IBM freezes pension, switches to 401(k)

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I agree with you, almost.

Congratulations on getting through 2000-01 so successfully. I expect you'd been told you were being too conservative at your age...

I think your recommendations could be improved, though. First the quicker one:

... the boom has to come down on executive excess, so that equitable proportions are given to the common worker.

As a percentage of the available money, the amounts paid to CEOs is often small, even if the dollar amount is greater than required to feed a family of millions.

The problem is not the unproductive use of money on CEO payments, it's what the CEO does for the money.
Companies are run to maximize the amount received by the CEO. If an incentive program exists, the company will be managed to maximize the incentive.

So if the CEO's bonus is based on profits, half the employees will be laid off to increase profits.
If the CEO's bonus is based on stock price, half the employees will be laid off to increase the stock price. Strangely, not having people to do the company's work makes investors eager to buy.
If the CEO's bonus is based on efficient operation of the copmpany, half the employees will be laid off to improve productivity. Temporarily.

You can see how the interests of CEOs and common workers tend to diverge.


Your other recommendation:
... people need to become more disciplined and pursue education more vigorously, in order to advance knowledge and skills and remain employable in highly paid jobs in a global economy

Education by itself is not the key.

One problem is the Sputnik effect.

When the Russians were first to put up a satellite, a panicked country decided to emphasize science and math education to produce people who could help catch up.

Of course, it usually takes a few years to produce the scientists needed.
But that's okay; only about 12 scientists were needed, and all of them had been escorted to the US from Germany after the War.
And, from what I can tell, no one actually learned any more science or math anyway. The education system was not much better then than now.

As this shows, the problem with education as a cure-all is that there are probably always enough people looking for the innovative, high paying jobs already. The people able to fill them identify themselves by talent, interest, and effort. They find their way.

Trying hard to qualify more people than jobs isn't worth the effort.

The second problem might be called "profit is our product".
If the government offered to pay $100,000 per person graduating with a degree in whatever, many schools would open to teach whatever, and they'd each make certain as many people graduated as possible. Those deceased while matriculating might still find a way to conclude their school careers successfully.

So the second problem is devaluation of any education you choose to value.


The third problem is the implicit devaluation of some skills by encouraging others.

At least some of those graduates in whatever would have been good plumbers. The world needs plumbers, but not many parents strive to give their children all the advantages needed to become a plumber.

That's one reason plumbers cost so much today.


So education is not a real solution.


I think we ought to go back to a principle of Henry Ford's. Ford could have hired workers at far less than $5 a day, but he wanted his workers to afford the cars they were making.

What would happen if the Federal government doubled the minimum wage to $10? How many more people could afford cars?

Not enough time to continue, but something to think about.

Posted by: Anton Philidor   Posted on: 01/06/06 You are currently: a Guest | Members login | Terms of Use

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