does create higher profits for companies though.. but how does that help us? think they are going to invest in Research and Developement?? LOL !! yeah right… and heres a good one for you. IF (lets just say it is IT we are talking about) they did reinvest in R&D who do you think they would hire for that???? hmmmmm…. how about the people who already know the product…. which is…. the people you just outsourced it too.. etc. etc.. IF you’ve been an IT consultant EVER.. you would know.. that first “little job..” will lead to more and more work.. (at least if your good..).

    Comment by Mike Verinder -

  57. Thanks for sharing your thoughts in a no-pressure, “do your own homework” kind of way, Mark. It is much appreciated. I’ve been catching up on my political homework lately for the coming election, and it is nice to be able to read the thoughts of well-respected members of my community.

    Comment by Scott Johnson -

  58. The real problem, is that CEO’s only really think quarter to quarter. There’s no sort of long-range..or even mid-range planning going on at all. Sure, shareholdes demand some sort of planning, but often, that’s only providing an illusion of a plan, not often a plan itself.

    Outsourcing is a good example of that. Sure, it’s good for the free market to go to the lowest cost. But then the question is, who’s going to buy your product? Everybody is passing off that question, that responsibility to someone else. It’s not my problem!

    If you left out the skyrocketing costs of..well..essentials such as transport and health costs, you’d be showing a deinflation trend in the economy. And that would get the economists panicing.

    I’m not one, so I couldn’t tell you about the long term affects of that. But it seems to me that the panic itself would be a huge problem on its own.

    Actually, if you take all four parts as one, you come up with one big problem. The skittishness of the stock market. The expectations that profits should go up and up and up without end. (A lot of the talk about reforming SS generally points to the stock market as a better investment).

    The big problem with that, of course, is when all that “saved for retirement” money starts coming out of the market. And the prices start dropping on a regular basis. And more people panic and pull out. It’s the average joe that’s going to get killed in that.

    So what’s the solution? Unfortunatly, there’s none. Things can be done to mitigate the damage, but that’s the economy and you just kind of have to live with it.

    Comment by Karmakin -

  59. As long as consumers make PURCHASE decisions with price as a major factor (regardless of the place of manufacturing), then business owners should be given the freedom to make PURCHASE decisions (of employment contracts) with price as a major factor.

    Consumers spend less on a product made in China. This consumer is free to do whatever she/he feels like doing with the extra money. Business owners spend less for a “job” made in India. This business owner is free to do whatever she/he feels like doing with the extra money. The business owners actions are documented, and if they decide to give the few top dawgs some cash, then they have chosen to do so, and we as the public should announce it to investors with the ‘loudspeaker’ of mass media.

    We should not regulate how the owners make money. We should document it, and they will think twice next time they try to raise capital.

    Somewhere, Atlas is shrugging…

    Comment by greg -

  60. Outsourcing –

    The “shift jobs to other areas” argument is quite flawed. Take a $70k/year job to India where they’ll do the work for $20K. And a new job opens up in a service industry; where the employee can make $30k/year!

    Ooooh, no job loss there!

    Comment by Charles -

  61. i find that many companies say they are going to “reinvest” the money saved but you are so right they don’t they are just lowering their overall cost structure. But as in business this is only a fad and the work will swing back to the US, it just sucks if your job gets sent overseas in the meantime.

    Comment by manish jain -

  62. 1. Outsourcing – just silly protectionism. The outsourcing issue has been blown out of proportion and, in any case, is unavoidable in a global economy. “Prevent insiders from selling stock or earning corporate bonuses in any year they outsource jobs” – just about the silliest thing I’ve seen you post.

    2. Expensing options – right on. Cisco is about the worst offender of this.

    3. Protecting drug profits – you’re right on that the drug companies argument that innovation will stumble is false – particular given that R&D spending, while growing, doesn’t compare to the increase spending in marketing. But big pharma’s problems will be solved over time, as a great deal of drugs will come off patent and enter the generic space. They also don’t have a great pipeline of blockbuster drugs like they’ve had in the past. But the one advantage to the US system which most people don’t talk about is that generic drugs are actually cheaper here in the US than in Canada, for instance.

    Comment by Damian -

  63. Outsourcing–

    Mainly an issue since the beginning of NAFTA, the GDP has only increased every year and unemployment if virtually the same as it was when NAFTA began. So why do people get to caught up on “outsourcing?” A: Labor union propaganda. If unemployment, and therefore employment is unchanged, yet Americans are making more, outsourcing has only caused a positive impact on the economy.

    Comment by Allen -

  64. I love free markets. One of the great side-effects of free markets is that they have the potential to make many people very rich. It is this possibility that drives innovation and is at the heart of the power of free markets. However, one of the worst side effects of those who benefit from free markets, and become wealthy, is that these people are invariably driven to something akin to guilt – the outcome of which is that they begin to turn on the free market that made them rich in the first place. Mark, I really respect what you do, and have done. But your views on outsourcing are protectionist and cynical. The market dynamics that drive your business ventures (and pad your bank account) REQUIRE that if someone in India can do your job for 1/10th the cost, it is imperative that that job go to India. Free markets demand freedom to chase the highest economic value. As to where that savings goes, what business is it of yours? Someone has to recieve the value of this savings. It does not matter who, as this money will flow back into the market, and create value elsewhere. And speaking of politics. It is the height of self-delusion for the left to snipe at outsourcing, when it is the primary, and most effective means, of feeding the poor, of uplifting the less fortunate countries of the world, of sharing the American dream.

    Comment by Dan Burgin -

  65. This is another great reason why I have become such a fan of this blog. Mark’s no nonsense approach really is refreshing.

    I wish you would have touched on the crazyness surrounding patents and trademarks, particularly arround technologies. The days of being a single, independant inventor really are over.

    Great work Mark.

    Comment by Kevin -

  66. Doesn’t expensing stock options have a further negative side-effect for the poor CEO’s? It will make it easier for shareholders to evaluate the true size of the CEO’s total compensation.

    Comment by TommyA -

  67. and well, u wouldnt be alive if you were poor and had aids, because they’d be far too expensive, if however you happen to be extremely wealthy(aka magic johnson, who i love and think is the best player i have ever seen) then you’re correct you’d be happy, the trick is to find a happy medium, with some gov intervention , not total we might be able to find that proper balance

    Comment by sam -

  68. Outsourcing –

    I can’t find the link, but I read an article that mentioned that over the past 4-5 years, the U.S. has gained more jobs from outsourcing than we have lost to it. Many European companies have started divisions in the U.S. The problem is- we hear from the guy complaining that he lost his to India, we don’t hear from the guy who just got a new job working for Audi in the United States.

    Pharms-
    Good point Miller. If drug research was left up to governments, I think we would be far, far behind where we are now. If I had AIDS, I would be thrilled that over the past 20 years, the drug companies spent billions on research and now my life will be manageable. I would think that I could care less if they sell the drugs cheaper in Canada, Europe, or even Africa. I would just be happy to be alive.

    Comment by Juno -

  69. I have to disagree with you that ANY part of outsourcing jobs is bad, you must have watched Lou Doubbs…

    Outsourcing of jobs creates new jobs, yes maybe in a different industry, yes those whose jobs were outsourced need to be retrained relocated or (the worst case scenario) retired, but the economy only wins from a free trade job market.

    Even when insiders or CEOs put their money into their own pockets economy wins. Money will be used in disney world, new cars bought, new buildings purchased/built, etc etc. All this creates more jobs here at home.

    No one, no one will want to keep worthless greenbacks in their pockets.

    Comment by Simon -

  70. I agree with your points but want to put out a philosphical question to you and your readers. I agree with your take on profits and drug company CEOs. I think the R&D argument is B.S., and I have done clinical drug research at U.T. Southwestern and know what the motvation is behind the drug companies funding outside research. But, are drug companies under any different obligation than other public companies to not charge as much as they can get for their products? Does Pfizer have some moral obligation regarding profits that Microsoft doesn’t?

    Comment by Miller Logan, M.D. -

  71. 1. Outsourcing

    Why are Amercians better than anyone else? Someone who owns a business should be able to hire whoever they want, whereever they work, and pay them whatever that person is willing to work for. This is called capitalism and free markets. Doing so would enable the most “fair” distribution of wealth throughout the world. It is well known that markets cannot be perfectly free, but to a large extent they can.

    2. Stock Options

    This is a great idea (companies having to buy options on the market). Can’t work for small companies for various reasons, who most certainly should be able to give employee’s ownership, but this system would work very well for large companies.

    3. Drug Companies

    Are they profitable? Sure they are. Is the patent system broken? In many cases, yes it is. Get rid of patents? Hell no. Whatever you may think Mark, if the US govt took away drug patents new drug development would virtually grind to a halt, at least as far as phase 2/3 trials go. In the grand scheme of things, patent protection of 20 years isn’t very long. Eventually all of these drugs will come off patent and the generic drug makers will produce them and sell them only somewhat above their cost of operations. There are huge costs involved in drug development thus the drug companies profits have to be huge. What you and it seems everyone else is forgetting is the very large number of drug/biotech companies that fail every single year because they could not develop a product that would sell. The large drug companies aren’t really drug companies at all, they are marketing machines who buy up the rights to drugs that look promising and sell them.

    If we do anything about the drug business at all, that is the part that should change. All of this marketing to consumers who are in general too ignorant to make decisions on what drugs they want, then they go to their doctor who is more concerned with keeping them as a patient than doing the right thing, so he prescribes to them whatever they want.

    Let the drug companies charge whatever people are willing to pay, but get rid of any form of insurance that doesn’t require patients to pay a % of the costs (instead of the copay system). There are plenty of cheaper options available but people pay 10 times as much for drugs that are only marginally better because it doesn’t cost them any extra. Everyone doesn’t drive a Lexus even though the Lexus is far superior to a Honda Civic, is also costs a lot more too.

    What we need is medical insurance that only covers the basics instead of the systems we have now, which all basically cover everything. This is what makes them so expensive. Our medical industry could easily provide the same care that was available in 1990 for a lower price (or very simliar price) as it cost in 1990. Instead everyone wants the latest and greatest even though they can’t afford it, but they get it anyway because they aren’t forced (directly) to pay the cost, instead the cost comes out of their pay before they ever see it.

    Comment by Shawn Fox -

  72. This blog just further confirms to me that the prevailing US corporate culture really is adept primarily at infantilising our populations (pretty obvious why it would ‘want’ to do that, but that’s another story).

    OK. We have a world in the most desparate travail. Ecosystems are near collapse. The primary driver of our large-scale systems (oil) is very close to running out. The most powerful country in our world has elected a vicious idiot to power who turns his back on all the major issues and inflicts death and horror on tens of thousands of innocent foreign adults and children (all-but invisible via your mainstream media) in order to persue the interests of his tiny elite clan. Non-human species are disappearing at record, and increasing, rates. Advances in food production are, as the environmentalists have long predicted, failing to keep up with soil degradation to the extent that we now have the smallest world food stocks in living memory, yields are declining. Etc, etc.

    There are desperate problems that need to be tackled incredibly quickly if our ‘Western’ civilisation is to survive, let alone flourish. And yet what do you, clearly a highly intelligent man, think worth commenting on in this most important of all elections? Corporate trivia. I find this diminishment of human concerns incredibly sad.

    Comment by Cris -

  73. Agree with everything you have written.

    Comment by Blake -

  74. Almost all blogs I ever visit are trash, you have the one I think I will continue to visit. I share you vision on the futures of media, only I have to operate with financial restrictions. Kudos to you.

    Comment by Joe -

  75. Very well said. Couldn’t agree more.

    Comment by Charlie Schluting -

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    Comment by Interactive Web Visions --- Cost Effective Web Support Services. -

  77. The US Government loses the tax on the guy’s salary and also all the money from stuff he uses the money for within the US. Instead, the money “saved” is mostly going into some rich guy’s bank account and some of it to some Indian/Chinese/etc guy. I’m not sure about all the details and all the possible economic effects, but from how I see it, the US loses overall.

    Comment by runescape money -

  78. the fact of the matter is, something has to be done soon. in about 10 years, the ratio of people paying into SS and the people receiving SS payments, is going to go below 1:1. this is NOT GOOD, and we’re in deep crap if something isn’t done SOON.

    Comment by wow powerleveling -

  79. I’ve seen quite a few mentions of “free markets” in response to the outsourcing and pharma topics.

    To those who invoke that argument…

    Exactly which industry do you think operates under “free market” conditions?

    Pharma? Hardly.
    Agribusiness? Laughable.
    Energy? Get real.

    If you can’t make an argument for any of those (and be very careful in trying to do so), try banking, aerospace/defense or communications/media. Yeah, those will be pretty tough, too.

    Through legislation, they are all well-protected and subsidized either directly or indirectly, and government oversight agencies are run by industry insiders.

    I would suggest that the “free market” response is no longer valid, if it ever was. Pick an industry and state your case if you feel otherwise.

    Peace & Love –

    Comment by Alias Jones -

  80. I have to disagree with you that ANY part of outsourcing jobs is bad, you must have watched Lou Doubbs…

    Comment by crsoft -

  81. very good!

    Comment by 11nong -

  82. Senator Hatch is a douchebag… if you reall wanted to donate money to the Utah State Library, you would have already done so. Greedy SOBs these days…

    Comment by funny shirt guy -

  83. agree with your points but want to put out a philosphical question to you and your readers.

    Comment by msnblog -

  84. A Social Security benefits cut was enacted years ago when Social Security benefits were made taxable. Retirees now include up to 85% of SS benefits in taxable income. In my case (married, both over 65, filing jointly) I paid $5,505 to IRS for SS benefits received in 2004. For me, this was a decrease in SS benefits of 17.8%.

    Here is one suggestion to close the gap between the traditional portion of Social Security revenues and benefits to be paid out, whether or not private accounts are enacted. Tax on Social Security benefits should be returned to the Social Security Trust Fund; it should be treated as a rebate to the Social Security Trust Fund from the retiree instead of a tax paid to IRS.

    This change in the law should result in appreciable receipts for the Trust Fund. There would be no change in anyone’s tax liability – I would pay the same amount, but $5,505 would be redirected to the trust fund. Of course, the treasury would receive less money – but that result is consistent with other actions by the administration and Congress that have also reduced revenues.

    Comment by Maurice Kaufman -

  85. agree with your points but want to put out a philosphical question to you and your readers. I agree with your take on profits and drug company CEOs.

    Comment by flash -

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    Comment by chenfenga -

  87. agree with your points but want to put out a philosphical question to you and your readers. I agree with your take on profits and drug company CEOs.
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    Comment by softdowna -

  88. Great Blog; just found it!

    To James: Canadian drugs’ prices are regulated by the government. Drug companies are still making profit from selling to Canada. There are also some Canadian research based drug companies, so definitely there’s business even under regulation. But regulating a big industry in a big country is very different from what we see in Canada. We’ve got to remember Canadians are also benefitted by research in American drug companies.

    Comment by web -

  89. agree with your points but want to put out a philosphical question to you and your readers. I agree with your take on profits and drug company CEOs.

    Comment by IT -

  90. I agree with your points but want to put out a philosphical question to you and your readers. I agree with your take on profits and drug company CEOs. I think the R&D argument is B.S., and I have done clinical drug research at U.T. Southwestern and know what the motvation is behind the drug companies funding outside research. But, are drug companies under any different obligation than other public companies to not charge as much as they can get for their products? Does Pfizer have some moral obligation regarding profits that Microsoft doesn’t?

    Comment by soft -

  91. Outsourcing is bad?

    I have to disagree with you that ANY part of outsourcing jobs is bad, you must have watched Lou Doubbs…

    Comment by freemovie -

  92. Great Blog, just found it!

    Comment by 免费电影 -

  93. worshiping at the market altar

    Certainly the problem of outsourcing of jobs is given attention out of proportion to it’s size in the US economy. But. Do all of you free market fetishists who claim that your unwavering faith in “free markets” to solve every ill and make the world the best place possible means that you can’t suport any regulatory interference in a “business decision” to outsource, also support an internationaly free market for labor? Do you support an abscence of regulatory interference in people who’d want to work at jobs in the US coming here to find them? If the jobs should be free to go to China, shouldn’t the Chinese be free to come here and take them? Free as the air? If you do support such a thing, you’re all awfully quiet about it.

    http://www.336.com.cn/corp/sitemap.html

    Comment by gameman -

  94. I like your blog!

    Comment by gameman -

  95. Great Blog; just found it!
    Still haven’t heard why pharms should be shielded from the leveling of supply & demand except maybe give them corporate welfare for proven cancer cures. The reason the same identical drugs are cheaper in Can/Mex is that they are forced to negotiate, as a country, for better pricing. Our sleazebags, on the take, are committed to the pharms for the “campaign” contributions that largely go in their pockets. Here in San Diego we call them bribes. Any country that is stupid enough to re-elect them deserves what we get. I’ve been buying prescription drugs, made by USA firms, at an average of 15-20% of what they cost here for 30 years and no problems except for getting older.
    Also, pharms should not be permitted to advertise except in industry publications as long as they are charging us for it.

    Comment by Norm -

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    Comment by soft -

  97. Hee hee hee. Mark Cuban preaching against the evils of outsourcing. Can you say Nash, Nowitzki, Najera, Abdul-Wahad, Pokolzene, and Imbanga ….. all foreigners hired by Cuban to fill precious and highly paid positions as NBA players.

    Hey Mark, why not hire Americans instead. You could pay them less than you are paying these foriegners. Maybe the government should start regulating your team to ensure that you are doing things “the right way”. Why not, you want to impose government regulations on other businessmen who are excercising their business judgment in deciding to utilize foriegn workers.

    Again, Cuban is a hypocrite.

    Comment by Wilson -

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