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May 01, 2009 11:08 PM UTC

Why Business Shouldn't Be Run Like a Business

  • 15 Comments
  • by: Colorado Pols

We’ve all heard the old yarn that “government should run more like a business,” but has there ever been a time when this was less true? Republicans like Weld County DA Ken Buck continue to push this idea, but it’s just plain silly to suggest, in this economy, that we would want government to run like a business. Consider this from The Associated Press:

The AP found that some have changed the rules to make it easier for executives to qualify for bonuses. Others are doling out more stock options, which give executives the right to buy shares in the future at prices locked in today. Other findings in the AP’s analysis:

  • Four of every five CEOs took home a cash bonus, despite the fact that the stock prices of the companies in the survey fell by an average 36 percent and profits fell 31 percent.[Pols emphasis]
  • The median payout in cash for salary and bonuses fell 20 percent from a year earlier to $2.4 million. But that’s still 48 times what the average U.S. worker makes, based on the most recent government figures.
  • Chesapeake Energy CEO Aubrey McClendon topped the AP list with a total package worth $112.5 million, even though his company’s stock price fell nearly 60 percent last year. Motorola co-CEO Sanjay Jha was second with $104.4 million. It was the first time since AP started analyzing CEO pay three years ago that anyone topped $100 million.
  • Check that first fact again: “Four of every five CEOs took home a cash bonus, despite the fact that the stock prices of the companies in the survey fell by an average 36 percent and profits fell 31 percent.”

    Is this how we really want our government to run? Where results are essentially deemed irrelevant?

    There might have been a time when it made sense to crow that “government should run more like a business.” This is definitely not that time.

    Comments

    15 thoughts on “Why Business Shouldn’t Be Run Like a Business

    1. You have some like Steve Jobs, Sergi Brin, & Larry Page who work for $1.00/year. And some like Bill Gates who’s salary is reasonable – $450K/year when I was there.

      But you have many others where they sit on each other’s boards and give each other these great deals where they all suck at the teat of their company and are way overpaid.

    2. .

      “government should be run like a small publicly held business with involved stockholders who demand openness and hold the board accountable.”  

      As little as our Congress does, I think of them as a stand-in for a board, rather than as active managers.

      Golly, for all the impact he’s had, my Congressman could have played hookey for the last 2 1/2 years and I don’t think it would have made one bit of difference.  

      .

      1. And government is not a business.

        Government and businesses do different things.  Any attempts to equate them are complete bullshit.

        There is no business I can think of that would willingly agree to feed the poor or provide medical care to sick children.  I’m sure that’s fine among those who want to run government as a business, but it’s not in the best interest of society.  

        Government needs to act in the best interest of society.

        1. .

          neither Pols, nor David, nor I said that government was a business.  

          But both can benefit from good management, which is what the aphorism purports to be about.    

          .

          1. As should be manifestly clear from the last year, “good management” is NOT what business has been about in this country since the 80s, and government has only been following suit(s).  Sound management principles, otherwise known as “prudence,” were abandoned in favor of “clever manipulation” of balance sheets and a high premium on insider baseball, both leading to anything but prudent investments.  

            No, the Crash of ’29 put rest to Coolidge’s “the business of America’s government is American business,” and let’s hope this crash puts to rest the notion that government should be anything other than what it means, governing those who put their interests ahead of others no matter what the cost to society (i.e., taking millions in bonuses when their “corporate” interest suffered)…something we used to call by it’s proper name:  crime.  

              1. the problem is there’s more than one alternative.

                Government can serve the public interest ACTIVELY as you suggest.

                Government can also serve the public interest by “governing” those who do not.

                I would disagree that people won’t enter into medical care or feeding the poor for profit, as some do, though on the whole, most don’t.

                My concern is with those who steal from the poor to line their already silken purses.  If government does not govern them, then it gets left holding the bag for the poor.

    3. The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.

      Some things never change.

      Link here.

    4. Lets just create a tax on people with say over $100 mill or $500 mill. Knockem for 10% annually, lock it into the constitution like minimum wage and run like hell.

      You pay income tax in CO and you have mega millions you get beaned with the asset tax. At least it would fix your unbridled thrust for massive new cash, then you could let the rest of us real folks just be.

      Do I sound like I’m giving up … nearly.

    5. and claims that the talent must be kept to justify the bonuses.

      Frankly, they get paid millions when they get fired.

      I don’t lose money for my company. I guess that I’ll never get a big firing bonus.

      1. Was blame earned by the Autoworkers Union for not adjusting to market conditions…yes, but more blame goes to the management and white collar professionals who designed cars the public did not want or need. I think the restructuring is a good thing and will ultimately save my union brothers their jobs.

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