May 23, 2018
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Executive compensation and what’s wrong with U.S.

By Fred Mendel, Special to the BDN

The average American is extraordinarily alienated from his government because of one simple fact. He is exhorted to spend, spend, spend to reawaken a economy that is 70 percent dependent on rampant consumerism. On the other hand, he is berated by his failure to save, save, save and oh, my, his failure to confine his consumption within his ability to pay for his consumption. Sounds a little bit inconsistent to me, and to most of my fellow middle class buddies who pause briefly to ponder this dichotomy. So we choose the path we each consider the common sense way. This can seem very chaotic.

On Wall Street, the choice was made quite simple. Threaten the economic fabric of society and extort huge bailouts from a federal government devoid of real intestinal fortitude and even more devoid of a moral compass. The government caved in and shoveled out the cash to buy off the horrific threatened calamity, even worse than the present-day economic crash occasioned by Wall Street and its esoteric paper derivatives.

Why would a government think that Wall Street’s arguments and implied threats made sense? Why, simply because that is the mental set of career politicians we allow to misrule in our name in Congress. They firmly believe in the old-boy network, no matter how many women end up in office. These liberated ladies just joined the club. When they discovered the manifold rewards of the hog trough in the public sector, they went along to get along.

The underlying fallacy in the executive compensation on Wall Street is this: When your company is losing billions but you made your sales quota, your “contract” with your employer enables you to receive a huge bonus. This is valid even if the taxpayers foot the bill for their firm’s incredible stupidity. Such contracts should have a clause that ties their company’s fate to individual performance.

I seriously doubt the Japanese auto manufacturers, who savagely beat our auto industry into a state of structured bankruptcy, ever found any particular virtue in the concept of paying bonuses to staff while their firms were losing billions. More likely, they felt a sudden urge to commit suicide or at least improve corporate performance.

In the United States, this simple concept has escaped the interest of the self-involved types who want theirs, no matter if their company is hemorrhaging red ink or not. Until this self-involved persona is addressed on a national basis, we are doomed to follow our superiors in global trade and productivity, and the Chinese into the 22nd century. As an American who inhabits the lower middle class, I find this piggish and sluggish attitude by our financial “leaders” and our government disgusting and infuriating. I doubt that I am alone in this point of view.

As a point to this polemic, let me suggest that any company that owes the taxpayer money be prohibited from any bonus payouts to any employee until their corporation makes a profit. If the employees so effected want to leave their firm, blacklist them so they will have difficulty finding a job washing dishes. Perhaps, upon further reflection, they may rediscover a certain sense of corporate loyalty and affection, possibly similar to that of the Japanese in their auto industry, for example.

Let me also suggest that our Congress and president lose their favorable health insurance plans and seek coverage through the dreaded private sector. This may expedite their efforts in this health insurance reform, posthaste. The usual gridlock would evaporate, purely out of their own considerable self-interest. When I suggested this to Sen. Olympia Snowe in a letter, the silence was deafening. How surprising.

Let me further suggest we disband our standing army, re-deploy military members as leaders for a comprehensive newly redesigned National Guard. They would thus be defending their country and providing a highly disciplined National Guard. We get our heads out of other nations’ business, increase national security and save our children’s lives. I am sure their parents would favor this, at least. I do not see Brazil or China or India exporting their troops to other countries for their national agenda.

Fred Mendel of Sherman is a retired general accountant.

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