Category: White House

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What are you worth, and how does it compare?

What we are getting paid for what we do displays in a very crude way what we are worth to society. Crude in the sense that it’s a very one dimensional measurement, but still relevant, since most of our society consists of corporations and their task, in turn, is to maximize the value for their owners.

Of course that means that what you get paid is the lower than the value you contribue, or at least it should be. That is how corporations make money. By paying you less than the value you contribute. If you include all secondary costs that you incur, then the difference between your contribution and your cost is what you bring in as profit for the company. The larger that difference, the more valuable you should be to the company, regardless of how much you are paid.

Of course, the public sector doesn’t try to make profit. They try to provide services for the public in an as efficient manner as possible. As salaried in the private sector go up, keeping good people working in the public sector is getting increasingly difficult. The people have to have other drivers than only salary. Sense of service or status might be some.

However, I sometimes wonder about the priorities that society shows by pay disparities. Is Judge Judy doing a job that is worth 100 time what Justice Scalia does? A US Supreme Court Justice is paid around $200,000 per year. Judge Judy gets around $20,000,000. Along the same lines, are the efforts of Rush Limbaugh worth more than 100 times than the efforts of the President of the USA? The president gets approximately $400,000 per year. Mr. Limbaugh earns about $50,000,000 per year.

I could bring up a lot of other misalignments in reward versus value, even if you look solely at the private sector. But I think it’s worth to keep in mind that the average family income in the USA is in the region of $50,000. That is for a family, not for a person. That means that the effort of 1,000 families is valued at the same level as Mr. Limbaugh.

I believe that if nothing is done about the income disparity, the country of USA will slide into a more and more dire financial situation. Let me know what you think.

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Doing what’s right for the country or doing what sounds right

As I am writing this I have to admit that I feel slightly confused. We are still in an economic downturn, and because of that people are unhappy, which means that they have once again voted in a group of people whose policy choices got us here in the first place. But that is not so surprising. If you only have two choices it’s easy to choose the other just because you are unhappy. There aren’t any other alternatives. Well apathy, maybe, but that does not make anybody happy either.

No, my confusion stems from an even simpler situation. There is a federal office called the Congressional Budget Office (CBO) that is non-partisan and really only crunches numbers and scenarios to see what the effect is of different political decisions. They were instrumental in getting the health care bill balanced last year, although many of the people in congress chose not to listen to all the data. And this is happening again.

The CBO has come out with a report saying that the most effective thing Congress can do right now to stimulate the economy is to make sure that unemployed people get unemployment benefits. The reason is simple. They live on a tight budget, and any money coming in is spent, which in turn turns the wheels of businesses small and large. This in turn has the effect of improving the economy so that these companies need to hire people, lowering unemployment and increasing spending capital. The CBO has also found that the least effective thing that Congress can do is to reduce income tax. Also not entirely hard to understand, since it would leave people who already earn an (un)reasonable amount of money with slightly more money. Money they will be more likely to save, since the economy is bad.

Are you with me so far? Now comes the conundrum. Why is it that everybody in the GOP says that the most important thing is to make sure that the top 10% earners get to keep their tax cuts. Tax cuts that have had their income increase with 10% year during the 2000s, while the rest have not had any net gain at all. Keeping these tax cuts is so important that they would rather have the economy continue to flag and keep the deficit, since they are unwilling to even consider paying for it. Unemployment benefits on the other hand, they need to be paid for, if they are even considering them at all.

Now I ask the follow-up question. Who benefits from this? Well, as we know, it’s the top 10% earners in the country. That means that if all of them vote Republican, they would constitute about 20% of the GOP vote, since overall it’s fairly even between the parties. Even if we assume that they have 100% voting record (Meg Whitman proves that it’s not the case), as opposed to the 50% average that you might get in a general election means that they can be maybe 40% of the republican voters.

Why does the GOP in Congress want to shaft 60% of the people who elected them? And why do that 60% constituency continue to vote for them? If what they did was because it was the best thing to do for the country I could understand it. But it isn’t. And I don’t. I wish somebody could explain.

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Please, say it ain’t so!

The rumors are already flying. Tim Geithner might not be Treasury Secretary much longer. But who are they floating as a replacement? JP Morgan Chase CEO Jamie Dimon. Huffington Post has an article where they discuss whether it would be a good fit or not. My reaction? I pray that they will not be that stupid.

I know that a Treasury Secretary needs to know a lot about finance, economics and what goes on on Wall Street. But really. Replacing one Wall Street insider with another just makes it a revolving door of people mentally connected from most people in the USA, and makes lobbying from Wall Street look like an amateur’s game.

If Timothy Geithner steps down, which might not be such a bad thing, I would hope that they could find somebody that has more knowledge of small businesses, entrepreneurship and general daily grind activities. Somebody who undersands that keeping banks too big to fail will just set us up for another crash just like the one we’re in with bigger job losses and the potential for a real depression. No, we need to make the price to be big so high that it’s not financially responsible to share holders to be so big. And separate money lending banks from investment houses. The latter should not even be allowed to be called banks, just to limit the confusion.

The USA needs a good and steady hand at the helm of the Treasury. I don’t believe the Wall Street CEOs even know what the chart looks like.