Bailing Out Corporations

At the risk of belaboring the obvious, I just want to add my two-cents worth to the increasingly heated national debate re the economy.

I listened to a debate on public radio about a recent decision by the "Wages Czar", who issued an edict that corporations who had taken bail-out funds from the government would have a cap on their salaries. The cap represented a sizable down-sizing of their income, on the order of a 90% reduction. The response by the debater (name unremembered) was that these executives had counted on their incomes and had incurred debts which they would be unable to pay after the downsizing; as a result, the pundit added, they would likely quit their jobs and leave the corporations in the lurch.

Losing income has happened to a lot of people in the US. I feel unable to muster up any sympathy for someone whose income decreased from 5 million to 5oo,ooo. But that's really missing the point, I think. The money being grossly overpaid to these CEOs, under whose frigging brilliant leadership their corporations were disintegrating, was not voted by the stockholders. Yet the money paid to the CEOs was money that could have been distributed to the stockholders, who were actually not only entitled to some of that money but who were disenfranchised of their right to limit the salaries of the CEO.

The captain of a ship who leads the ship into an iceberg doesn't get a reward. Perhaps going down with the ship is a viable alternative. I understand the argument that if the corporations collapsed the economy would be further damaged. However, please not that the economy was already damaged severely by the greed of the CEOs; we just hadn't "taken the loss" yet. There were and are other alternatives to bailing out failing operations. For instance, as in the Telco corporate problems, perhaps corporations could be split up or dismantled into smaller but more profitable enterprises. Let the CEO of a failed corporation be dumped without compensation and without stock options. They should not be rewarded for failure caused by poor judgment and greed. Too bad if they can't pay for the villa in Capri.

And let's not forget that we carry some responsibility for the current debacle. Many people bought houses that were grossly over-appraised, knowing the house was not worth the loan. People over-bought stock on the market expecting a never-ceasing increase in value. Some fought for raises from companies barely surviving, as in the aircraft industry, even forcing some companies that paid their salaries into failure. We've lost the steel business for the same reason; short-sighted greed carried out to the point of self-destruction. We lost the automobile business the same way; greedy people make high prices and lazy ones have poor workmanship. Result: business gone elsewhere. So it's not just the CEOs who are at fault.

We can't survive as an economy unless we produce. We are becoming a service-provider country, with few real products of our own. We don't even produce as much of the raw materials as we used to. We send out the money; we ship in the products. People in other countries are benefited, but we are poorer because we can't compete in the open market for goods or services. This creates a steady downward decline with corrupt managers and politicians attempting to profit on the way. I suppose they hope to make it to that villa in Capri before the catastrophe.