2011 CEO Pay

Hey Mama, is it true what they say,
that Papa never worked a day in his life?
And Mama, bad talk going around town
saying that Papa had three outside children and another wife.
And that ain't right.

Heard some talk about Papa doing some store front preaching.
Talking about saving souls and all the time leeching.
Dealing in debt and stealing in the name of the Lord.
- The Temptations

It's interesting how people line up behind politicians and political parties out of habit or odd obligations but when it comes down to it we all abhor certain actions from other people. The Temptations' timeless hit "Papa was a Rolling Stone" had a couple of lines that always reminded me of government, especially the government in control today. I keep hearing that same sort of storefront preaching these days about how the administration can save our souls while transforming the nation into one that's "fair" and everyone gets to dip into the honey pot even if they put in no elbow grease.

President Obama talks about taking from the rich through higher taxes on investments via the healthcare law, letting the Bush tax cuts expire and gimmicks like the so-called Buffett Rule. Of course this would only be the tip of the iceberg, as the ultimate goal is to fund a welfare nation that simultaneously discourages the notion of being rich in the first place. Hence the disdain that drips when Obama talks about Romney "maximizing profits" for investors in distressed businesses. Of course none of those companies that Bain assisted could have survived without cash and management infusions.

But this is all about distracting because we don't have to wait to see what government in general or this administration in particular would do with money taken in the name of its hapless citizens.

In 1998 four tobacco companies came to a settlement where they agreed to pay $206.0 billion to 46 states over the next 25 years. Money paid combined with cigarette taxes collected since then has tallied $244.0 billion. A huge chunk of that money was supposed to go to educate smokers and would-be smokers in order to dissuade smoking.
The states spend only $8.1 billion to control use of cigarettes but the Center for Disease Control said the number should have been $29.2 billion. That doesn't sound fair to me.

The problem is these states have their own habit that they can't seem to kick and it's a spending habit. Of course the biggest spending habit in the history of this nation is taking place at the White House and in both instances they all deal in debt and steal in the name of the Lord or something supposedly altruistic. I think any irresponsible spending by government is despicable but when they support that habit with attacks on good people it's a sin. Households earning $250,000 a year should be the model for everyone, looked up to and promoted, not scorned and attacked. Investments that save businesses and keep people employed must be encouraged and applauded, not painted as something nefarious.

There is nothing more nefarious than hijacking productivity, except stealing from those that can least afford any financial hits.

Punishing or Helping Poor People

I had a debate last Friday with smart people from both sides of the political aisle and they agreed they like the idea of taxing cigarettes. They think it stops smoking, so it's a smart idea. Yet, it's clear that it's not such a deterrent that billions of dollars a year aren't still spent on smoking. The fact of the matter is such taxes crush opportunities and dreams more than any form of lower education and racism ever could. In all honesty people are being punished for being addicted or dumb (depends on your perspective) to pay for government spending run amok and everyone takes a cut, from the federal government to states and cities.

On Friday the state of Illinois voted to hike its cigarette tax another $1.00 because it was in such a rush to help poor people:

"Today's action will improve the health of our people and lower the burden of smoking-related conditions on our Medicaid system, while helping to fill the $2.7 billion Medicaid shortfall and stabilize the system for those that need it"
Gov. Pat Quinn

I get that in the end people that don't smoke will have to pay medical bills for people that do smoke but these taxes are bogus. The money doesn't go into a special fund to pay those medical expenses. This summer to light up in Chicago it will cost $11.00 a pack. That's cheap compared to New York. In the Big Apple taxes alone are $5.85, bringing to total cost to $14.50. I have a godson in the Bronx and each parent smokes a pack a day. If there were no taxes on cigarettes they would have $76,869 saved over an 18 year period, or enough to send their son to college and break a cycle.

Of course if they didn't smoke at all they would have $190,530. That's an amount that changes lives. Everyone is accountable for their own actions but it's a flat out lie that the government, from top to bottom, gives a damn about poor people or smokers and it sees its feign caring as a way to spend more and more money. For all the talk of going after the rich, the true enemy of the poor is government and its great assistance program including taxes for your own good. When the hell will people wake up to revolt against government dealing in debt and stealing in their name?

It should be known that the states that spent the most money on cessation and prevention programs saw the biggest decreases in cigarette smoking. For those that like sin taxes as a deterrent at some point you will probably feel its sting unless you don't use gasoline, eat fast food, drink sodas and nosh potato chips. It will not stop there.

Recently big banks agreed to fork over billions of dollars for robo-signings, with a large piece going to help homeowners. The vast majority of that money is going toward state budgets and spending plans that have nothing to do with housing or helping victims.

Follow Up To Salina Kansas 1872

A couple saw me talk about the eighth grade exam and sent me a great email suggesting maybe the test was for teachers and not students. It is still a tough test. Along with materials to back up their conclusion they included this fascinating piece that provided rules for teachers.

Rules for Teachers 1872

1. Teachers each day will fill lamps, clean chimneys.
2. Each teacher will bring a bucket of water and a scuttle of coal for the day's session.
3. Make your pens carefully. You may whittle nibs to the individual taste of the pupils.
4. Men teachers may take one evening each week for courting purposes, or two evenings a week if they go to church regularly.
5. After ten hours in school, the teachers may spend the remaining time reading the Bible or other good books.
6. Women teachers who marry or engage in unseemly conduct will be dismissed.
7. Every teacher should lay aside from each pay a goodly sum of his earnings for his benefit during his declining years so that he will not become a burden on society.
8. Any teacher who smokes, uses liquor in any form, frequents pool or public halls, or gets shaved in a barber shop will give good reason to suspect his worth, intention, integrity and honesty.
9. The teacher who performs his labor faithfully and without fault for five years will be given an increase of twenty-five cents per week in his pay, providing the Board of Education approves.

CEO Pay and Shareholder Value

According to AP the typical CEO paycheck was $9.6 million, up 6% which is a lot less than Alex Rodriquez made with the Yankees and corporations had a better year. But there will be a lot of saber rattling and finger-pointing in this era of class warfare and hatred toward the profit motive. There was a piece out immediately after this report that pointed out it would take a minimum wage worker @ $7.25 one month shy of 9,096 years to make what David Simon made last year. For me that makes it pretty clear - make sure you aren't working at minimum wage for the next 9,000 years.

While I dislike the fact politicians are going to jump on this news its shareholders that need to decide if the payouts are egregious - and they need to be more vocal if they want to continue to be part owners.

In the top ten these are guys you really can't be angry with.

On the other end of the spectrum, investors in these names should have a serious beef. I will say I haven't looked into details of all these pay packages and often they accumulate over time but a quick glance shows a much different experience for the CEO and the shareholder. By the way, these are legendary names and some even consider Mulally a corporate hero - but he's going to have to turn the stock around.

Comments

Over spending is sin. Sin taxes are an excuse to justify the stealing from the poor. Lon Cothran on 5/29/2012 10:08:47 AM

Aren't all taxes "sin taxes"? From Federalist #51: "If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary." Because of fallen human nature, governments need to exist, and so, taxes. To your real point, any tax should be for the sole purpose of funding government, not to encourage or dissuade any particular activity. "Sin taxes" are a public relations gimick to extract money from the suckers. Tim Irving on 5/29/2012 10:34:35 AM

Before I answer, let me first comment on one idiotic answer which is sure to crop up. Certainly, some shallow thinker is bound to replay that "It is not the role of government to legislate morality!" to the contrary, every act taken by every government is a legislation of morality. Laws against the most basic of crimes (murder, theft, rape, arson) are statements of morality which say it is immoral to hurt others as opposed to a moral code that says might makes right. Much of the animal kingdom lives under the code of might makes right where the strongest bull gets ALL the cows or the first of the meat of the kill. Tax codes are statements of morality which say almost everyone has a part in funding the common good of society and that certain good acts deserve reward by lowered taxes. As for "sin" taxes, these are fully justified if there is any tie to the good of society or the costs of the sin. If the sin is greed based, like gambling, then there is a cost to society to fight the crime which is generated by feeding that greed atttitude. If the sin is sex or diet based, then there is a huge cost in health care to fight STDs, cancer, emphysema, etc. (>30 STDs are epidemic in USA today, yet we still do not tax or charge more for insurance for promiscuity and/or homosexuality). If the sin is environmental, then there are both clenup and health care costs which should be covered. Many times, these costa are not easy to identify, so I am personally fine with not having rigid ties between costs and taxes. As a last comment, there are behaviors which are bad for society in excess, but not a problem on moderation. Such is the case with alcoholism versus a glass of wine or a beer. Prohibition is not the answer, but taxing could be a good way to discourage the damaging behavior. Unfortuantely, too much of our populace is so completely incompetent at personal finances that the taxes do less to discourage the behavior than they do to further enslave those people to poverty. Those people will spend most of their money on their bad behavior while failing to put good food on the table or pay the utility bills. In those cases, sin taxes so not seem to work, although those people will poor no matter how much money they get or how low the cost of their addictions. Bob G on 5/29/2012 10:57:49 AM

Not good. It will be wasted just like Ca Jerry Brown raided the 911 Lic plate which was to used for scholarships for families of 911 victims Bob Medkeff on 5/29/2012 11:00:25 AM

If they are indeed sins, the gov't now legitimizes them. Once enacted, it's now in the gov't's best interests to make sure the sins continue. There are frequent arguments about the societal cost of gambling, smoking, drinking. Isn't the gov't now endorsing them? Scott Heck on 5/29/2012 11:00:29 AM

The government and most others believe that the End Justifies The Means. Until that fundimental flaw of reason is changed, nothing in the way of reform is possible. z on 5/29/2012 11:16:53 AM

I think phrasing the question like this shows your preference for a particular answer. I don't think you gain much from shaving off "interesting" (read: difficult) parts of the question off in order to make the question more readily askable. A on 5/29/2012 1:46:34 PM

My problem with sin taxes is authority. The right of government to tax unnecessary goods never bothered me until recently. It's repellant to place my trust in hands which keep exposing their shallow, grasping abuses. When tax dollars are misused, it's often for entirely useless purposes such as those disgusting parties some government agencies recently got busted for. So, my money is wasted by thieves who steal it and then spend it on what looks to me like just another 'sin'. Absurd. Patricia Flynn on 5/29/2012 3:02:23 PM

Every in-hock government continues to pass additional sin taxes so as to pay off the union bennies and continue to get elected.The big-eared one in our White House promised no new taxes on the middle class. Does he think only the poor and the rich smoke? First thing he did was dump another $10 per carton tax on cigarettes, and now the wuss governor of Illinois wants another $10 per carton to pay off OUR unions. And I can no longer order off the internet because the turds in D.C. passed a law that says sellers must report sales to the states, which then bill buyers for their grubby paws. A pox on all elected and union turds. Delta Rosner on 5/29/2012 4:04:29 PM

The greater the sin.....the greater the tax! Joe Tully on 5/29/2012 7:45:11 PM

Good Question. Sin tax is just another tax. Who is the government to determine what "sin" is ? McDonalds food does as much damage to Americans as smoking. I mean, why not tax lying, lust, dirty thougts, etc. Just another tax. Bart Harrison on 5/29/2012 9:34:57 PM

I quit smoking 35 years ago when they hit 70 cents a pack, so there is some merit to the idea that raising the price can reduce addiction. If that was all there was to it, however, I could have easily cut from 2 packs a day to one. My deeper reason was that I simply wanted to live, and that has certainly paid off, saving me a pile of money at the same time. I don't see how taxing cigarette addicts $3000 to $6000 a year helps anyone when a good smoke cessation program might cost less than $500. That's what that money should go for, not for some remote hope of curing cancer. Unfortunately, that would reduce the politicians' cash flow faster than anything else. Why don't they tax prostitution the same way? Would Eliot Spitzer have quit chasing high price call girls any sooner? Dennis Howard on 5/29/2012 10:54:23 PM

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