Being proactive is the only way to save economy, expert says

By Josh Holderbaum
Western Herald

A visiting corporate restructuring expert wants government to focus less on saving companies and more on putting people back to work.

Sheldon Stone presented the lecture “Strategic Corporate Restructuring” Feb. 26 as part of the Keystone Community Bank Haworth College of Business Breakfast Lecture Series.

Stone, a WMU alumnus with bachelor’s and master’s degrees in organizational behavior, serves as a partner to Amherst Partners, LLC, a company that advises corporations on restructuring, mergers, and acquisitions.

An admitted pessimist, Stone thinks the recession could end soon, provided we find more jobs.

“I don’t think any of us really know how things will turn out,” Stone said. “Unless we put people back to work, even though we have high productivity, we still run the risk of a double-dip recession.”

While unemployment rates sit at around 10 percent in February, Stone prefers to look at rates of underemployment – people who have given up finding work or part-time workers looking to become full-time – which Stone estimates at around 20 percent.

That underemployment has led to people spending less.

“I was at a local mall one day with my family, and as I walked around the mall, I counted one in four people had shopping bags,” Stone said.

“I told that to one of my co-workers and he said, ‘Yeah, the other three are returning things.’”

Some perceived slowdowns actually work well for the economy, Stone said.

For example, car manufacturers used to keep factories running non-stop to push cars out, which led to cars sitting on lots with options few buyers wanted.

“That cycle of production push has ended,” Stone said. “That’s a good thing because they’re making more profits at 11 million [cars] than 16 million. The profits are greater, the revenues are less.”

Many companies remain underutilized because businesses didn’t pay attention to where and how they were expanding when they expanded, Stone said.

Troubles in Europe might also slow down any potential U.S. recovery.

“Iceland is virtually bankrupt, they’re just not using the word,” Stone said. “Greece isn’t far behind them. Many countries are not buying bonds from Greece. Portugal isn’t too far behind them. If Europe goes, will the shoe fall over here?”

While Stone approved of President Obama’s bailout of the financial industry, avoiding a worldwide collapse, he also wants government to take a more conservative approach.

“The next governor needs to make Michigan a Right-To-Work state,” Stone said. “We’re not going to put people to work any other way.”

That’s because some companies being propped up now may just fail later on, Stone said.

“If they can’t do it now, they’re never going to,” he added. “The government has to be sort of Darwinian, let the chips fall where they may. Right now the government is leaning towards the left and socialism, and we need to let these companies adapt or die.”

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