Criticizing is easy. Just ask anybody. They'll gladly tell you what's wrong with Obama, Bush, the Democrats, Congress, the Republicans, or frankly, the way you mow your grass. The best way to throw a true "kvetch" (complainer) off his or her game is to ask them a simple question, "So, what would you do?" Chances are, you'll get an answer that would make all the aforementioned groups seem brilliant by comparison. Criticizing is easy, finding solutions is hard.Since I do more than my share of critiquing, I like to try my hand at finding solutions from time to time. It's my way of keeping myself from ever becoming a 'kvetch'.
With earning season in full swing this week, you'll soon be hearing about huge profits and huge bonuses. I don't really have as much of a problem with people making large bonuses as some of my more Liberal friends do. If you can make me a $100 billion and all I have to do is pay you $100 million-sign me up! In fact, contact me right here and leave your number! I'll call you right back! I have no problem with "over-paid" sports figures, radio show hosts, movie stars, or anyone else who's helping someone else get rich and breaking off a piece for themselves. It does drive me crazy that some freakishly tall mental midget gets $20 million for throwing a round ball through a hoop while an emergency room nurse makes $40k. But as long as the stadium is full and the money's flowing, why not?
I believe most people think like me on this one. The real problem comes when someone loses $100 billion and still gets paid his $100 million. That what drives people to start shopping for sniper rifles and high towers. The Obama Administration is now paying lip-service to the idea of limiting executive's pay. That feels a tad un-American to me. Like I said before, if you can make me rich, I don't want the Government telling me when it's a good deal. I'll take my own chances. Thankyaverymuch. What I think someone is worth is my business. However, taxing profits is as American as apple pie.
So, here's my idea.
Let's base a bonus tax on the amount of money given to the top management of any major company on the profit they produce. It would work like this; You can pay your CEO, CFO, etc., anything that you want. However, only .01% of the amount of your profit payed in bonuses will be "bonus tax" free. For instance, if my CEO makes my company $100 billion, I can pay him up to $100 million bonus tax free! If I pay him 200 million, the extra 100 million causes the profit to get taxed on a sliding scale. $100 billion profit times .01% = $100 million with no tax, $200 million is .02% so the $100 billion profit gets taxed an additional .01%. If the bonus was $300 million, then the tax on the profits would jump to .02% and so on. The highest tax you can put on the profits is 100% and the lowest tax liability for those that don't make a profit would be the equivalent of the bonuses they pay.. The beauty of this plan is that the higher the ratio of bonus to profit-the worse they get taxed. If they choose to give out bonuses of $10 million when the company loses money, that's fine, the tax will be $10 million. I doubt the stockholders will go for that.
One of the little games our corporate-bought-and-paid-for politicians like to play is the "It's just too difficult" game. That's the game where they try something they know will fail and then say, "Well, we tried, I guess it's just too hard." That's the game they're going to try to run past you on these corporate bonuses. If it's possible to stop me, your average worker, from making any money on the side (just look at how they tax my kid's paper route, your waitresses' tip, or someone preparing your taxes) then, I think we could do this with very little effort. Don't buy for one minute that it "just can't be done." It can, and should, be done. H.C.
14 comments:
I agree, but let's be honest here. It's not the "corporate-bought-and-paid-for politicians" that are in charge, rather it's the corporations themselves, often to the extent that they are the ones writing law & policy, both public & corporate. I don't see them intentionally shooting themselves in the foot anytime soon.
-n
Hey Nic,
Your absolutely right. A lot of times Big Pharma, Big Oil, Insurance companies, etc. are writing the legislation behind the scene. That's why we need more transparency. The Clintons started it with their behind-closed-doors Health Care, then Bush/Cheney with their Energy policy and now Obama. We should throw out the "Well, they did it first" mentality and send a message that we DO want it on CSPAN. Maybe nothing can be done to change things, but if something CAN be done, the first step is public awareness. I'm just trying to demonstate that there ARE solutions and the idea that "It's just too hard" is exactly what they want us to believe.
Hey!!! What's wrong with the way I mow my lawn?????
Now the people next door... There's an example of what's wrong with America...
I look at it this way: There's a reason corporations pay someone $100 Million. And when you don't satisfy that reason, they (either the BIG Bosses or the BIG shareholders, not the riff-raff like I) move you to the curb. Albiet with a good severance package. Just look at some of the corporate 'trash' that's been dumped over the last two years. However, most of the 'outrageous' bonuses are in that evil place: Wall Street.
Although I can list a number of reasons why I should be paid the same, my check comes up about three zeros short...
I shoulda been a banker...
Hey Hack,
LOL, Your mowing horizonal!!! Everyone else is doing the verticle thing. Come'on man, get with the program.
I agree with you that it's really the stockholders problem. But the real issue is this "Corporate quarter" philosophy. We have to work toward long-term growth instead of the idea of returning good results for 3 quarters (at high risk) and then a massive drop when the risk fails. It doesn't do us much good to fire the guy after he's made his money and the damage is done. The way these guys negotiate their contracts, failure has little punishment and risk taking has all the rewards. Unfortunately, the stockholders are playing the same game, get your quarterly profit and bail at the first sign of trouble. This is creating "bubble" markets. I'm not sure that my solution on this post really addresses that problem completely. I was responding more to the issue of bonuses, but I think it would have a marginal effect on the way the stockholders view giving bonuses during none-profit quarters.
"I shoulda been a banker..."
"Yeah, sunbathing in the Bahama's, hot model pouring your drinks, all on bail-out tax dollars, short-term profit and a golden parachute. It does sound kinda good. The trouble is, Hack, You and I have too much of a conscience.
I more often blame this on the board of directors. (You should see some of the winners on the various Michigan Corporate boards.)
Look at Chrysler, they went private, then hired Bob Nardelli. Jeez, that clown ran Home Depot into the ground, got a platinum parachute, then Cerberus put him in charge. If anyone thought Chrysler was going to be around after that move, they need to start putting their money under their mattress.
I am convinced of 'what shareholders' the Boards represent. It definitely isn't the small investor/speculator that owns 100 shares. It isn't even the guy that owns 10,000 shares. It's the dozens of Mutual Funds, Hedge Funds (who, BTW, do the bulk of investing for Pensions - Don't get me started...), and Family Memebers (the Ford family has a 'special' class of stock that will alway give them 40% of the control) that are represented. Or should I say: Fearful of?
Does anyone think Vikram Pandit gives a damn about 'ol Hack, that owns 5500 shares of Citi (C)? Or that Alan Mulally cared about my 6000 shares of F? Maybe if I doubled my present positions and then added four zero's to them. And in the case of F, I'd still be outgunned by William Clay and family.
Major corporations compete for talent, much the same as Major sports teams compete for running backs and pitchers. And even though the various leagues have 'salary caps', they manage to pay lots of money to their stars.
Which is why, IMO, having a politician create bonus (salary) caps for corporate America is a joke.
On a side note: I've been actively/passively trading the 'Market' since the early 90', and what's been killing it (other than Obama getting infront of a camera) for the small, long term investor, IMHO, is the various hedge funds, mutual funds, and ETFs that are shorting it. When the SEC eliminated the 'uptick' rule, the market started this daily/weekly roller coaster ride.
If the idea is to build wealth (for whatever end reason), the old adage of 'buy and hold' has been replaced with 'buy it, sell it, and buy it back'.
Sorry for the rant. I had just gotten my IRA back to 2005 levels, when 'The Narcissist of the Free World' got on the tube and drove it back to 2001 levels.
"I agree, but let's be honest here. It's not the "corporate-bought-and-paid-for politicians" that are in charge, rather it's the corporations themselves, often to the extent that they are the ones writing law & policy, both public & corporate. I don't see them intentionally shooting themselves in the foot anytime soon."
Took the words right out of my mouth, nic. So far, the Obama administration hasn't done a single thing to convince me that they're any different than any administration we've seen so far when it comes to keeping corporations at bay. I would've never imagined it would've gotten to THIS point (invest hundreds of billions in corporate welfare), but it could've been easy to predict that Obama would keep bed fellows happy.
I remember during the Democratic primaries how his O-ness promised to broadcast health care negotiations on C-SPAN. To date? Nada. In fact, it's almost as if the Prez is making it a point to completely dance around his promise with a hold that people's memories are short or that the Kool Aid's hypnotism is working (it looks like it is). And that was just in the health care discussion. When it comes to ever other big business dealing, it now comes at no suprise that we are dealing with politicians who like to keep their sleazy work out of the public view.
What Obama, Nancy "The Dems always keep it real and never do backroom negotiations" Pelosi, and the other Congressional Dems don't seem to get is that while the general electorate is pretty uninformed about a lot of issues, they can also detect lies when they need to.
The general public doesn't need to know that the Obama is in bed with corporate giants if they can see all the public displays of affection already being demonstrated (bailouts). Don't be suprised if this motivates a MAJOR shakeup come midterms. It's a little too early to make these predictions, I know. But I don't think I'm very far off.
Oh yeah. Before I forget, ditto for the Supreme Court of the United States.
If there was ever a clear message being made, it was with this verdict.
Meant to say "decision." Sorry. Damn typo.
"..(What the)...Dems don't seem to get is that while the general electorate is pretty uninformed about a lot of issues, they can also detect lies when they need to."
I gotta give you some props for that observation. Just something about a used car with new paint..
Hey Hack,
Here at the "U" where I work we've hired executives from Kmart and Delphi, both of which were disasters. Then they bring in all their failure friends who's track record is about the same. We've had administrators (I have to be careful here) that have had, let's say, questionable ethics, and then get parties thrown for them when they "find a better position" (read; forced out). Meanwhile, housekeeping staff gets escorted out by Safety for being late 3 times in a month. Apparently, after your so high on the ladder, there is no such words as "failure" or "unethical". This is part of the problem. There simply is no accountability anymore. Just look at the way we treated Ken Lay (who deserved it) compared to Barney Frank. They both did the exact same thing (lied to stockholders about the status of the corporations they were heading) But Barney is still in his position with no repercussions. $17 trillion in wealth has disappeared and to date, no one has been punished. I agree with you that capping salaries is a joke, especially oversaw by the same politicians that take their lobby monies. That's why I think taxing the profit of the stockholders is a better (though not perfect) solution. I'm all for reinstating the 'uptick rule', without it, short selling and default swaps become too profitable. There's something fundamentally wrong with making more money if a company fails. We also need to revisit the Glass/Steagall act. Two things that haven't been tried well enough in this country (IMO)-well-regulated capitalism and middle class tax cuts. Great thoughts Hack!
Hey Dre,
"Transparency" and "Accountability" were two words that candidate Obama embraced during the campaign that he seems to have forgotten since he became President. Part of the problem is; he was referring to someone else during the campaign and now doesn't want it on his own people. Although I completely agree with you on the influence of Corporations, let's not forget that the other side of the coin is the PACs and special interest groups. I'm not sure that I want an environmental group having unlimited influence while a corporation is not even allowed to defend itself. What we really need, is to get all the money out of politics (bump, smack, rustle). Sorry, I fell out of my chair laughing at myself.
P.S. As far as the mid-terms. I think your right on target. But in political terms, 10 months is a long way off. Just ask Martha Coakley.
As always a entertaining and informative read, but especially liked your use of kvetch, keep up the yiddish
Hey Aviad,
Thanks, I have to look out for my Yiddish peeps too. I'd be a shlemil not to.
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