Much has been said, not least in the popular media and even in intelligent literate writing, that decries the goal of profit maximisation as the stated goal of industry. Just off the top of my head, I think of Michael Moore's Roger and Me, where he rails against the fact that profitable industries are still closing plants and moving manufacturing to countries other than the US in the 80s and 90s (a process that, as far as I'm aware is largely complete nowadays). But even more recently The Wire - or more specifically the introduction the the 5th season - talks about how with journalism and the funding of newsrooms, it wasn't that they weren't making profits, it's just that they weren't making enough profits.
I've come to realise this to be true: that profit maximisation indeed is not a sufficient means of defining what companies should strive for. But of course my objection has little to do with agreeing with the discourse I've cited, and more to do with explaining exactly why "profitable" companies still desire to make sometimes large and drastic changes.
Much of this has to do with my having been contacted by The Christman Group, an investment bank that has an internship opening that I'm hoping to fill. But the less said about that the better, I'm sure - I don't have unrealistic expectations. Suffice to say between recieving an e-mail that expressed interest in me and arranging a phone interview, I decided to do what any responsible job-seeker would - find out as much as possible about my potential employer. Aside from reading their President Richard Jackim's very accessible book "The $10 Trillion Opportunity," (I bought the e-book online) about their company's focus on Exit Planning for mostly privately held middle market companies, I was also looking at what seems to be the beginners bible of MBA finance, Brealey-Myers' Principles of Corporate Finance.
Brealey-Myers makes an intriguing and really rather stunning assertion about the brief managers should recieve from shareholders - exactly that profit maximisation is not the most appropriate objective of professional managers. This is in part because profit maximisation as a principle is needlessly vague - it is not time specific, it does not say for what period profit is being maximised - whether this year, next year or 5 years hence, each perhaps at the expense of the other, or of other longer term periods of profit. It makes no sense to have one year have the largest profits imaginable at the expense of profits for the next ten years. Similarly owners do not want to sacrifice profits for the next ten years in the hope that at the end of that period there will be one year of huge profits.
The answer is Net Present Value. I find it a little difficult to explain in totality the concept of Net Present Value except mathematically, and I don't wish to go into too much detail - you can read the wikipedia article on it, and download a copy of Brealey-Meyers (isn't piracy grand?). But suffice it to say it is the beginners holy grail of corporate finance. The maximisation of Net Present Value argues that given the same level of risk, the return on investment of a given amount of capital must exceed what that same capital would earn through the capital markets (buying govenment securities or shares of similar risk as the investment), or else the investment cannot be justified since it does not create more value than the opportunity cost of capital.
I'll try and make that a little more concrete. When you have a given amount of money, and you don't do anything with it other than stuff it under your mattress, you are losing money. Not just because of inflation, that makes your money less valuable, but because you are not investing it in order to create more wealth. This investment is not "funny money" - on the contrary it is very real. Whenever you put money into capital markets, that is the money that business users borrow to fund their businesses - to make more and better widgets. It's the money that people borrow to buy a house or car. These are things those people couldn't otherwise do, and you are allowing them to get those things done, for which they are paying you back your investment plus interest. That return on investment is the base level at which someone who doesn't stuff their money under the mattress operates. If you have $100 and you do nothing with it, at the end of one year you have $100 (before inflation). If you put that $100 towards buying government securities that give a 7% return at the end of one year, at the end of one year, you have $107.
What maximising NPV argues is that if you are investing in something at the same level of risk as a govenment security, it needs to provide a return of more than 7% in order to be a rational decision. Otherwise you are not making as much money as you can given the level of risk. Put another way, you are taking on too much risk for too little reward - when the going rate of that risk is lower than that of your investment.
This brings me back to the beginning of this post, about why "profitable" companies may still move factories or streamline newsrooms. Because if you are only making the amount of profit equal or less than the amount of profit you could be making by investing in capital markets, you are not making a rational decision. For the level of risk of your endeavour, you need to be making more profit than you would otherwise be making, or you're putting in all that effort and still losing money compared to investing it.
Of course in the real world this becomes more and more complicated as more variables come in, but in general this is a useful guide in terms of how to make rational decisions regarding the allocation of capital. And the efficient allocation of capital is a good thing. Me saying why that is will have to wait for another post, but suffice to say anything less is just irrational.
I've always been a big fan of 
Which brings me to 
That experience was saved really by the food, which is why I went back, but otherwise it's not what I would have thought of as ideal. I imagine that there are people who love to dawdle and socialise in a place where you can't hear yourself think, much less talk, but I'm not one of them, and if I'm going to spend copious amounts of time in a place, it would have to have a much more relaxed atmosphere. But that might just be me. trendier souls than myself may find this their Mecca, but I can find the ambience a little wanting.
But fine, to go through a long wait and less than ideal environment, the food service should be as impeccable as the food itself promises to be, given the lineage. Unfortunately the service tends towards the harried, with a distinct feeling that the place is at least understaffed. Our food took absolutely forever to come, and the timing in between courses was just way too long. And for that, there's none of the customary geniality of Blackbird. I suspect unless you're a regular or a big spender, terse is the watchword. But the food was very good, and very good enough to make us want to come back. I think the hostess (who's quite handsome, if you're into such things) was free enough to answer our question about when they're less harried, and we resolved to come back then - they open at 3pm, and they don't get too crowded till around 6 plus.
Today was a happy day, and we hadn't eaten yet at 4 something, so we took a swing and got there about 5, which seemed just right. Everything was lazy and laid back. On stepping in you would have thought it was the serving staff having their dinner break, rather than paying customers. We got to sit at a table, we didn't have to sit precariously at the bar, we were able to order fast and our food was timed well for arrival. Not that I go in for excessive schmoozing, but our server seemed particularly unwilling to go through the motions with us the way he was with the rest of the clientele, and I wonder what the fuck that was about. To be sure I was a little unkempt and we only had a single glass of wine between us (a nice Grenache - fruity but still mild) - I suppose more leisurely places must make more of their income on pushing the drinkies, but still - that's no call for being selective in your service.
monkey had the medjool dates - and this may be my ignorance, but they were absolutely lovely. I'm not sure where the dates were in the bowl of four, they were probably holding the spectacular meatball in the middle, covered by the bacon wrapping it all up, but the experience as a whole was very charming. The tomato sauce I thought was particularly outstanding. Next was the pork shoulder, and that was absolutely spectacular. If anything, even though the pork was absolutely perfect, it was the seasonal vegetables accompanying, lovingly rendered in the not-too-heavy pork fat, that was most outstanding. It all came together in a way altogether heavenly. Anything with pork I suspect is a home run in either restaurant, personally.
In comparison, the large plates were altogether fine, but less than spectacular after the pork. I suppose if we were more tuned in to the style of the place, we would have just had more and more small plates, but we wanted a main along with the starters, at least this time round. The pasta was next (they don't update the menus online, so I'm not sure if it was linguine or tagliatelle) - very nice, if a little heavy on the oil and a little oddly tart. Nothing to write home about, but very solid. The pizza similarly was very nice, very fine. Perhaps the meat on top was a little clumped and a little over salted. Overall the use of pepper was strong but that was actually very much to my liking. Good dishes, but overshadowed by memories of pork. 
Dessert was uninspired polenta cake for her, and rather good thin chocolate bars for me. Doesn't seem as if dessert is their core competancy, so if you're full, you might just skip it for coffee and port.
I tend to record a bunch of things off of MSNBC every day. I have a series recording on my DVR to record Morning Joe, I record Hardball and I record Race to the White House. David Gregory is good (though he looks like a monkey), he's personable, he's pretty balanced, he does a good job of moderating his show. His background as someone who has ever tried to grill Bush and the various Bush press secretaries while in their press room also stands him in good stead. He's a smiley presense on TV and tends to seem genuinely engaged with what's going on. He doesn't quite have Tim Russert's gravitas and chubby heft, but he makes a fun host for "Race" and would eventually be a good replacement for Meet the Press after the election, which will give him time to grow into the role before the next presidential. 
Not that Hillary won't be running the day after election day. Even if Obama won, I wouldn't put it past her to at least lay the groundwork for a potential insurgent campaign in case he fucks up. That way no piss-ant little VP will stand in her way in 8 years. Not that Obama's going to win anyway. 
Chris Matthews, whatever you want to say about his politics and his slightly stubborn and fussy manner (especially when he's made to stay up late and do election coverage), he's good at what he does and very insightful. I think he pretends he's a little less in love with Obama than he was, but somehow I doubt it. He can tend to get some of his analysis of stuff skew more left than makes sense, but when you're actually good, you're sort of entitled to your views. There was a pseudo puff-piece on him not long ago that was really a hatchet job, which was a shame. It'll be interesting to see him run for Senate.
I remember Joe Scarborough as someone who was rather odious as a prime-time commentator, but I have to say that for some reason the shift to Morning Joe has done wonders for his presentation. Either that or it's age, or having Mika there for him to constantly browbeat, he's come to be genuinely watchable. He's also a well of knowledge when it comes to explaining to a liberal audience how conservatives think. Being able to explain how some things just play well, even though certain left leaning partisan audiences might set their hair on fire. Like the 3 am ad, and now the Celeb ad. It's a good show, and I watch as much of it as I can as often as I can take it. Some days the politics just gets too silly though, and I don't last much beyond an hour. I also speed through the show pretty quickly, since I skip Mika's news, most of the finance (except for Jim Cramer and Erin Burnett), all the sports and ads etc.
I'd rather stab myself in the chest than watch Keith Olberman. He and Rachel Maddow deserve one another. I'll say what I've always said about him. If "do it live" pappa bear Bill O'Reilly is an idiot (and he probably is), then Olberman is as much if not more so. Dick. And every day I tape Hardball, and every day I see Mike Barnicle in the first frame I immediately hit delete.
