Keeping Capitalism's Excesses in Check

In ''A sophisticated assault on global capitalism'' (Economic Viewpoint, Nov. 8), Jeffrey Garten complains that the efforts by the Sierra Club and citizen organizations to influence the forthcoming debate in Seattle on the ground rules for international trade constitute an ''assault on global capitalism.''

He complains that as a result of the work of the Sierra Club and Amnesty International, Shell Oil put pressure on the Nigerian government to clean up its human-rights act and the Nigerian environment; that the anti-sweatshop movement got Nike Inc. to raise the wages it pays to workers in the Third World making pennies an hour; that a broad coalition of consumer and environmental groups got Monsanto Co. to abandon its ''terminator'' technology, which would have prevented farmers from storing seed from one season to another.

If this is an assault on global capitalism, then global capitalism is in trouble. Perhaps, just as we need fair trade, not just free trade, we need responsible capitalism, not just global capitalism.

Carl Pope
Executive Director
Sierra Club
San Francisco


Garten points with alarm to the alleged power of nongovernmental organizations (NGOs) and their threat to global capitalism. How surreal--as if the NGOs had the power, the money, the control of the media, and can therefore wreak havoc on international capital. The only reason that thousands of people and scores of NGOs are planning to demonstrate against the presently existing World Trade Organization and globalization's palpable deficiencies is precisely because they, the citizens, have so little direct political or media power.

It is conceivable that ''a global market can promote not only growth but individual freedom as well as a cleaner environment,'' as Garten writes, but only if that ''market''--that is, those powerful corporations and institutions--is brought under democratic political supervision and direction and into the full light of democratic transparency.

Gerald Cavanaugh
Ashland, Ore.


Garten seems to have problems with free speech. He uses terms like ''assault,'' ''disrupt,'' and ''hijack,'' which imply that the NGOs are some kind of terrorists. He assumes that, as far as trade is concerned, only governments and businesses should decide what is best for countries and their citizens. He assumes that unfettered free trade and global capitalism are the only way to a global nirvana. He encourages creation of ''enemies lists'' to rein in the NGOs.

I don't know about an ''open world economy,'' but one thing the world needs is open political processes. The U.S. has in most cases stopped supporting countries run by tyrants who would suppress open government. I assume Garten would protest if I were to say that businesses have no right to participate in political processes. NGOs have just as much right as a business to advance their mission. If he wants NGOs to open their finances and members if they participate in political processes, then businesses should have to disclose what political parties, political action committees, and candidates are supported by their executives.

Phillip Gordon
Castro Valley, Calif.

It's Time for Gillette to Sharpen Its Focus

Anybody who has ever followed Gillette Co. knows that every 15 or so years the company needs to reengineer itself (''The big trim at Gillette,'' News: Analysis & Commentary, Nov. 8). The last time was prompted by an unwanted takeover attempt. The company needs to not only sharpen its razors but also its pens and, ultimately, its focus. Stuffing the channel inventories is a game as old as any in this business, and it always catches up. Gillette CEO Michael C. Hawley got stuck with the excesses of the regime of former CEO Alfred M. Zeien, and he and his financial henchmen will have to cut sharply and quickly. The question is: Can an ''inside'' guy make the tough calls?

I predict the razor-cutting cannot stop on the factory and warehouse floor. I look for trimming of the bureaucratic expense creep as well and a renewed emphasis on new products, the lifeblood of any such business.

Let's face it, the company has always depended on blades, batteries, and oral care products for the bulk of its profits. Why not shed the underperformers when it is obvious which they are? It's only about 15 to 20 years overdue.

Richard B. Goldman
Weston, Mass.

Understanding the Nuances of Community Philanthropy

''Lending a helping hand--with stocks'' (Business Week Investor, Nov. 15) was welcome, but it had several flaws. First, the ''new intermediaries'' have not just come along. They have been here for many decades in the form of America's community foundations. Donor-advised funds have been a staple of community-based philanthropy, providing thousands of effective partnerships between professional foundation staff and individual donors. Unlike the three funds you cited, community foundations have one other important ingredient: live program staff who are knowledgeable about charities in their own cities and towns.

Also, people who set up donor-advised funds don't really ''direct'' further charitable gifts--they can only advise and recommend. Paying attention to these legal nuances may be an excellent reason for working with a community foundation.


F. Warren Hellman
Chairman
San Francisco Foundation
San Francisco

A Wake-Up Call for the Old-Boy Network

It will take more than a move to Boca Raton, Fla., to show a ''loosening up'' for the old-boy network at the Business Council (''A chic spot for the CEO crowd,'' Up Front, Nov. 1). Director Philip Cassidy should spend less time evaluating the shopping opportunities for women when women-owned companies represent 38% of all U.S. businesses. Perhaps it is because the companies he represents have only 3.8% of senior officer positions held by women and that gender parity on corporate boards probably won't be attained until 2064.

Jamice Loiselle, CEO
Progressive Solutions Inc.
Madison, Wis.

Don't Sell Stock Index Funds Short

''New exchange funds: Not just spiders and WEBs'' (BusinessWeek Investor, Nov. 15) implied that a 20% fall in the Standard & Poor's 500-stock index would prompt redemptions of 44% or more of Vanguard 500 Index Fund, resulting in taxable capital-gains distributions to shareholders. A 20% market decline would not necessarily prompt redemptions. Indeed, during the two 20% declines experienced over the past three years, the fund has enjoyed net cash inflows. To reach a 44% redemption level would be unprecedented.

George U. Sauter
Managing Director
Vanguard Group
Malvern, Pa.

In Defense of Medical Savings Accounts

Regarding Howard Gleckman's ''The nasty side effects of medical savings accounts'' (News: Analysis & Commentary, Oct. 25), the facts about medical savings accounts refute him. The Internal Revenue Service's own figures show 32% of MSA purchasers have been uninsured--that's from the beginning of the program in January, 1997, through June, 1999. Keep in mind, this is a severely restricted program. Any product that causes people to leave the ranks of the uninsured and voluntarily purchase coverage should be welcomed, not scorned.

Gleckman's contention that MSAs encourage their owners to avoid preventive care to head off expensive illnesses has no support. Nor is there evidence that people with high-deductible policies avoid care and have worse health and higher expenses as a result. The opposite is true, as evidenced by the Rand Health Insurance Experiment. Those assigned $1,000 deductible coverage and given the $1,000 to pay for their out-of-pocket expenses actually consumed considerably less health care than those with zero-deductible coverage--and there was no difference in their health outcomes.

The notion that MSAs will siphon off the healthy and that health plans will be left with sicker workers and more children defies reality. MSAs have been around in one form or another for five years, and this has not happened. Finally, Gleckman quotes the Urban Institute as saying that if 25% of workers took an MSA, the premiums for those who stay in traditional plans would increase by as much as 60%. For the math to work, those who were leaving would have to have had claim costs substantially lower than zero.

At Golden Rule, we are proud to have pioneered MSAs, which are insuring many previously uninsured people. If Congress lifts the onerous restrictions this year, many more uninsured will have health-care coverage.

Jack Whelan
President and CEO
Golden Rule Insurance Company
Lawrenceville, Ill.

Cable Consumers Should Thank FCC Chairman Kennard

Regarding ''Is the FCC chief all talk?'' (News: Analysis & Commentary, Oct. 25): A few facts reveal that the approach of Federal Communications Commission Chairman William E. Kennard is on target. Cable-TV rates have increased only in moderation (even with the onset of deregulation) because cable operators know customers can readily choose a competitive service such as direct broadcast satellite at comparable cost. The rate of cable price increases has slowed from a CPI increase of 7.26% last year to only 3.75% this year. And the gap between the rate of cable increases and that of inflation was significantly smaller than in previous years.

Meanwhile, cable's competitors continue to make substantial gains, growing from under 3 million customers in 1993 to 14.5 million today. Direct-broadcast satellite in particular has shown pronounced growth in the past year, jumping from 7.25 million to 10.05 million subscribers. Cable operators are making service and pricing decisions that are responsive to marketplace competition.

Robert Sachs, President & CEO
National Cable Television Assoc.
Washington

Don't Confuse Lean with Cheap

It is wrong to blame the current capacity crunch on just-in-time (or lean) manufacturing (''Just-in-time manufacturing is working overtime,'' News: Analysis & Commentary, Nov. 8). Many people mistakenly believe that being lean means cutting everything--workers and plants as well as inventory. Wrong. The lean approach insists on ample capacity. This is crucial for adequate maintenance, which is crucial for good quality, which is crucial for everything else. Lean manufacturing is not necessarily cheap manufacturing.

Paul H. Zipkin
Durham, N.C.

''New exchange funds: Not just spiders and WEBS'' (Business Week Investor, Nov. 15, 1999)

''New exchange funds: Not just spiders and WEBS'' (Business Week Investor, Nov. 15) should have noted that if the S&P 500 stock index were to fall by 20%, the Vanguard Group's 500 Index mutual fund's unrealized capital gains would be halved as a result of falling stock prices.

''Lending a helping hand--with stocks'' (Business Week Investor, Nov. 15, 1999)

''Lending a helping hand--with stocks'' (Business Week Investor, Nov. 15) should have added that any tax deduction on donation of stock held one year or less is limited to its cost basis.