Posted on 01/22/2007 9:16:03 PM PST by jazusamo
Great article.
Please add me to this ping list. Thanks in advance!
Please add me also.
"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."
- Friedrich A. Hayek
LOL. What a great and pithy statement.
Dr. Sowell's Basic Economics should be required reading of every US Senator.
While I still believe Home Depot's board was wrong to give hundreds of millions of dollars to a CEO they were firing, I nonetheless believe Gordon Gekko was right. Greed is good. It's what gets successful people out of bed and onto the job every morning.
Should computer experts tell brain surgeons how to do their job? Or horse trainers tell either of them what to do?
Of course not. Actors are the only people who know everything.
The senators wouldn't understand it; it doesn't have pretty pictures of bunnys and flowers.
LOL! You're both right on the money.
All too often, the highest paid CEO is the bringer of the "miracle turnaround", taking a company from losing money to making big bucks in a matter of months, then moving on to the next job and an even higher salary.
But it is easy to turn a company around in the short run: Fire a bunch of employees and sell of a bunch of assetts. Overnight you have positive income and lots of cash.
Eventually though, these guys start believing their own BS and stick around a little too long. The next morning when the party is over the hangover starts. They haven't solved the fundamental problem, they have just kicked it down the road. Their products still aren't selling, and now they have fired all the employees who were working on the next big thing and liquidated all the assetts they would have used to manufacture them. Then they get the golden parachute at precisely the time the company can least afford it.
Even worse, before they take the jump out of the plane they are flying into the ground they take all that cash they generated firing employees and selling assets and buy another failing business and repeat the process. What you have is not productivity but a cycle of destruction akin to a pyramid scheme.
These big companies are not sources of wealth, they are sinks. What keeps them afloat is the truly innovative products produced by the smaller businesses they sometimes purchase.
Would the stockholders of Home Depot be worse off with the CEO of Costco at the helm? Hardly. Not only would they have a competent CEO, they would have one whose salary doesn't resemble a pirate raid on the company's books.
ping
Bravo. You nailed it.
Did you, by any chance, see yourself in the article?
Well, he nailed something, but I'm not sure it was the target.
The fact remains that, basically, people haven't the standing or the knowledge to meaningfully criticize what other people choose to do with their money, and nothing in the post in question deal with this reality.
Instead he goes off on executive salaries exactly in the way Sowell complains of, but without dealing with the crux of Sowell's critique. It's OK (if risky) to disagree with Sowell, but anyone doing so ought to at least offer up some reasons and deal with Sowell's argumentation head on.
Liberal economic ignoramuses (I know, I'm being redundant) just can't understand how someone who has no direct interest in your wellbeing can help you. In lib world someone must intentionally say they want to help someone and not make a cent off it to count as help. So according to libs, that "greedy" boss who gives you a job because he's forced to is not helping you. And the nitwit good person who is nice to you but can't give you a job or does a poor job educating or training you is helping you. In lib world, that makes sense.
More than any other living American, Tom Sowell's books (of which I have a number) and articles should be required reading in all classrooms from high school on up.
This is also why you can find a web programmer in silicon valley for just over minimum wage, but finding a good plumber, HVAC tech, or finishing carpenter is going to really cost you. It has to do with the relative value of certain skills, and just how scarce those skills are.
There's an old joke where the punchline is,
Total service fee: $5000.
Hitting the pipe with the hammer: $5.
Knowing where to hit the pipe with the hammer: $4995.
Mark
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