Let’s run government like a business

For many decades, there have government critics who think government would be better if it were run like a business.  Be careful what you ask for; you might get it.

If government were run like a business, then the president (or governor) would be approved every year by the Senate.  This approval would be almost automatic every three years. The President would hold his position until he retires, quits, or is fired by the Senate.  If  the Senate fires him, there would be few if any hearings

The President would appoint new members to the board as previous members quit or die.

Every year, the voters would get to approve a third of the current members of the board.   They would have two choices: for or abstain.

Rather than have a variety of public services available to all citizens, there would be fees for every service.

You want to get mail, you would have to pay an annual fee or by piece each day.

You want to drive somewhere, you would have to pay an annual fee to each jurisdiction you drive in or pay a toll each time you drive in a certain jurisdiction.

You want to have a quick response if you have a medical emergency, a fire, or a robbery, you would have to pay an annual fee to each entity or pay before you get the help.

And on and on it goes to where we might have to put coins in our refrigerator to open it.

None of us really likes to pay taxes, but without taxes our lives would be chaos.  Supposedly, Supreme Court Justice Oliver Wendell Holmes, Jr. said, “I like taxes, they buy me civilization.”  And he was a Republican!!

Dictatorship of the directorate

I've long promoted the idea of withholding votes for directors of companies who are paid too much.  Well, even if all the shareholders withhold their votes, the directors of many companies get to keep their jobs.  All that is required is a plurality of votes.  Since one vote with no opposition is a plurality, they get to keep their jobs.  And their perks.  And accumulate more shares.  And run the company without any consideration for the owners.  Instead of Milton Friedman's corporate purpose of "shareholder value", they run the company for "director value".

For more, see "When Shareholder Democracy is Sham Democracy", James B. Stewart, New York Times, 2013-04-12.

Quote of the day: entitlements

"Indeed we do have an entitlement problem; some feel so entitled to power & wealth that they're willing to undermine our economy and our democracy."
- Annabel Park, founder of the Coffee Party

Click here for original.

Let's see!  Is the CEO of U.S. Bancorp entitled to $9,311,164 for 2012 compensation?  Or did he earn it?  Who decided this?  Did the shareholders or the self-selected board of U.S. Bancorp?  If Richard Davis earned it, did he do it with his own "hard work" or did thousands of employees contribute to the success of U.S. Bancorp and earned far less than one-hundredth of what he received.  If the latter, did they receive a bonus for their hard work?  Now these are the people who are entitled to better pay.

See "CEO pay watch: U.S. Bancorp's Richard Davis", Patrick Kennedy, Star Tribune, 2013-03-13

Greedy corporate boards

Eric Jackson, The Street wrote "How Do You Slow Down Executive Pay?", Yahoo! Finance, 2011-03-11.  He thinks that we don't need the gimmicks live shareholder advisories on pay.  He says shareholders should simply throw the votes out.

I added the following comment to the article.

"I agree with Eric Jackson; vote the bums out.

I've felt like a lone voice for years.  I withhold my vote when the CEO gets over a million dollars a year or when the members of the board get over $100,000 a year.  The latter is nice work if you can get it; show up five times a year (not every board meeting!!!).  Many of us would be in the gravy with that pay.

And what is a CEO doing on the boards of other companies?  Isn't he or she being paid a lot of money to run one company?  Maybe the pay for being on other boards should be reimbursed to the company the CEO is running."

And later I added:

"Oh, I almost forgot about these boards gradually stealing the company from the shareholders that bought their shares on the open market.

To "align the interest of the board and the executives with the interests of the shareholders", they grant themselves stock, either directly or through options (the ability to buy shares at way below market value).  The net result is they are granting themselves more and more votes at a discount from what the regular shareholders paid.

In other circumstances, isn't this called skimming and either criminal or unethical?  Now, to put any kind of restraint on this behavior is called anti-business."

I didn't add that when I worked for Sperry Univac in the 70s, somebody published an article about attending a Sperry Board meeting.  The directors were served an elaborate meal that many hardly touched.  Some of the directors slept through parts of the meeting or said very little.

I've heard that in many companies, the board just agrees to what the company executives propose and go home.  Nice work if you can get it.