When one considers the state of the modern American economy, the phrase survival of the fittest hardly springs to mind. Instead, we think of idioms like too big to fail and zombie bank. We think of Band-Aid fixes, public make-work schemes/scams, of borrowing demand and earnings from the future and assorted other conjuring tricks used by economists and politicians, all designed to ensure the survival of the weakest...at the expense of the fittest.
The nation's largest insurer, for instance, remains but a coddled mass of inefficiency, even after hundreds of billions in taxpayer-funded cash infusions; and its flagship automotive companies still suckle desperately on Washington DC's nanny-state teat. Ol' Fannie and Freddie were gifted - on Christmas eve, no less - enough taxpayer juice to guarantee they will waste at least that much...and probably many times more...before all is said and done.
It seems that all a company needs to do to earn somebody else's bailout cash is to display an unrivaled aptitude for first loosing their own. The more bereft of any real world capabilities an institution is, the more likely it will find itself the recipient of your tax dollars.
Thankfully, not all acts of corporate stupidity are noticed by Big Brother. Some reckless companies are actually, GULP, allowed to fail. Here at The Daily Reckoning, we like to pay homage to those institutions kind enough to remove themselves from the corporate gene pool. We are all better off without bankers who can't count and automakers that can't compete. It's time to stand by the tar pit to cheer their timely demise.
With that in mind, we recently opened nominations for this year's Daily Reckoning Financial Darwin Awards. In short, the Financial Darwin Awards recognizes the efforts of companies that, through unwavering dedication to idiocy, rendered themselves either financially castrated or entirely extinct.
Readers were quick to nominate the US Congress, the education system, the Federal Reserve (with separate nominations aplenty for its Helicopter-in-Chief), the entire middle class of America and even the state of California. There were also a few nominations for individual companies, among them Circuit City and the creatively named Linens 'N Things.
Circuit City was a damn good electronics chain that was too stupid and slow to adapt to Wal-Mart's entry into electronics, observed one reader.
Chimed another: I would give the award to Circuit City's corporate managers for deciding that the best way to save money and ensure business survival was to get rid of their best salespeople. Aside from depriving the business of those people themselves, the decision also sent a message to the survivors: Stay mediocre or lose your job. (Well, they lost their jobs anyway, but it probably took a few months longer.)
A reader from Down Under was kind enough to send through a small list of ill-fated morons...
ABC Learning - ended up being bought out by welfare groups with Rudd federal government financial assistance... Storm Financial - the case of this company reads like a frenzy of stupidity and greed, combining into a black comedy... Timbercorp - the model of this business growing trees proved to be an abject failure... Opes Prime - another failed financial advisory...
And still more...
Don't forget Washington Mutual, writes another, for forgetting the good banking activities that made them as large and well liked as they [once] were.
Now, as much as we enjoy laughing at others' stupidity, we enjoy profiting from it even more.