In the United States, as Warren Buffett put it, we live in a country where valor on the battlefield is rewarded by a medal, and the best teachers get thank-you notes [except now teachers are more likely not to get thank-you notes, but blame for their failure to overcome all the obstacles placed in their way by permissive parenting, excessive and counterproductive regulations, and the need to teach to the tests in order to keep their jobs], while speculators and financial executives get millions. And similar levels and types of rewards exist in most other industrialized countries. As most readers know, my wife is a university professor, and this year, after several years of no increases in salary, or token raises of one percent, the faculty at the university received another one percent raise that wasn’t one.
Why not? Because the university took it all back – and more — in other ways. Health insurance premiums weren’t raised [that happened last year with a massive increase], but the cost to faculty still went up because the co-pay for prescription drugs was doubled; the co-pay for physician visits was increased; and the procedures covered and the amounts covered were decreased. Faculty parking charges were instituted. Departmental budgets were cut by another 15%. On the other hand, the new university president will get a 15% higher salary than the departing president.
These sorts of “rewards” are far from limited to education. Despite the fact that those Americans who are working happen to be working longer hours than they were thirty years ago, family income, in real dollar terms, has decreased over the past decade for all but the top ten percent, and that decrease doesn’t include increased costs of various sorts passed on to employees in a myriad of ways. But Goldman Sachs senior employees get hefty bonuses for figuring out how to double the price of aluminum so that the company gets a larger profit while passing the costs on to everyone else.
I don’t mind “rewards” that recognize true efficiency, where the costs for everyone go down, and profits go up without screwing someone else, but these days, all too many executive rewards are awarded for “efficiency” that results in essentially lower pay and longer hours for underlings and often even increased costs to everyone else. That’s not efficiency, but passing the buck to those who can’t pass it to someone else.
The last time this sort of business behavior was rampant, over a century ago, it resulted in trust-busting and corporate dismemberment. That’s one of the very few parts of the not-so-good-old days that we ought to bring back… because it’s all too clear that American business and even large non-profits and state governments aren’t about to reform themselves on their own. And that in itself is a shame.