Tuesday, July 01, 2008

Gramm on Stuff

Phil Gramm on CEO-pay:

In economics, we define labor exploitation as paying people less than their marginal value product. I recently told Ed Whitacre [former CEO of AT&T, who retired with a $158 million pay package] he was probably the most exploited worker in American history because he took Southwestern Bell, which was the smallest of the former Bell companies, and he turned it into the dominant phone company on earth. His severance package should have been billions.

[There is] a lucrative premium for talent. When we were all hunters and gatherers, and you were better with a bow and arrow than I was, there were limits on how much more game you could kill than me. Today, CEO decisions about whether to acquire or not acquire a company, to shut down one part of the company or not shut it down, get into a market, get out of a market, where those decisions mean billions of dollars, is it surprising that people are willing to pay tremendous amounts of money for people who make those decisions right?

And on the primary problem with the US Economy:

Now many of the largest IPOs in the world are occurring on other markets. In the six years that I have been a banker, I have seen decisions made to open functions in London rather than New York because of a better regulatory climate. Every American should worry a lot about this. We have benefited enormously from New York being the financial capital of the world because we had a more efficient regulatory structure than other nations did.

We can't possibly compete with a 35% corporate tax rate that is so punitive that if a company opens a plant in Ireland it costs them a billion dollars less than in the U.S. over 10 years because of the difference in corporate taxes.

Why is America the richest country in the world? It's not because our people are more brilliant; it's because we have a better free-market system. Why has Texas created 1.6 million jobs in the last 10 years whereas Michigan has lost 300,000 jobs and Ohio has lost 100,000 jobs? Because governance matters, taxes matter, regulation matters. Our opponents in this campaign are so dogmatic in their goal of having more government because they love the power it brings to them that they're willing to let it impose costs on the working people that they say they want to help. I am not.

Sounds right to me (on everything other than John McCain). Whole fabulous piece here.