And so it begins-GM CEO resigns

[Mike DC]

 

Look, we all understand that the best athletes should be the ones getting into the pro leagues.  We agree that it's fair to let the best win out over the second-best, don't we?   

But that doesn't mean we are gonna let the best of the 18yo college football players take the field against the best of the 9yo grade school football players.  We don't view this as fair competition.   The 18yo players ARE the best at the time, but once upon a time they were 9yo too.  They would never have had a chance to get better in their teens if the previous 18yo generation had been allowed to mangle them on the field when they were younger. 




Surely we can agree to support free-market competition, while still understanding that competition needs some basic oversight to keep it fair?  Without it, those on top at the beginning of the game will just unfairly squash other people at the bottom who might have become top-notch if given a fair shot.

   

[RD]

less than 2% of the U.S. population hold 33% of the wealth.  that was said to support Mike DC's statement. (statistic provided by my economics professor at ESU, Emporia, KS).  Is it a generalization?  Yeah, probably, but I bet its not very far off target.

295,000,000 in the United States

5,900,000 is 2%
2,950,000 is 1%

edit:

Microsoft CEO Bill Gates has more wealth than the bottom 45 percent of American households combined.
1999 figures: http://www.cooperativeindividualism.org/wealth_distribution1999.html

Table 1: Distribution of net worth and financial wealth in the United States, 1983-2001
  Total Net Worth
Top 1 percent Next 19 percent Bottom 80 percent
1983 33.8%    47.5%              18.7%
1989 37.4%    46.2%              16.4%
1992 37.2%    46.6%              16.3%
1995 38.5%    45.4%              16.1%
1998 38.1%    45.3%              16.6%
2001 33.4%    51.0%              15.5%
 
  Financial Wealth 
Top 1 percent Next 19 percent Bottom 80 percent
1983 42.9%    48.4%              8.7%
1989 46.9%    46.5%              6.6%
1992 45.6%    46.7%              7.7%
1995 47.2%    45.9%              7.0%
1998 47.3%    43.6%              9.1%
2001 39.7%    51.5%              8.8%

Total assets are defined as the sum of: (1) the gross value of owner-occupied housing; (2) other real estate owned by the household; (3) cash and demand deposits; (4) time and savings deposits, certificates of deposit, and money market accounts; (5) government bonds, corporate bonds, foreign bonds, and other financial securities; (6) the cash surrender value of life insurance plans; (7) the cash surrender value of pension plans, including IRAs, Keogh, and 401(k) plans; ( corporate stock and mutual funds; (9) net equity in unincorporated businesses; and (10) equity in trust funds.

Total liabilities are the sum of: (1) mortgage debt; (2) consumer debt, including auto loans; and (3) other debt. From Wolff (2004).

more good charts/statistics
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

[Troy]

I don't mind oversight - everyone should play by the rules and be penalized appropriately for breaking them. I DO mind unnecessary controls based on someone's happy idea of utopia. Capping salaries will severely limit the available talent pool and handicap these companies in relation to others whose hands aren't tied.

I believe the government shouldn't be telling businesses how to do business. If the government was a business it'd have failed miserably a long time ago.  Politicians are good at marketing but not so great at delivery. We all know companies with great salesmen, catchy ads, and great deals that never seem to ship a product (or change the price on the bill). Most of us expect businesses to honor their word - why not politicians?

Here's a related story that's much more in line with what I'd expect the government to do (not what they said they'd do):
"The U.S. House of Representatives on Wednesday approved legislation to curb "excessive" employee pay at financial firms that receive government bailout funds, a measure that could supplant an earlier effort to heavily tax executive bonuses.

The bill, which passed on a 247-171 vote, would give the U.S. Treasury broad powers to prohibit "unreasonable and excessive" compensation and bonuses that are not based on performance standards."
http://news.yahoo.com/s/nm/20090402/pl_nm/us_financial_usa_compensation

Troy

[Troy]

less than 2% of the U.S. population hold 33% of the wealth.  that was said to support Mike DC's statement. (statistic provided by my economics professor at ESU, Emporia, KS).  Is it a generalization?  Yeah, probably, but I bet its not very far off target.

295,000,000 in the United States

5,900,000 is 2%
2,950,000 is 1%

edit:

Microsoft CEO Bill Gates has more wealth than the bottom 45 percent of American households combined.
1999 figures: http://www.cooperativeindividualism.org/wealth_distribution1999.html

And my response is: So? He should be an inspiration - not despised. Go out, make yourself successful and become a statistic that everyone else is measured against. He gives more to charities than most people can comprehend. I think America is losing the drive, ambition, work ethic, and ingenuity that made people like Henry Ford, Harvey Firestone, and Thomas Edison. Now it's all about the overnight success.

I think the top 5% has 50% of the wealth (and pays 95% of the taxes). I posted the statistics a while back but now I'm fuzzy. I bet the other 95% would be revolting in the streets if their tax rate was the same. But that's ok, the rich can afford it right?

Troy

[bull]

If these CEOs are overpaid the market, if left alone, would correct the mistake. But when gobs of money is spend to prop up dead wood you're going to end up in crisis. The wood is dead for a reason. Let it fall by the wayside.

[Mike DC]

If these CEOs are overpaid the market, if left alone, would correct the mistake. But when gobs of money is spend to prop up dead wood you're going to end up in crisis. The wood is dead for a reason. Let it fall by the wayside.

I don't agree that the market would automatically correct overpaid CEOs.   



Truly uncontrolled markets will no longer even obey their original free-market principles themselves.  That's the problem. 

The CEOs are the 18yo football players stomping the 9yo stockholders & employees.  The CEOs are rightfully at the top of the pecking order, but that position has given them more extensive powers that just the ones they rightfully should have.   




People talk about "income redistribution" because the system has been allowed to distribute income too unfairly in the first place.  Myself, I'd much rather just see the baseline economic power structure addressed before the inequality gets so far out of control that anyone talks about "correcting" it with I.R.     

[bull]

I disagree. I think it would correct itself it the powers that be would stop propping them up.

[Mike DC]

   

Well, I guess we're just on different sides of that fence. 

I don't like Laissez-Faire economics as much.  Looking at history, I see socioeconomic mobility and the middle class consistently doing better in situations with a notch more govt presence.   

   

[Khyron]

heheh also Looking at History..


Rome burned 

[Mopar2Ya]

The gov wants to get involved, then quit letting these CEO's get paid millions, no one person deserves that $ especially now. IMO.

And maybe you do not deserve what you are making either. Why don't we bump your pay down to. . say $6.00 an hour. For the last 9 years I do service work inside our local GM truck plant. I pass by guys sleeping for a couple hours at a time. Others will sit in break rooms for hours playing cards. Should they get paid what they are making?  Yes they should, because they have a contract. Do I think some of them deserve what they make?  No I do not. But it is not up to me, and certainly not up to the government.

It is not governments job to dictate who makes what. At least that is not supposed to be it's job. That would be up to the company/board of directors to decide. Because if they do this to the people you do not like, what is to stop them from coming in and telling you, you are making to much.

I'm not the one on trial here, I'm not part of a possibly bankrupt business.  My comment was directed at the severance package not the yearly income. You think these CEO's that got these companies into trouble should be paid 23 million to leave? If they weren't in this mess the $ issue wouldn't be questioned. I don't think the gov should be involved either, but they are... what should they do... I don't know. Will the USA eventually turn into a country similar to the oil rich countries, the have & have nots? 

[Arthu®]

Maybe, just maybe the US companies will start thinking about a two tier board structure, this would definitly limit the power of a small group of people within the company.

Arthur

[RD]

less than 2% of the U.S. population hold 33% of the wealth.  that was said to support Mike DC's statement. (statistic provided by my economics professor at ESU, Emporia, KS).  Is it a generalization?  Yeah, probably, but I bet its not very far off target.

295,000,000 in the United States

5,900,000 is 2%
2,950,000 is 1%

edit:

Microsoft CEO Bill Gates has more wealth than the bottom 45 percent of American households combined.
1999 figures: http://www.cooperativeindividualism.org/wealth_distribution1999.html

And my response is: So? He should be an inspiration - not despised. Go out, make yourself successful and become a statistic that everyone else is measured against. He gives more to charities than most people can comprehend. I think America is losing the drive, ambition, work ethic, and ingenuity that made people like Henry Ford, Harvey Firestone, and Thomas Edison. Now it's all about the overnight success.

I think the top 5% has 50% of the wealth (and pays 95% of the taxes). I posted the statistics a while back but now I'm fuzzy. I bet the other 95% would be revolting in the streets if their tax rate was the same. But that's ok, the rich can afford it right?

Troy

I dont believe i was "despising" him, but rather just stating some facts regarding the distribution of wealth in regards to MikeDC's post.  I am sorry that you assumed I was saying something other than what I did.

FWIW, I may not agree with the current taxation system that our country has, as I dont agree with many of its policies.  I will not "go and make myself successful..." because that is not what I choose to do.  Money just causes problems.  My life is called to live one of humbleness and simplicity, not complexity caused by extreme amounts of money.  Money makes people angry and say things they dont want to say, and do things they dont want to do... if this is not the case, then your statement may have been a tad less offensive than what it was.  I am not judging you, it is not my place to do these things.  I am just stating that due to money, people change the way they talk, view, and act in regards to others, their situations, and life in general.  That is partly why I am so sickened by the bailout.

[Troy]

Ok, just most people bring up Bill Gates to prove how "unfair" things are. Blaming a rich guy (or anyone really) for one's status in life will do exactly nothing to make it better. My statements were directed at anyone who likes to complain about how someone (or everyone) else has it better than them - yet never does anything to improve their own situation. Successful people rarely get that way through laziness or sheer luck. Some aren't even all that smart. I'm not wealthy but I'm no longer as poor as I used to be. I hope to keep improving my situation but, if there's a setback, I'll keep right on going. That's what I was talking about.

Troy

[chargerboy69]

My comment was directed at the severance package not the yearly income.

Well, you really did not say that.

You said "The gov wants to get involved, then quit letting these CEO's get paid millions, no one person deserves that $ especially now."

You think these CEO's that got these companies into trouble should be paid 23 million to leave? 

If they are contracted to receive the money yes, they are entitled to it. Whether I think they deserve the compensation does not matter. It is not mine, yours, or the governments job to go into a company and decide what a fair wage would be. 

[RD]

You think these CEO's that got these companies into trouble should be paid 23 million to leave? 

If they are contracted to receive the money yes, they are entitled to it. Whether I think they deserve the compensation does not matter. It is not mine, yours, or the governments job to go into a company and decide what a fair wage would be. 

but it can be, all we have to do is a make a law.   there is a federally mandated minimum wage... its not that difficult to make a federally mandated maximum too heheheheheh 

[Mopar2Ya]

My comment was directed at the severance package not the yearly income.

Well, you really did not say that.

You said "The gov wants to get involved, then quit letting these CEO's get paid millions, no one person deserves that $ especially now."

You think these CEO's that got these companies into trouble should be paid 23 million to leave? 

If they are contracted to receive the money yes, they are entitled to it. Whether I think they deserve the compensation does not matter. It is not mine, yours, or the governments job to go into a company and decide what a fair wage would be. 

The 23 million(or any of the other millions dolled out during this bailout fiasco) given as bonuses/severance doesn't make good business sense, whether it is contracted or not. This sort of business is what got these companies into this mess, & not changing things will most likely not help. You, Me, or the gov shouldn't have to decide a fair wage, the smart people running these companies should have figured it out by now.

You think these CEO's that got these companies into trouble should be paid 23 million to leave? 

If they are contracted to receive the money yes, they are entitled to it. Whether I think they deserve the compensation does not matter. It is not mine, yours, or the governments job to go into a company and decide what a fair wage would be. 

but it can be, all we have to do is a make a law.   there is a federally mandated minimum wage... its not that difficult to make a federally mandated maximum too heheheheheh 

Interesting, but that does seem like an invasion by the gov. 

[69charger2002]

hey hold it EVERYBODY. 
this thread is 4 pages long, is mainly in a roundabout way political, and yet we've kept it civil!!! this is astonishing... ok back to the disagreeing
trav

[Troy]

Whether it makes good business sense (to you) or not - they were still contracts. Contracts have to be agreed on - and upheld - by both parties and are legally binding. It's not so easy to nullify them - which is why you haven't seen Congress or the President follow through with their threats. For the record, I'm a contract employee and when I do work for a salary I usually have a bonus plan in place as well. I accept a position based on the promised wages and would be very, very ticked if someone who didn't participate in the negotiations decided to alter my agreement.

Troy

[Mopar2Ya]

I just hope they all manage to learn/change & move forward for the better.

hey hold it EVERYBODY. 
this thread is 4 pages long, is mainly in a roundabout way political, and yet we've kept it civil!!! this is astonishing... ok back to the disagreeing
trav

I disagree... 

[nh_mopar_fan]

You do know that some of these AIG guys that got bonuses and then gave them back were working for a yearly salary of $1, right?

Did anyone read the letter from one of them in the NY Times a week or so ago?

[Mike DC]

         
 
Just a quick comment about yanking the money back from these companies -- 




We can't really decide to yank back money that we just gave. 

Oh yeah, the government would certainly be able to do it.  But once that becomes a threat it would change how every company would deal with the money. 

The govt gives a company $100 billion because they want it to operate like it isn't $100 billion in debt anymore.  But if the companies have to sweat it out for another 1-2 years after they get it, waiting for the govt to go through their books with a fine-tooth comb, waiting to see if the govt will change its mind about whether they deserve it or not  . . . then the company really can't operate as if it has that $100 billion in the meantime.  Hence, the bailout money would be rendered inert until the paperwork is really done and the dust settles. 

   

[69charger2002]

if i loaned someone 100 billion i'd sure as hell want to know how they are spending it. of course i am loaning the 100 billion in a fraction of a way with my wasted tax money. smart hard working people always get punished or drug down by the lazy unmotivated wastes of human life that make up 50% of america. it's sickening
trav

[41husk]

Trav, If you would like to loan me a couple of billion dollars, I would be more than happy to give you an itemized list of how i will spend your money  

[Mike DC]

if i loaned someone 100 billion i'd sure as hell want to know how they are spending it. of course i am loaning the 100 billion in a fraction of a way with my wasted tax money. smart hard working people always get punished or drug down by the lazy unmotivated wastes of human life that make up 50% of america. it's sickening
trav

Haven't you heard? 

It's not real money they're wasting, it's just TAXPAYER money!   

[bakerhillpins]

Whether it makes good business sense (to you) or not - they were still contracts. Contracts have to be agreed on - and upheld - by both parties and are legally binding. It's not so easy to nullify them - which is why you haven't seen Congress or the President follow through with their threats. For the record, I'm a contract employee and when I do work for a salary I usually have a bonus plan in place as well. I accept a position based on the promised wages and would be very, very ticked if someone who didn't participate in the negotiations decided to alter my agreement.

Troy

If it were that simple I might agree with you. But unfortunately, had the govt not stepped in many of these companies would have gone tits up. Their contracts would therefore no longer be valid and they would have lost their job and received no bonus etc. So while I agree with our basic premise, I just will not buy into it for this argument. The govt felt it was necessary to prop them up to avoid complete collapse... Maybe they should have let them fail. But where would we all be now? 

All though on the plus side it looks like we are getting some good out of the ClusterF**k.
http://www.fool.com/investing/general/2009/02/27/voting-not-just-for-november-anymore.aspx

Bryan