I think you have some valid points, and some not so valid. My opening comments...
1) I don't think asking corporate leaders to take a pay cut is communist. It aught to be good business sense. I do think taxing the hell out of them is communist. It will only cause them to move/avoid taxes. Also, outrageous taxation coupled with limitless public assistance is redistribution of wealth = communist!
2) I have given plenty of thoughts on gov't assistance. I understand that some people need it some time (which is fine), but i cannot and will not tolerate people who need it all time. One word - parasites. This country, especially the urban areas, need a good deworming.
3) I think trickle down economics works, but like most complex systems, it needs to be watched and monitored.
4) Bottom line to all this, in my opinion, is that everyone (companies and individuals) are focused on the bottom line, and ONLY the bottom line. Instead of giving value at lower (resonable prices) we get de-valued products and services at over valued prices. Why? Because the focus is on the bottom line for the investor. Who is the investor - all of us! Big name $$ men and the average 401K holder.
What we need are lower prices, lower corporate profits, lower executive salaries, lower gov't benefits (which might result in lower gov't costs and lower taxes)
The tax code may function as a carrot or a stick. Those companies which move production offshore have essentially already received a tax cut and do not need further consideration.On the other hand,companies led by executives with a moral compass who demonstrate a sense of responsibility to their workers, to the larger community and to the nation need every consideration.A change to the status quo would yield higher profits, higher salaries,more innovation,and better products.This ,of course,requires work, imagination, and an entrepreneurial spirit which seems to be in short supply at present.
Business can not go it alone.Government can play a role in shifting the focus from short term profit to long term gain--- innovation credits? We need to be pouring money into basic research.We need to be pouring money into a sagging infrastructure which saps our competitiveness.
We also need to do something about the endemic corruption in business and government which acts as a dead weight on the economy to say nothing of the deleterious effect it has had on our politics---campaign finance reform?-- increased scrutiny of lobbyists?---truth in political advertising legislation?
Such as is, was. Most societies distill similarly. Sometimes it is hard work, a new idea, or being a mean as a snake chieftain of a Bedouin tribe, members of a society selectively rise to the top. They (or more likely their succeeding generation) ensure what got them there perpetuates (fur trade, oil exploration) by passing statutes, tax laws, or other legal action needed. Then they fall down because of economic reversals, outrage of the general public, or other factors. The rich get richer and the middle class dissipates. Happening now in China. Happened in France in the 1700's.
But I have always failed to understand why anyone can do anything for a company to earn $ 50 million a year. The stockholders (most who are unaware they're invested in the company) should be outraged and screaming their heads off. But, since they're IRA or other investment is performing well - or maybe not - they don't care.
Charlie, as to your number 4 - I agree. Marketers have American consumers pegged. They know how much most people will pay for necessities, whether it's bacon or underwear. Wal-Mart is good at this - they dictate to producers based on their research. But the consumer drives Wal-Mart. Just like society, should Wal-Mart get too big ond officious would the great, unwashed populace rise up in a sea of indignity?
(Tongue frimly in cheek)
A fifty million dollar paycheck for the man at the top is the inevitable consequence of trickle down economics. I prefer to call trickle down economics crumb theory economics: the few eat the bread and the masses are left with the unwanted crumbs.As I recall, gluttony is one of the seven deadly sins.
A $50 million paycheck is NOT an inevitable consequence. It is a product of gluttony.
However, trickle down economics works.
What I would like to see is a bill that would automatically adjust minimum wage yearly based on inflation. If inflation is 1% then minimum wage would rise 1%; if inflation is 3% then minimum wage would rise 3%.
What ends up happening now is that workers will work for years to earn pay increase only to have them erased in one fell swop by congress upping the minimum wage 20 or 30% at a time.
I can think of no better anti-poverty initiative can you?
Trickle down economics,once referred to as voodoo economics, is an article of faith for conservatives but has never been proven. Trickle up economics would make much more sense,particularly in light of the fact that we have become a consumer economy. We should focus on the small businessman, the local merchant,the family farm instead of the oligarchs who see this country merely as a business address and have contempt for the common man.Small businessmen have a palpable connection to the community in which they live ,and it is this connection that makes the much vaunted invisible hand possible. The small farmer, for example,can produce food of higher quality without the environmental degradation that comes with industrial farming.
To forestall rebuttal, I do realize that some enterprises require an economy of scale.But In a mature economy such as ours, large and small operators should be able to exist. At present all of our attention has been focused on the idea that bigger is always better, a sad legacy of Ronald Reagan, charismatic man who could not envision the consequences of the philosophy he popularized.
Thank you for your feedback. The idea was not to promote limitless public assistance, rather to allow us to have a chance to earn a good living and not just scrape by. By the way I agree with your deworming comment because it applies to individuals and businesses alike.
The concept of "trickle down economics" works though not in practice. The problem with has been the same since its inception. When the government gives businesses and wealthy individuals money that is to be tickled down, they busy back stocks and give themselves bonuses. That is not the way it is supposed to work.
The average 401K investor only accounts for .05% of all stocks sold. The 1% hold 51% of all stocks/bond sales.
I agree with you. More needs to be done to encourage businesses to recognize their moral responsibilities in the communities they serve. If more people knew which businesses treated their employees well, their communities well and their customers well; they could give them their business. Then those businesses that are not morally responsible might see their lack of positive actions affect their bottom line. I would love to see businesses think long term gains over short term profit. One only have to listen to the daily financials to see how a businesses stock value suffers when they do not meet the short term gains.
I agree it would be nice to see your idea put in place. Though what I have seen is that anytime the conversation turns to raising minimum wage, businesses cry foul. They have fought every increase in the minimum wage because it is never a good time to raise it. There are members of the Tea Party that wanted to see minimum wage law struck down.
Trickle down economics has been trumpeted as the great cure all since Hoover. Since then it has never worked and yet they keep trying to push it down our throats. They say that insanity is doing the same thing over and over and expecting a different outcome. We continue to allow people that push this idea to be in positions to be able to push them.
I feel the government has failed us in this area in one way. Too many times they have allowed many businesses to pay a fine without admitting wrong doing. This is done to protect them from liability and law suites. If they had to admit they were wrong or negligent they would be liable for millions in damages. This could be a big motivator for them to do the right thing. Instead the government provides a shelter to protect themselves from litigation.
First, I have educated myself some about economic terms and The term "trickle down economics" is the wrong term. In plain english, my thought process was 'supply side economics' and 'Reaganomics' and I incorrectly used ther trickle down term.
Having said that, I am going to take a seat if this discussion is going to be pure econonomics. I find economic theory boring and I will find some wet paint and watch it dry instead.
Economics in the real world is intrinsically bound to culture, society and social interaction. THAT is a discussion!
So let me pose a question from this perspective - I suspect I may be the only conservative in a group of liberals and independents. Which of you broad minded big hearted people would trade places with a major CEO? How would you behave differently? Would you demand a pay cut? Would you raise the pay of all 50,000 employees? How much?
Let's start there... :-)
If I were a major CEO I would have to take a serious look at how the employees are being treated. In that vain I would take a page out of the undercover boss show to see how things are actually working. I think that for the most part major CEO's are today what they want to hear and not the truth. After all who brings bad news to the boss, never seems to go well.
While some major CEO's have taken salary cuts as part of a PR scheme they do not touch their stock options and other comp programs. I would review these aspects of my comp package as well. I think I could make it on $1 million a year just as well as if I made $50 million a year.
I would in turn take the amount that I reduce my salary and develop ways to benefit the employees, especially hourly employees. When I look at business expenses the cost of turnover is very high. If I can made things better for my employees I will see better moral and and stronger desire to stay with the company. The more talent I can retain the lower my labor costs even if I raise salary or other comp programs for employees.
Further more the happier my employees are the better their interactions will be with our customers. This will increase sales and customer service. I always do more business with companies that I have a positive customer experience with. So my approach would e a win win for all concerned and I would benefit with bonuses based on real improvements and not short term imaginary ones.
If I were the CEO of a major company and was paid a salary of 50 million for the year of 2013. I would work to make my salary 60 million by the end of 2014. In 2015 I would quit.
Some good answers. I agree with them in principle, and would have agreed more a few years back. However, as I have gained knowledge and experience working close to management, I have a better understanding of details that some people miss.
When you consider "how the employees are being treated" what are you looking for? Is the employee treated well? I don't know - define "well." Is the employee treated fairly? I think most are. Does the employee get everything they want (less work, better hours, more pay, full benefits)? Probably not. To me the question to ask is this - Is the employee treated fairly in relation to their skills, their productivity, and in relation to their other co-workers. Lastly, is the "mistreatment" a result of company policy or a bad middle manager?
I could agree with a paycut from $50 million to $1 million. Why cut the stock options? If the stock price falls, doesn't the CEO take a loss as well? Perhaps we could limit the amount, but then how exactly would we (the government, the public) do that?
Develop ways to benefit the employees... good idea. You have some good ideas, but I disagree with your assumption about labor costs. If you raise wages, raise benefits, and improve working conditions, you have, by definition, raised your labor costs. If the employees are all happy, won't they want another increase in a few years? Then what? Raise labor costs again? Don't give them an increase and watch them leave? It is a delicate balance, and God help you if a union is involved.
You can talk all you want about happy employees, better customer service, and increased sales, but the real deal that increases sales comes from offering a lower price or increased value. Think about your own buying habits. You can get better, friendlier service at your locally-owned, small-town grocery store, but your grocery bill will be 20-40% higher than if you buy groceries at a large chain or (gasp) Walmart. How long will you pay $280 for $200 worth of groceries just on principle?
If I were a CEO - I would cut my own pay, and the executives pay. I might give a modest increase to the blue collar folks. But I would surely lower my dividend payments to stockholders! Kiss of death? I don't think so, because I would also force my retailers to lower their prices on my product, which would surely increase our (mine and retailer's) sales. We would all get more money the old fashion way - through work and increased sales!
What if a company with annual sales of 10 million, pays there CEO 100 thousand per year and a company with annual sales of 10 billion pays there CEO 100 million that .o1 percent of sales, should the CEO of the smaller company take a cut?
Parachute bail outs for CEO's is something you will not see on a smaller company level. Which is where it starts to turn unethical not the only place it starts but one. I know its seldom as simple as the example or question above. But the ethics don’t have to be. If a man makes 100 million a year off a certain percentage of company's revenue, or he makes 100 thousand working for the smaller company at the same percentage as the bigger, imo there is nothing unethical about that.
It has been my experience that am employee feels they are treated well when they are recognized for doing well. I have seen all too often that the only time you hear from management is when you screw up. When you go the extra mile nothing comes down the pike. People in general want to know that when they put in the extra effort someone notices and acknowledges it.
I had a supervisor that corrected poor performance and also let some one that went the extra mile know he appreciated their extra effort. As a result the people in his department felt they were valued and they worked even harder. As a result the turn over rate was almost zero and the absenteeism was also drastically reduced.
The positive changes that resulted from his positive interactions reduced the over all cost for the department. The training costs were reduced, quality went up reducing the expense of redoes and the list can on and on. When this is expanded company wide the savings are increased exponentially. By keeping the talent and allowing the talent to be expressed you gain the benefits from many years of combined experience. This can also lend itself to increased efficiencies and better overall performance in all facets of operation.
As to the idea of small town store vs. mega store. When I go into a small store I get to deal with people and for the most part they are happy with what they are doing. When I enter a big box store like a Walmart I do not get the same feeling. I find automated checkout lines with one person covering 8 checkout lanes. They look and sound over work and they certainly do not look happy with their job or they way their section is being run. The negative feelings they have towards the support or lack of support that get from their management team is reflected in how they handle issues involving customers. Positive experiences net positive results.
We need to see more people enjoying what they do and not simply earning a check. It seems that we as a society have forgotten what matters most in life...life. We run through each day and never stop think about what it is that we are doing or why we are doing it. The check and the material things it can buy seem to be more important than the people in our lives. When I work on a computer all day, the last thing I want to deal with when paying for my groceries is another computer. I want to talk to a real breathing person and ask how their day was.
We are all in the mess together and only by taking back the power we have forgotten we have, can we affect any real positive change. I do not mean at the end of a gun, rather with the purchasing power we all have. An old man was asked why he bought the most expensive flannel shirt money could buy. He said the last one he bought lasted twenty years, he could not afford to buy the cheap one and replace it every year.
Shapechanger all (for-profit) businesses exist to make money so it seems to me who you have to convince is the stock holders that your plan to improve the lives of the employees will make the company more money!
Dale, Amen! The fate of the Sambos restaurant chain reveals what can happen when businessmen forget the golden rule.
Charlie, to your question about trading places with a CEO for a major company. I wouldn't - mainly because I'm retired and comfortable. But, if I were to be transformed into one, I would like to think my values would remain the same and I would cut my own salary (and that of other top level management) to a reasonable level.
But, since I have never been in that position and never will, I don't know. I have a feeling that with great wealth comes the great desire to keep it and increase it. And I would probably fall into the same snare.
Part of the problem is that the consumer/stock holds in any company hold the power. If you have a 401K you are a stock holder in the companies that make up your plan. As a customer of a business you have a choice to take your money to another company.
Most people have no idea of what companies they are personally invested in. Though if they wanted to take the time they could find out. One of the classic companies that get batted around is Wal-Mart, in part because they are simply the largest retailer out there.
One of the many complaints about them has been that most of their employees are part time and therefor not eligible for health insurance. This requires their employees to get health insurance through Medicaid, if they do not earn enough to purchase private insurance. Perhaps those that want to see a reduction in government spending through a decrease in the number of people on Medicaid took their business to companies that provide insurance to their employees it might make a difference.
One or two people doing this will not make a difference though as the numbers increase it will have a profound affect on the way a business does business. We have the power to make changes through the way we show our values. If we punish people that have to get government insurance because their employer does not provide it and reward the business for not providing it because it makes them more profitable. What does this say about what we really value as an individual or society? Our actions are a visible demonstration of our belief system.
What is trickle down economics? If you invest your life savings into a business and you work hard and long hours to make it pofitable, and it grows and you need more people to continue to grow the business, making it more and more profitable, everyone working in that business profits. The owner earns more money. More workers are hired and pay and benifits get better. It is a win win for all. Yes the owner will earn the highest salery and the trickle down will be all the new jobs, higher saleries and benifits for the workers who produce more wealth (profit) for the business. Trickle down is GOOD!
You illustration is in fact the way that "trickle down economics" is supposed to work. However, in many cases what happened bore no resemblance to your illustration. The norm was that businesses took the money they got from the government in the form of subsides and tax breaks (corporate welfare) and bought back stocks, gave themselves large raises/bonuses. Then under the Bush tax cuts they closed plants in the US and relocated them to Mexico, China and any other country that would provide low cost labor and other incentives.
Further more through accounting tricks that moved much of the profit they earned into tax haven accounts in the Caribbean. Meanwhile those that lost their jobs went on unemployment and got attacked for being "takers" and not being contributing members of society. In the end what was meant to be a saving grace for the country ran head long into greed. Like so many other things created with the best intentions when it runs into greed it and all those that were supposed to benefit, lose. The masses are tired of losing so those at the top can feel good about who they are. Things have to change and we have to stop making excuses for those that place money over people. We in the end get what we put out.
SC: So you understand why our Founding Fathers insisted on a small and very limited Federal Government. The Federal Government was to protect private property, solve disputes involving business transactions when more than one State was involved in the dispute, to write bankruptcy law, and coin the money and guarantee it’s steady value, all of this, based on our Constitution. The Federal Government has no further power to get involved in the Free Market than that. The States can regulate business activity using their 10th Amendment Rights. Issue professional licenses, building codes, permits and so on.
The Federal Government tax breaks or subsidies are un-Constitutional. Just because we do them does not make them Constitutional. Finally, for those who argue that the Commerce clause allows the Federal Government to regulate the Free Market is false. This is how we get subsidies and tax breaks, EPA, Energy, OSHA and on and on. The Commerce clause was put into the Constitution to solve disputes involving business transaction that crossed State lines. Sense each State can regulate the business within it’s boundaries, the Federal Government’s court system was needed to solve disputes when more than one State was involved. Thus the Commerce clause.
We as a nation are far removed from the original intent of our Constitution, due to the ignorance of most Americans, about our Constitution. This ignorance comes from the teachers who teach civics and government in our schools. They don’t know the subject (Constitution) they are teaching.
...they USED to teach.
Teachers don't teach anymore; they prepare for standardized tests. You know that.
Most fun I have had in a long time... I went to a local high school and taught history and government for a day. Prepared material that aligned with the planned curriculum for the day, took the ball, and ran....
The kids were floored.... They had no idea the country had immigration issues, wild outlandish media barons and over-wrought conservatives obsessed with social issues - 100 years ago!
The teacher never had a chance to get to that depth (not that deep) - there was always a battery of tests just around the corner.
Ironside, ALL government and civics teachers are ignorant of the Constitution?
By the way, Alexander Hamilton favored enterprise zones,and the federal government subsidized the National Road in 1811.At the behest of the federal government, Fremont blazed the Oregon Trail. The railroads were built by generous government subsidies as was the transcontinental telegraph.We have been living in sin for a very long time.
The "free market" has been regulated since Hammurabi ,so it is rather fanciful to assume that a modern nation could exist without national regulations. And why is state control always to be preferred over national control? The Civil War should have resolved that one.I don't know about you,but my first allegiance is to the nation.
Fly: Roads are in the Constitution. Railroads were viewed as new roads just as Aviation routes are air roads. The telegraph was viewed as part of the railRoad because it followed the railroad and only was granted access to use the land given to the railRoad right of way.
The reason that State control is always to be preferred over national control is because that is the way our Founding Father wrote the Constituion! The Tenth Amendment, that pesky one that binds the hands of an over reaching Federal Government.
Ironside, The Erie Canal was not viewed as a road and federal involvement in the project was seen as unconstitutional. This would indicate that the road analogy was not "watertight" and that the Constitution is not and was not the inflexible document that you describe.The Constitution has evolved to suit the times which is its great strength. Amendments have been added or deleted as circumstances dictate.
Your understanding of the commerce clause is correct for the 18th century though not for today. During the 18th century business actions affected those that lived in a single state. Today that is not the case by any means. Today we understand that putting toxins in the air, water and ground are not good for us. People down stream or down wind have a right to be protected from the toxins dumped by businesses in another state.
More businesses to especially since e-commerce came to the forefront are not just local rather multi state and multi national. The intent of the commerce clause is still the same. The advances in technology have only increased the amount of disputes that need to be resolved.
The Federal government's used of the commerce clause is mostly used to bring uniformity across the country so that all businesses play on a level playing field. It is also intended to protect the public from businesses that have no ethics. It does not mean that they always get it right, no one ever does that.
The use of subsidies was intended to forward an endever that was in the national interest. Today that has been manipulated and abused to the benefit of a few.