Rant #4 - The ugly plus of Capitalism

Context: Richard Grasso of the NYSE was compensated tens of millions. After weeks of withering criticism over his $140 million basic pay package, NYSE chairman Richard Grasso was forced to resign September 17, 2003.

http://www.usatoday.com/money/markets/us/2003-09-17-grasso-meet_x.htm

I wanted to go back in time a couple years ago to a moment when people were in such confusion: is this system that has built our society and culture we enjoy today a total sham? How can it be so corrupt? With so many lying accountants, false witnesses and fudging CEO's you have to wonder if there is a better way.

I'm about to go off on a rant...

So, within all this meandering through facts and fiction, and trying to decide whether it is right or wrong for Grasso to have been compensated so heavily, I have yet to see someone attempt to address the issue of capitalism and the market economy at it's core. I believe understanding it with a respectful eye would avoid many of our negative impressions.

First of all, I believe (or would certainly hope) that every fellow fiscal conservative in this nation would agree that capitalism is not perfect. Yeah? Ok. Of course it isn't perfect, simply because theory can be proven, but the human character cannot. The only thing you can always depend on mankind for is that one will always resort to looking out for # 1. Game theory 101. No, i'm not going to get into it; look it up.

Anyway... In the end, every man will die to protect his own freedom and that of his family. He will "greedily" seek out the best possible way for himself to succeed. Any economic model allows certain groups to achieve this, but only one, by nature, allows everyone the opportunity. Maybe not EQUALLY, but nonetheless, everyone can achieve his/her dreams if they really dedicate themselves to doing so. I am a firm believer in this.

Capitalism takes for granted man's inherent passion for acquiring wealth and seeks to set everyone free to do so at his/her discretion and level of ambition.
What is does not do is put everyone on the same playing field to start. But should it? Is it really the job of the "powers that be" to force this upon a free-thinking and moving people? Culture, personal habits, family background, disabilities, etc. are all factors in deciding whether one succeeds or not. The government ought not to be placed in the position of having to figure these factors out for every individual. (The exception would be for those who are physically or mentally underprivileged) There is no ONE formula for fixing every economic issue in the world. It is open game for anyone who decides to take part. Hence the name "open-market" system. At the risk of sounding libertarian, I would propose that the best economic model is one which regulates only inasmuch as it protects the rights of others (less endowed or privileged from birth) to achieve the same success as the most powerful among us.

Consider: We have Bill Gates', Larry Ellisons, George Bushes and Warren Buffets in every race, every nation on earth; people that are capable of achieving the same level of financial success and public power, relative to their own culture. The only thing holding them back is the proliferation of open-market philosophy and their own respective cultures. But it doesn't make them any less "wealthy".

Granted, not every culture even DEFINES success the same way our western world does. Alas, African cultures despised the thought that they were "uncivilized" when European colonialists attempted to subject them to their political forces and cultural prejudices. In their cultures, success was defined far differently, as it is in many places around the world. Do we not consider our wives, kids, time, homes, pets and hobbies valuable to us? Aren't they just as important a factor to us in defining our success as money is? If not, why?

NOW, I say all this to make the point that as flawed as it is, Capitalism is proven to be the best system to compliment AND operate DESPITE man's flawed nature.
Indeed, it takes advantage of that flawed nature, each individual's weaknesses AND strengths simultaneously, turning each action into a direct force upon the whole. There will always be those who are better off than others, and they ought not to be penalized OR DEMONIZED for being so. Likewise, the law ought to protect and set free the less advantageous to achieve the same -- When and IF they do, they ought not to be afraid of losing that freedom. Unless your liberty and control of your own destiny is being undermined, you live at your station in life BECAUSE of the decisions you are MAKING RIGHT NOW. Every day can improve upon the former; each day can end with more money, more time, more peace than the one before, but it ought to be up to us, not Washington. We must never complain about from where we start, because in a truly free society we are the ones who determine where we end.

"The one who complains about how the ball bounces is often the one who dropped it."

Richard Grasso, admittedly made a fortune at the expense of others. It was extravagant, and unfortunate. I am glad that he stepped down. And yes, CEO's are paid incredible amounts of compensation, and yet they make decisions that affect millions of lives. Yet, I would also say that while these men lay off thousands of men and women, they also employ thousands more. And in every circumstance, the actions are taken to assure those thousands of employed that they can keep their jobs. And, in the case that they are NOT taking the COMPANY'S interest above their own, the law intervenes, as in the case of Enron, or Worldcom, etc. This is why we have the SCC; oh yeah, and shareholders.

Indeed, Capitalism does not allow CEO's the same rights we have, because as they succeed, they must keep the interests of others in mind ALONG with their own, or fail completely. (Insert old Biblical principle: "To whom much is given much is required") If you redistributed a CEO's pay into the average salary of that of their pink-slipped entry-level workers, it would make only a dent in the savings of the typical layoff picture. $3-5 million may seem ridiculous and unfair, but I would deny it as such. Like I said earlier, they keep companies running, flowing and moving forward. Case in point, GE's "Jack The Great" laid off thousands, but led the company into unprecedented growth (double-digits for years on end), ultimately re-hiring many of those workers (and thousands more) while benefiting shareholders, execs, local governments, consumers, etc. Yes, he was paid enormously, and therefore many of us "working class" can easily complain that he "Doesn't deserve it". But who are we to say that? He worked just as hard if not harder than most of us; moreover, he lost his family, sleep and personal time over it all, and probably his hair too. If the man loses everything else WE value in life, except his money, then let him have it. It's all he has now. 15+ years of 80 hour weeks, constant global travel, stress 24/7 and public exposure (and at times, scrutiny and humiliation) are certainly things we would never ask to live with. So let him take his pay. In the meantime, he'll spend it. And, ultimately it'll find it's way down the line to you and me. Yeah, the forbidden phrase of the 1980's "Trickle-Down Economics".

I am of the persuasion that capitalistic economics are less of a totem pole, as much as it is a circle.
Or a wheel, for that matter, with spokes and a center. We all depend on each other, and what "goes around, comes around". I support limited regulation of corporate operations, and fair taxation. But I also support the encouraging of business and increased corporate efficiency. Without it, we'd all be out shucking corn.

While it's easy to complain about Grasso making his $140 million, think about it: he resided over the hub of the very engine of capitalism, which generates trillions of dollars every year, and keeps 2/3 of the world running every day. Sure, I'd like a piece of that $140 million. But I'd rather have the freedom to pursue success with my own family than be bound by increasingly restrictive rules as I achieve the very thing the rules are meant to give me: a fair shot at achieving financial independence.

The rules are supposedly made to protect the "little guy", right? Yet, when the hand of the "protected little guy" reaches higher, the very rules made to protect him bind that hand.
This is what happens when you attempt to combine the greater aspects of two opposing systems: Socialism and Capitalism.
It's not only a circle, it is a vicious circle. But I'm not complaining. America is the land of opportunity, more than any other nation on earth (at least for now) and I intend on doing what I can to keep the system working. Meanwhile, food is on the table, the heat and power is paid for and I can sit at Starbucks and drink a white mocha while writing this reply.

It's a wonderful world, please... stop griping!