“The length of this document defends it well against the risk of its being read.” – Winston Churchill
More on Corporate CEO salaries from Michael Brush- see http://articles.moneycentral.msn.com/investing/companyfocus/isaceoworth364timestheaveragejoe.aspx
1) “Top executives at Fortune 500 companies averaged $10.8 million in total compensation in 2006. The average worker . . . made $16.76 an hour, which worked out to $29,544 for the year. Those numbers are from a report called ‘Executive Excess 2007: The Staggering Social Cost of U.S. Business Leadership.’ ” Further, “CEO pay in the U.S. has grown to become 364 times the average worker’s pay. It was just 40 times the average pay in 1980. It’s hard to imagine that top leadership skills have grown much scarcer in the past 37 years.”
2) The minimum wage was increased from $5.15 to $5.85—“the first increase in the federal minimum wage in 10 years. But the minimum wage is still 7% below where it was 10 years ago, adjusted for inflation. Meanwhile, CEO pay has gone up 45%, adjusted for inflation, according to the ‘Executive Excess 2007’ report.’ ”
3) Milton Friedman wrote in “Capitalism and Freedom” that the raising of the minimum wage may actually have the effect of putting people out of work because it raises the controllable costs, which is employee salaries. If the cost of paying any number of employees is raised, and a business has to continue to justify keeping a certain number of employees employed, it will raise prices on consumer goods and services. So, an increase in the minimum wage has an adverse affect on those it is most meant to help. A car of marginal quality would perhaps cost $500 more after an across the board wage hike, which is an increase someone making over $100k can afford, but someone making less than $50k may not be able to. Keep in mind, if the minimum wage goes up 70 cents, it is more likely that other salaries will go up, so that certain job markets can remain competitive. This affects all businesses, not just McDonald's who now has to pay a burger flipper 70 cents more. A factory worker now must be paid 50 cents more per hour, and so on, because, that particular business wants to retain their services, while now being able to justify letting a slightly less productive worker go because of the increased wage-scale across the board, not just because of a minimum wage increase. Hm, I wonder if certain types of politicians might want illegal immigration to continue, thus voting against any type of immigration bill because the illegals will work for lower wages, which keeps corporation/business profits high. See below for why I would think this. Yet another connection between sub-topics- no wonder this blog diatribe is so friggin' long. Raising a wage 70 cents in 10 years is the best that can be done? Milton was against raising the minimum wage, (which I agree with), against taxing corporations for reasons I'll get to eventually, and against the graduated income tax. If I could channel Friedman's spirit, perhaps it would have a better idea of how to collect money to run the government, even if it were restricted to just the apects that he approved of, than he did while he was alive. Conservatives- that is your economic deity? Wow.
4) CEOs at Fortune 500 companies “retire with an average of $10.1 million in their supplemental executive retirement plans . . . In contrast, only 36% of American households headed by someone over 65 even had a retirement account in 2004—and those that did had an average value of $173,552, according to the Congressional Research Service.” (I see this getting worse in the future as the taxes and necessary cost item prices [particularly health care, the most necessary of the necessary costs for the elderly] continue to rise. Connecting the dots- the money we could be saving for retirement, in order to pay for the increased cost of health care, is being stripped from us by excessive taxation and spent on wasteful government programs I already have addressed, or will address. I knew conservatives would need help seeing my point, so I thought I would help out. Incidentally, two dots connected looks nothing like this: ÷ . That’s the symbol middle class people use to represent into how many different ways the net money on their pay check must be divided.)
5) Why is this all so noteworthy you say- this is the essence of capitalism you say. These CEOs have rare talents, but not as rare as you think. “U.S. executives make three times as much as their European counterparts, even though these European bosses manage companies that are 40% bigger . . . Yet, presumably, companies on both continents draw from similar talent pools in terms of education, work experience and cultural background. It that’s true, it’s hard to accept the notion that rich pay in the U.S. is the result of scarcity of talent.” (People espousing the idea that all the stars are aligned and all is right with the world because there is inequity, and continue to believe that talented people are justly rewarded, even if they don’t display any talent, should change the way the furniture is arranged in their living room every once in awhile, which would be an activity that would display their ability, but perhaps at most their interest, in obtaining a different perspective. These are the types of people that would have been keen on serfdom, justifying everything their king says because he instituted a clean food mandate that guaranteed that 20% of the rat excrement must be removed from their bread pudding prior to distribution of this food-stuff to the masses.)
6) “Exorbitant pay packages are often awarded by board compensation committees that are too cozy with CEOs” . . . that “fail to link pay to performance” . . . [and] are the result of “consulting firms that advise companies on CEO pay. The problem is they have an incentive to recommend rich pay packages—because they also get paid for doing other consulting jobs for the same company.” (See #12 below) (The proliferation of nepotism granted by the father of an adopted badger who votes to give the albino squirrel more nuts, at the expense of hard-working foraging squirrels, is preposterous and must stop! Yeah, I was tired of the pedophile running the daycare analogy. The conservatives would put this issue in a vacuum and say: “so someone is being paid more than he or she is worth, that happens all the time, so what is the big deal.” Well, couple that salary, that comes out of the pockets of middle class workers and combine it with corporate tax loopholes/shelters (see #7), which means that more tax must be collected from the rich and poor workers at graduated levels, and there is your problem.)
7) “Tax loopholes let companies deduct as much executive pay as they want, as long as the compensation is defined as a performance incentive.” (Paying a CEO the type of money they are paid is like rewarding an elephant whose job it is to go up on the high wire, but whose weight when standing on the wire, brings the wire down to ground level. See, there is no risk if a CEO under performs, when neither the inner-workings of private business nor the government [via the tax loopholes for the companies paying the exorbitant CEO salaries] don’t hold them accountable. The reason they aren’t held accountable is because they are in bed together- and they are cheating on us! Yeah, we’re getting screwed, and our children will be the offspring of that fiscal illegitimacy.)
8) There are governmental reform proposals “to tax the earnings of the top [executives] at private-equity shops and hedge funds as ordinary income instead of distributed capital gains . . . The loophole costs the federal government about $12.6 billion a year, says the Economic Policy Institute.” (Ah, so there is a connection between government waste and these disgusting details about how the government has been protecting private business. Guess I lucked out on that one- finding a connection that is. Go look up “hedge fund” on Google and read the wikipedia offering. I don’t quite understand all of that hedge fund stuff, but I’m sure the government is right in not taxing those managers more and passing a tax rate incommensurate with middle class wage-earnings onto the private citizen earning $15 an hour. When Homer Simpson is likely to be more diligent in his promise to god to give up doughnuts for lent than the government is at recognizing its own failures, or those of enterprises it allows for, we’re in trouble.)
9) “Another proposal seeks to limit the amount of income [executives] can roll into their retirement plans, where the money grows tax free. Rank-and-file workers face limits, but top [executives] do not.” (Helloooooo, Securities and Exchange Commission . . . are you there? Or are you turning in that application for the events coordinator opening at New Horizon (daycare)?
10) The proposals in 7-9 above are the brain-children of democrats. Shocking. Good work democrats, but now go look into your policies on immigration, health care, and welfare before getting too self-righteous. Oh, and see this Cato Institute article about the revered Bill Clinton and Congress: “Policy Analysis—How Corporate Welfare Won: Clinton and Congress Retreat from Cutting Business Subsidies” (from May 15, 1996) – http://www.cato.org/pubs/pas/pa-254.html. Said report goes on to relate that “the president’s vetoes of the GOP budgets specifically targeted corporate welfare cuts as being too deep.” (Meaning, Clinton rescued the corporations from losing funding when Congress had meant to reduce corporate welfare. On the flip side- “Of the $19.5 billion budgeted from the 35 least defensible programs, Congress cut just $2.8 billion in 1996. That was 15 percent cut from the 1995 level. Eighty-five percent of corporate welfare spending survived.” It is important to keep in mind that the Congress at that time was held by a republican majority. If corporations weren’t rescued by the president, they were bailed out by Congress.)
11) Some corporations need and deserve subsidies and each side does a poor job attempting to justify what that type of corporation might be: “the military continues to purchase weapons systems, not because they are needed for national security, but because the spending ‘creates jobs’ or helps a firm back in a representative’s district.” (That quote was from the Cato Policy Analysis No. 254, linked above from 1996; well, it is 11 years later, the democrats now control Congress and a republican is in the white house and we have this: “The State Department ‘does not know specifically what it received for most of the $1.2 billion in expenditures under its DynCorp contract for the Iraqi Police Training Program.” (from Aram Roston’s article which can be found at- http://www.msnbc.msn.com/id/21428395). You might wonder why I would leak the topic back into government waste within the subtopic confines of CEO salaries and corporate tax shelters. The military the quite probably the biggest corporation we have, especially if the federal budget numbers I included in part 5 are any indication? In the wake of the BlackWater information, (see #12 below) shouldn’t we be concerned that the soldiers in our military have useful, necessary weaponry and that the money that is earmarked in the budget for military spending isn’t lost track of as in the DynCorp matter? We’re due to spend $2.4 trillion on wars projected over the next decade according to an NBC News and Associated Press report-http://www.msnbc.msn.com/id/21456930.
12) BlackWater is a military company that has been awarded a series of “no-bid contracts,” which means that they do not need to bid against any other companies in order to obtain the rights to have the government as the customer. To be fair, perhaps there aren’t any other companies equipped to take on such a task- given conflict risks and the overall scope of the job. Courtesy of the Wikipedia “Blackwater” offering: “The cost for each Blackwater guard in Iraq . . . [is] $445k a year . . . the company has received over one billion dollars in government contracts.” Is there some kind of frequent buyer discount the government could use to save some money? When I go to Fantastic Sams to get the hairstyle refreshed, (and I might just as effectively use my Yard Machine lawnmower) I am rewarded, after buying 12 haircuts, with a free haircut. Also interesting is that Blackwater’s owner and founder is a guy named Erik Prince who “was an intern in George H.W. Bush’s White House . . . and is a financial supporter of Republican party causes and candidates.” Hmmmmmm- that sounds like the government and a corporation are in bed together to me. This seems no different than the CEOs collecting huge salaries and incentives granted by board members at the expense of the workers for those companies, and probably the American people who are paying CEO salaries by consuming their goods and paying for that company’s services (flying on their airlines, buying 2 x 4s from their home improvement store, etc.)
One more thing on Blackwater and DynCorp. Blackwater- “it is estimated by the Pentagon and company representatives that there are 20 to 30 thousand armed security contractors working in Iraq, and some estimates are as much as 100,000, though no official figures exist.” When we’re paying $445,000 a year per contracted guard (#12 above), ah, maybe we ought to get an estimate that closes the gap by more than 70 thousand guards. DynCorp was paid $1.2 billion (#11 above) for its contract with the government, and spent $4.2 million of that on “ ‘unauthorized work’ –that is, on projects that were not approved by the State Department,” including the construction of “a U.S. taxpayer-funded Olympic-sized swimming pool” in Iraq.
13) The "State Department," and "federal watchdogs": These phrases are used in a number of the articles I’ve perused while doing the research. They seem as inept as the government they are investigating, given the number of government waste projects I’ve identified and the amount of money lost to those projects. See, I’d just as soon employ a pro-active, engaged, non-governmental sponsored entity before the end of time so that our children and their children aren’t held hostage by the conniving, irresponsible ways of federal and state governments. Does all the proof need to be in to do something? Can we start to vote for candidates more aligned with our political, social, and economic principles now or should we wait until we are ushered back to some Hoover-ville environment by the two major parties, due to their excessive greed, oversight, and fiscal mismanagement that I have PROVEN? Or do you like working until mid April or early May, (depending on what state you reside in), to see your money flushed down the drain by the government who has conditioned us to feel they are entitled to it?
14) “Consultants expect CEOs to cite the fat paychecks of hedge fund managers and the kings of Wall Street to argue for even more lucrative packages . . . The Securities and Exchange Commission required companies starting this year [2007] to more completely disclose what they’re paying their top executives. But the SEC’s approach has been criticized for failing to provide useful figures for investors.” http://www.msnbc.com/id/19079624. (It is 2007, it took this government 230 years to check into corporate/business handouts? A tubercular, drunken hedgehog (ahem) would move through a cold vat of molasses the size of the universe more quickly.)
15) I encourage the reading of the Cato Policy Analysis report I link above. There really are more facts and figures than I have the space to include contained therein about the excess of government sugar-daddied corporate welfare. I really like the information about kick-backs to companies like Mars, Pepsi, Tyson Foods and Dole to the tune of $85.5 million for foreign advertising. In one case- there was a $125k outlay to promote frozen bovine semen (hopefully that is not an unmentionalbe ingredient in my beloved Mt. Dew). Huh, and even I thought all of those animal analogies I’ve been using were insignificant and distracting.
Note: This footnote (no. 17) appears at the end of the Cato Policy Analysis report: a Harvard economist “estimates that every additional dollar of federal spending costs the economy between 30 and 40 cents of efficiency lost from the taxes required to fund the spending . . . every additional dollar of spending would need to lead to at least $1.30 of public benefit to be an efficient transfer of resources.” Any chance that a significant portion of federal spending would lead to the public benefiting?
Next Time: Voting for the lesser of two evils and consent of the governed.
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