"The problem with capitalism is capitalists."

[Guest Cerebus]

Buckley sums up one of the reasons why I'm more and more disillusioned with the Republican party:

 

Capitalism’s Boil

Some ugly details.

 

Every ten years I quote the same adage from the late Austrian analyst Willi Schlamm, and I hope that ten years from now someone will remember to quote it in my memory. It goes, "The trouble with socialism is socialism. The trouble with capitalism is capitalists." What brought this on this time around was the published recapitulation of executive plunder featuring, but hardly limited to, Viacom. The top three executives at Viacom received total compensation last year valued at about $52 to $56 million each in salary, bonus, and stock options.

 

 

We got, in one story of these goings-on — by Geraldine Fabrikant in the New York Times — a whiff of sobriety, as from someone hanging on to a tree limb in the landslide. Ms. Fabrikant quotes Brian Foley, "a longtime compensation specialist," and what he said was, "The compensation is beyond breathtaking." Viacom's share price, in the year of the gold rush for its managers, decreased by 18 percent.

 

We learn from Viacom's SEC filing that its chief executive, Sumner Redstone, who is 81 years old, is presumably guarding against the hazards of senior-citizen penury. His salary was $4.97 million, and he received a bonus of $16.5 million. We think we see traces of sibling rivalry in the picture, because one of Viacom's co-presidents, Tom Freston, received only $16 million in bonus. Viacom's other co-president, Leslie Moonves, has got to have done something truly humiliating, because his bonus was only $14 million.

 

Why does capitalism tolerate such institutional embarrassments? The answer has to be that embarrassment simply isn't being felt. Consider excruciating, but apparently tolerable, incidentals. Mr. Freston is based in New York. But from time to time, business requires him to be in Los Angeles — where, as it happens, he also has a home. On those nights does he take hotel rooms? Ample hotel rooms, understand. No. He just charges the company what he thinks is appropriate to pay him for using his own home. In 2004, this amounted to $43,000. He is evidently a man with simpler habits than the Los Angeles-based Mr. Moonves's. He does the same kind of thing, he has his own home in New York, but what he charged the company for the nights he spent in New York was $105,000.

 

Once again, there is a muted reproach from the corporate world, assessing this kind of thing. It is the voice of Graef Crystal, who is styled as "a longtime compensation expert." Mr. Crystal says of Sumner Redstone that he "certainly qualifies for the 'unclear on the concept award' contest for paying himself $55.9 million in a year when the company lost $17.5 billion."

 

Here and there efforts are being made to impose correlations of some sort between executives' compensation and stock performance. "The secret to linking pay to performance remains elusive," writes Claudia Deutsch of the New York Times. "Net income at Eli Lilly fell 29 percent and its return to shareholders dropped 17 percent last year, but its chief executive, Sidney Taurel, saw his pay go up 41 percent, to $12.5 million." There doesn't seem to be anything elusive about that: the boss aggrandizes. (Translate from Buckley-ese: To make greater)

 

One does have to allow, in the mind's eye, for the truly unique person. If Thomas A. Edison were alive today, his genius intact, it would be unwise to cavil at any arrangement whatever made by a company seeking his services exclusively. Bill Gates is not a genius on that order, though his gifts are complementary to Edison's — Gates knows how to exploit a technological epiphany.

 

Edison had the epiphanies, but was no good at all at exploiting them. Imagine if Gates had come up with the patent to the light bulb.

 

What dismays is the utter lack of class in such businesses and businessmen here parading their skills in distortion. Michael Eisner appears twice in the table of the 25 largest compensation packages paid in a single year. In 1993 he took home $203 million. In 1998, $575.6 million.

 

That money was taken, directly, from company shareholders. But the loss, viewed on a larger scale, is a loss to the community of people who believe in the capitalist free-market system. Because extortions of that size tell us, really, that the market system is not working — in respect of executive remuneration. What is going on is phony. It is shoddy, it is contemptible, and it is philosophically blasphemous.

 

The compliant should consider founding a new company. Executive Remuneration Corp. The value of its shares to fluctuate according to the salaries and bonuses and stray benefits paid out to the managers of the top 100 U.S. companies. The way things are going, stockholders would become rich in no time. And no high salaries would be needed for officers of Executive Remuneration Corp (ERC): just one man with a tabulator, adding up the salaries of the Eiseners for that year.

 

Now remember, this isn't a New York Times editorialist, a socialist, or even Democrat this is William frickin' Buckley, one of the fathers of post WWII conservatism and founder of the National Review, probably one of the most conservative mainstream news magazines in the country.

 

And I'm inclined to agree with him 100%. I've always felt that Big Buisness is as much of an anthema to free market capitalism as Big Government, perhaps even more so. The wealth gap is increasing, the amount of uninsured is much higher than it should be, and its harder and harder for normal people to make a living. Where I differ from many lefties is that I hardly think that re-distribution of wealth or "univeral health care" is in order. We should all get what we EARN. Not more but certainly not less. That's what I always thought free markets were all about, one of the reasons I joined the Republican party in the first place.

 

What really pisses me off is that this problem stems from the supposedly free market Republican Congress giving endless benefits and tax breaks to huge corporations (while smaller companies and their employees get the squeeze) and CEOs and other bigshots giving themselves (or having their boards give them) huge bonuses and income hikes at the expense of their workers, its no wonder the belt is tightening.

 

There is a difference between free markets and greed. Thanks to Republicans we're getting more of the latter and we all get the ass end of the deal.

[Stephen Joseph 0]

It's okay buddy. Come join us Libertarians. At least we mean what we say.

 

And yeah, I completely agree with Buckley here. If anything, the whole point of economics has been to hammer home for centuries that your market wage should equal what you bring to the table. Performance.

 

The problem is of principle-agent, sort-of. When you get in a position of power, you do everything you can to maintain it if it has any air of permanancy. If your window is short-term, you become predatory, taking everything you can. In the end, both solve the problem by removing the predator, but at what cost?

[Ted the Poster 0]

It's okay buddy. Come join us Libertarians. At least we mean what we say.

Yes, join ussss... We have Denis Leary and Clint Eastwood...

[Guest MikeSC]

The problem is --- we do not want the government to dictate wages. At all.

 

So, it's an open market.

 

I wouldn't mind massive taxation on bonuses above a certain level and on contingency fees for lawyers.

-=Mike

[Stephen Joseph 0]

It's okay buddy.  Come join us Libertarians.  At least we mean what we say.

Yes, join ussss... We have Denis Leary and Clint Eastwood...

Hey man, free Kool-Aid and snacks at all the meetings. Can't beat that.

[Stephen Joseph 0]

The problem is --- we do not want the government to dictate wages. At all.

 

So, it's an open market.

 

I wouldn't mind massive taxation on bonuses above a certain level and on contingency fees for lawyers.

-=Mike

Nah, I think the dillio is that peeps should get smart and tie raises to perfomance. Incentives, that BS. Taxes bad...incentives good!

 

Then again, should I ever become a corporate executive, my plundering of the company will reach Enron Proprotions.

 

(cept no one goes to jail for shitty management)

[Guest MikeSC]

The only problem is --- who is going to force the changes? Everybody who has the power to tie incentives to performance are the same people who might be in the position of power themselves.

-=Mike

...Who fully agrees that some execs tend to be compensated FAR above their actual performance, but the ways to resolve it aren't numerous...

[The Czech Republic 0]

It's okay buddy.  Come join us Libertarians.  At least we mean what we say.

Yes, join ussss... We have Denis Leary and Clint Eastwood...

Hey man, free Kool-Aid and snacks at all the meetings. Can't beat that.

Yeah don't eat the brownies though. They're not for everyone. I found that out the hard way. I could taste colors.

[Special K 0]

The only problem is --- who is going to force the changes? Everybody who has the power to tie incentives to performance are the same people who might be in the position of power themselves.

-=Mike

 

Shareholders should sue. Now I'm not one to say that often, but they're taking money directly from their pockets. There does need to be some protection against this.

 

William Buckley's awesome by the way.

 

Anyone think the libertarian movement might pick up a bit of steam when our generation comes of (political) age? I'm sick of conservative martyrdom and big-business coddling and liberal snivelling and criminal loving.

[The Czech Republic 0]

It damn well better. I'm not fond of the Republicans right now, but man, I really hate those stinking Democrats.

[Guest MikeSC]

The only problem is --- who is going to force the changes? Everybody who has the power to tie incentives to performance are the same people who might be in the position of power themselves.

-=Mike

 

Shareholders should sue. Now I'm not one to say that often, but they're taking money directly from their pockets. There does need to be some protection against this.

 

William Buckley's awesome by the way.

 

Anyone think the libertarian movement might pick up a bit of steam when our generation comes of (political) age? I'm sick of conservative martyrdom and big-business coddling and liberal snivelling and criminal loving.

The stockholders actually, if memory serves, approves of all of this stuff.

 

Of course, the ones with the power tend to have the voting control.

-=Mike

[Ted the Poster 0]

It's okay buddy.  Come join us Libertarians.  At least we mean what we say.

Yes, join ussss... We have Denis Leary and Clint Eastwood...

Hey man, free Kool-Aid and snacks at all the meetings. Can't beat that.

Yeah don't eat the brownies though. They're not for everyone. I found that out the hard way. I could taste colors.

Sorry about that. *zips up pants*

[Rob E Dangerously 0]

It's okay buddy.  Come join us Libertarians.  At least we mean what we say.

Yes, join ussss... We have Denis Leary and Clint Eastwood...

Hey man, free Kool-Aid and snacks at all the meetings. Can't beat that.

What about good looking women?

[Guest Cerebus]

Ann Rand? Oh wait she's dead. And she was never attractive.

[Jobber of the Week 0]

Michael Eisner appears twice in the table of the 25 largest compensation packages paid in a single year. In 1993 he took home $203 million. In 1998, $575.6 million.

So I guess Space Mountain really isn't the biggest mountain in Disney.

[The Czech Republic 0]

It's okay buddy.  Come join us Libertarians.  At least we mean what we say.

Yes, join ussss... We have Denis Leary and Clint Eastwood...

Hey man, free Kool-Aid and snacks at all the meetings. Can't beat that.

What about good looking women?

Erm, Kennedy from MTV long ago?

[tominator89 0]

Anyone think the libertarian movement might pick up a bit of steam when our generation comes of (political) age? I'm sick of conservative martyrdom and big-business coddling and liberal snivelling and criminal loving.

I certainly hope so. I've been a registered Libertarian since 2001 and it's the party that is closest to my beliefs.

[Slayer 0]

It's okay buddy.  Come join us Libertarians.  At least we mean what we say.

Yes, join ussss... We have Denis Leary and Clint Eastwood...

Hey man, free Kool-Aid and snacks at all the meetings. Can't beat that.

What about good looking women?

Erm, Kennedy from MTV long ago?

...you're out of the club

[Ted the Poster 0]

It's okay buddy.  Come join us Libertarians.  At least we mean what we say.

Yes, join ussss... We have Denis Leary and Clint Eastwood...

Hey man, free Kool-Aid and snacks at all the meetings. Can't beat that.

What about good looking women?

Dixie Carter

the blond nerdy chick from VIP

 

Don't know any others...

[Big Ol' Smitty 0]

What really pisses me off is that this problem stems from the supposedly free market Republican Congress giving endless benefits and tax breaks to huge corporations (while smaller companies and their employees get the squeeze) and CEOs and other bigshots giving themselves (or having their boards give them) huge bonuses and income hikes at the expense of their workers, its no wonder the belt is tightening. 

 

There is a difference between free markets and greed. Thanks to Republicans we're getting more of the latter and we all get the ass end of the deal.

 

Public Morality>Private Morality

 

The wealth gap is increasing, the amount of uninsured is much higher than it should be, and its harder and harder for normal people to make a living.

 

Why do you hate America?

 

If you don't like it GEEEEETTTT out.

 

[insert Conservative Cliche #3 here]

[Jobber of the Week 0]

Libertarian women just don't really exist. That's why Badnarik had to use a man in a wig for that commercial of his.

[Ted the Poster 0]

They don't really need to. We can argue alongside either major party in order to get teh poon.

[Dr. Tyler; Captain America 0]

This may be the first time I've ever agreed with Buckley.

[Art Sandusky 0]

Same here. Very good piece.

[NoCalMike 0]

The problem today is that corporations have too much power and are pretty much absolved of any wrong doing. For every ENRON scandal, there is probably ten more similar companies doing the same thing, a lot sneakier. Left and Right you see our government making decision after decision that does nothing but either give big business a big handout, or strips another regulation that they were supposed to abide by. The first step is to reverse the supreme court decision that a corporation should be protected by the same rights as an individual, then things would slowly domino from there, but that first step will be nearly impossible in today's world.

[The Czech Republic 0]

You would.

[kkktookmybabyaway 0]

I'll take Kennedy, as long as she's not related to Uncle Ted.

 

Oh, and I don't care what a CEO makes, but Jesus, can you at least pay them for doing a good job first?...

[Ted the Poster 0]

I'd take Kennedy if she had bigger tirts and wouldn't talk. Damn that's an annoying voice. Leah Lail is sexy too.

[Stephen Joseph 0]

Ann Rand? Oh wait she's dead. And she was never attractive.

I shudder to think she spawned the movement.

There's libertarian babes in Washington DC. Thought I only know them through an herbal connection...

[Stephen Joseph 0]

You would.

Yes, I would.