EnduringSense

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Posts Tagged ‘bankers’

Teachers, Tenure, NFL and Wall Street

Posted by Steve Markowitz on October 31, 2011

Discussions relating to the challenges state and municipal governments face often include the cost of education.  While most Americans agree that the educational process needs repairs, proposed actions are debated.

Those on the Left often express the belief that the educational system can be improved by throwing more money at it.  For example, President Obama suggested including billions more for “public school modernization” in his latest jobs plan.  This is in the time-honored Progressive tradition that proffers that any societal ill can be cured by government spending.  If only it was so easy!

The main school of thought is that America’s education problems are more systemic that include a breakdown of family and a corrupt philosophy within unions that rewards teachers for years of service, rather than performance.  This Blog adheres to this view.

Hall of Fame quarterback, Fran Tarkenton, retired from the NFL (National Football League) in 1978 after 17 terrific years.  He has since been an entrepreneur and adviser on small business education.  Tarkenton published an op-ed in the Wall Street Journal some weeks ago titled What if the NFL Played by Teachers’ Rules? that looks into the problems of public education.  To make a point, he interposes the method of compensation and promotion for teachers and NFL players saying: “Imagine the National Football League in an alternate reality.  Each player’s salary is based on how long he’s been in the league.  It’s about tenure, not talent.  The same scale is used for every player, no matter whether he’s an All-Pro quarterback or the last man on the roster. … “.  The result of such lunacy is easy to understand.  Under such a system the NFL would at best offer a mediocre product that few would be willing to purchase and the league would ultimately disappear.

For those like President Obama who claim that more money can address the problem of education, Tarkenton offers the following statistics in rebuttal:

  • Inflation-adjusted spending per student in the Unites States has tripled since 1970.
  • America spends more per student than any other Western country except Switzerland.
  • Spending on buildings and equipment for schools has doubled since 1989, even after being adjusted for inflation.

Tarkenton correctly concludes that one problem with America’s educational system is the method by which its employees are compensated.  Teachers are not rewarded on results or efforts, but merely for years on the job, have little incentive to excel.  Worse, poor teachers who have no fear of being terminated for performance continue to teach to the determent of students.

America’s corruptive compensation practices are not only found in public education and the problem is broader than the way unions demand compensation for members.  For example, there is rightfully much angst being expressed by the Occupy Wall Street movement relating to Wall Street’s compensation for some of the same executives that helped create the Country’s ongoing financial mess.

The federal government played a role in creating Wall Street’s outrageous compensation packages.  First, starting in the late 1990’s, it and the Federal Reserve bailed out Wall Street with historically low interest rates every time the economy slowed down.  This led to bubbles and a belief on Wall Street that there was little risk in their increasing risky behavior.  Had the government let the recessions occur, i.e. required market corrections, during this ten-year period, Wall Street banks would have had poor profit years that would not only have tempered compensation packages, but more importantly tempered their willingness to make what were outrageously risky investments.

The government’s response to the 2008 financial meltdown was even more outrageous, bailing out the very people who caused the crisis.  However, instead of making these capitalist pay the ultimate price for their gross failures, the destruction of their companies, the government bailed them out.  That allowed the same executives to retain their jobs with outrageous compensation packages at the expense of the American taxpayer.  This grotesque crony capitalism started under the Bush Administration and continues under Obama.

Examples of compensation inequities in America are many.  These inequities have intensified in recent years not because of greed or capitalism, but because of peoples’ ability to act on that greed.  This increasing ability to act on greed has been enhanced by unnatural market manipulations that range from union demands for government workers, to governmental bailouts of huge banks and companies.  Unless these unnatural market manipulations are addressed (stopped) the problem of the inequities will continue.  Unfortunately those that govern will instead likely create still more interventions to repair their earlier interventions, which will only exasperate the problems.  This madness will continue until a transformational leader emerges with the guts to break the ties between power groups and those that govern.

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Posted in Bailouts, Education | Tagged: , , , , , , , , , , , , , , , | Leave a Comment »

The Government/Wall Street Con

Posted by Steve Markowitz on April 14, 2010

Lee from New Jersey forwarded this interesting You Tube clip featuring MSNBC financial commentator, Dylan Ratigan, discussing the con perpetrated on the economy by the banks, Wall Street and the government that led to the finical meltdown and the greatest wealth transfer in American history.  This two-piece clip is a worthy view.

Towards the end of the first clip, Congressman Alan Grayson, Democrat from Florida does an interesting politico two-step.  First, he accurately blames the previous administration (Republicans) and the banks for creating the mess.  But, he then looks to government to create legislation to “fix” the problem.  How lame, especially after Grayson correctly accuses Congress of being on the bankers’ take.  In addition, it was government intervention in the first place fertilized the mess, mainly through tinkering with Fannie Mae’s and Freddie Mac’s charters.  Then, it was government, first Bush and now Obama, that bailed out the con artists.  So let’s give government another shot at it?  Hmmmmm.  That’s Progressive logic.

Ignoring for a moment how we got here, the main problems are gross imbalances in supply and demand within our complex economy.  Should we turn the “repairs” over to the same class that helped create the mess, we should expect no different outcome.  The correct alternative is to let the free market repair itself by correcting the imbalances.  While not pretty, this mechanism is the quickest and most efficient way to allow the economy to get back again into equilibrium and then grow.  And unlike the government, the laws of supply and demand cannot by bribed.

Posted in Bailouts, Banks, Capitalism, economy, Free Markets, Governmental Intervention | Tagged: , , , , , , , , , , , , , | 13 Comments »

Obama’s Change Brings Strange Banking Bedfellows

Posted by Steve Markowitz on January 28, 2010

Whether your politics leans toward the Left or Right, a major disappointment with Barack Obama’s first year in office has been his unfulfilled promise for “change”.  Most Americans were weary of the sleaze and backroom dealings that became synonymous with Washington politics prior to Obama’s election.  The President promised change and that message resonated, especially with Independent voters.  It is the unfulfilled promise of change that led to last November’s election of two Republican governors in states that only a year earlier voted for Obama and more recently the election of a Republican Senator in that very Democrat state of Massachusetts.

Instead of change it is business as usual in Obama’s Washington as exemplified by his association with the bankers.  Remember Obama’s “fat cat” banker name-calling designed to make him look like a populist?  Well he sure doesn’t walk the talk given his actions and personal friendships.

First, Obama continued Bush’s policy of bailing out the “fat cats”. Then, there is his personal association with these folks.  Take for example his association with Robert Wolf, chief executive of UBS Group Americas.  Wolf first met Obama in 2006 in the New York office of another “fat cat”, billionaire investor George Soros.  OK, so now we have two extremely wealthy individuals who make their money on banking befriending and advising the President.  You can be sure that their interest in the relationship is not all alteristic and in fact involves their desire to further their own interests and those of their industry.

Let’s look at Wolf’s access to the President:

  • Wolf hosted an Obama fund-raiser in UBS’s Manhattan offices and raised $350,000.
  • While Obama said he spurned lobbyists, he accepted cash “from a Robert Wolf at USB Bank.”  U.S. employees of UBS had already contributed more than $200,000 to the Obama campaign.
  • Wolf visited the White House 20 times in the past year.
  • Wolf lunched privately with the President in June 2009
  • Wolf joined Obama July 4th to watch the national fireworks from the White House.
  • Obama and Wolf golfed together on Martha’s Vineyard in August.
  • Obama placed Wolf on his economic-recovery advisory board.

But that is not all of it.  While Wolf’s UBS employer has huge assets in the U.S., its foreign ownership insulates Wolf’s bank from much of the banking regulations.  In addition, UBS agreed last year to pay the U.S. government $780 million to settle accusations that it had helped defraud the Internal Revenue Service.  Hmmmmmm.

As they say, if it quacks like a duck don’t start looking look for elephants.  The duplicity shown in the unfulfilled promise for change and the close ties to people with conflicting interests indicates that the President commitments made during the campaign where those of just another politician.

Posted in Politics, President Obama | Tagged: , , , , , , , , , , , , | Leave a Comment »