Brewmaniac

Bush takes aim at executive salaries
President tells Wall Street CEO pay should be tied to shareholder interests
MSNBC News Services
Updated: 2:19 p.m. ET Jan 31, 2007

NEW YORK - In his “State of the Economy” speech today, delivered from the financial center of the world, President Bush aimed at bringing his economic message out of the shadows of the Iraq war. On his second day in a row he focused on the economy, the government reported faster-than-expected growth of 3.5 percent in the final quarter of last year.

In his address, Bush took aim Wednesday at lavish salaries and bonuses for corporate executives, standing on Wall Street to issue a sharp warning for corporate boards to “step up to their responsibilities” and tie compensation packages to performance.

The president acknowledged people’s continuing nervousness about their financial picture, despite a string of similar reports that provide some reason for optimism. He said some workers are being left behind in the booming economy and the disparity between the rich and the poor is growing.

“The fact is that income inequality is real. It has been rising for more than 25 years,” the president said. “The earnings gap is now twice as wide as it was in 1980,” Bush said, adding that more education and training can lift peoples’ salaries.

The president spoke to an audience of business leaders at the venerable Federal Hall — a symbol of both America’s democracy and its economic resilience. Later, he stopped along Broad Street to shake hands with New York police officers and then ducked inside the New York Stock Exchange. The surprise visit caused a frenzy on the already chaotic trading floor. It was so crowded that traders standing just five feet away of Bush had a better view of him on television screens.

In his address, Bush said he realized that stories about the enormous salaries and other perks for CEOs, for instance, create anger and uncertainty that affect the country’s investors.

The president does not endorse any government role in reducing those packages. Instead, Bush highlighted new federal rules that the administration thinks are a better path toward wise compensation decisions by companies.

“Government should not decide the compensation for America’s corporate executives,” he said. “But the salaries and bonuses of CEOs should be based on their success at improving their companies and bringing value to their shareholders.”

In effect starting last month, the rules give investors access to clearer and more detailed information from public companies on their top executives’ pay packages and perks. Their impact will become apparent as corporations begin issuing 2006 annual reports.

“America’s corporate boardrooms must step up to their responsibilities,” Bush said. “You need to pay attention to the executive compensation packages that you approve. You need to show the world that America’s businesses are a model of transparency and good corporate governance.”

Today, a report showed gross domestic product, the broadest measure of overall economic activity within U.S. borders, expanded at a 3.5 percent annual rate during the October-through-December quarter, according to the Commerce Department.

It was the best quarterly reading in the GDP report since the beginning of last year, when the slide in the U.S. housing market was not yet fully evident. It also was a healthier pace than the annual growth rate of 3.0 percent that economists were expecting. Consequently, it strengthened their sentiment that the Federal Reserve will not cut interest rates soon.

“Overall, we’re seeing some very good growth data, combined with some friendly inflation data, which overall supports the view of a steady Federal Reserve,” said Alex Beuzelin, senior market analyst at Ruesch International, in Washington, D.C.

On the inflation front, the closely watched personal consumption expenditures price index fell 0.8 percent in the quarter, mostly because of falling energy prices. It was the biggest decline since the third quarter of 1954 when it dropped 1.2 percent and surprised economists, who were expecting gain of 1.9 percent.

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, has said he will push legislation to require shareholder approval of executive compensation plans. And a separate bill before the Senate to raise the minimum wage would fund accompanying tax breaks to ease the burden on small businesses by capping executives’ tax-deferred pay packages at $1 million a year.

Still, even Bush’s words on pay were met with complete silence from the business crowd he addressed.

Huge salaries and other perks for CEO have drawn investor ire and made splashy headlines. Anger over executive compensation unrelated to performance, even as companies stumble, lay off employees or renege on billions of dollars in pension obligations for workers’ retirement, has spread from shareholders to union activists and buttoned-down mutual fund trustees. The chasm between executives’ salaries and the pay of rank-and-file employees continues to widen.

Home Depot chief executive Bob Nardelli was earning an average of $25.7 million a year — excluding stock options — before he was forced out in a furor over his hefty pay. He left with a severance package worth about $210 million.

In 2001, General Electric Co. paid chief executive Jack Welch $16.25 million. Welch was replaced that year with Jeffrey Immelt, who earned $3.4 million in total annual compensation in 2005.

The New York Stock Exchange faced an uproar over former CEO Richard Grasso’s $187.5 million severance package. Former New York Attorney General Eliot Spitzer, now governor, sued members of the NYSE board over the package given to Grasso when he quit as chairman in 2003.

The annual salary of the president is $400,000.

“The state of our economy is strong,” he declared.

Democrats respond that Bush is giving a misleadingly rosy picture about the economy.

“President Bush can deliver all the economic pep talks he wants, but the fact remains that his failed leadership has led to the worst job recovery on record, stagnating household incomes, a rise in poverty and record deficits,” said Stacie Paxton, spokeswoman for the Democratic National Committee.

Since Bush took office in 2001, the country has seen one in five manufacturing jobs disappear, a total of 2.96 million lost jobs. The U.S. trade deficit is expected to climb to a fifth consecutive record when final 2006 figures are totaled next month.
© 2007 MSNBC InteractiveThe Associated Press and Reuters contributed to this report.

URL: http://www.msnbc.msn.com/id/16903282/
© 2007 MSNBC.com


It's about time someone started talking about corporate greed and executive compensation.
What really blows me away is who's taking it to the media, Bush has been riding on the coattails of big business for years.
Isn't it like "the kettle calling the pot black" or "bitting the hand that feeds you"?

I noticed in the examples of overpaid CEO's that no oil company big boss was picked on.
Executive's salaries have been out of line for some time now, how can they be brought in line now?

__________________
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highthief

Aside from legislation? I dunno. Stock exchange rules to tie compensation to performance for listed companies?

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aceventura3

Google just announced earnings, which grew about 70%. The company has a market cap of over $150 billion, it did not exist 10 years ago. They generate a 20% return on equity. In your view, what should the executives be paid? Who other than the shareholders (the owners of the company) should determine the pay of the executives? If you don't own Google shares why would you care what Google pays its executives as long as they pay taxes?

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"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

highthief

I would think that most people do own shares of large corporations via their mutual funds, RRSP/IRA, and regular trading activities, etc - thus we all do have a stake in how executives are compensated.

Personally, I think if a company performs there is no reason an executive should not be well compensated. However, like most people, I don't think executives who receive whopping big salaries while presiding over poorly performing companies should be well paid while their companies suffer due to the executive's inadequacies.

__________________
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aceventura3

If you are saying shareholders should play a more active role in what goes on in the companies they own, I agree with you. People should attend annual meetings, read quarterly and annual SEC filings, and vote. If they are not willing to do these things they should not invest in equities. If shareholders acted like owners, executive pay would be in-line with what they want. We don't need government invovlment.

Do you feel the same way about actors in poorly performing movies? Athletes on poorly performing teams? Politicians in poorly performing cities/states? Teachers in poorly performing schools? I know it is relative, but pay for performance - is pay for performance. I agree with pay for performance across the board.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

Brewmaniac

Absolutely agree!

__________________
"That's a joke... I say, that's a joke, son"

highthief

To some extent - however, in the case of a CEO, who has control over the entire organization, the impact of his performance on the success or failure of the company is much greater than what the performance of a single teacher is in an entire school. Additionally, there is no real way to compensate a really, really great teacher for exemplary performance that is comparable to the vast bonuses and benefits a CEO might earn.

So, while in principle, I like pay for performance tie-ins, it is not valid to compare the influence a CEO has to that which the average worker has.

I do think that sports stars are a more valid comparison and that their compensation works best when tied to performance.

__________________
Si vis pacem parabellum.

roachboy

i dont see much going on in this move beyond an attempt by a collapsing presidency to regain some footing for itself by shifting into a transparently hollow populist mode.

this is not to say that questions of exorbitant executive pay is not a problem--it is simply an expression of class warfare republican style, during which you (a) define the state as irrational so (b) roll back its regulatory functions while (c) floating this ridiculous fantasy that markets are somehow "rational" so that (d) when things politically are going well, actors who operate within a key conservative demographic can take anything and everything they can with the understanding that (e) when things head south politically, there will be a certain hollow bluster on this whole process that the conservatives--whose economic ideology lay behind this grotesque state of affairs in the first place--can use to position themselves as representing the interests of "the people" on economic matters.

the response from the corporate side of things is predictable, and i think that ace (who i do not agree with, but who is consistent) sums up pretty well: "whaddya talking about? this is the private sector. buzz off."

and that is where things stand.

i dont see anything like a revision of the underlying economic ideology that the neo-hooverites have been working since the 1970s in well-funded think tanks, and since reagan as an element of public ideology. given that, i dont see anything beyond posturing in the bushstatement. well, posturing and an index of the sense of political implosion that must finally have reached the well-protected surface of the planet george w. bush lives on.

when you start to see american conservatives ditching their disastrous but sound-byte friendly neoliberal economic ideology, maybe i'll start taking this sort of thing seriously. but there's no sign of that: no amount of damage seems to falsify it; no amount of human suffering and squandering of resources seems to impact upon it; no coherent analysis from the right is out there that calls their own economic philosophy into question--so this gesture is nothing more than that.

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spinning dog. such faithfulness it hear

it make you sick.

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host

rocahboy, I find it amazing that anyone still takes "at his word". anything that Mr. Bush says:

The "surge", for example, will have to include up to 48,000 troops to make it effective, or believable:
<center><img src="http://talkingpointsmemo.com/docs/files/1170351179Troop%20Increase%20Spratt%20Letter_Page_2.jpg" height=770 width=615></center>
<br>
http://www.talkingpointsmemo.com/doc...?resultpage=2&

aceventura3

Does your opinion change if it is not "corporate". Let's say your regularlly hire a babysitter. Do you pay her or him based on their skills and experience relative to market rates in your area for babysitters or should you pay based on some formula someone makes up in Washington? Do you think the babysitter should be paid by you based on your household income? I think what you pay the babysitter is a private matter.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

JustJess

Actually, until RB's post, no one was saying that gov't *should* regulate business. However, I do agree with the idea of mandating that all executive compensation packages are transparent to all shareholders. I think that will cause a correction by itself, as long as the shareholders are paying attention. If the CEO is supposed to come up with a certain percentage of growth etc, and does not, they should not be entitled to all those gravies. And I cannot conceive of the idea that fired CEO's still get hundreds of millions of dollars in severance packages... you're getting rid of them because they sucked, right? So why are you paying them decades' worth of compensation??

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loquitur

I still don't know what will be accomplished at a public policy level by placing caps on corporate executives' compensation. What's the point? If the shareholders don't mind paying it - and it's their money -- why is that other people's concern? (You know who those shareholders are, by the way? The biggest ones are the government employee and union retirement funds.)

roachboy

a.) ace:

analogies between corporations and a babysitter are false from the outset.


b. general:

in what i wrote above, the key was that there is nothing to this pr move on the administration's part. the economic ideology adopted by the right is the explanation. loquitor restates one of the implications of that ideology.

speaking of loquitor: stakeholder is a better category than shareholder. with stakeholder, it is a bit more difficult to fall into the illusion that corporate activity is private in any meaningful sense of the term. if you do not accept the premise (that corporate activity is private), then (obviously) your argument does not fly.


also: i didnt make a direct argument about whether this sort of issue should or should not be addressed at the regulatory level.
i simply said that it would not be addressed at the regulatory level by the right.

__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite

JustJess

Am I missing something?

No one is saying government would be/should be regulating business directly. Not putting caps on things, nothing like that. The only thing Bush suggested - and I actually agree with - is that compensation packages should be transparent to shareholders etc, and SUGGESTED that corporations start tying pay to performance. No one wants to make the pay/performance thing a law. Not the right, and not any of the usually-identified-as-left people here either.

The only thing that I agree should be law is the comp transparency.

It seems like you guys are used to automatically arguing, but no one is actually reading anything.

__________________
My heart knows me better than I know myself, so I'm gonna let it do all the talkin'.

Elphaba

It is this pending legislation that I believe Bush is trying to circumvent by recommending voluntary policing of executive salaries. I'm inclined to think that both proposals will be dead on arrival, and that Bush is merely engaging in populist happy talk.

The_Jazz

If this is an example of the "kinder, gentler" TFP Politics, it sucks. As JJ suggested, can we all at least argue the same point?

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Elphaba

I believe this is Boatin's point/OP:

Just sayin'...

loquitur

roachboy, I have no idea what the hell you're talking about in #13. Maybe I'm just dense, but I don't have a clue what you mean.

roachboy

what part of this gives you trouble, loquitor?
the statement that corporate activity cannot coherently be understood as private seems pretty straightforward.
but it contradicts a basic assumption of neliberalism, which has assimilated idiotic claims like those of milton friedman, who argues that corporate activity can be understood through exclusive emphasis on shareholder profits (going so far as to say that corporations act ethically when they generate profits for shareholders)--within this logic, corporate activity would be private.
the only problem with that logic is that it is wholly false--except in a narrow legal sense--but that narrow legal sense is not a viable political sense--because corporate action is NOT private, because it is legitimately a target for public action, for political action--because it is political----the friedmanite line--which your post above repeated, whether you know it or not--has been largely abandoned--except for certain flinstone behemoths like walmart. that because the friedmanite view is bad for business--it blinds corporations to the consequences of their actions, it erases any impetus behind anything like corporate ethics, replacing them with shareholder profits as the main index of coherent action.

now in the fantasyworld of american freemarketeers, the trends of tnc internal monitoring (which increasingly have been shifting over the triple bottom line-based assessement, a move which presupposes replacement of the primacy of shareholders with the broader category of stakeholders, a rearrangement of corporate power, an imperative for greater transparency, etc.) may not matter--but that is (yet another) index of the increasing irrelevance of this ideological position.

have a look at the csr audits collected here, if you like:

http://www.globalreporting.org/Home

and think about what this shift in internal monitoring amounts to from a political viewpoint.
one thing it means is that neoliberalism is bad for business.
another thing it means is that the premises of neoliberalism are being rejected.
among these premises is the logic of your earlier post.

naturally, american conservatives haven't caught up with this kind of tepid move at the level of tnc internal monitoring. what you make of this is an open question. personally, i think this shift functions as a kind of immanent critique of american conservative economic ideology--which has left a trail of disaster everywhere that it has been applied (think structural adjustment or captialist "shock therapy")....but that presupposes that the data about tnc activity is more significant than the statements about that activity you could get from a neoliberal administration and the media apparatus that shares its assumptions about economic activity. one could see this information across a reversal of priority and start with statements from a neoliberal administration--but to my mind, that makes no sense. or you could start with assumptions about economic activity more generally grounded in that ideology--but that too makes little sense. folk do it. i assume the reasoning is mostly based around it being easy. easy peasy.

__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite

EaseUp

You ARE aware that this has nothing to do with the subject people wish to discuss in this thread, aren't you?

I recently sold my Home Depot stock. Partly because its performance sucked, and partly because they compensated a lackluster CEO to the tune of $240 million. That caused me to decide they don't need my money.

If more stockholders did the same, corporate salaries would get back to reality, without the need for government interference.

Agreed on the transparency issue.

kutulu

Jesus, talk about missing the point. It is very simple. Bush said executive salaries are out of control and basically said that it's messed up that the gap between the rich and poor is too wide. Does anyone actually dispute that?

JustJess

kutulu, I think everyone just got befuddled. No one actually disagrees with what Bush said, and the liberals are used to arguing with everything he does/says (I find myself doing that too) and the conservatives are used to arguing with the liberals. When there's nothing to argue about, they get all confused.

__________________
My heart knows me better than I know myself, so I'm gonna let it do all the talkin'.

roachboy

i dont see the bufuddlement.
the critiques of bush's statement seem pretty well-founded--that without a significant revamping of conservative economic assumptions, these statements cannot be seen as anything more than empty, populist grandstanding by a lame duck president.
within the debate here, such as it is, things shook out in a strange direction or 3, but that does not mean that the premise of the critiques of the bush administration is not coherent. it just means that this thread contains sequences where the participants talked entirely past each other. it happens.

__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite

Aladdin Sane

It is none of your business how much executives or anyone else in the private sector is paid. It's not your money or your property.

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host

....LOL.... the wheel keeps turning.... your "sentiments" only fuel the determination of the participants in this never ending, balancing act:

roachboy

see?
there is no incoherence at the level of "what is this thread about?"

but there are radically opposed notions of what is and is not public, where corporate activity falls along that gradient (between the two terms public/private)---and from that both (a) different conceptions of the relationship between economic activity and politics (conservatives would have economic activity be wholly separate from politics, following from their insistence on the public/private split as absolute--so there is nothing to be done by anyone--stakeholder or not--in shaping corporate action--which is assumed to be necessarily for the best in this the best of all possible worlds. needless to say, i think this view worthless--indefensible analytically, disastrous politically)

and

(b) on that basis very different views of whether and how to take bush seriously when he makes some empty gesture toward the rest of us by saying "maybe executive pay levels are a bit out of whack--gentlemen, please think about that--no pressure--not to worry--we know that corporations are owned by the private individuals who invest in them and that everyone who controls capital is exemplary in every way and so we would never dream of telling you, holder of capital, what to do because, well, you are better than most people: wiser, possessed of a broader view, acting with collective interest at heart."

__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite

FoolThemAll

Apologies if I missed it, but did you ever explain why you find it worthless?

Also:

If I'm understanding this correctly - it isn't even the business of stakeholders to shape corporate action - then I don't see where anyone advocated this position.

It's my impression that right-wing economic ideology calls for low or zero regulation NOT because the capital-holders are necessarily wiser than the rest of us, but because they are the owners of that capital. Because they have a right to use that property as they see fit, even if the use is foolish, as long as that use does not steal from the health or property of others. Now, it wouldn't shock me if you took issue with this view as well, but it looks like you're currently attacking a strawman.

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I wonder if we're stuck in Rome.

loquitur

roachboy, your position betrays a fundamental misunderstanding of what capitalism is all about. Capitalism is not anarchy. It presumes a certain level of societal infrastructure and the rule of law. It does not follow, however, that having a social contract therefore means all activity is at the grace of the government and that nothing is private. That's why your post was incoherent to me: your'e making leaps of inference that have no syllogistic continuity.

Milton Friedman has held a more prestigious professorship than you, won more Nobel Prizes and received considerably more professional recognition. I'd be very careful, if I were you, about calling him an idiot. His theories have largely (though not totally) been vindicated by time, as you can tell from looking at most economic discourse nowadays and the relative weight placed on Keynesian versus Friedmanite solutions. Neither model is followed rigidly, of course, but the emhpasis in recent years has been considerably more Friedmanite (monetary rather than fiscal), especially in the US.

We all need oxygen to breathe. That doesn't mean we are all creatures of oxygen and nothing else matters. Ditto societal infrastructure as provided through government.

roachboy

not in this thread, fta, i haven't. in what i have put up in the context of this thread, the argument should be simple enough to draw out---the claim is that conservative framing of corporate activity as involving primarily the relation of private shareholders to private corporations is dysfunctional--both as a description of corporations (because it is only one relation amongst any number of relations--like (say) that which links and opposes labor to capital)---and because, taken as a way of thinking about neoliberalism, it had lead to disastroud consequences (think the history of structural adjustment programs of the results of capitalist shock therapy)...

i dont understand what you are saying here. the whole idea behind the stakeholder (a term that floats outward from the planet business ethics) is to empower a wider range of groups in the shaping of the factors that, say, a tnc would take into account in making bidness decisions. it was developed explicitly as a critique of the freidmanite view of bidness and its exclusive emphasis on shareholder profits. it is about the notion that corporate activity is political, is public simply because the effects of that activity run WAY beyond the question of whether shareholders make money or not--and that the public should be represented in various ways in the process of fashioning business strategy. whence stakeholder groups.

i take this claim to be self-evident, not in need of any particular defense.

neoliberalism is bad for business.
it is not bad in the same way for american political purposes, because no matter the problems its actual implementation have generated (and on this the evidence is easy to find and kinda overwhelming), neoliberal arguments nonetheless simplify the world--they minimize the space for political action for example.

both elements are featured in conservative ideology (depending on what sources you have in mind when you happen to generate statements, of course)...so while i am not sure that this line represents a straw man, it is more trivial than the other (about the privateness of corporations and their actions following from the exclusive emphasis on shareholder-corporate entity relations).


loquitor:

geez. (1) who is working with syllogisms? when did a 17th century mode of arguing from general principles to the Particular get to be part of the rules that shape the form of arguments?

(2) there is no general characterization of capitalism in the posts i have put up here. i dont know where you get that from. the claim that capitalism presupposes an infrastructure is self-evident. the correlate of this--that therefore capitalism is not anarchy--seems one of those moves that simply restates the premise and which doesnt move the argument.

the fiction of a social contract is nothing more than that: a projection backward in time of legal and institutional arrangements that obtain at a given moment. it doesnt work the other way around--there is no social contract that constititues the basis of any given legal arrangement, not in the literal sense. another way: you dont seriously believe that there were at some point "states of nature" do you?

i can see why you'd play that way, though: you want to attribute the basis of existing social arrangements to a contract that predates the state and various legal arrangements. that way, you can make a separation between that which obtains and the legal and institutional infrastructures that enable that which obtains to function. i dont buy it.

the simple fact of the matter is that markets are legal constructs. corporations are legal entities. economic activity is hedged round with law--it presupposes law (e.g. contracts) to operate at all.
law is a public institution, like it or not.
nothing about this changes if you resort to the fiction of a social contract. so there is a sense in which everything about capitalist activity is public.
there is also a sense in which much of that activity can also be understood as private.
the question in this thread is not which is more true, but rather about how conservative economic ideology frames capitalism and of the consequences that follow from that--and how this framing works at cross purposes with anything that george w bush might say about executive compensation.
so the nature of capitalism itself is an indirect referencepoint in this conversation--there is and has been no general theory of capitalism advanced here.
you act as though i did advance one.
that is wrong.

first, this is really funny. i am sure that the corpse of milton friedman blushed a little as this curious little handjob unfolded in your post.

of course you are correct: friedman won more nobel prizes than i have. he had a more prestigious chair than i have. cultural markets therefore are rational. given the absolute rationality of markets, i, like any good boy, really should just submit--and by submitting i mean that i, like any good boy, should recognize the superiority of arguments advanced by people who have won more nobel prizes than me and who occupy more heavily endowed chairs than i do. really, i do not know what i was thinking. i suppose that i should apply this rule to other areas as well: i should imagine dianetics a vital book for our time because it sells more than my books have. l. ron hubbard is a more powerful thinker than i am because capitalism sez so through demand levels. this past superbowl was a cultural event of epic proportions, only topped in overall significance by the last episode of mash, and this because the always-rational cultural markets within capitalism have determined as much via the level of demand/viewership. if i had a tv show, i would obviously have to recognize its inferiority to the super bowl. who wouldnt?

in music, christine aguilera is Important. she sells more records than i do. were i rational in the sense that you seem to argue for, i would stop doing what i do and start emulating her.
all this because what's real is rational.
everything works out for the best in this the best of all possible worlds.
it's true.
you're right.
i will definitely mend my ways.

__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite

FoolThemAll

What, exactly, is your definition of 'public' here? It's sounding amazingly broad to me so far.

How are these disastrous consequences caused by the notion of corporations as private?

I misunderstood what you meant by stakeholder. Okay.

If you're talking about external costs like pollution, sure. If you're going beyond that to matters like downsizing or, say, exorbitant CEO compensation, then no, it's not self-evident, and you do need to explain it.

You're certainly free to make odd (well, odd to me) assertions about whether corporations are private in the context of this thread and how much control non-shareholders should properly seek, but if they come without an explanation, then they're not much use to anyone except the like-minded choir.

Fair enough on both counts. I'd simply argue that the view I presented is the stronger of the two by far. Of course capital owners are capable of bad decisions. That pretty much goes without saying. For every 'self-made' millionaire, you'll find a person of mediocre talents who got lucky with a sizable inheritance or an unattentive board of directors or what have you.

One more thing:

Not to speak for loquitur, but the part that irked me wasn't that you disagree with a more popular person like Friedman, but that you called his notions idiotic. At best, 'idiotic' is an exaggeration. At worst, it's as vacuously dismissive as terms like 'fascist' and 'anti-American' often are.

__________________
I wonder if we're stuck in Rome.

roachboy

fta: on the last point you make: agreed. i do that too much, often without really thinking about it. so am taking this under advisement, for whatever that's worth.
=======
on the stakeholder matter: the extent to which stakeholder groups influence various aspects of corporate action (and a trade union would be a stakeholder group, for example--and therein lay some of the problems of the term and traces of its origin in bidness ethics--which is another topic) is in the main a function of the political situation and internal culture of that corporation. one way of looking at the relations between stakeholder groups and the corporation is as a conflict over borders between public (by which i mean zones of activity that can be understood as having effects on a wider public--externalities in the parlance---and so which should be matters of public and/or political concern and action) and private (zones of activity which do not generate such effects, which may not be legitimate targets of public concern/political action)....using this (admittedly general) notion of the public, or of public action (or actions for which corporate entities can and should be held politically accountable) i tend to argue for the widest extension of the notion of the public. because i do not see anything about corporate activity that should not be held up as matters of public concern/political concern/political action. call it my residual marxist because it is. i would argue that economic activity is public activity. all of it. even shareholder investments--first because the distribution of wealth within a given social order is a political question, second because the money invested is going into entities that are themselves engaged in public activity, and which can and should be held politically accountable for that activity.

that this is even a question is an index of how far things have degenerated ideologically over the past 40 years or so in the wake the shift away from nation-state oriented capitalism--which undercut trade unions--which undercutting enabled capital to jettison the political redefinitions that the trade union movement had forced it to accept--redefinitions what made very fundamental types of corporate activity into conflict areas--at stake in these conflicts were questions of power--implicit in these power conflicts were questions of who *should* shape the nature and distribution of profits (for example)--behind this were basically antithetical views of what profit comes from--for investors, then as now, it seems that wealth would be generated by investment; for trade unions, wealth is produced by labor. this is a version of the backstory behind my arguments here--probably should have explained this more (in retrospect at least), but figured i would try to keep the thread geared toward the op. so now is as good a time as any.

i dont think anything i am arguing for is "odd"--it just comes out of a view of capitalism as a collection of historical processes--and from my not forgetting about that history when i think about contemporary capitalism. that this seems odd is to me what is odd--but that's (again) another matter.

__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite

FoolThemAll

Was it in this thread or another that someone made a babysitter analogy?

I think it's relevant to bring it up here, to understand how far this notion of 'public' goes. Hiring a babysitter is economic activity, no?

If a babysitter and a parent contract for babysitting services, is it proper for the government to forcibly shape the contract in any way? What ways? At what point would government intervention go too far?

How far does this go? Does the mere fact that I vote - a public activity if anything is - open my property up to government regulation/control above and beyond the factor of external costs?

Is it always proper for politics to concern itself with the distribution of wealth? If that's what your saying, why do you think that?

Degenerated, heh... you say po-tay-to, I say po-tah-to.

To me, it's obvious that it's a combination - both investment and labor produce wealth. Either can enhance the wealth-producing capabilities of the other. A large assembly line is much less useful without multiple laborers to put it to use and multiple laborers' efforts are much less useful without labor-aiding machines.

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I wonder if we're stuck in Rome.

kangaeru

I would agree with you roachboy that capitalism can exist because it needs a specific kind of environment in which to work, and that this environment is made my governments, which are public institutions. However, I would not argue that because these public institutions, which are instruments of the people whose prosperity they are meant to facilitate, that corporations are inherently "public" entities themselves.

The drafters of the constitution, specifically Alexander Hamilton, placed the sovereignty of an individual's private property as being paramount importance to the sustainability of a democtatic capitalist state. While I do understand your point, it seems to me you're sweeping the concept of private property under the rug.

If you argue that corporations exist because by the design of public institutions, and therefore these institutions, and the public inherently, have a right to govern corporations, how do you maintain consistency with the principle of private property? How can it only apply to some people, and not others? Why should only the fabulously rich be unprotected by this law? And once you cross that line, where does it stop?

The logic you're using would make sense to me if we were talking about a neo-socialist state, in which some of the mechanisms from both capitalism and socialism were combined to form a new type of government and a new type of economy. That being said, how can you argue that the logic you're using assumes a capitalist state at all?

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Dont be afraid to change who you are for what you could become

roachboy

fta: babysitter and corporate entities are not similar enough for an analogy leaning on the former to say much of anything about the latter. same problem the alchemists had--they thought that because a and 3 (empty variables referring to substances/objects) were both material that it should follow that one could be converted into the other.

point 2 (from your post):
property in the form of a corporation owned by shareholders is not like property in the form of your lawn held by you. so if i understand the point you are making (and i am not sure that i do), it seems to be another strange analogy. but i am not sure. so please explain more of what you mean.

point 3: at the descriptive level, you're right...but this isn't a conversation about descriptions of capitalism so much as it is a political argument about how capitalism is framed ideologically. so i am making an argument for the widest extension of the notion of public-ness in the context of captialist organization. during most of the fordist period (particularly ww2-the early 197os) the political situation was such that unions had significantly cut into what had been understood as the "private" space of profit maximizing--but they did it based on political conflict--which presupposed organization and pressure and, well, conflict. in the states, you had a screwy trade union model, so things didnt go as well for working folk as they did in europe, where the power of the trade union movement was reflected in functionally social-democratic arrangements. with the shift toward more flex-accumulation modes across the 70s, this situation began to change quickly--now the political situation is dominated by capital and their functionaries (to use a neutral term)...the relation of labor to capital is political, as is the extension of the notion of public-ness. all of this changes as the overall balance of power changes. i am making an argument about the current political situation--and it refers to the op via the linking of conservative economic ideology to the range of options bush has to actually do something about, say, ceo salaries (or the radically uneven distribution of wealth that has come about since the reagan period)--the claim is that the ideology leave bush no room to do anything but talk.

cooking something as i write this: i'll get back to the thread later and respond to your points, kangaeru.

__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite

aceventura3

Perhaps Bush should take on something really affecting the bottom line of average Americans.

I agree with what is below, but probably disagree with what many of you will say is the cause and the solution. I believe the average investor is too passive and therefore they get screwed from all directions. The answer is to stop being passive.

http://finance.yahoo.com/expert/arti...chricher/23654

Both quotes from the same source.

From my point of view money is money. If I pay a babysitter for a service I want value for what I pay for. If I pay a CEO for a service I want value for what I pay for. What I pay should be nobody's business but mine and the person I pay, babysitter or CEO. If the company is owned by shareholders it is nobody's business accept for the sharholders.

I do understand that there are people in the world who don't like to make financial decisions and actually need someone to tell them what to do, hence the above article illustrating how they get screwed, but at least they didn't have to know any math.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

roachboy

um, not necessarily.
first, the analogy to the babysitter is false (again).
second, corporations do not operate in some econ 101 fantasyland of abstract markets impacted by abstract variables like supply and demand to the exclusion of all other social and political factors. so they manage complex relationships with stakeholders (the set of social actors whose interests are directly or indirectly affected by corporate activities) that tip into political questions once stakeholder groups mobilize, frame a debate, make that debate public, etc.. so any subset of corporate activity is potentially political. if a corporation is paying say 15 cents a piece for a shirt, selling it for 80 dollars retail and the ceo is making say 10 mil a year (what not?) then the ceo salary can obviously be made into a political matter simply by linking the variables together (e.g. it is politically, socially, ethically unacceptable that a corporation can pay its ceo x dollars/year when it pays the workers whose labor creates the objects get paid dick.) in a world where demand is to a significant extent maintained via branding, this (or any) type of political argument/action can be quite damaging--witness nike for example--and the corporation will have to respond to it--or generate a convincing appearance of having responded.

babysitters just arent in anything like that position.
my claim at bottom is that there is no a priori divide that separates private from public, private from political. there are fluid boundaries that are being continually renegociated. this is a simple statement of empirical fact (again, look at nike--they are something of a textbook example).
your position is geared around an arbitrary a priori. it leads to a simple refusal to see what is in front of you. i would imagine that were you ceo of a tnc that found itself inside the political flashpoint on a given issue, that attitude would render you dysfunctional in a hurry.

there are tncs that have tried--and try--to work the way you (implicitly) suggest: walmart is one example. they seem to figure that their scale gives them impunity. obviously, this is a risky position to occupy, and to some extent walmart is paying for it in pr at least. another exception in monsanto, but they are privately held, so the rules of the game are a bit different for them. but they too have paid a heavy price for their stonewalling. watch "the future of food".

kangerau: much of what i was going to say in response to your post is in the above. while i do not know what you mean exactly by a "neosocialist state" (maybe you could explain it more), i can tell you that i have no problem with democratic socialism. part of that follows from knowing what democratic socialism actually entails. i mention this because, too often in discussions here, folk operate without any clear idea of what the word "socialism" or its compounds mean.

__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite

aceventura3

If you say it is wrong without giving a reason, I guess I am supposed to take your word for it?

Paying a person for a service, is paying a person for a service. You say that is wrong????

You think there is a difference based on scale, responsibility, education, what? Bill Gates might be paying his babysitter more than some CEO's get paid, should Bush comment on that? Do you have an interest in that? Perhaps if tax dollars are involved I can see your point. For example foster parents (similar to a baby sitter) getting money from the government, should be paid based on some common formula and made public. Perhaps we have a right as the public to have input in the CEO slaries of corporations receiving government contracts, but if it is a private sector company (even if it is publically traded) doing business in the private sector, the public has no interest in the CEO salary. The public has a right to buy or not buy from that company. And, the public has a right to buy or not buy the shares. If fraud is involved or criminal activity, that different, but we are not talking about that.
You call variables like supply and demand "abstract"?

I agree econ 101 does not apply directly to corporations in the context of this discussion. Econ 101 covers macroeconomics. Econ 102 is more applicable to this discussion - microeconomics.

Social and political factors do impact corporate behavior. Managers get paid to manage or manipulate (pick your own word depending on how you feel about what corporations are doing) these factors. As a part of managing these factors occationally you get guys like John Chambers of Cisco who take $1 in salary (while still making millions)
but trust me when it is made public the information is going to be managed as to present the company in the most favorable way.
When Walmart wants to build a store in your town, they will use words like "stakeholder", that is a part of "managing" social and political factors. It makes people feel good to be a "stakeholder", but try taking that to a bank, or see if they call the next day. If they are true gentlemen, they will send flowers however.

O.k. but how much did you pay for popcorn the last time you went to see a movie? How much did the farmer get? Why aren't you concerned about that?

How about class action lawsuits. Where the lawyers get millions representing the class, and each person in the class gets pennies on the dollar for the real damages incurred. Why aren't you concerned about that?

I am more interested in who cares for my son, than I am in the CEO's of the companies I invest in. I care about both, but I figure I could alway sell the stock or make more money.

I agree. The government is involved in everything. They even have a say in who you have sex with. As an adult if you offered to pay another adult for sex, you could go to jail. Government is out of control.

I beg to differ. My view of the world allows me to easily do what needs to be done, because I understand the "game". I would suggest that your views are the ones that would lead to indecisiveness, chaos, and eventual failure. It seems you would try to hard to make too many "stakeholders" happy, and we already know that desiganting someone a "stakeholder" is "managing".

Wrong. Walmart does what needs to be done. They bend to make "stakeholders" happy. They simply piss off the competition and the unions.

"Everyone hates Walmart", the biggest retailer in the world by a margin of 2 or 3 based on sales. I want to pay that PR price some day, don't you?

I will check it out.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

host

Do you understand, ace.....IMO, you write like someone who doesn't have even a clue.....

Do you really think anything has changed since Smedley Butler's long military career? Do you really think that Wal-Mart provides "low prices" by means of an independent, private, neutral, capitalistic business model?

aceventura3

By definition I don't have a clue because I don't get your point. I don't understand your disagreement with the points I have made. Also, I am the first to admit my writing is not sophisticated, if I were any good, I would be making money doing it - I am a capitalist to the core, so was Sam Walmart.

Fundemental truths don't change. People do what they consider to be in their best interest when they hve time and a reasonable opportunity to consider the alternatives. Gen. butler's views on war are generally correct in my opinion. I can not think of any war that did not have some form of economic issue associated with it or a nation/leader having a military and simply using it. However, I think people understaand and know why they fight and do it for their own reasons - these reasons often differ from the reasons given by "leaders". For example - during the Civil War in theis country, most people fought for reasons other than the slavery question or to "save the Union".

Yes, for the most part. The retail market is regulated by governement, this regulation restricts competition. The restriction of competition has allowed Wal-Mart to make excessive profits over the years as compared to what would have happened in a more competetive market. I don't blame Wal-Mart for that, I blame excessive government regulation.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."