I just happen to be auditing some corporate numbers today and of course me being the kind of certified professional I am, I have access to things like corporate salaries. So we're going to talk about micromanagement for a moment.
You see I have a big beef with the jawboning of bank CEO salaries. The government has no business doing this, not even in a crisis. And the idea of putting it up to a political kind of populist litmus test is really disturbing. So I'd like to put together an analogy which should give people who think this stuff is fair, a moment to consider something. First of all, think about yourself and where you work. Now think about your department and what it does. Now imagine the budget of your department waved around like a red flag in front of the bull of public opinion.
Hmm.
Now at the company I'm working at, I can see that with regards to salaries, the executives make a total of 26.7 million. Now everybody that works in marketing makes 26.5 million put together, and the folks who work under the heading of Administration make about 85 million. But since we just got finished dealing with the Super Bowl imagine a scenario in which Senator Frothmouth decides not to pick on executives, but on marketing.
The interesting thing is that for consumer products, we are very much the target of marketing. We may not know all the things a CEO is supposed to be judged on, but we know a bogus TV ad when we see one. How about Budweiser ladies and gentlemen. Does anyone honestly believe that you are really going to change how many people drink Bud based on the TV ads? Who else had stupid commercials? Hmm. Pepsi had a pretty cool one and a pretty stupid one. Cut half of the marketing team at Pepsico's salary in half!
The crowd I hang out with meets bigwigs on a semi-regular basis. Although I don't go for that sort of thing, I could probably wrangle a bunch of skybox seats in any given sport if I tried hard enough. That's all marketing too. We don't need skyboxes in this economy, any idiot can see that.
I think you get the picture. Any sort of anything can be singled out by politicians and their media flunkies for criticism and jawboning. That's not how you make policy, that's how you make enemies of business - the businesses we all depend on. Let's keep this whole thing simple. Buy it and take control of shutup.
There are only two intelligent choices in an economic crisis of this sort. Nationalization or Laissez Faire. In between those extremes is regulation and taxation. Read my lips, WE DON'T HAVE TIME. It is absolutely impossible under crisis conditions for the government to come up with an improved set of regulatory frameworks or tax incentives that will create the proper stimulus. I hope Obama gets the message very soon that half stepping doesn't work on a tightrope.
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While I'm at it speaking of tax policy, I am in total agreement that a rebate is not going to produce stimulus. So while I would be personally psyched to get a payroll tax exemption (Oh my GOD, that would be cool!) I know exactly what I would do with it, which is the same thing most Americans would do, save it for a rainy day. The statistic is that when Bush mailed the checks last year, 83% of it went to savings. That's something of an astonishing figure but if it's true that means households are all hunkering down - everybody wants to spend nothing.
It is not entirely clear to me how consumer spending will get us out of the recession, but buying a pair of socks actually makes sense in macroeconomic theory. The equation is
GDP = C + I + G + (X − M). More on that later...
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