Tuesday, January 10, 2012

Executive Compensation and the Evils of Income Inequality: How I Once Again Know the Answer to Everything.


This is my response to someone's comment about Tim Cook' compensation package not being unreasonable.
I am ashamed at how articulate and civilized I was. My apologies to you all.


 There is almost correlation behind excessive CEO salaries, stock performance and economic growth. The rub is that he Tim Cook will pay taxes at a lower rate than all but the poorest Americans, which means effectively, if we are running a deficit, we are subsidizing his paycheck.
   For an individual to get paid an enormous sum isn't a bad thing, it is the fact that it is a societal norm that is bad. The massive concentration of wealth at the top of the income spectrum is highly deleterious to any society-to the point that it is one of the statistical indicators the CIA uses to determine how stable a country might be. The greater the income inequality the higher the likelihood of violent insurrection.
Currently, according to the CIA World Fact Book, the US should be involved in violent civil unrest and social upheaval up to and including rebellion and revolution. The US currently ranks lower than several countries that are undergoing such destructive social change. This fact has been one of the issues that has caused Sec. Napolitano (among others) to make statements that people find offensive and potentially threatening of civil liberties. It isn't just out of thin air.
The threat of an overly-unbalanced distribution of wealth is one of the primary drivers behind progressive income taxes with a deduction-laden incentives. The idea is not to prevent great wealth, but to prevent great, unearned wealth not tied to any productivity. Especially in these days of a globalized economy, someone worth millions or billions doesn't necessarily take their massive windfall and invest it in another business venture, the people they PAY to handle their money have a fiduciary responsibility to put that money where it will have the most opportunity to grow. For the last 10-15 years that has been OUT of the United States (not my opinion, the opinion of former Sec. Labor Robert Reich). Higher tax rates with targeted deductions are a 'passive' government incentive to reinvest money here.
   As for the the income inequality, check into: http://www.wagingnonviolentstruggle.com/
-and its correlation to not only the Occupy movement but the Arab Spring and the fall of the Iron Curtain. It is one of the reasons why all those demonstrations have been peaceful.
   I am not saying that the government should put a direct cap on what a CEO can make, but there should be some incentive to EARN the money. Jobs-love him or hate him-revolutionized the way humans interact with information, create, design, and do business as did Henry Ford and many others who built great fortunes, they didn't step into a position that already existed and Hoover massive amounts of cash out of it regardless of their abilities. There is a major difference.

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