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article imageOp-Ed: U.S. biz pays CEOs more than taxes, and no questions asked?

By Paul Wallis     Nov 21, 2014 in Business
Sydney - Generosity to oneself is pretty normal. When U.S. corporations who refuse to consider raising minimum wage and audit staff toilet time start giving their pet high flyers more money than they pay in taxes, questions need to be asked. Nobody's asking.
Ridiculous salaries for top execs are nothing new, but what is new is that salaries are now apparently immune to law. This is Piglet Paradise. It’s also highly suspicious.
The Guardian explains the pattern:
Which would you think would be larger for Ford Motor, a company that last year reported revenues of $139.4b: the taxes it pays the US federal government or the compensation it pays its CEO?
If you picked option B, congratulations – you may be cynical, but you’re right. Alan Mulally, Ford’s CEO, pocketed a compensation package that totaled $23.2m while Ford itself got a US federal tax refund of $19m.
OK, now bear with a bit of logic – What are these guys doing that generates such generosity? Why is the CEO of Ford getting more money than the IRS? Is this collusion? Is it corruption? Why does the rest of the country have to pay taxes and margins on everything, but not the super-rich?
The political factor, of course, is unavoidable. Citigroup, apparently, got tax benefits “for buying unprofitable companies”. The argument here is that this is the equivalent of a loss, so naturally forms part of tax account options for compensation.
Corporations have it easy, and the gravy train is standing room only. What’s odd, though, is that nobody has seen through this weird wardrobe of the Emperor’s new clothes.
Consider this: One way of laundering money, well known in media, film, and elsewhere, is paying vast amounts of money for things that are basically worthless. You can charge $10 million for a sandwich, and if someone buys it….? This is no mystery.
Corporate money moves in strange ways, and few of those ways are credible.
Least credible is that the hopelessly underperforming executive “sector” is earning its money. This collection of degree-buying, crap-worshipping, megalomaniacal gerbils has zero credibility, even in the business world. Real business guys know they’re dealing with stooges and middle tier zombies.
Can you regulate this global scam? Doesn’t look at all likely. Government, ironically, has been exhibiting a level of naiveté which would be touching if it wasn’t proof of total incompetence.
The Guardian, again:
Washington State gave Boeing $8.7bn in tax breaks to ensure that the 777x was built in the state, but the aerospace company has been shifting engineering jobs to lower-wage areas, saving the company $100m a year and resulting in layoffs.
If you’re somehow beginning to suspect that business is coming a very poor second to “expedient” business practices which just happen to generate a lot of money for individuals, welcome to 1986. This is the real culture. It’s a sad fact that nobody, even the very un-idealistic business media, seems to have fully grasped exactly how little real business has to do with corporate behavior.
Do investors benefit from this rather overplayed shell game? To a point, but with caveats. They benefit from the hype, but they also take the fallout from massive corruption like the subprimes, and collateral damage from the endless scandals which trash their investment assets.
CEO wages and taxes aren’t the problem. They’re the show-off part of a “we can get away with anything” culture. They’re flaunting their corrupt behavior. Like a bad crime movie, they’re into close-ups of themselves as “rogues”. They’re actually a pack of spoiled brat hangers-on to the guys who do the thinking, but what the hell, they need more pampering at the world’s expense.
Now the questions:
Why is nobody in business, particularly investors, questioning this behavior? (Forget government. The duly elected lickspittles won’t argue with the money fountain.)
Why is the business environment being so slavishly, obsessively trusting? This environment has produced multiple major economic disasters. If you’re a passenger on the Titanic, why are you paying the iceberg more money?
Why do even the participants in this charade trust the machinery? This is a blender for money and assets, and if you happen to be in the wrong place, you’re mince.
The system is well and truly screwed. There are no fixes because nobody wants to risk upsetting the sandcastle’s foundations. The tide meanwhile keeps coming back in, too, but building on the high ground, out of reach of the destructive backlashes, seems to be too hard an idea to understand.
The culture and the people are the same. This is “normal”. It’s not real business, it’s not real investment, it’s an inside track for cretins in the power structures. The only remedy is annihilation.
Moral of story: Beware of gifts bearing geeks. You'll never forgive yourself for what it does to the gene pool.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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