National Prices Fall 18%, New York Further to Go

Hahahaha!!! Benson, we may have worked at Lucent at the same time but I’m not sure if you were there until the Great Exodus of July 13, 2001…

As you remember Alcatel was a major, major competitor. To use its takeover of Lucent (which was nothing but a shell of its former self by the time of the takeover)is anecdotal if you’re trying to use it as an example of there being no French enterprises that can rival American ones. You’re rah-rah American Business enthusiasm is quaint and touching but I’m not sure it’s fair or accurate.

As you probably should know, the executives of Lucent gutted it and Bell Labs and many people made off with ridiculous millions in stock sales (including, basically, insider trading near the END of the fabulous run-up of the stock–specifically, I’m referring to a sale of $2 million dollars worth of shares by one top executive on–what was it?–November 14th 1999) while the lifers from AT&T/Bell Labs days lost their retirements…

Everything froze up in the last quarter of 1999 financially and the telecom bubble popped before the Internet bubble. Eventually, all those wonderful internationals you’re referring to were being disappeared, literally from one day to the next. It was shocking. It seemed every week from the announcement we missed earnings and well into 2001, any researcher who was not a full-timer was losing his/her job/fellowship/program and sometimes, if the person was not a grad student with a visa to be in the US, they lost their visa status and had to leave the US, and rather quickly.

One of my students from France (from the 80s) ended up at Bell Labs. I think he was there for about a year and then he was simply disappeared one day. When these young post-docs would get notification, often they couldn’t go back to the office at all. For those of us in Murray Hill, it was very depressing.

I did go to a kind of fun party thrown in Hoboken by one of the young researchers who was let go. There were about 15 of these international kids on their way out or out already.

While this process ground through and the stock was sliding downhill, many great scientists and researchers on the younger side (and not so young) started jumping ship. Many went to teaching jobs both here and in Europe…

AND, notably, a good number went to Sophia Antipolis in France (heard of it???).

July 13, 2001 was the buyout date and departure of many, many old-timer Bell Labs guys, and for me, that was truly the real END of Bell Labs. Sure, people moped around in the late 90s longing for the AT&T days of Bell Labs but it was still pretty good…we just didn’t know it.

Under Lucent, “they” expected results that could instantly be turned into product and a set of researchers who could support current product improvements. Bell Labs was already different by then. Although it seemed relatively awash in money and overly funded with lots of dead-end projects, and military money slipping in, it was not the Bell Labs of another era when guys got away with doing, basically, nothing and were constantly fudging demos and test results, when the labs had a large focus on abstract science…remember the monkeys and chickens kept in Murray Hill…remember the guy who played solitaire his entire career…it was nearly like working for the federal government.

Only the monopoly of Ma Bell could support the billions that went down the drain at Bell Labs in those days.

Bell Labs continued to be a multi-billion dollar drain on Lucent and they simply could not support it.

All that to tell you that Alcatel did not kill Bell Labs. What broke down the old Bell Labs of our youth started with the break-up of Ma Bell in the 80s, number one; the spin-off of Lucent in the 90s, number two; and the overzealousness of the Lucent team to blow the stock into the stratosphere and a kind of empire-building where it financed its purchasers to boost sales. Lucent collapsed in on itself.

Now, again, I have to say, BL was not sustainable any longer with the changes both at AT&T and Lucent, the market and society. One would argue that Bell Labs was broken up into many pieces and many executives and researchers started ventures and spun off into small companies, that many of the endeavors and lines of research that were at Bell Labs still exist but have been shifted to military-funded university programs.

That all said, your arguments about demographics in France and the race/class issues appears to me to be what your average Joe, the NY Times reader/World News watcher, would come away with from the media. Hackneyed.

Demander of Respect,
Yes, I’m glad you pointed out the rather ridiculousness that Whole Foods and the aptly-named Banana Republic were somehow harbingers of improvement. I’m one of those who reads Brownstoner who laments the almost complete mallification of Manhattan and the encroaching mallification in Brooklyn.

>>>>Neighborhoods were built up and suddenly there were Whole Foods and Banana Republics where there used to be only Key Foods and Old Navy (thanks to both consumer credit and corporate credit giving them capitlal to build the outposts.)<<<<

Great post Ledbury. The NERVE of those Blacks and Hispanics for wanting reasonably priced food and clothes!

Do you have any idea of how much of a smug racist you come off as?

I agree with the economist who compares the NYC economy to “the edge of a cliff.”

I just got back from a large New Years dinner/party at popular restaurant in Tribeca and I felt the same way — actually I made the exact same comment to somebody at our table.

You can feel it in the air. 2009, I’m afraid, is really going to suck.

Brooklyn Greene;

Where to begin? As you said, it New Year’s eve, so I don’t have the time – getting ready to go out. Just a few points:

-One inconvenient fact that you forgot to point out is that France, Japan and the rest of Western Europe have had virtually ZERO job growth over the past 25 years, a period during which the US economy has created about 30 million jobs. This is not my opinion – this is a historical fact. Given this fact, France, Japan and the rest of Western Europe, are on a downward demographic spiral. When more than 65% of your salary is taxed away, there’s not much money left for bringing kids and such.

Moreover, worse than that is that they do not try to replenish their population by assimilating immigrants into the economic mainstream. Is there a Silicon Valley in France to which bright Indians and Chinese can immigrate ? The immigrants are poor and consigned to the suburbs of the major cities. You ask about the poor in other cities. Have you forgotten the riots that broke out in the suburbs of Paris last year?

Western Europe is akin to an adult retirement club. If you are in the club – that is, a native person – you can sip espresso in the piazza after the 35 hour work week, all on the govenment largesse. Nice while there are still enough young people to support it – but they are rapidly disappearing. I’ll ask you the same question: can you please name one French company that is any type of leadership role? I used to work for Lucent, and am saddened to see what happened to Bell Labs after Alcatel took over this national treasure.

Well, Benson, I’m not so sure you’re taking into account the Japanese citizens save and American citizens do not.

Anyway, I was not drawing a causal line between CEO compensation and the housing bubble (though, on second thought, CEOs did, indeed, have a financial interest in creating and maintaining the bubble of course). I simply wanted to point out that if we had some equity in pay (which has slid into Gilded Age insanity it seems at this point), we might not be in “this huge mess” (read: “this huge mess, not necessarily the real estate crisis…but this whole HUGE mess.”

The issue is, from what I pick up here and there mind you, is that American pay has not kept pace over the last 30 years, and with Americans reflex to spend, they and the economy would have been better served if the vast majority had had money to spend and not racked up tons of debt basically leading to a negative savings rate.

As most people can understand, giving $1000 to someone living on $1000/month will generate more economic activity and cascade through the economy (as long as that person does hand over the whole check to Wal-Mart but rather spends it locally, maybe on food, small items, at so-called Mom-n-Pop venues). If you give $1000 dollars to people who make $1000/day, yes, they may end up spending it on the mortgage or some such when all is said and done but it will likely not generate much activity. If you give the $1000 to someone who gets $10,000/day to spend, then it’s relative to giving the poorer person in this scenario about $3.50 which doesn’t do very much for him.

This explains why the huge tax breaks took billions out of the government coffers and did little for the little folks…in fact hurt those who have to rely heavily on government spending. As we have read, as Warren Buffet saves another $55 million in taxes (and many, many less rich, but still rich, people saw their taxes drop) and insiders rip off the government for billions in so-called war spending…and now the money being thrown at the financial companies and now the automakers (yesterday it was the airlines if I remember…), the poor have gotten poorer and the programs that were there to help them have dried up both from government cuts and not cuts in private donations. Wonderful.

In fact, because so much ended up relying on the noble classes and not on fair taxation, it has left programs that were started in the 80s due to the Reagan era cuts (food pantries and food banks, etc.) to counter that mess now struggling because they have become so absolutely reliant on private funding. By the way, we have friends who run (ran?) a well-off arts foundation that unfortunately lost a ton with Made-Off and now they’ve just had to cease their weekly panel discussions and events…all gone…kaput…their endeavor was widely known and important in their field.

Basically the Surge Up economy has left us in a horrible predicament all around. I’m glad you can point to all those wonderful things America is still good at, but frankly, if you drive around a little you can’t help noticing the crumbling/rusting bridges, etc. on interstates and in NYC…the water mains breaking, the sewer main that spewed millions of gallons of yuck into Greenwich and the river (ending the oyster beds),…etc., etc., etc. Last night on Channel 13 there was good show on this.

I’m not saying that we cannot get it together, but frankly you need read up a little more. Even I, lowly victim of the NY Times and PBS with smatterings from the European press know that important infrastructure improvements in other countries has outpaced us here in the US: broadband access, high-speed trains, solar power, building technologies and standards, etc.

Look, it’s New Year’s Eve. So let’s not get into a long discussion (i.e. don’t contradict me!!! Hahahaha!!!), but the fact remains many studies show and economists with half-a brain like Paul Krugman point out the majority of Americans have used credit to replace stagnating/retrograde wages…though talking with Paul gives me the creeps a little because he doesn’t blink very much.

It’s different than in Japan. Thanks for the insights, but I could relate all my stories about France too and could give you lots of examples that might “argue against” limiting executive pay and through the roof bonuses by looking at the stagnation years in France, but to be honest, despite all the years of “la crise” we heard about non-stop, middle class people kept sticking gold coins into nooks and crannies of their homes (literally!). Plus, even with a much fairer spread in salaries, France has had some pretty good years too! And, in spite of the supposedly high income tax rates (and you get more for those taxes frankly…e.g. health care), people had disposable income to sock away money and gold. Average Americans haven’t been able to do this, number one, and number two, the percentage of those living in poverty has steadily grown in the US.

The number of people living at or below poverty in NYC would, together, make their own city that would be the 5th largest in the US! Think of that for a new year’s minute. Kind of hair-raising. Is this the same in Tokyo or Paris…? I’m not sure…