Usable Insight - The “Bailout” - American Gangsters
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How do you tell the truly worthy from the truly greedy
to lead us into the future?
The truly worthy jump at a second chance
to make right what was done wrong.
The truly greedy keep defending their actions
and then ask for more
the moment you want something additional from them.
If Jane and John Doe with lousy credit and a lousy track record take more risks and lose more money in Las Vegas, would Las Vegas give them a second chance and reward them with more money?
I don’t think so. So why should senior executives who risked and lost and furthermore did not steward their companies profitably or properly benefit from a bailout? Just the fact that they are not being prosecuted, get to keep at least one of their second homes, and most importantly are being given the chance to redeem themselves should be compensation enough.
What are we so afraid of? Why can’t we tell them the following: “This is your compensation (I like the $400k max. price the candidates have spoken about), take it or leave it.”
We are afraid that if we put conditions or restrictions on them, that they’ll reveal their true nature and values of being more self-serving than concerned about the public trust and they’ll walk. And then what will we do?
We have become so intimidated by how difficult these executives have made their jobs out to be. We think, “Better to have someone with experience and mediocre or worse results than you or me who can hardly balance our checkbooks.” An empty suit seems less frightening than no suit at all.
I recently saw the movie American Gangsters where in a rush at the end of the movie they reveal how much of the New York City police department was purged of its corrupt policemen during the 1970’s. The movie didn’t go into it, but I’m sure many citizens thought that corrupt cops who at least were not murderers might be better than no cops. Apparently those fears did not get the better of New York City who weathered the storm and their police department was cleaned up in time.
Maybe the time has come to give the leaders of these companies a “Take it or leave it” deal with compensation entirely connected to results (including repaying the American taxpayer). At the very least it should bring forth the ones who are more dedicated to making things right than to their own self-interests.
As for the others who don’t come forth, let them leave.
Afterthought. I think the current crisis offers America the greatest opportunity to overhaul its transactionally myopic (get the deal, do the deal, next deal) culture and transform it into one that transcends the “zero sum game” that our lives and relationships have deteriorated into. That would be something we can all look back on with pride rather than shame.
Our parents and theirs made the world safe for us in WWI and WWII. Can we do no less for our children?
***
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September 23rd, 2008 at 4:51 pm
I am very glad to see this usable insight. Its about time we (the public) started talking about this injustice of paying the executives millions of dollars even when they do not perform for what they were hired for. They make a mess of the institution they were leading and then leave with their millions to live happily ever after.
September 23rd, 2008 at 9:18 pm
Completely agree with you Dr. Goulston. So, where, or how, rather, do I begin to make a difference in what is certainly an uncertain world? Thanks!
September 23rd, 2008 at 10:49 pm
Sadja and Aaron,
Thanks for your comments. I wish I had an easy answer for where to make a difference in this world. I think it helps to think ahead in your life and to what you want to look back on.
As I get older I am struck by how much people who make selfless sacrifices matter to me and how much self-absorbed, selfish people who do nothing for the world tick me off.
Evil triumphs when good people do nothing.
September 23rd, 2008 at 11:33 pm
As always good food for thought. We have to a large extentevolved into a culture that has encouraged individuals to be absolved from accountability and responsability. As a result courage and character are are sorely missing
September 24th, 2008 at 7:17 am
Appropriate insight—-in retrospect I’m starting to think technology,efficeincy, speed etc..has not created but decreased our “human time”. Our responsibilites have increased….more “things” to take care of everyday. This culture keeps us out of touch, out of time to create the changes we need…to tackle the big projects. Who has the time to take on corporate America? I’m on the phone all day trying to figure out my health insurance issue’s.
September 24th, 2008 at 7:24 am
Interesting perspective to try to change things, but it would seem that the changes would come in all different shapes and sizes, and need to be made in many people and/or groups of people. Is everyone at every level in our society willing to make necessary changes?
In my view the underlying cause of this enormous credit bubble is systemic across America…and in no way can be finger-pointed to any “one group” of individuals. This massive problem grew out of the pure appetite for credit and abuse of credit across all income levels….Americas irresponsibly “having to have everything…immediately”. Enormously taking on overly excessive credit card debt, then refinancing over and over to support their outlandish lifestyles….the big houses, the pools, the vacations, eating dinner out all the time, three car garages loaded up with expensive big cars or trucks and entertainment toys such as boats, etc., people who could not have reasonably afforded to purchase the new furniture or huge flat screen TV’s…always buying on credit…people abusing their student loan financing and using it for inappropriate means of all kinds of entertainment rather than on education.
Abuses in not ensuring people understood what they were signing, or caring that they understood the financial obligations they were entering. The lack of financial education provided to every American in our schools or otherwise. The issues around proper disclosure by financial institutions to educate creditors…and the lack of attention given to disclosures by those individuals taking on credit. The lack of interpreters available to ensure everyone understood what could potentially happen, as well as individuals falsifying personal information at any cost to have all of the luxuries in life without assuming responsibility to repay.
In addition, the level of greed across all industries across America…how the top people at all kinds of industries do “short-term” time at companies (average CEO lifespan is 18months) and expect/demand to receive millions and millions in compensation, although senior executives deserve to get paid more because they sign financial statements saying that they believe them to accurately represent the financial position of the company — so they are at risk for anyone who works for them at any level screwing up — and those individuals can be criminally tried, go to jail, and suffer punitive damages as a result of screwing up if found guilty under the Sarbanes-Oxley law. The tragedy is that once the cash payments are excessive, and the cash flows out of the company it is not flowing back into communities and infrastructure.
We forget or do not make time to watch over elected officials at all levels to ensure that they are acting in the best interest of the communities, states, and governments.
Further, the abuse of the military industrial complex and appetite to keep invading and to keep the overfunding going at the expense of our economic stability and deterioration of infrastructure or replacement of outdated manufacturing. Even our memorials and monuments in honor of respecting those individuals who served to keep our nation a free country have deteriorated significantly in our Nation’s capital! Further, the overspending in national and local governments through either corruption or lack of oversight over the prudent and responsible allocation of funds…
Money has been being wasted at a ridiculous pace on many things and the abuse of credit across the nation has been going on for a very long time…instead of in the direction which we hope would build up and sustain our great nation.
For everyone who manages their finances well, pays their taxes, donates to charity…this enormous credit issue flies in the face of doing the right things…as Grandpa Jones use to say, “no good deed goes unpunished”.
September 24th, 2008 at 7:28 am
In addition aren’t we being taught to get as much as we can? Squeeze every drop out of the stone…otherwise you’re not maximizing, not being “smart”. I think a little fat and inefficiency is good for individuals and companies from a holistic viewpoint but that is not a favorable or championed idea.
September 24th, 2008 at 3:10 pm
Common sense tells us all that this would be the right approach but I fear this administration will roll over and take the soft approach rather than the tough one. I hope I’m wrong the public somehow tells our “representatives” that we don’t want a free bail out for irresponsible people and greedy financial markets.
I also fear that we have the fox’s guarding the chicken coop!
September 24th, 2008 at 3:41 pm
Hi Mark,
Great article. More indicators of motives: Paragraph 8 whjich forbids any review of what they do with the $700 billion or answer to anyone or any court. Further, why the urgency (by Friday)? Isn’t this the same kind of thinking that got us into ther war in Iraq?
Jim
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