Obama on Fiscal Responsibility

[MattZ]

Sure I can, but i'll also agree that there needs to be more accountability in the way of their compensation. Which, I do believe there is in a lot of companies, even if it seems like there isn't.

 

Whatever. My bigger point (not directed at Matt) is that there is no black/white absolute stance here...even though it's much easier to argue when you make it like that.

 

Haha, yeah. I didn't mean literally. I am with El, though. Like most things we argue about around here, I just don't think the issue is black and white. Are the folks arguing for nationalization and compensation caps being intellectually consistent? Can you simultaneously incentivize people to go work for companies without caps on compensation (i.e., FOREIGN banks) as you argue that the govt can fix the situation? Who is going to be left to do the fixing?

 

Of course, I realize that the folks that are going to be incentivized to go work for Deutsche Bank are the folks that got us into this mess in the first place (or didnt see it coming). But that's why I don't think the issue is black and white. There's no easy answers.

[Good Old Neon]

Are we defending $30 million dollar salaries because we truly believe a single high ranking employee deserves to be compensated at a rate that is ,commensurately, hideously obscene in comparison to what the average employee takes home, or are we simply defending the status quo? That, just because they can, they should, and that it

[bjorn_skurj]

Honest to God, the American people are not ready for that level of a controlled economy. They shot Huey Long for even suggesting it.

[Basil II]

They shot Huey Long for even suggesting it.

 

 

A history lesson right there.....

 

-Robert

[MattZ]

Are we defending $30 million dollar salaries because we truly believe a single high ranking employee deserves to be compensated at a rate that is ,commensurately, hideously obscene in comparison to what the average employee takes home, or are we simply defending the status quo? That, just because they can, they should, and that it

[Guest Speed Racer]

Again, what do they do in a day, what is their actual labor. Be specific.

 

One of my projects at work right now actually involves outlining what a specific CEO does in a day and arguing why this CEO deserves the remuneration received. I had very similar thoughts to yours going into the project, but I guarantee you that you could not last in this person's job for a day without sending something - a project, yourself, a major client or vendor - up Shit Creek without a paddle. I was surprised.

 

Part of the reason they are remunerated to the extent that they are is a lifetime apprenticeship up to that point. Managers manage, and executives execute. Jules is right - if you've never been in or worked in close proximity to that kind of a position before it really is hard to understand why a simple sentence like that is equal to tens of millions of dollars per year. First they do so on a small scale, and if shown an aptitude for management and execution move up until they're up top (like your friend Turkey Jowl). Others, like Bill Gates, have such a brilliant idea at such a young age - AND an aptitude for management - that they are able to become ridiculously wealthy AND maintain a successful company.

 

They can lie in your face and you either believe them, want to believe them, or think they're so great you don't care. They have ideas - ideas that you might think are stupid as hell, but actually and literally buy. Read that part again, seriously: stupid as hell, but you buy them weekly. These ideas are generally able to effect an industry, increasing a CEO's value to the company based on that company's newfound reputation or new demand for the idea machine.

 

Say what you will about these people, but they are VERY good at what they do. They are either smart enough to make the money that they do or smart enough to surround themselves with people who make the decisions that earn them the amount of money that they make. Geniuses deserve the posts because they are as smart as they are. Any idiot - and I mean an honestly stupid person - who can ass-kiss and network their way to a position they are WAY too dumb for is, contrarily, very well suited for a position like that.

 

*******

 

In regards to your doomsday scenario: there will always, ALWAYS be someone willing and able to do your job for less. That goes for CEOs, that goes for shit shovelers. If the CEO leaves, he will be replaced by an ass-kisser in minutes. If 100,000 shit shovelers put down their shovels, as soon as that hits the AP wires 100,000 more will be ready for duty.

 

*******

 

And for the record, I'm not defending that they SHOULD make this much (though I don't know how much I believe in salary-capping, but higher taxation is a definite yes), I'm simply saying that not only is it rational, it's pretty irrational to ask why they make as much as they do.

[Guest Jules]

Wow, Lauren, thanks for that. Well said.

[Moe_Syzlak]

I rarely look at this thread much, but seeing Jules as the last posted often causes me to check in on it. that said, I read Speed Racer's (Lauren's?) post. I have worked closely with many CEO of billion dollar companies over the past 15 years. Not been in the same building close, but in meetings with these guys. Some companies in which I have had multiple meetings with the CEOs: Sprint, Dana, Arvin (now Arvin-Meritor) amongst other, smaller companies. I will say this. It is not easy and one of the biggest misconceptions is that the little guys do all the work and the higher up you get, the more money you make for doing less. There is some truth to this in that you do DIFFERENT work and you are paid for different things. Let me tell you, you are never NOT working when it that position. I have run two small businesses and I was never NOT working (not sleeping? Sure often, but never not working. The problem as I see it with a lot of executive compensation is they are paid these huge sums before they ever actually do anything and despite screwing up royally. I personally witnessed these screw-ups from highly-compensated CEOs at multi-billion dollar companies (without naming names). But the market bears the cost of these execs. I heard on ESPN radio this AM that 50% of people say the biggest problem with the MLB is the player salaries. That SHOCKED me. The market bears these costs and it is not the player's fault. However, I think these companies need to be smarter about the way contracts are structured and NOT give these CEOs golden parachutes despite fucking things up royally. Conversely, how do we expect these companies to right the ship without the best of the best leadership?

[Guest Jules]

I rarely look at this thread much, but seeing Jules as the last posted often causes me to check in on it. \

I guess I'll take this as a compliment.

[Moe_Syzlak]

I guess I'll take this as a compliment.

You should. As I have said, I am pretty fiscally conservative, but I feel that is not license to be completely dogmatic about it. We should strive for what works. Right now, the jury is out and I am having a really hard time being honest with myself about how I feel on "Obama and Fiscal Responsibility." But, I feel this thread is often masturbatory and when i see you have posted it is generally going to provide a break in that. I don't always (often?) agree with you, but I appreciate your perspective.

[Guest Jules]

Well, thanks for that. I'm the first to admit I'm not the most constructive when it comes to these threads, but hey, it's only a message board afterall. Plus, I'm too busy exploiting my employees to put much more thought into it.

[Artifice]

I think there is too much blurring of the line between responsibility and accountability. Supposedly, a CEO's pay should be justified and regulated by accountability, and it is not. And day to day mid level managers down to indiviudal employees may not steer the ship, but they fix problems and patch leaks that would otherwise cause the ship to sink.

 

What this comes down to is a "market will bear" or "because they can" justification. The free market is an amoral mechanism also devoid of ethics and long term foresight. Using it as a moral/ethical/"right" justification for anything is logically inconsistent. The free market will also bear unsafe worker conditions (until the worker supply dries up from injuries), child labor, unsafe and unsuitable products, etc, ad naseum.

 

I'm not a proponent for some kind of centrally planned or limited executive pay limits, but the system we have now is bullshit. If a couple of you have really worked with CEOs, you'll know that their salaries are determined by compensation committees (cronies from other companies - back scratching), or by an "independent" consulting firm whose real role is to validate what's already been decided internally. And, as has been pointed out, an even bigger problem is pay prior to or in absence of performance.

 

In a perfect world, these execs should be paid base salaries of $1mil or less, and earn the rest annually based on performance, just like I or any other professional does (at which point their salaries can scale up quite a bit). And there should be some accountability via derivative shareholder action that if a CEO makes a bad decision or cooks the books, and it doesn't come to light right away, a civil action to force a refund of the bonus money should be a fairly uncomplicated claim to litigate. Ultimately though, you'd like to see more of these guys who forego bonuses when the company is tanking, instead of the ridiculous arrogance of a guy like Merrill Lynch's Thain who asked to be paid a $10 million performance bonus during the BofA buyout of his failed firm.

[Guest Jules]

To All My Valued Employees,

 

There have been some rumblings around the office about the future of

this company and, more specifically, your job. As you know the economy

has changed for the worse and presents many challenges. However, the

good news is this - the economy doesn't pose a threat to your job. What

does threaten your job is the changing political landscape in this

country.

 

Let me tell you some little tidbits of fact which might help you decide

what is in your best interests.

 

First, while it is easy to spew rhetoric that casts employers against

employees, you have to understand that for every business owner there is

a back story. This back story is often neglected and overshadowed by

what you see and hear. Sure, you see me park my Mercedes outside. You've

seen my big home at last years Christmas party. I'm sure all these

flashy icons of luxury conjure up some idealized thoughts about my life.

 

 

However, what you don't see is the back story.

 

I started this company 28 years ago. At that time I lived in a 300

square foot studio apartment for 3 years. My entire living apartment was

converted into an office so I could put forth 100% effort into building

a company, which by the way, would eventually employ you.

 

My diet consisted of Ramen Pride noodles because every dollar I spent

went back into this company. I drove a rusty Toyota Corolla with a

defective transmission. I didn't have time to date. Often times I stayed

home on weekends while my friends went out drinking and partying. In

fact, I was married to my business -- hard work, discipline, and

sacrifice.

 

Meanwhile my friends got jobs, they worked 40 hours a week and made a

modest $50K a year and spent every dime they earned. They drove flashy

cars and lived in expensive homes and wore fancy designer clothes.

Instead of hitting the Nordstrom's for the latest hot fashion item, I

was trolling through the discount store extracting any clothing item

that didn't look like it was birthed in the 70s. My friends refinanced

their mortgages and lived a life of luxury. I, however, did not. I put

my time, my money, and my life into a business with a vision that

eventually some day I too would be able to afford these luxuries my

friends supposedly had.

 

So, while you physically arrive at the office at 9am, mentally check in

at about noon, and then leave at 5pm I don't. There is no "off" button

for me. When you leave the office you are done and you have a weekend

all to yourself. I unfortunately do not have the freedom. I eat and

breathe this company every minute of the day. There is no rest. There is

no weekend. There is no happy hour. Every day this business is attached

to my hip like a 1 year old special-needs child. You, of course, only

see the fruits of that garden -- the nice house, the Mercedes, the

vacations.... you never realize the back story and the sacrifices I've

made.

 

Second, the economy is falling apart and I, the guy that made all the

right decisions and saved his money, have to bail-out all the people who

didn't. The people who overspent their paychecks suddenly feel entitled

to the same luxuries for which I dedicated, earned, and sacrificed a

decade of my life.

 

Yes, business ownership has is benefits, but the price I've paid is

steep and not without wounds.

 

Unfortunately the cost of running this business and employing you is

starting to eclipse the threshold of marginal benefit and let me tell

you why:

 

I am being taxed to death and the government thinks I don't pay enough.

I have state taxes. Federal taxes, Property taxes. Sales and use taxes.

Payroll taxes, Workers compensation taxes, Unemployment taxes, Taxes on

taxes. I have to hire a tax man to manage all these taxes and then guess

what - I must pay taxes for employing him. Government mandates,

regulations, and all the accounting that goes with it now occupy most of

my time. On Oct 15th I wrote a check to the US Treasury for $288,000 for

quarterly taxes. You know what my "stimulus" check was? Zero. Nada.

Zilch.

 

The question I have is this: Who is stimulating the economy? Me, the guy

who has provided 14 people good paying jobs and serves over 2,200,000

people per year with a flourishing business or the single mother sitting

at home pregnant with her fourth child waiting for her next welfare

check? Obviously, government feels the latter is the economic stimulus

of this country.

 

The fact is if I deducted (Read: Stole) 50% of your paycheck you'd quit

and you wouldn't work here. I mean why should you? That's nuts. Who

wants to get rewarded only 50% of their hard work? Well, I agree which

is why your job is in jeopardy.

 

Here is what many of you don't understand ... to stimulate the economy

you need to stimulate what runs the economy. If suddenly the government

mandated to me that I didn't need to pay taxes guess what - instead of

depositing that $288,000 into the Washington black-hole I would have

spent it, hired more employees, and generated substantial economic

growth. My employees would have enjoyed the wealth of that tax cut in

the form of promotions and better salaries. But you can forget it now.

 

When you have a comatose man on the verge of death, you don't

defibrillate and shock his thumb thinking that will bring him back to

life do you? Or do you defibrillate his heart? Business is at the heart

of America and has always been. To restart it you must stimulate it, not

kill it. Suddenly the power brokers in Washington believe the poor of

America are the essential drivers of the American economic engine.

Nothing could be further from the truth and this is the type of change

you can keep.

 

So where am I going with all this?

 

It's quite simple.

 

If any new taxes are levied on me or my company my reaction will be

swift and simple. I fire you and I fire your co-workers. You can then

plead with the government to pay your mortgage note, your SUV, and your

child's future. Frankly, it isn't my problem any more.

 

Then I will close this company down, move to another country and retire.

 

You see, I'm done. I'm done with a country that penalizes the productive

and gives to the unproductive. My motivation to work and to provide jobs

will be destroyed and with it my citizenship.

 

So, if you lose your job it won't be at the hands of the economy; it

will be at the hands of a political hurricane that swept through this

country, steamrolled the constitution, and will have changed its

landscape forever. If that happens, you can find me sitting on a beach,

retired, and with no employees to worry about....

 

Signed,

 

Your boss

[Sir Stewart]

I'd never known JUDE to write so eloquently.

[Artifice]

A repost of a really tired meme full of faulty logic is your response?

 

oh boy.

[Good Old Neon]

What a load of shit.

 

You do realize we just gave Wall Street a trillion dollar plus welfare check, and that that

[JUDE]

Thanks for the compliment Bunk, I did have help though (i.e. an underling wrote it for me and I just took credit and received an obscene compensation package for it).

 

 

What does opening a business in Somalia have to do with this?

[MattZ]

What does opening a business in Somalia have to do with this?

 

I think the point would be that people who tend to rail against taxes also tend to ignore the benefits that accrue to them through taxes. Hard work and success does not occur in a vacuum. It occurs in the context of a society that funds itself with taxes. And while it is easy (and wrong, frankly) to hold up the pregnant woman on welfare as a scapegoat, the truth is that eating Ramen and putting every dollar into your business in Somalia would have yielded far fewer riches to our hypothetical business owner than it would have, and would continue to, in the good ol USA -- even with Obama's higher taxes.

[bjorn_skurj]

I'd never known JUDE to write so eloquently.

I did a story once on the Poughkeepsie-based Center for Objectivist Studies. I assume the memo comes from there.

[John Smith]

First off I know this is a fictional chunk of rhetoric fashioned by some right winger to whine about the demise of small business. But I

[JUDE]

I think the point would be that people who tend to rail against taxes also tend to ignore the benefits that accrue to them through taxes. Hard work and success does not occur in a vacuum. It occurs in the context of a society that funds itself with taxes. And while it is easy (and wrong, frankly) to hold up the pregnant woman on welfare as a scapegoat, the truth is that eating Ramen and putting every dollar into your business in Somalia would have yielded far fewer riches to our hypothetical business owner than it would have, and would continue to, in the good ol USA -- even with Obama's higher taxes.

 

So conversely, do you think that people in Somalia who post on semi-obscure former alt-country message boards complaining about the current state of business/economy are told to move to America and try their luck and then they can talk?

[bjorn_skurj]

Nature (and business) abhors a vacuum. For instance, we just found out this week that someone is opening up that most quixotic and doomed of ventures - a newspaper - in my home town.

[MattZ]

So conversely, do you think that people in Somalia who post on semi-obscure former alt-country message boards complaining about the current state of business/economy are told to move to America and try their luck and then they can talk?

 

The hypothetical author of Jules' post said that he is "done with this country." I would suppose that Good Old Neon was responding to that 3rd grade-level, temper tantrum-type argument by calling "him" on it. I don't see why your converse argument is relevant in this context. Unless you can point me to someone in Somalia who is done with that country. You can expand your search beyond semi-obscure former alt-country message boards, if you like.

[MattZ]

Also, the reason Jules is great is because he posts shit like that and then disappears while everyone else fights about it. And he knows what he will find when he checks back in. Lemmings, we are.

[Guest Jules]

Who, me?