Zeitgeist Thoughts

One thought that has played over my mind after watching the Addendum to the Zeitgeist movie, was the view expressed by Jacques that real wealth, real value, is created only from technology. Furthermore, people who solve problems, like scientists and engineers, are the only real wealth creators in the world. They alone spur human progress.

As for bankers, lawyers, accountants, politicians and corporate management, they add little to nothing to the overall prosperity of a society. They are a burden, not an asset.

I was struck by that view. I have been known to rant in the past about the flawed management of a company like General Electric. At one time, some 40 years ago, there probably existed no other American company that rivaled GE for scientific and engineering prowess. GE solved problems, and made life easier for its customers. With the exception perhaps of Hewlett Packard (a company whose history I greatly admire), GE attracted the best and brightest of American science.

But today, the company that Thomas Edison built is a shadow of its former self. It has been corrupted, slowly, over the past 20 years, with a financial virus that has diluted and betrayed its great scientific past. Today, GE Capital, GE Money and NBC have overwhelmed the company, destroying its value-creation ethic and its long-term focus. Edison must be spinning in his grave.

Here we are, on the cusp of a nanotechnology revolution, and GE has shed its Plastics division. Why? Because its profit margins aren't high enough! What a tragedy! Likewise, here we are, in 2009, near the emergence of a smart electric grid, where utility companies everywhere are striving to better control their loads through intelligent demand management. What does GE's top brass decide to do? They decide to exit the appliance business. Why? Because it's too hard to manage through such a heavily cyclical end-market. It's too hard to compete in that space.

What?! Are you kidding me?! How braindead is that?!

Gone are the long term investment strategies. Gone are the long range R&D budgets, sacrificing short-term profits for long-term leadership and dominance.

Make no mistake. Lasting shareholder value is NOT created through share buybacks and exorbitant dividend payouts. Rather, it is built from a heavy emphasis on innovation and creative laboratory solutions to society's problems. Cash flows rain down from heaven on companies that can solve real-world problems. To outspend and out-think your competition in the R&D lab is the surest way to real wealth.

If I was Jeffrey Immelt, there are five things I would do on my first day on the job, well before the lunch hour:

1) I'd sell GE Capital
2) I'd acquire First Solar
3) I'd acquire Ormat Technologies
4) I'd acquire Ocean Power Technologies
5) I'd telephone President Obama and lobby for the Repletion Project

Thus concludes my rant for now.