Thursday, February 5, 2009

A Cap That Fits?

What's wrong with giving CEOs, and top earners in corporations big year-end bonuses to the tune of more than 18 billion dollars?

What's wrong with corporations sending their top earners, and big sellers on expensive junkets to Las Vegas as a reward for work well-done, and to keep them motivated?

What's wrong with a corporation taking possession of a new, multimillion dollar company jet that the company ordered for the use of it's corporate heads?

Well, one thing that's wrong with it, is that these things are being financed with the American people's tax dollars, during a time when many Americans have lost their jobs, and are tightening their belt as a new kind of exercise regime.

"But that's not exactly right! American tax dollars are not being used for these expenses, whether you think they're exorbitant or not. These monies are coming from other funds."

Yeah, sure! How these execs can separate our money from any other is beyond me. Weren't these corporations teetering precariously on the precipice of ruination? Didn't some have to go to Capitol Hill, hat in hand, begging for a bail out?

It seems to me that if these companies were doing so well that they could pay billions of dollar in bonuses, finance expensive junkets, sporting events, and sports arenas bearing their names, then they didn't need the people's money to begin with.

For future recipients of bail out monies, yesterday, February 4, 2009, President Obama capped the salaries of corporate heads at the pay level of the American President, $500,000.oo. The move is not retroactive. Already, many are crying foul, while others are applauding the move.

"This move by the President could be very bad for New York; the state will suffer the most under this cap. And it will cause an unfortunate brain drain, a mass exodus of talent to other corporations, at a time when the best minds and the most talented are needed to shepherd these failing corporations out of the red and back into the black."

Well, if these talented tenth were so great, why are these corporations in the fix that they now find themselves in? If they're so damn smart, why did they need government bail out monies at all?

One thing that we may face if these talented, smart people move to other companies is that they may bring the new companies down in the same way they did the old ones.

And if the rats abandon a sinking ship, who would want them anyway? I thought a captain went down with his foundering ship, and was the last to desert her bow and stern.

By capping the salaries of company heads who accept bail-out money, many believe that Obama capitulated to politics, and political expediency, in hopes of smoothing the ruffled feathers of those Americans who're struggling the most in the economy.

I say power to him. Maybe it's time for some of these companies to fail, if their only hope for survival is to continue with their business as usual tactics--the very things that got them here in the first place, unchecked greed, and bad business policies.

If corporations wish to pay out big bonuses, fine, just don't ask the American people to finance it.

I thought that "pay to play" was at the very least unethical, if not illegal. We shouldn't assure companies that they're too big to fail, and insure them against bad managerial decisions and policies. I know of no place where bad decisions are tolerated, and failure is rewarded with fun and games and expensive consolation prizes, to the extent that we have seen during this financial crisis. I say if these corporations wish to play, let them pay, and not the American people.

This cap is just the right size, given the immensity of the problem, and the extensive use of taxpayer dollars that will be required to help resolve the problem.


Seda said...

Amen, BD.

The things these guys are most talented and smartest at are fishy tax returns and golden parachutes.

Have you read "Unequal Protection," by Thom Hartmann? I think a lot (most?) of the problem is that in the United States, corporations are legally considered persons, and are given the same rights of privacy and so forth under the 14th Amendment as humans. But a corporation is not a human, and putting it on a level legal playing field with a human gives an enormous advantage to the corporation, which typically has a zillion dollars more in resources.

Another problem is that corporations can buy up other corporations to form huge, multinational conglomerates that are "too big to fail," and so get bailed out by the government all the time - which is fascism. And people can sit on the boards of competing companies.

The whole system is rotten to the core, and those three reforms - removing corporate personhood, limiting corporate ownership of corporations, and restricting the number and kind of corporations on which one can sit on the board - would be far more welcome even that the salary cap.

Believe me, a few months work for their tax lawyers, and they'll find or create a loophole that lets them keep all the money they can squeeze out of the companies.

Good post, keep it up!

Black Diaspora said...

I like this voice of yours, too. Like you, I have many voices, and have only recently decided to add this one to yet another blog.

I believe that it's better to get what you're thinking out, no matter how many ears it ultimately reaches.

"Have you read "Unequal Protection," by Thom Hartmann?"

No, I haven't. But I shall. I like the summary you have provided regarding what he dislikes about our current business/corporate model.

"Another problem is that corporations can buy up other corporations to form huge, multinational conglomerates that are "too big to fail," and so get bailed out by the government all the time - which is fascism."

I agree. I hear that those banks which received bail-out monies are being encouraged to use some of it to buy up other failing, financial institutions.

These buyouts will entitle them to even more tax credits reaching into the billions of dollars.

I'm not anti-business, but I don't think that we should allow our business/corporate entities to dictate how our economy should be run (What's good for business is good for America.).

I'm told that the decisions that Congress made on behalf of Enron (now defunct) was later used to create the economic meltdown that we're now experiencing.

I'm not an economist, but I'm thinking we, the people, need to become more savvy really quickly, if we want to keep our government accountable to us in the one area where we can be hurt the most--around the health and regenerative power of our economy.

I think that the solution you outlined is far overdue, and I hope that the "salary caps" are merely the down payment toward real business/corporate reform in this country.

But it's going to take an informed electorate willing to put partisanship aside, and force those we elected to do what's in the best interest of our country, rather than theirs.

One economist sees the problem this way: because of the jitters in our economy, banks are too scared to lend, and consumers are too scared too spend.

This economic logjam will not necessarily be broken with more tax cuts, because people will do with them what they did before--save them.

Without consumer confidence, those persons most vulnerable to an economic downturn, are not going to let go of their precious dollars, when they may need them later to weather a more violent economic storm.

"Believe me, a few months work for their tax lawyers, and they'll find or create a loophole that lets them keep all the money they can squeeze out of the companies."

And I'm sure you're right, which makes me wonder who's really in charge, and who's really running this country.