Monday, July 23, 2007

True Democracy and Economic Wealth Continued

Readers of the controversial blog entry of a week or so ago,

I had to bring this late comment from the True Democracy post to the top. Too good to be lost way down at the bottom of that discussion. And I have another great email comment to post on the subject tomorrow or the next day. Who said you can't talk politely about politics, religion, or sex? I'll have to work up something on sex for future discussion, as we've already covered politics and religion!


DGP said...
"Hi. My wife showed me these comments, which I have found thought-provoking, and I love the civility among disagreeing parties. These are my two cents: When I was in graduate school in the '70s, a young man (a close friend of my wife's brother)stayed overnight and, over dinner, let us know that he was part of a movement to role back social programs until Franklin Roosevelt's social network would be erased. He felt that churches and individuals would take over the function of providing for those in need. We considered him an intelligent, privileged, naive, idealistic young man whose beliefs had no chance of coming to pass. Carter was in the White House and the country had just experienced the Nixon years, government wiretaps, the enormous contributions, in cash, solicited from corporations by the Republican Party, etc. The nightmare was over; who could forget it? Since then, regulations have been rolled back not just to pre-Roosevelt (Franklin) but to pre-Roosevelt (Teddy); the trust buster and founding ecologist. Corporate heads now make 500 times as much as their workers rather than the 50 times of thirty years ago, there are essentially no limits to mergers and companies make money by shipping jobs to countries with no worker rights or benefits. The United States hemmorhages wealth through it's lopsided balance of payments. Those who insist on a quality product and fair treatment more often than not are beaten out by those who spend largely on executive pay. Chainsaw Al, the legendary company buster, made millions in bonuses by cutting jobs. Does anyone really think that a ten million a year ceiling to executive pay would be socialism? Or that extending the social security tax so that there is no longer a ceiling to deductions, which would take care of almost half of the yearly deficit for the country, is grossly unfair? Somebody does; that bill reportedly has no chance of coming to a vote. It's always possible to make more money by cutting pay, cutting benefits, deregulating, not enforcing safety standards, firing watchdogs and generally taking the short view that at this point appears to be ruining the world for our grandchildren and their grandchildren. Controlling the press is even better. Slander works; it's a tradition. That's how Nixon got rid of Ed Muskie (an attack on Muskie's wife caused Muskie to cry publicly during his defense of his wife, a kiss of death for a presidential candidate), and it was the tipping point for the last presidential election. Swift Boat tactics work, and a genuine war hero (who was anti-war) was outshouted for patriotism by a draft evader wrapped in a flag. Simply put: the health care system is worse than ever and 90% of doctors will agree, the United States appears to have gone from paragon to villain in public opinion polls in the world's democracies, morality is used as an issue to help the wealthy get wealthier (Calvinism, anyone?) and it appears to be okay to be financially greedy as long as you're not sexually greedy. I could not believe the results of the last election, but I've come to believe it. Sure, government is inefficient, but privatizing appears largely to have been a way to pay fabulous sums to those companies, such as Honeywell, that have replaced government employees with unregulated contractors. Has anyone followed the disastrous results of private contracts in Iraq? Shoddy workmanship is cheaper. Anyway, you can tell which side of the discussion I'm on. I think giving a third of my money to the common good is getting off cheap, but right now that third is being distributed to Cheney's cronies. I'd rather have a program for the poor, thank you."

Thanks DGP for your insightful comments. I like it civil. Sometimes Payne Hollow has to come in to moderate!



BB-Idaho said...

DGP sums it up nicely. I agree, and offer a generalized summation from Will & Ariel Durant's 'Lessons of History':
CHAPT VIII, closing paragraph:
"We conclude that the concentration of wealth is natural and inevitable, and is periodically alleviated by violent or peaceable partial redistribution. In this view all economic history is the slow heartbeat of the social organism, a vast systole and diastole of concentrating wealth and compulsive recirculation."

brd said...

How much do I love that paragraph. A lot I think.

Josh Stock said...

Thank you DGP, for your comments. I believe that I, too, fall into the category of your naive idealistic friend. I wish that families, churches, neighbors, community organizations, and local NGOs would reclaim many of the social support functions that were handled outside the government prior to the Great Depression. I have no illusions, though, that this will ever happen unless we see some significant changes in our society about the nature of individualism, wealth, and justice for the oppressed.

I agree with you, DGP (and BRD) that wealth is inequitably distributed, and much power and wealth are accumulated in too few people. I disagree with you, however, that government regulation via the bureaucracy, is the fix.

I hear you ask, "Then what is?"

In my opinion: Local groups; Civil society; Rotary, Salvation Army, Kiwanis; churches/mosques/synagogues; neighborhood associations. I would love to see a system established where the US Government finds a way to encourage these organizations to flourish and re-engage with the roles that some (many?) of them have historically had. I understand that because the system is broken, and many people are dependent on state services (they have no fault, because they have no other recourse), the government cannot step out completely and should not do so. But I think that the mentality of "I don't need to do it--that's what my tax dollars do" needs to be put out of its misery, people need to start DOing.

As far as salary caps go--I don't disagree in principle so much as I do in practice. Who decides what salary is "too much"? Do ballplayers get capped too, or just CEOs? Will our strong business leaders be lured overseas to Europe in hopes of a bigger paycheck, leaving 2nd tier managers to lead the businesses of our country's economy?

I'm often ashamed at the behavior of people in the business world, who are quick to claim bonuses gained by putting thousands of jobs (and the families who depend on them) on the chopping block. The Golden Parachute phenomenon is even worse.

Perhaps tying Executive pay to a multiple of entry-level worker pay would be possible (say, 50x instead of 500x). Then a CEO could earn a higher paycheck by paying the employees more, balanced by the fact that if s/he pays too much, the company goes broke. But then the company is likely to give fewer pay increases to middle-level folks (keep more at the low end to spread out the costs), and it tips the scales even more in favor of the CEO.

What's the solution to this one?

brd said...

See how many good ideas we are generating in our discussion. Josh I like the idea of tying the executive pay to worker pay.

I don't think you need to worry about US execs running off to Europe yet though. In a very creatively titled article in Forbes, Mind the (CEO Pay) Gap.

"The size of the gap, however, is up for debate. A study by consulting firm Towers Perrin found that American top dogs make 80% more than their brethren in Britain. Another consultancy, Hay Group, has found a 50% gap.

But a recent study--by academics, not consultants--says the gap is much smaller than previously thought. Martin J. Conyon, John E. Core and Wayne R. Guay, all professors at the University of Pennsylvania's Wharton School of Business, compared the largest 250 British companies with about 1,200 U.S. firms of similar size. Both the Towers Perrin and Hay studies, by contrast, used much smaller samples.

In 2003, according to the Wharton data, the median U.S. CEO pay package was about $2.5 million, including salary, bonuses, benefits and incentive compensation. That was 35% more than the median British CEO, who brought home a little less than $1.9 million."

brd said...

Interesting new book by J.M. Coetzee entitled Diary of a Bad Year in the making. The New York Times quotes an excerpt that is of interest here.