![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
ysabetwordsmithI found this article recently:
This outrages me. Shareholders aren't paying; the taxpayers are. So long as a company runs at a profit, there is some justification for allowing it to assign that profit as it sees fit, on the grounds that it must be doing something right. (I deviate from corporate doctrine by asserting it is not acceptable for a company to put out shoddy goods and services to its customers so as to enrich its shareholders and executives, nor to cheat and abuse its workers, nor to shortchange safety protocols so as to cause damage to persons and habitat; but some examples of such behavior are legal and common, and many more are simply gotten away with.) The individuals in charge of the company may at least be demonstrated by said profits to be competent at their jobs. However, when a company does so poorly that it is in danger of collapsing altogether, which failure could harm the public, and the company goes to the government and demands money -- then it absolutely becomes the public's business how that money is spent, because it is our money, and because the executives in charge of the company have been demonstrated as incompetent by reason of their faulty decisions leading to imminent failure.
I don't think they should have bonuses. I don't think they should have $500,000 a year. I don't think they should have jobs. And they have absolutely no right to demand money with no strings attached. That is arrogant beyond all tolerance. It is another example of privatizing profit and publicizing risk. It rewards failure; worse, it rewards leeching. This kind of shell game with money is what caused much of the economic sinkhole to start. One cannot have a stable economy if the bottom layers are soaked to death, nor if the upper layers are full of ignoramuses. And while we are on the topic of rampant incompetence, I am not impressed by the government's ability to count with its boots on, and I am not pleased to see any segment of society fail so epically that it requires government assistance to bail out, thus expanding the scope of government into areas where it often does as much harm as good.
Current events imply that extravagant sums of money do not attract talented leaders; they attract people who enjoy hoarding huge sums of money and aren't too picky about how they get it. This previous approach having failed spectacularly, I would like to see something else tried instead, and some other people employed to implement it, while we still have some fragments of an economy to scrape together.
/rant
CEO Pay Is Nobody's Business but Shareholders'
Washington, D.C., February 11, 2009--In a new article just published on Businessweek.com, Dr. Yaron Brook, executive director of the Ayn Rand Center for Individual Rights, argues against the idea that our government should dictate CEO pay to America's companies. According to Dr. Brook, "Shareholders have a moral right to pay whatever they judge necessary to attract, retain, and motivate talented leaders."
This outrages me. Shareholders aren't paying; the taxpayers are. So long as a company runs at a profit, there is some justification for allowing it to assign that profit as it sees fit, on the grounds that it must be doing something right. (I deviate from corporate doctrine by asserting it is not acceptable for a company to put out shoddy goods and services to its customers so as to enrich its shareholders and executives, nor to cheat and abuse its workers, nor to shortchange safety protocols so as to cause damage to persons and habitat; but some examples of such behavior are legal and common, and many more are simply gotten away with.) The individuals in charge of the company may at least be demonstrated by said profits to be competent at their jobs. However, when a company does so poorly that it is in danger of collapsing altogether, which failure could harm the public, and the company goes to the government and demands money -- then it absolutely becomes the public's business how that money is spent, because it is our money, and because the executives in charge of the company have been demonstrated as incompetent by reason of their faulty decisions leading to imminent failure.
I don't think they should have bonuses. I don't think they should have $500,000 a year. I don't think they should have jobs. And they have absolutely no right to demand money with no strings attached. That is arrogant beyond all tolerance. It is another example of privatizing profit and publicizing risk. It rewards failure; worse, it rewards leeching. This kind of shell game with money is what caused much of the economic sinkhole to start. One cannot have a stable economy if the bottom layers are soaked to death, nor if the upper layers are full of ignoramuses. And while we are on the topic of rampant incompetence, I am not impressed by the government's ability to count with its boots on, and I am not pleased to see any segment of society fail so epically that it requires government assistance to bail out, thus expanding the scope of government into areas where it often does as much harm as good.
Current events imply that extravagant sums of money do not attract talented leaders; they attract people who enjoy hoarding huge sums of money and aren't too picky about how they get it. This previous approach having failed spectacularly, I would like to see something else tried instead, and some other people employed to implement it, while we still have some fragments of an economy to scrape together.
/rant
![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
(no subject)
Date: 2009-02-13 07:55 am (UTC)How? I mean, what is wealth if it can evaporate?
*sigh*
Date: 2009-02-13 08:04 am (UTC)This is one reason I'm not sanguine about the government conjuring up merry bundles of cash to "stimulate" the economy. That's worth, not wealth. It mostly exists on the government's say-so. We surely need to be creating jobs right now, but we should be doing that as frugally as possible; there are a lot of things that could be accomplishing using extant resources, or perks and credits, rather than money. You can't eat a dollar bill; you certainly can't eat electronic ones and zeroes sculpted into a bank's assertion of worth. Those things only have value as long as people believe in them, and plenty of countries have demonstrated how easily people's faith in currency can be shaken. That's an illusion that isn't safe to stress too far. Unfortunately, governmental awareness of this is much like a mechanic's awareness of torque...
Q: How far do you tighten a screw?
A: A quarter turn before it strips.
Re: *sigh*
Date: 2009-02-13 02:30 pm (UTC)*makes a note*
(no subject)
Date: 2010-06-26 02:31 am (UTC)(no subject)
Date: 2009-02-13 10:57 am (UTC)You should take anything that has the name "Ayn Rand" attached to it and forget any rational understanding of it. Her followers, like her philosophy, are so rabidly libertarian that you can't really find a common ground. The current economic mess is largely a Randian catastrophe anyway. Alan Greenspan is a major Objectivist and used her philosophies to manipulate the United States economy based upon Rand's work.
Objectivism is a real piece of work. It is based on a rabid anti-communism that Rand picked up when she was a child and their is no support for anything other than lassiez faire and caveat emptor in their economic system. If your not interested in being a robber baron then the philosophy won't work for you. I find that the best response to a suggestion by an Objectivist is to listen carefully to what they say and the apply the absolute opposite of their advice.
David
Hmm...
Date: 2009-02-13 05:36 pm (UTC)Actually, one of the biggest Rand fans I know is a conservative. And I find some of the foundation's ideals of individual liberty and responsibility to be valid. Other times, yes, I think they're crazy.
>> The current economic mess is largely a Randian catastrophe anyway. Alan Greenspan is a major Objectivist and used her philosophies to manipulate the United States economy based upon Rand's work. <<
I tend to agree with this, that deregulation contributed more than regulation to the mess. But I have heard some things that make me suspect the government's homeowner-related regulations contained some asinine rules.
>>If your not interested in being a robber baron then the philosophy won't work for you.<<
I've come to that conclusion myself. It's anarchy, really, because the philosophy values the individual above all else, including society. If that spreads, society comes unglued, which is not something I really desire. Conversely, systems that abnegate the individual in favor of society suffer from other problems making them equally undesirable, and which tend in the long term to explode. I believe that a healthy culture balances the needs of the individual and the group.
(no subject)
Date: 2010-06-26 07:14 am (UTC)(no subject)
Date: 2009-02-13 12:24 pm (UTC)(no subject)
Date: 2009-02-13 12:38 pm (UTC)I think that we CAN "bail out" companies that fail, in situations where the ongoing existence of that company has some sort of benefit to the society.
But the way we do that is buy buying them out, in some form or another, and, once we do that, we get to run them, 'cause it's OUR FREAKIN' COMPANY then.
(no subject)
Date: 2009-02-13 12:41 pm (UTC)No thanks. Many folks want separation of church and state. I want separation of business and state. If a company fails, it failed because it was stupid and needs replacement. Let people build something new and better to put in its place, don't prop up the failure.
It's like tying a prosthesis to a rotting leg. Just don't do it.
(no subject)
Date: 2009-02-13 01:36 pm (UTC)Because things don't fail in isolation. The collapse of one structure takes down the things that rely on it, even if those things did nothing wrong.
"Well, that bridge is rotten. We should let it fall down, then build another one later."
That's one solution. But another one is to fix the bridge.
If a business is rotten, you need to prop it up so that the things that rely on it don't fall down. Then, as it's propped up, you need to rip out the rot and rebuild. (That's the part that people tend to forget. In actual building, too, not just in the analogy.)
One major reason to have a government in the first place is to have an entity whose responsibility it is to do the things that are EVERYBODY'S responsibility. There's no one person you can point to whose job it is to put a bridge across a river for everyone's use, or to prop up a business that everyone ELSE'S business relies on. So that's where a government can step in and take on the job.
The government, in this case, as in ALL cases, is the visible agent of "everybody, in aggregate."
You can't separate business and state. If you combine church and state, they infect each other, and both weaken. If you separate business and state, they both collapse.
(no subject)
Date: 2009-02-13 01:51 pm (UTC)Hmm...
Date: 2009-02-13 05:25 pm (UTC)I think there are a lot of things that turn very dangerous if they are run for a profit rather than for the public good (as business tends to do) or if people have only one choice (as nationalization tends to do). Something like health care or water supply or electricity is crucial and causes swift huge doom if it is interrupted or corrupted. A business can mess it up by doing shoddy work and pocketing most of the money, or by doing decent work but charging more than people can afford, or even both. A government can mess it up by clogging the lines with red tape, or letting things go flop because they have a captive audience who has to take what they're given, or both.
Something everybody needs must be managed carefully. Government broke up the Bell telephone company because it was causing the kind of problems that capitalism causes when there's not enough competition. It worked rather well; telephone companies now scramble and compete for customers, which can be confusing and distracting, but at least the prices became more reasonable and if you hate your company you can dump it. But I can see validity in arguing that the government should be in charge of things like utilities, because the government is supposed to make sure everyone gets basic services while a business is mainly about making money and doesn't care if poor people go without services. Look at the ruckus over Obama's proposal to extend broadband coverage, and how that parallels the old argument over extending electricity.
I see both business and government as seriously flawed. I've seen both of them, separately and together, create huge disasters. This is what has me looking for alternatives or blends or something that will work better. Since most people don't think that way, but rather flip back and forth between established options even if those are flawed, I spend a lot of time going, "No, not that way! The doom!" because I can see the yawning trap ahead.
Hmm...
Date: 2009-02-13 06:17 pm (UTC)*sigh* That is true.
>> "Well, that bridge is rotten. We should let it fall down, then build another one later."
That's one solution. But another one is to fix the bridge.<<
Fixing the bridge only works if there is enough structurally sound material left. That's a crucial determination to make; I'm not sure anyone is even checking. Another alternative is to tear down the bridge carefully, rather than letting it collapse messily. This can minimize collateral damage.
>>If a business is rotten, you need to prop it up so that the things that rely on it don't fall down. Then, as it's propped up, you need to rip out the rot and rebuild. (That's the part that people tend to forget. In actual building, too, not just in the analogy.)<<
Good point about forgetting to rip out the rot. This is a key reason why I believe the CEOs whose decisions contributed to this disaster should be fired.
>> The government, in this case, as in ALL cases, is the visible agent of "everybody, in aggregate." <<
I agree with this. However, I prefer to reserve the government as a last resort, because it tends to be stupid and clumsy. I greatly prefer things to be done some other way.
>>You can't separate business and state. If you combine church and state, they infect each other, and both weaken. If you separate business and state, they both collapse.<<
Several different governmental models (including fascism and communism) have demonstrated ways in which merging business and state can cause disaster. Capitalism generally separates the two, which prevents some problems but can cause others. In my observation, either merging or separating business and state requires careful attention. There's no easy solution.
Hmm...
Date: 2009-02-13 05:45 pm (UTC)That's an interesting argument. I shall ponder this. My suspicion is that there are some, and that plenty of people would name things like gambling houses or cigarette manufacturers. It could be interesting to go through and ask, "What good does this do? What harm does this do?" It's obvious that cigarettes cause massive misery, expense, and death. But I've also known a few people who use tobacco for spiritual purposes and/or to manage personality and talents in productive ways not duplicated elsewise. I am fairly certain that there are businesses which cause far more harm than good, and I'm not very happy about that.
>> If we use that as the yardstick by which we choose whether government should nationalize something, we'd be nationalizing everything.<<
Which I agree would be a bad idea.
>>Many folks want separation of church and state. I want separation of business and state.<<
That's an interesting premise, and a good guard against fascism.
>>If a company fails, it failed because it was stupid and needs replacement. Let people build something new and better to put in its place, don't prop up the failure.<<
I tend to agree. However, other folks have pointed out some valid drawbacks to letting things fail catastrophically.
>>It's like tying a prosthesis to a rotting leg. Just don't do it.<<
To follow your idiom, there's a different between having a leg traumatically severed in a car wreck vs. having it surgically amputated. The latter is less messy and more survivable.
In economic terms, then, this would be something akin to bankruptcy: an orderly closure of a business, so it could be shut down with minimal doom and replaced with something better, rather than an effort to maintain a business whose policies were terminally flawed.
Re: Hmm...
Date: 2009-02-14 04:12 am (UTC)That's an interesting argument. I shall ponder this.
I've thought of one. That company that produces the Girls Gone Wild DVDs. If it was an actual adult film company it would make some sort of contribution bc many adults like adult films. But Girls Gone Wild has NO redeeming value.
(no subject)
Date: 2009-02-13 03:45 pm (UTC)This isn't to say that I don't feel the outrage that many do over propping up banks & then watching them give huge sums to the CEOs who were at the helm when they were failing. Just that I think that, it could be a problem long-term. I'd rather see rules on proportional salaries such that the CEO can only my N times more than the entry-level salary. At which point it's using the carrot rather than the stick -- do well, make sure your employees are doing well, and you get to do well.
While I agree, in theory, that institutions that fail should be allowed to fail, in practice there are certain thresholds of economic decay that lead to civil unrest. That's generally tied to unemployment rates. So... if a large business fails, and the businesses depending on it fail, and the banks lock up such that no one can get any capital for their business.
(no subject)
Date: 2009-02-13 03:52 pm (UTC)Life is uncomfortable. We are entitled to the pursuit of happiness, not to be given happiness.
(no subject)
Date: 2009-02-13 03:56 pm (UTC)... I wish I should remember where I was reading that the other day. It was an article discussing unemployment levels in relation to civil uprisings.
(no subject)
Date: 2009-02-13 03:56 pm (UTC)*sigh*
Date: 2009-02-13 05:12 pm (UTC)Hmm...
Date: 2009-02-14 02:34 am (UTC)I believe that people are entitled to a fair chance, and that a key purpose of civilization is to make life more fair.
There are a lot of unfair paradigms in effect, some of them compile, and there is a limit to how much unfairness people are willing to tolerate. When it gets too extreme -- when people feel that they are being robbed, cheated, or otherwise abused -- they tend to respond first by grumbling and dragging their feet, and later by bursting into violence. The more precarious their living situation -- the more people who fear that they will not have a place to live or food to eat -- the more likely violence becomes and the more severe it becomes.
In nature, systems incline towards balance. When air is hot in one place and cold in another, wind arises to balance those temperatures. So too, societies seek a certain amount of balance, not always perfectly equal, but responding to moderate extremes. Wealth has been rushing into the top fraction of society for quite a few years, and that's causing problems. The more obvious that becomes, the greater the difference between the richest and everyone else, the greater the strain it puts on society as a whole. Society does not thrive when vast numbers of people find themselves unable to meet even their most basic needs, through no fault of their own.
Re: Hmm...
Date: 2009-02-14 04:14 am (UTC)Maybe we need to resurrect the slogans of the French Revolution.
Re: Hmm...
Date: 2009-02-14 05:21 am (UTC)Re: Hmm...
Date: 2009-02-14 08:19 am (UTC)Hmm...
Date: 2009-02-13 05:32 pm (UTC)Yes, that's a problem. The question is, given where we are now, is it a worse problem to cap some businesses or no businesses? Or might we simply open the discussion of salary caps, as a similar concept to minimum wage, and consider capping all of them, which would at least be fair?
>>I'd rather see rules on proportional salaries such that the CEO can only my N times more than the entry-level salary. At which point it's using the carrot rather than the stick -- do well, make sure your employees are doing well, and you get to do well.<<
I would be thrilled to see that on this planet.
>>While I agree, in theory, that institutions that fail should be allowed to fail, in practice there are certain thresholds of economic decay that lead to civil unrest. That's generally tied to unemployment rates.<<
It all comes down to the fact that as long as people have their basic needs met, they're fairly biddable; when they don't, they aren't. They go looking for people to blame. And if you forcibly take their scarce resources -- which taxation is for many people -- and they then perceive that you are wasting those resources, they have a tendency to beat down your walls and tear you limb from limb, as plenty of governments have discovered to their mortal dismay. I'm pretty sure that, despite our idealogical differences, all of us here agree that this would be a Bad Thing.
>> So... if a large business fails, and the businesses depending on it fail, and the banks lock up such that no one can get any capital for their business.<<
The banks are locked up now, which is part of the problem. Giving them ridiculous amounts of taxpayer money was supposed to solve this problem. It didn't. I've read in a couple of places, which sadly did not provide hard numbers and names, that the bailed-out banks had clamped down harder on lending than those banks not bailed out.
Thoughts
Date: 2009-02-13 05:11 pm (UTC)Since the government has already made that unfortunate mistake, however, we're stuck trying damage control.
Re: Thoughts
Date: 2009-02-13 05:12 pm (UTC)They haven't listened yet. Actually, I don't know of many people who think things like the stimulus package are a good idea, and yet they keep voting for it.
Someone needs to take a bit, bridle and a whip to these people and remind them who's on top. :P
Re: Thoughts
Date: 2009-02-13 10:17 pm (UTC)They haven't listened yet. <<
*sigh* Same here. Freesh, when it came the first bailout, I was trying to get hold of Republicans and tell them to vote the fool thing down, not that it helped any.
>> Actually, I don't know of many people who think things like the stimulus package are a good idea, and yet they keep voting for it.<<
I was somewhat intrigued at first hearing, on account of the green tech and job creation aspects. The first codified version impressed me only marginally. Subsequent versions have lost ground rapidly. I believe the current version has been whittled into a way to waste large sums of money, that may or may not do much good.
>>Someone needs to take a bit, bridle and a whip to these people and remind them who's on top. <<
"People should not fear their governments; governments should fear their people" ... eh?
I can just see you in corset and thigh-high leather boots, whip in hand, riding the backs of a herd of wild swine. That would make a splendid political cartoon in ink.
(no subject)
Date: 2009-02-13 12:36 pm (UTC)*blink*
But. . . that headline . . . that's precisely the POINT.
See, the government only gets to dictate those terms if the companies take the bailout money.
The bailout money is in the form of a loan with ownership guarantees.
In other words, it's stock. Non-preferred secondary stock, but still.
But taking that money makes the citizenry of the US into stockholders.
Which means that, by Dr Brook's argument, it IS our business.
Why is it our business what the CEOs make? Because it is OUR buisiness that the CEOs are running -- we bought a stake in it with the bailout.
Duh. Read for content, Randite -- the stockholders have gotten fed up with the corporate greed of the people managaging our money, and are trying to impose caps on it.
Thoughts
Date: 2009-02-13 05:14 pm (UTC)Pistons
Date: 2009-02-13 01:35 pm (UTC)Re: Pistons
Date: 2009-02-13 05:48 pm (UTC)(no subject)
Date: 2009-02-13 02:42 pm (UTC)This is a thing I run into all the time in corporate America these days. What a CEO does has become so mystified (probably intentionally) and over-exalted that the only way to compare how much they are making. Which, as WE all know is about as stupid as selecting your used car off the lot based solely on the sticker price.
Very little of what any CEO does at ANY company is really rocket-science. Anyone who KNOWS the business (and that is as true of the blue-collar machinist on the production floor as it is of the white-collar middle manager) is capable, given the data, of making smart choices about its direction. All the rest is fluff and "conventional wisdom" that has been piled on the role for the last 60 or so years.
If we as a country (and as employees and stock-holders) continue to treat CEOs as rock-stars, then who is to blame them for getting over-inflated senses of importance?
I think this whole horrible recession is a good thing on a lot of (albeit painful) levels. A whole lot about our economy (and by extension the corporate structure at most of our larger companies) has been deeply flawed for a long time, and we have all just been riding comfortably past in our illusionary limo-of-the-good-life.
My biggest fear at the moment is that none of the right lessons really get learned from all this pain and we end up just patching the holes and carrying right on down the road, like we have done in all the more recent recessions. I still have faith that Obama (and hopefully the rest of us) is smarter than that, but I am also prepared to be disappointed...
Thoughts
Date: 2009-02-13 05:59 pm (UTC)Excellent point! Many people are still trumpeting the value of principles that just gutted the economy, such as Greenspan's ideal that "financial self-interest" would keep people honest. Those principles having been proven disastrously wrong, it would be prudent to try other principles and other leadership.
>>What a CEO does has become so mystified (probably intentionally) and over-exalted that the only way to compare how much they are making. Which, as WE all know is about as stupid as selecting your used car off the lot based solely on the sticker price.<<
Absolutely. I am reminded of ancient cultures in which the priests became insanely wealthy because nobody really knew what they did but everybody believed it was vital. That ... tends to end messily. Since America more or less worships wealth, the parallel is quite close.
>>If we as a country (and as employees and stock-holders) continue to treat CEOs as rock-stars, then who is to blame them for getting over-inflated senses of importance?<<
That would be one of the ways in which the culture as a whole is at fault, not merely the handful of people empowered to make the decisions that went horribly wrong. I'd say one thing we need to do is demystify the CEO. Let's be honest, now: is running a company really one million times harder than picking strawberries or scrubbing toilets? Certainly it isn't a million times harder than teaching small children. Huge disparity in income widens the gap between rich and poor; the wider that gap gets, and the more of the country's money is concentrated in a very tiny percentage of people, the more dangerous it becomes for everyone. That isn't going to change unless we, as a culture, pull back somewhat from idolizing money and the people with the knack of accruing it. Because there are very few people who can't be morally ravaged by the application of absurd amounts of money and power. It's like salt; you need some to survive, but too much will kill you.
>>I think this whole horrible recession is a good thing on a lot of (albeit painful) levels. A whole lot about our economy (and by extension the corporate structure at most of our larger companies) has been deeply flawed for a long time, and we have all just been riding comfortably past in our illusionary limo-of-the-good-life.<<
I agree.
>>My biggest fear at the moment is that none of the right lessons really get learned from all this pain and we end up just patching the holes and carrying right on down the road, like we have done in all the more recent recessions. <<
Mine too. And me being a bard, how I deal with that is by circulating information and starting discussions. We've got a good one going here, I think -- people are raising valid points from all different perspectives.
(no subject)
Date: 2009-02-13 06:00 pm (UTC)So yeah, if you make a lot of money, everyone in the WORLD can peek.
I wasn't QUITE correct
Date: 2009-02-13 06:12 pm (UTC)The Public Sector Salary Disclosure Act (PSSDA) was passed in 1996 to make Ontario's broader public sector more open and accountable to taxpayers. The Public Sector Salary Disclosure Act requires organizations that receive public funding from the Government of Ontario to disclose annually the names, positions, salaries and total taxable benefits of employees paid $100,000 or more in a calendar year.
It's only public sector jobs. Still, since we have a lot of things publicly owned, it's only fair that taxpayers see how much is being made by public workers.
On the CRA website, you can see the financial statements of any registered charity. That's how I found out my mom hadn't had a raise in 10 years. :/
Re: I wasn't QUITE correct
Date: 2009-02-14 01:45 am (UTC)(no subject)
Date: 2009-02-13 09:45 pm (UTC)ETA: I see