What we need to do NEXT Part 2

This is the second part in a series. For the introduction and first part, read yesterday's entry. By the way, normally I include end notes for each individual blog post. This time I'm going to create end notes for the entire series. I should have mentioned in the first post that these suggestions are being posted in no particular order.


Wage Disparity

Now, once we have taken care of the coming credit crunches, we need to deal with a serious problem of income disparity. Are you aware that in 2005 the average CEO made over 821 times what the lowest paid employee that worked for him or her made? Ten years earlier it was about 275 times. So, if the average company has an employee making California’s minimum wage of $8 per hour, then the CEO of said average company was probably making around $6,568 per hour, and making around $13 Million per year (assuming 40 hour work weeks and 50 weeks per year.) That compares to the roughly $16,000 that the employee made. So the CEO made in less than 3 hours what his or her lowest paid employee made in a year.

I’m going to be honest. I really don’t believe that any CEO is worth that much. I might have a different opinion of this if executive pay rates went up only while a company was doing well. This has not been the case. Studies show that executive pay rates go up regardless of how a company is doing. Executive pay boards, which are used at most companies to determine how much company executives should be paid, are usually made up of CEOs at other companies. Imagine if you could have your friends decide how much you should get paid. That is exactly what these CEOs are doing, and it explains why executive pay can go up even when the CEO of the company is running the company straight into the ground.

So, how do we tackle this? Do we increase minimum wage to $400 per hour? Oh, heck no! That really would cause inflation and monetary devaluation. Let’s not go there!

I have a much better way of dealing with this.

Let me sketch this out instead of giving a detailed plan. You’ll see why later.

Instead of setting the minimum an employee can make, we set up a maximum disparity between the lowest paid employee and the highest paid employee or executive at a company. If the company goes over that multiple, then it forfeits all tax deductions.

Wait, what would be the outcome of that? Well, some companies would choose to increase the minimum pay of their employees to allow the executives to keep being paid well. That would increase the disposable income of those employees and increase the tax base simultaneously. Some companies would choose to pay their executives less, leaving more money for the company to invest in expansion, diversifying their product lines, or research. Some companies would choose to do neither. These companies would end up paying the government higher taxes, which could help offset tax breaks for individuals. Most companies would do some combination of these.

Now, how would we flesh this out? My first suggestion is to set the multiplier to 100 to 150 times the minimum employee’s pay. This ensures an executive pay of $1.6 to $2.4 million annually at a minimum. If the company wants to pay their lowest compensated employee more, then the executive’s pay would only go up. At $10 per hour the executive compensation goes up to $2-3 million.

Next, we count all compensation in this formula excepting only commission pay. Stock options? Count. Stocks? Count. Company condo? Count. Vacations? Count. Sold that multi-million-dollar super-computer to the government and got a $5 million dollar commission? Not covered. You made it, it’s yours. The best businessmen often pay their salesmen better than they pay themselves, realizing that a good salesman will bring in business that they can’t get themselves.

Now there are a couple of areas that I haven’t filled in yet even in my own mind. Do we want to implement this plan immediately, or phase it in over time? Do we want the cut-off point to be a hard cut-off, or do we want to phase-in the reduction in tax-breaks? How do we count contracted or temporary employees? Do we count the employees of a firm contracted to do certain kinds of services, such as janitorial firms? These can, and should, be debated at length.

One of the things I really like about this plan is there is so much room for compromise. Go ahead, change the multiplier! Count stock options differently than straight pay! Leave out corporate jets! Phase it in over time, or not! Allow companies to wait until the current executive contracts are over before it counts! All is negotiable!

It also allows every company the flexibility to determine what is an acceptable way to meet these goals. They can pay their executive less, or their employees more, or some combination. Maybe paying all of their corporate taxes is perfectly acceptable to some companies.

The upshot is that employees are going to be paid more, and more will be paid in taxes to the government. This is a win-win situation for our country.

What we need to do NEXT

By Ed Smallwood

My most recent blog entry is so long that I'm going to have to divide it into several entries. I'll be posting one part per day until the election. First up is a quick overview, followed by what we have to do for the economy.

In the next several days we will have selected a new President. I can only hope at this point that good sense will take over and Senator McCaint will be shown one of the most humiliating defeats in U.S. History. I can also only hope that the Democrats get their Filibuster-proof/veto-proof majorities in both houses of Congress.

My biggest fear should this happen is that the Democrats will celebrate until late January, and then fall victim to infighting as to what should be done. This would be just what the Republicans would like to see. Divide and conquer. All the Republicans need is for the average citizen to believe that the Democrats are ineffective in ruling to take back Congress the following term.

This is what Congress needs to do in the next 4 years. If the Democrats take over, then we stand a chance of some of this being done. If the Republicans hold on just a little bit, our chances of this happening are slim.

The Economy

We must take care of the home mortgage crisis. This should be the number one concern of Congress right now—doubly so if we have to wait until late January. Corporations and the rich have had their bail-out, and its clearly not trickling down. In fact, in an article in the New York Times published on October 24th, Joe Nocera detailed an employee conference call he sneaked into with an executive of JPMorgan Chase where the executive stated pretty bluntly that the money they had received from the Federal Government was going to be used to purchase other banks, not to free up lending to individuals.

People have no money to buy things because they are paying so much of their income (more than half for some families in the Silicon Valley) for housing. This is leading to layoffs at companies because people aren’t buying products. If we don’t stabilize this now, we stand the chance of having a depression, not just a recession. Just ask the auto industry. I can’t keep count of the dealerships that have been going out of business around here lately, and Chrysler just announced that it would be laying off 25% of its staff, and is actively looking into a merger with General Motors just to survive.

The reality is that the banks are going to have to write-off some of the value of the homes they financed at exorbitant rates in the last few years. Nobel Prize winning economist Paul Krugman said last March that he thought home values in this country might drop by as much as 7 Trillion Dollars. You can make all kinds of arguments about who needs to pay for this loss from all kinds of angles, but the fact is the banks are going to have to lose some of the value on these properties. The government doesn’t bring in anything like enough money through taxes or bonds to cover these mortgages. This is, in fact, several times the annual GDP of this country, so nobody makes enough money to cover this loss. No reasonable suggestion as to how to deal with this has gotten around this fact. Yes, the government can buy up these loans, but if they buy them at face value, taxpayers are going to be stuck with a whopping big bill that could sink our government.

The best option, then, is for the banks to lose some of the value on the bad loans they made either from greed or stupidity, the homeowner should absorb some of the loss for taking out the loan they never would have been able to pay back anyway, and the government should absorb some of the cost as well. This frees up the maximum amount of capital to allow the economy to recover.

The alternative is to throw the homeowner out into the street, let the bank take the full loss on the loan when they sell the foreclosed property at distressed rates, and watch property tax rates plunge for the local government. Are you ready to watch crime rates soar because the city has to lay-off police officers due to declining property tax revenues? Meaning the former officers can’t make their mortgage payments. Making the economy worse. And so on.

I’m not depressing you, am I?

So, if we don’t take care of the housing mess quickly, we won’t have the ability to deal with the looming corporate credit crunch (which sounds like a name for a candy bar.) We also will not have the capital to do other necessary things, which will be covered later.

Palin is worse than we thought

Folks-

I've resisted blogging about Sarah Palin in this election cycle, largely on the belief that you vote for the President, and not the Vice-President (which I think is a bad idea to begin with.) However, it has become plain that McCaint's choice of Palin was an absolute disaster. I obviously did suspect this from the beginning. The day her choice was announced, one of my co-workers asked me what I thought of her as a pick, and my response was: "I think McCain just lost himself the election." When he asked me why, I said: "He can't use the experience argument anymore. It's impossible to argue that she has more experience than Obama." We've watched them try to make that argument, but really what McCaint did was put a woman whose experience comes out to being a sports journalist, mayor of a town of about 6,000 people, and governor of a state of only about 650,000 people (about a third the population of my county) for less than 2 years up against a man who has a law degree from Harvard, was the editor of the Harvard Law Review, was a University Constitutional Law Professor, was a State Senator in a state with a population of over 12 million, and a Federal Senator for that same state, and then claim she has more relevent experience than he does. It would be comical if our future didn't depend on the outcome.


For most of the campaign we've been told how Palin is "one of us," and backs the same things we do, such as energy independence, ethics, America, and all things patriotic. It seems every single day something comes out to prove that sentiment wrong in every way.


As for her interest in energy independence, on October 21st the AP posted an article written by Martha Mendoza detailing how as Governor of Alaska, Palin backed shipping Alaskan Liquified Natural Gas to Japan, instead of using it in the U.S.


As for her ethics, she very obviously tried to get her former brother-in-law fired, and fired the man who refused to do it. Contrary to the reports from the McCaint Campaign, she was indeed found to be in violation of Alaskan Ethics rules, but the body making the report had no power to do anything about it. Then a few days ago it came out that she spent $150,000 of the McCaint campaign money for clothes in direct contradiction of what McCaint himself said 15 years ago. The campaign is gamely saying that the plan was to donate them to charity after the election. Does that suddenly make it ethical? I don't remember McCaint saying anything to that effect back then!


It's clear that she has no idea what the job of Vice President entails. Every time someone brings up the subject she either rebuffs the question, or gets the answer very wrong. The job of the Vice President has nothing to do with legislation. The Vice President has two tasks defined by the Constitution: 1. Cast a tie-breaking vote in the Senate (not write or debate legislation), and 2. Take over the job of the President any time he or she is unable to perform the job. This usually is interpreted to mean when the President dies, but it also comes up if the President is in surgery, or is otherwise incapable of performing his or her job. That's it.


Now, after telling us all along that she is one of us, and taking Obama to task over his connections to William Ayers, she makes a really boneheaded statement: She is incapable of calling those who bomb abortion clinics and kill doctors, nurses, staff, and patients of those clinics, Terrorists. That's right, the guy who didn't kill anyone in his bombings in the '60's is a terorist, but those who target and kill abortion supporters to suppress other abortion supporters through terror, well, she can't call them terrorists. I'm not exagerating this folks. She can't refer to extreme-right-wing terrorists as what they are. "My killers aren't terrorists," she seems to be saying, "because they are on my side."


This may seem difficult to believe, but it's true. I'm not going to make you take this on faith. You can click the link above or check out the embedded YouTube video below and see her refuse to call abortion clinic bombers terrorists yourself.




This is what she is, in her clearest sense. She is an elitist, not a bi-partisan. She believes that her needs come first, her ideas come first, her beliefs come first, and if she needs a terror squad to put down ideas she doesn't like, she will. This is not the kind of "change" we need in this country, and never did.

It is clear to me that she and McCaint would destroy all of those things that I think makes America great. Tolerance of differing ideas. The idea that anyone can make it in America. This isn't what we are all about.

If you agree with me on these points, please pass this on to your friends.

-Edly

What needs to be done NOW

It’s clear at this point that things are bad and getting worse in our economy. The bail-out package that was touted by The White House and Congress as the way to fix our economy has had little, if any effect. While we have been told that it will open credit markets, the evidence we have right now is that, for individuals, it did nothing of the sort. Last week mortgage rates increased by 0.75 points. That is what we call a tightening of the credit market, not an opening of it.

So, giving hundreds of billions of dollars to big corporations and rich people didn’t trickle down. Who would have expected that? Considering roughly 75% of the U.S. population was against this bail-out package, I’d say most people.

Here’s the rough spot in all of this. We are right at the end of an election cycle. Politicians really don’t want to pay attention to any of this until late January, after the break and the inauguration of the new President. However, there is more than enough time between now and inauguration day for a person to lose their home through foreclosure. Actually, there’s more than enough time for quite a few people to lose their homes this way, possibly tens of thousands. So Congress just wants the kids to wait while the grown-ups take care of business-as-usual. But this is at the same time that the Democrats, whom I consider the good guys, are in position to win a veto-proof, filibuster-proof, majority in both houses. I would like to see this happen.

I just don’t want to see this happen at the same time they let a whole lot of people get thrown out in the street. In the interest of full disclosure, my family could be included in with those who lose their homes.

We need to get the attention of those in Congress and get them on this issue right now. We really can’t wait until a new President is in office. We let the Bush White House have their bail-out of the rich, and it’s not helping. We need to get a bail-out of the middle-class going now. This probably means we need to get in a foreclosure freeze while we debate the best way to help out people with these kinds of mortgages. But we must debate it and get it passed quickly. We can’t simply freeze the foreclosures and let it stay that way until Congress can get around to debating it in January. That will only push more banks into failure. If the Republicans refuse to let this happen, make sure everyone in the known universe knows that they won’t let it happen. Scream it to the hills, let them suffer and lose their seats in Congress.

In order to get their attention on this issue, we are going to have to call and email our Congressional Representatives and Senators pretty much constantly. We should also be calling up our news organizations, including local and national TV and newspapers. We can’t let them think that this news cycle is over, or nobody will pay attention to it until it is too late.

My Thoughts on California Proposition 8

By Ed Smallwood

Folks-
I don’t like grapefruit. To me, it tastes horribly bitter. When I say bitter, I mean it tastes like someone distilled out the bitter chemical from broccoli and then added a little bit of sugar to it. Not “kind of bitter,” but “Good God, are you feeding me grapefruit?!?” bitter. It took me a long time to find this out, but there is a small percentage of the population that has taste receptors for bitter that work especially well with a chemical in grapefruit, and to these people it tastes unacceptably bitter. That’s me. It’s not that I don’t like the idea of grapefruit, it’s not that I have anything against grapefruit, its not that a grapefruit scared me as a child, it’s just that I would probably starve to death if that’s all there were to eat. It just tastes horrible to me.
Now, just what the heck does that have to do with California Proposition 8? Quick synopsis of “Prop 8”: Proposition 8 would put in a constitutional amendment that would overturn the recent Judicial ruling stating that homosexual people have the right to marry.
So, again, what would my dislike of grapefruit have to do with Prop 8?
There are a few reasons stated as to why gay people should not be allowed to marry. The first is that they are not able to naturally reproduce. The usual reply to that is: “Why do we not then require married people who do not reproduce divorce, or why do we allow sterile people to marry?” My thought instead is: Then why do we give extra rights, such as the right to determine what happens to a brain-dead spouse, the right to get medical coverage from an employer, or the right to visit a spouse in the hospital to married couples only? These rights have nothing whatsoever to do with reproduction.
There are a few other arguments that come out, but eventually you come down to a couple of final ones: Homosexuals choose to be that way. If we allow homosexuals to marry, it will destroy marriage.
I’m going to make an admission here: I’m straight. I’m heterosexual. In short, I’m like most people (except for the hating grapefruit part.) But why should that be? If gay people choose to be homosexual, then why did I not choose to be homosexual? Are they in possession of information I am not? Does food taste better when you’re gay? I seriously doubt it. So why would one choose to be a member of the last group it is okay to discriminate against when it is so easy to choose not to be?
I have found that I learn more about myself by turning these questions around: Why did I choose to be straight? I have had people try to convince me that I chose to be straight the first time I had sex with a woman. That is a classic case of putting the cart before the horse and ignores the important question: Why did I decide to have sex with a woman instead of a man? Was it because I would be part of the majority? Was it because I would get benefits from my employer if I married a woman? Was it because of some words written thousands of years ago? Did I flip a coin at some point and it came up “tails?” (Yeah, tails!) Was it because I’m a grapefruit-hating mutant? Could it be that it was because I’m attracted to women in a way I am not attracted to men?
Hint folks: The correct answer is the last one. Yep, it’s not even all of the above. That last answer so overwhelmed the others that I didn’t ever consider them (and I never flipped that coin—there was no point in doing so.) That might explain why I chose to marry a woman, even when it’s obvious that they carry cooties (just ask my boys.) I won’t go into the reasons I selected the woman I married now. That’s subject enough for a book, probably of poetry. (“There once was a man from…” Okay, what rhymes with “Santa Cruz?”)
So, why would someone choose to be gay? To me, the answer is simple: They don’t. I did not choose to be straight. I am straight. Just like I did not choose to hate grapefruit. I do not find men sexually attractive. There honestly isn’t any argument that would convince me to be gay, just like you can’t convince me that grapefruit isn’t bitter. So to me it naturally follows that gay men do not find women sexually attractive, and lesbians do not find men sexually attractive, and you cannot argue them into feeling otherwise. You may be able to cow them into behaving as if they do, but that is simply straight conscription, not honest, open debate. People will do strange things under pressure.
Now, what does that mean about those that think that being straight or gay is simply a choice? To me it means that either the person making the argument that a person chooses to live a “homosexual lifestyle” is a gay person living a “straight lifestyle,” or they really haven’t thought it through and were convinced that it is a choice by someone else who is gay and living a “straight lifestyle.” I’m thoroughly convinced that they are either naïve or closeted homosexuals. The only third option I see is that they may be bisexual and denying their homosexual urges. Not necessarily complimentary, but I honestly can’t come up with any other options.
So what about the idea that allowing gay people to marry will destroy marriage?
I’m going to state right now as fact that should Prop 8 fail I will not be divorcing my wife. I do not believe that she will be divorcing me for that reason either. Remember that admission earlier: I’m not gay, and there is no argument that will “turn” me gay.
Now, a couple of decades ago, I saw the marriage of a close family friend, who I consider a sister, dissolve. Her husband, the father of my niece (not by blood), came out as strictly homosexual. This was indeed a family tragedy. The divorce was not amicable. Baseless accusations were made. A few years after the divorce, my sister’s ex-husband died of pneumonia complicated by HIV infection.
So, this would seem to be a classic explanation as to why allowing gays to marry would wreck marriage. Except, this was twenty years ago. The debate had hardly begun, and homosexuals clearly did not have the right to marry. If gays had indeed had that right at the time, perhaps my former kind-of brother-in-law would not have married my sister, and that messy divorce would never have happened. Of course, I would have been denied a wonderful niece, but even she would not have endured the tragedy of being separated from her father for the last few years of his life. Their marriage was an unhealthy fraud in the first place, and shouldn’t have happened. The lives of three people, and the death of one, attest to that.
I do not believe that passing this law will cause people with homosexual urges to stop having them, or to ignore them. It is illogical to believe that this could happen, just as it is illogical to believe that passing a law that states that grapefruit is not bitter would change the tastebuds in my mouth.
So, passing Prop 8 will not defend even one marriage. The final argument is left in tatters, and I will be voting against it this November. And should it fail, I will not be toasting its demise with grapefruit juice.

Barack Obama's Same Path Ad

Folks-
I'm not certain if I have mentioned that I am a supporter of Barack Obama. In case that isn't obvious, I am.

I do not believe that he is perfect. I'm not sure we share the same sense of urgency about the environment and alternative power, but I am very certain that McCain't and I are on different plains of existence about these subjects. Mr. Obama believes that something should be done, while McCain't thinks we don't have to change at all, except maybe by making it easier to pollute.

When it comes to the economy, Mr. Obama and I seem to be in greater agreement. I would like to see more details in his plan, like what he intends to do about the mortgage mess. Where McCain't is concerned, I would like to see him stay the heck away from the mortgage mess, since he obviously has no idea just what the heck he should be doing. Throwing money at rich people will only make them richer, not improve the economy. "Trickle-down economics," what used to be called "Reaganomics," has been an utter failure. That's what is responsible for our economic woes right now.

I'm not sure if Mr. Obama would agree with me about what to do to increase investment by rich people in America. Personally, I would tax those making 7 figures or more at a much higher rate, perhaps as high as 70%. No joke. That's still not the highest rate we have ever had. In the '60's the highest rate was 90%, and the net effect was that people who made the most money did what they could to stay under that tax rate. Think about that for a second. Imagine these CEOs suddenly trying desperately to avoid making tens-of-millions of dollars. Where do you think the money would go? Back in the '60's it went back into the business. Imagine just how solid American businesses would be if suddenly each one of these major companies had another $50-100 Million available per year, just from executives not taking such large salaries. Is it possible that this one change would fix our economy? Probably not, but it wouldn't hurt.

I'm certain that Mr. Obama agrees with me that education is the best buffer against a bad economy. McCain't clearly disagrees with us. Just this year, McCain't voted against a bill that would give Iraq War Veterans full tuition at any college or university in the U.S. because he thought it would lead to fewer soldiers re-enlisting. He didn't account for the fact that it could lead to more people enlisting in the first place. Right now, that's the problem our military is facing.

In any case, Mr. Obama has released a new short video on his economic plan. I'm including the link to that video here. Please take the time to watch it, and then read the comparison of his economic plan to that of McCain't's at http://www.barackobama.com/issues/economy/sidebyside.php.

-Edly