RSS Follow Become a Fan

Recent Posts

Q&A with Sen. Tom Cotton
Q&A with Sen. Ron Wyden
Q&A with Rep. Louie Gohmert
Q&A with Rep. Ted Lieu
Q&A with Sen. Tim Scott


Adam Kinzinger
Adam Weigold
Affordable Care Act
Agenda 21
Ajit Pai
Al DeKruif
American Enterprise Institute
American Legislative Exchange Council
America's Future Foundation
Amy Koch
Andrea Kieffer
Andrea Mitchell
Ann Coulter
Arlen Specter
Arne Carlson
Atlas Shrugged
Bad Legislators
Bad Republicans
Barack Obama
Barbara Banian
Bashar al-Assad
Ben Ginsberg
Ben Golnik
Ben Wiener
Beth Cobert
Bill Jungbauer
Bill Paxon
Bill Pulkrabek
Bob Barr
Bob Corker
Bob Davis
Bob Gunther
Bobby Joe Champion
Book Reviews
Brandon Petersen
Brandon Sawalich
Brian Johnson
Bron Scherer
Brookings Institution
Budget Control Act
Carla Nelson
Cass Sunstein
Cato Institute
Chamber of Commerce
Charles Chaput
Charlie Rangel
Chip Cravaack
Chris McDaniel
Christine O'Donnell
Christopher Painter
Civil Forfeiture
Claire Robling
Climate Change
Common Cause
Cynthia Lummis
Dan Hall
Dan Severson
Dave Brat
Dave Senjem
David Fitzsimmons
David Sturrock
Department of Justice
Department of Labor
Diane Johnson
Diane Rehm
Dick Armey
Donald Trump
Ed Morrissey
Edward True
Elijah Cummings
Erick Erickson
Erika Harold
Evie Axdahl
Federal Budget
Federal Communications Commission
Francesca Chambers
General Electric
Geoff Michel
Global Warming
Good Legislators
Greg Davids
Growth & Opportunity
Growth and Opportunity Report
Haley Barbour
Harry Reid
Henry Barbour
Heritage Foundation
Hilda Solis
House Amendment 111
Iowa Caucus
Iowa Republican Party
Jabhat al-Nusra
Jake Duesenberg
Janet Beihoffer
Jason Chaffetz
Jason Lewis
Jeff Bingaman
Jeff Flake
Jeff Johnson
Jeff Sessions
Jeh Johnson
Jim Abeler
Jim Oberstar
Jim Taylor
Joe Scarborough
John Blatnik
John Boehner
John Chafee
John Cornyn
John Gilmore
John Howe
John King
John Kline
John Kriesel
John McCain
John Nolte
John Yoo
Jonathan Merritt
Josh McKoon
Julianne Ortman
Julie Rosen
Justin Amash
Katrina Pierson
Keith Downey
Keith Ellison
Kelly Fenton
Keystone XL
King Banaian
Kurt Bills
Kurt Daudt
Kurt Zellers
Labor Department
Laura Ingraham
Lee Goodman
Liberal Republicans
Linda Killian
Loretta Lynch
Lost Generation
Louie Gohmert
Marco Rubio
Margaret Cavanagh
Marianne Stebbins
Mark Buesgens
Mark Dayton
Mark Foley
Mark Kennedy
Mark Meadows
Martin O'Malley
Marty Seifert
Mary Franson
Matt Dean
Matthew Feeney
Media Bias
Mercatus Center
Michael Brodkorb
Michael Cummins
Michael Gerson
Michael Kubesh
Michael Mukasey
Michele Bachmann
Mike Benson
Mike O'Rielly
Mike Osskopp
Mike Parry
Mike Pompeo
Mike Sommers
Minimum Wage
Minnesota Budget
Minnesota Conservatives
Minnesota Legislature
Minnesota Republican Party
Minnesota Tea Party Alliance
Mitch Berg
Mitch McConnell
Mitch Pangerl
Mitt Romney
Modern States Education Alliance
Morrie Lanning
Nancy Pelosi
National Security
Neal Peterson
Net Neutrality
New York Times
Newt Gingrich
Norm Coleman
Norm Ornstein
Office of Fossil Energy
Orrin Hatch
Pat Anderson
Pat Buchanan
Pat Garofalo
Pat Shortridge
Paul Demko
Paul Gosar
Paul Koering
Paul Krugman
Paul Teller
Pete Hegseth
Pete Nelson
Pete Sessions
Peter King
Phil Krinkie
Pine City
Pine County
Pine County Republicans
Politics in Minnesota
President 2012
Rand Paul
Raul Labrador
Ravi Zacharias
Reason Magazine
Reince Priebus
Religious Freedom Restoration Act
Renee Ellmers
Republican Liberty Caucus
Republican National Convention
Republican Party of Minnesota
Republican Study Committee
Rich Murray
Rick Nolan
Rick Perry
Rick Santorum
Rick Weible
Right to Work
Rod Hamilton
Rodney Davis
Roger Crawford
Ron Carey
Ron DeSantis
Ron Erhardt
Ron Latz
Ron Paul
Ron Wyden
Rory Koch
Rudy in the Media
Ryan Winkler
Scott Dibble
Scott Honour
Sean Duffy
Sharon Angle
Simply Right
Solar Power
Star Tribune
State of the GOP
Steny Hoyer
Steve Gottwalt
Steve Hensley
Steve Jobs
Steve Largent
Steve Perkins
Steve Scalise
Steve Smith
Steven Chu
Sue Jeffers
Tad Jude
Tarryl Clark
Tax Foundation
Taxpayers' League of Minnesota
Tea Party
Ted Cruz
Ted Lieu
Ted Lovdahl
Terry McCall
Thad Cochran
Thomas Mann
Thomas Massie
Thomas Miller
Thomas Sowell
Tim Cook
Tim Faust
Tim Griffin
Tim Huelskamp
Tim Kelly
Tim Pawlenty
Tim Scott
Title II
Tobacco Taxes
Todd McIntyre
Tom Clougherty
Tom Coburn
Tom Cotton
Tom DeLay
Tom Emmer
Tom Graves
Tom Harkin
Tom McClintock
Tony Sutton
Trans-Alaskan Pipeline
Twila Brase
Vin Weber
Virginia Foxx
Walter Mondale
Warren Buffett
Will Hurd
William McBridge
Xi Jinping
Yvonne Prettner Solon
Zygi Wilf
powered by

Rudy Takala's Columns

Newsbusters Column: Corporate Spending on Perks "Egregious"? What about the Feds? (4.07.2011)

Click here if you would prefer to view my column below cross-posted on Newsbusters.
As debate rages across the country about whether it is reasonable to reduce federal spending in light of the fact that the federal government is spending more than eight times what it takes in, the same publications willing to defend that spending often simultaneously criticize spending by businesses that make a profit. One such story ran in publications nationwide this week, including the Chicago Tribune.
In a story blaringly entitled Eight Outrageous Executive Perks circulated by Tribune Media Services, author Kathy Kristoff laments the compensation packages offered by varied companies to their founders and/or CEOs.
For example, Qwest CEO Ed Mueller’s family was permitted use of the company jet, an expense totaling $281,182 for the year. Occidental Petroleum served as another example; the company's CEO moved from Texas to California to do his job. Texas has no state income tax; California had a 9% state income tax at the time. Occidental agreed to pay the tax for him.
“But the problem,” according to the article, “with paying taxes for someone is that even the tax payment is taxable. There's also tax on the tax on the tax, which multiplies the actual amount that must be paid, making this one of the most egregious corporate perks in America.”
Egregious? What about the $174,000 earned by members of Congress? What about wasteful perks of the presidency?
It is problematic that the media is so busy looking for spending it deems wasteful in the private sector that it is often unable to investigate real public officials.
The article also passes judgment on companies’ boards of directors: “Indeed, while some perks are merely outrageous because they're given to executives who earn vast fortunes and are well able to pay the tab themselves, others have proved to be a sign of executive larceny and lax oversight by a company's board of directors.”
Are company stakeholders really asleep at the wheel, unable to discern the consequences of corporate decisions? Or could there be a rationale behind the economics at work?
Stephen Bainbridge, writing in a 2009 article on behalf of the Cato Institute, explores some of the mathematical reasoning behind executive perks. 
According to Bainbridge, economists “Xavier Gabaix and Augustin Landier [found] that ‘the six-fold increase of CEO pay between 1980 and 2003 can be fully attributed to the six-fold increase in market capitalization of large U.S. companies.’ In other words, CEOs got richer because their shareholders got richer.”
In a recent paper, Raghuram Rajan, the IMF's chief economist, and Julie Wulf, of the Wharton School, looked at how more than 300 big companies dished out perks to their executives in 1986-99. It turns out that neither cash-rich, low-growth firms nor firms with weak governance shower their executives with unusually generous perks. The authors did, however, find evidence to support two competing explanations.
First, firms in the sample with more hierarchical organisations lavished more perks on their executives than firms with flatter structures. Why? Perks are a cheap way to demonstrate status. Just as the armed forces ration medals, firms ration the distribution of conspicuous symbols of corporate status.
Second, perks are a cheap way to boost executive productivity. Firms based in places where it takes a long time to commute are more likely to give the boss a chauffeured limousine. Firms located far from large airports are likelier to lay on a corporate jet.
More simply summarized, perks are a cheap way for successful firms able to attract the highest quality personnel.
Bainbridge points out that the reasonable conclusion of any complaint about corporate compensation -- federal regulation -- will be to end innovation by state governments.
“Uniformity imposed by federal law will preclude experimentation with differing modes of regulation. As such, there will be no opportunity for new and better regulatory ideas to be developed — no ‘laboratory’ of federalism.”
The federal government’s insolvency is in many ways directly linked to its efforts to micromanage the states. That should be the story of our time, but it is absent from our media.

0 Comments to Newsbusters Column: Corporate Spending on Perks "Egregious"? What about the Feds? (4.07.2011):

Comments RSS

Add a Comment

Your Name:
Email Address: (Required)
Make your text bigger, bold, italic and more with HTML tags. We'll show you how.
Post Comment
Website Builder provided by  Vistaprint