Posted on 11/25/2008 2:48:10 PM PST by jazusamo
There is an old Russian fable, with different versions in other countries, about two poor peasants, Ivan and Boris. The only difference between them was that Boris had a goat and Ivan didn't. One day, Ivan came upon a strange-looking lamp and, when he rubbed it, a genie appeared. She told him that she could grant him just one wish, but it could be anything in the world.
Ivan said, "I want Boris' goat to die."
Variations on this story in other countries suggest that this tells us something about human beings, not just Russians.
It may tell us something painful about many Americans today, when so many people are preoccupied with the pay of corporate CEOs. It is not that the corporate CEOs' pay affects them so much. If every oil company executive in America agreed to work for nothing, that would not be enough to lower the price of a gallon of gasoline by a dime. If every General Motors executive agreed to work for nothing, that would not lower the price of a Cadillac or a Chevrolet by one percent.
Too many people are like Ivan, who wanted Boris' goat to die.
It is not even that the average corporate CEO makes as much money as any number of professional athletes and entertainers. The average pay of a CEO of a corporation big enough to be included in the Standard & Poor's index is less than one-third of what Alex Rodriguez makes, about one-tenth of what Tiger Woods makes and less than one-thirtieth of what Oprah Winfrey makes.
But when has anyone ever accused athletes or entertainers of "greed"?
It is not the general public that singles out corporate CEOs for so much attention. Politicians and the media have focused on business leaders, and the public has been led along, like sheep.
The logic is simple: Demonize those whose place or power you plan to usurp.
Politicians who want the power to micro-manage business and the economy know that demonizing those who currently run businesses is the opening salvo in the battle to take over their roles.
There is no way that politicians can take over the roles of Alex Rodriguez, Tiger Woods or Oprah Winfrey. So they can make any amount of money they want and it doesn't matter politically.
Those who want more power have known for centuries that giving the people somebody to hate and fear is the key.
In 18th century France, promoting hatred of the aristocracy was the key to Robespierre's acquiring more dictatorial power than the aristocracy had ever had, and using that power to create a bigger bloodbath than anything under the old regime.
In the 20th century, it was both the czars and the capitalists in Russia who were made the targets of public hatred by the Communists on their road to power. That power created more havoc in the lives of more people than czars and capitalists ever had combined.
As in other countries and other times, today it is not just a question of which elites win out in a tug of war in America. It is the people at large who have the most at stake.
We have just seen one of the biggest free home demonstrations of what happens in an economy when politicians tell businesses what decisions to make.
For years, using the powers of the Community Reinvestment Act and other regulatory powers, along with threats of legal action if the loan approval rates varied from the population profile, politicians have pressured banks and other lending institutions into lending to people they would not lend to otherwise.
Yet, when all this blows up in our faces and the economy turns down, what is the answer? To have more economic decisions made by politicians, because they choose to say that "deregulation" is the cause of our problems.
Regardless of how much suffocating regulation may have been responsible for an economic debacle, politicians have learned that they can get away with it if they call it "deregulation."
No matter what happens, for politicians it is "heads I win and tails you lose." If we keep listening to the politicians and their media allies, we are all going to keep losing, big time. Keeping our attention focused on CEO pay— Boris' goat— is all part of this game. We are all goats if we fall for it.
How do you think Oprah would like that?
Even better is the Russian story where God promises to do something to reward Ivan, but because he is a better person he will give double that amount to Boris.
So Ivan tells God to make him blind in one eye.....
If a corporate executive makes 100 million dollars a year, I could care less, unless that corporate executive happens to be standing before congress begging for tax dollars to keep his stupid company afloat. In that case, I want his goat to die.The same principles apply to entertainers, of course.
I can’t imagine the Ford and GM stock holders think they are getting a good deal on their execs currently.Their deal is as good as the deal that the producers of Gigli got from hiring Ben Affleck and Jennifer Lopez.
How can a company that is loosing 2 Billion dollars a month justify giving it's CEO 25 million dollars a year in bonuses?The same justification the producers of the movie The Postman had for paying Kevin Costner, I guess.
self-ping
“’deregulated,’ or at least improperly regulated”
Two TOTALLY different things!
You are correct that the unregulated mortgage backed securities were largely at fault, but you aren’t digging deep enough. Why were all those created? It was largely a reaction to the forced issuance of bad loans under the CRA.
Here’s how it works: The libdolts regulate the cr@p out of some part of the economy, here mortgages, making them unviable. The private sector responds by offloading the risk into a less regulated area, here the mortgage backed securities. The risk doesn’t vanish, though, it just shifts and eventually explodes.
If the libs would have regulated those securities, the private sector would have moved the risk to something else.
The only way to stop this through govt oversight is to regulate EVERYTHING. That’s called socialism, communism, or facsim, depending on the manner used and extent of regulation. Of course, that doesn’t work either, and the whole thing collapses that way, too.
The solution? Stop govt from trying to make business decisions at all. And also stop govt from trying to force the hands of the private sector. Regulate to stop fraud, monopoly, etc., then stay out of the way. The free market will then handle risk in the right places, and corrections will happen sooner with much smaller impact.
PS If the underlying mortgages were OK, MBS’s and those other instruments would have been OK. Actually would have been useful for risk management to handle nomal defaults, etc. The problem was they were built on a faulty foundation, namely bad mortgages that the banks were forced to write due to CRA and the like.
The General Motors CEO is begging Congress for a taxpayer bailout. The idiot producers of Kevin Costner movies are not. A least not yet.
When money is involuntarily being taken from my pocket by the IRS to line the pockets of Corporate CEO's or to bail them out of their bad decisions, then their compensation package becomes MY Business and your business.
So since the CEO of GM got a 25 million dollar bonus for driving his company into the toilet, and is now asking me as a taxpayer to bail his sorry @$$ out, I want his goat to die.
I hope I make myself clear.
You don't understand either economics or the movie industry.
The producers of Gigli did not get bonuses for their stupid decisions. They lost money. Lots of money. They didn't go to the taxpayers and ask the taxpayers to bail them out. They did not get multimillion dollar bonuses from their investors for losing money and then go to congress and beg the taxpayers to undo their stupid decisions.
“beg the taxpayers to undo their stupid decisions”
Something a lot of you are forgetting is that the govt - the people we elect to handle our tax money - FORCED a lot of the bad decisions. For example, with the Big 3, the govt FORCES them to deal with with UAW rather than let them manage their own employment practices. So I can understand why those same CEOs whose hands are forced by the govt then turn to the govt for a bailout when the decisions turn to cr@p.
Does that mean I am for the bailouts? Heck NO! The bailouts are just the next stage in nationalizing the private sector.
Here’s the process: (1) Regulate an industry to death. (2) Blame the private sector for mismanagement when those regulations wreck the industry. (3) Bail out the industry, making sure to get control under the excuse of “watching out for the taxpayers’ money.” (4) Take the industry over completely when it continues to fail due to (3). (5) Lather, rinse, repeat.
We are past (2) and well on the way with (3).
PS Alternative to (3) is just take over the industy. That’s the model being used for health care.
Honda, Nissan and Toyota all play by the same rules when building and selling cars in America. They make money. GM, Ford and Chrysler all lose money. The only thing that can save them at this point is Chapter 11. They need to cancel all those union contracts and supplier contracts and everything else, and retool and start basically all over. To bail them out would be to postpone their failure for another day.
And what we are talking about here is CEO compensation. No company should pay it's CEO more than minimum wage when they are losing 2 Billion dollars a month.
For example, with the Big 3, the govt FORCES them to deal with with UAW rather than let them manage their own employment practices.
Bull. They can make a smart business decision to simply go bankrupt, cancel all union contracts, fire every union employee and open up a non-union shop the next week and hire anybody willing to work for $48 an hour, like Toyota and Honda.
PS Alternative to (3) is just take over the industy. That’s the model being used for health care.
No the alternative is for these overpaid CEO's to make a smart decision and declare Chapter 11.
I could live with that. :)
Good points. However, I don’t think the CEOs will do chap 11 if they have the alternative of a govt bailout. And if they did, their shareholders would sue on the grounds of the CEOs failing to take available measures to salvage the stock. So the reality is that the Big 3 are working under different rules than Honda, Toyota, etc. Also, the foreign owned companies really cab “take their ball and go home.” Their govt will back them, too. The Big 3 can’t, and our govt is and has been the one actively screwing them over.
This also shows that the bailout isn’t of the Big 3. It is a bailout of the UAW. Without it, chap 7 or 11 is the only option, and that would kill the UAW. Gee, wonder why the donks are all for this “corporate” (union) welfare?
BTW, though, my points were for how libs/socialists take over an industry. Your point was (CE0 goes chap 11) is a way to block them.
Those CEO's should have taken Greyhound like all the other beggars.
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