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Thursday, April 13, 2017

Executive Compensation is a Central Driver of Inequality

People throw paper airplanes during a demonstration outside Quebec Premier Philippe Couillard's office in Montreal, Sunday, April 9, 2017, to protest recent pay hikes and bonuses to Bombardier's top executives.

The reasons for growing inequality and wage stagnation are not mysterious. Automatic is playing a factor, as are unregulated, exploitative “free” trade agreements that put corporations ahead of nations. Also, the present financial system, or at least the so-called financial industry (an industry that produces nothing), is proven to damage an economy in proportion with its size, like a leech, and banks, as profit-earning, gambling, rate-setting institutions have an inherent and corrosive conflict of interest.

See my related post:
Retail Banking is a Destructive Conflict of Interest

At the top of all this is the executive. The so-called “star of business” who requires insane, outrageous pay and bonuses to do their basic duties.  If they are the stars, and they run the economy, we should be in an even expanding boom of prosperity. Instead, their gambling and accounting tricks crashed a prospering world economy and forced entire nations to suffer to protect their investments and profits, and of course, that essential bonus. A common worker screwing up faces discipline, possibly dismissal. A CEO who has to beg for government aid and lay off thousands of workers gets a slight reduction in their bonus, but only after a lot of public outrage, like the apologies we have to drag out of airlines. The resent airline scandal is just an example of how executives and the rich view everyone “below” them.

An average worker earns somewhere between 1 and 2 million during their working life. Is one person’s year truly worth 5 human lifetimes (if they are earning 5 million a year)?  Should they get 5 lifetimes as a bonus? Can 1 person be as productive in one year as 5 during their working lives?

In saner times the top earners made something like 10-40 times the average wage. Now 100 times is considered an insult.  When you pay 1 person wages enough for 100+ compared to 10+ you waste resources and drain productivity. 1 person can only accomplish so much. Now multiply this by the number of executives in every company and corporation you see why the economy is moving like a snail. It’s covered with leeches.

When 1 person earns as much as 100, you can’t employ the 100. If 1 person makes as much as 40, that leaves enough to employ 60 more.  Or, you could increase wages across the board. O, you could use it to create a universal guaranteed income, enabling lower wages and reduction in supplementary income such a s EI, OAS, and welfare, across society without increasing poverty.  A redistribution that used to be accomplished through fair and effective, progressive taxation. Then these incestuous "competitors" discovered that they could threaten nations into giving them assistance and a free ride. If you tax massively profitable corporations and their rich executives and sharehold4ers too high, they will flee like the parasitic cowards they are. 

If you are earning a million dollars a year and you still "need" incentives to do your job, you are not a star, you are a lazy, greedy, piece of crap with less value to the world than a real leech.

 Wages have stagnated and the economy ground to a half becomes the leeches are draining us dry and declaring themselves geniuses for doing so. Why do they get paid so much? Because every company follows the same practice, willing bidding higher and higher despite results. Why do they? Why don’t shareholders demand the elimination of bonuses for incompetence? For a long time, most bonuses have been awarded as stock. 5 million in stock gives you a bit of influence, especially deciding your own value. A leech doesn’t let go until sated, the host of completely drained, or they explode.

The blood needs to be squeezed out of the parasites back into the economy so it can become truly productive again. 

Public anger mounts as Bombardier set to outline plan to revise compensation for top executives

| | Last Updated: Apr 10 4:26 PM ET

Graham Hughes/The Canadian PressPeople throw paper airplanes during a demonstration outside Quebec Premier Philippe Couillard's office in Montreal, Sunday, April 9, 2017, to protest recent pay hikes and bonuses to Bombardier's top executives.

MONTREAL — Bombardier appears unable to shake off public anger over hefty pay packages to its senior executives.

Dozens of angry protesters launched paper airplanes in front of Premier Philippe Couillard’s Montreal offices on Sunday to protest how the executives are compensated.
Earlier, many of them waved signs and shouted slogans such as “too much is too much!” during a march that began in front of the company’s headquarters.

Many of the protesters said they wanted the Quebec government to impose conditions on companies that receive public money so jobs are protected and executive bonuses are limited.
“It’s our money, and the government is laughing at us,” said one protester, Pierre Brazeau. “If we don’t come out in the streets, they’ll continue to exploit us like they’re doing now.”
Bombardier has faced a storm of public criticism ever since it circulated documents showing six executives were in line for a roughly 50 per cent increase in compensation last year.

The increases came despite the fact the company recently received a $372.5 million loan from the federal government, and US$1 billion from the Quebec government.

Chief executive Alain Bellemare has since asked the company’s board of directors to delay payment of more than half of last year’s total planned compensation for six executives, including himself, to 2020, provided the company meets certain objectives.
Executive chairman Pierre Beaudoin also asked the board to cut his 2016 compensation by US$1.4 million to bring it in line with what he received the previous year.

Bombardier has said it will formally inform shareholders on Monday about changes to the compensation for several of its top executives when it files a new proxy circular with the securities regulator.
Protesters and opposition politicians, however, say the company’s reversal doesn’t go far enough.
One protester, who gave her name only as Carole, said she hoped the demonstration would convince the company to repeal the pay hikes altogether.
“I’m hoping it will make a difference,” she said. “But I know that if we don’t do anything, nothing will change.”
Parti Quebecois legislature member Alain Therrien pointed out it was the second straight weekend of protests outside Bombardier’s headquarters.
“We can see this isn’t solved, even if Mr. Couillard would like it to be,” he said at the protest.
Quebec’s governing Liberal party used its majority to block several opposition motions calling on the government to take action last week, with Couillard arguing that government interference would send a bad signal to businesses.
The Canadian Press

Sunday April 16, 2017

Once a luxury, now a nightmare -- why airline passenger comfort always comes last

A United Airlines plane at George Bush Intercontinental Airport in Houston.
A United Airlines plane at George Bush Intercontinental Airport in Houston. (File Photo/David J. Phillip/The Associated Press)
Listen 4:29
Certain persons of a particular vintage can remember when flying was a thing of joy, magic and mystery combined with the delicious tickle of anticipation of an hour or two of being cosseted and catered to by people who understood the idea of service.
People dressed up to get on the airplane. Your parents made sure you wore a clean shirt and pants. Real food served on real plates with real cutlery, was presented with a smile. Sometimes free cigarettes were offered.
And you sat in a chair thousands of feet above the clouds and tried to catch a glimpse of your world below.
Delta Airlines ad from the 1959
An ad for Delta Airlines from 1959
No more.
Flying is now an ordeal, a nightmare whose constituent elements are premeditated and orchestrated to frustrate, infuriate, embarrass and humiliate.
Delays are common. Lineups are strangulating. You are served snacks you wouldn't feed your cat.
Even if you have bought and paid for a ticket, that is no guarantee that you will make the flight. Then of course, there's the possibility of being kicked off the plane.
I'm not suggesting that every time you fly United, the cabin crew will contrive to have someone beat the crap out of you. It could happen, as we know, but they don't have to.
United Passenger Removed
April 9, 2017. This image was made from a video. It shows a passenger being removed from a United Airlines flight in Chicago. (Audra D. Bridges via AP)
You can be kicked off the flight for any number of reasons. In 2013, a family was kicked off a United flight because they complained about the violence in an in-flight movie. In the same year, an Ottawa woman who is deaf and blind was removed from an Air Canada flight because she didn't have medical clearance; notwithstanding the fact that she had flown all over the world without a hindering bureaucracy.
Last year, a University of California student was yanked from a Southwest Airline flight for speaking Arabic. In May 2016, a University of Pennsylvania economics professor was removed from an American Airlines flight and questioned by authorities about some math equations on a pad of paper.
Then there is the bumping.
The airlines argue that they have to overbook flights to cover the costs of no-shows. Which means that the purchase of a ticket is no guarantee you will fly.
I can't think of any other enterprise—say a rock venue—where organizers sell multiple tickets for a single seat.
Why governments allow this is beyond the grasp of reason.
The cause of our anger is that we still believe airlines offer service for payment. That's where we're wrong. Service is an incidental byproduct of the real mission of the airlines or indeed any corporation—which is to increase shareholder value.
Which is why Canadian banks routinely pressure their tellers into selling services and products their clients don't want or need. Which is why cost-cutting and service attrition have become obsessive.
There is an ironic coincidence about that notorious United-inspired assault of Dr. David Dao. In the same week, a new book called The Golden Passport attracted widespread attention. Written by Duff McDonald, it examines the most prestigious business institution in the world, the Harvard Business School. Its importance to Wall Street and the Fortune 500 cannot be overestimated. An HBS degree is invaluable—like Willy Wonka's Golden Ticket.
What is intriguing is the kind of student it educates. Quoting an Aspen Institute study, McDonald points out, "When students enter the business school, they believe that the purpose of the corporation is to produce goods and services for the benefit of society. When they graduate, they believe it is to maximize shareholder value."
So forget about service being the cardinal principle of corporate culture. The airlines can do pretty much what they want to. And we have to go along or take the bus.
So the next time you fly and don't want to get bumped or beaten up, get to the departure lounge early.
And do what you're told.

Michael's essay is bang on.

Airlines don’t overbook because of no-shows costing them money, they they already have the money of the no-shows. However they can’t charge a no-show for essential “extras” like food, drinks, baggage, and enough room to prevent deadly blood clots in healthy people.

Airlines claim that fuel cost drives down profit although its price plummeted long ago and the amount of fuel used varies according to the weight carried. No-shows are less weight and thus expend less fuel for the same amount of money without requiring service, respect, or effort. Their ideal cargo/passenger is prepaid air. Overbooking gives them a chance to “bump” the numerous passengers in “steerage” to increase the number of "Executive/Business Class" and “1st Class” passengers. The standard, reserved, prepaid ticket is effectively a stand-by lottery ticket.

It is customer disservice for shareholder and executive benefit.

Also, don't forgot that, as far as I've heard from American police, they are trained to dominate and escalate to deadly force before the "suspect". They aren't trained to fire warning shots or wound, but go for the body shot. To kill or be killed on reflex. They have no training in any deescalation techniques or signs of possible mental disorders. They, like the RCMP were designed to be paramilitary police, but all to often become fully military enforcers of governments and corporations at the expense of citizens. They become so committed to duty, loyalty, authority, and expertise in intense force they forget they were intended to free citizens from military police. To serve and protect, reducing violence and harm, not promoting and exemplifying it.

Shoot first and avoid questions later.

They forget that we are watching back.

Just a what if....

What if the top wage was indexed to the lowest? Say the lowest wage is $10. This would rise at say $1 per level of increased individual experience and responsibility with mangers and executives get the top individual level plus 1$ per worker led directly. The top should be able able to perform, well, all positions of responsibility and labour below. Then, when the lowest wage rises, so does every other one. No one person directly leads a million. 

These numbers are just plucked out of imagination to conveniently illustrate the basic idea not the specific details.

Any thoughts? Any better or complimentary ideas?