Osso Buco and the Downside of Risk

I was at the supermarket today and had already put some diced prosciutto in my cart for the Spaghetti Carbonara that I was going to make for tonight’s dinner, when I saw the veal shanks in the meat case. I thought about buying them in order to make Osso Buco, but passed them by, probably because the recipe calls for several items that I wasn’t sure that I had at home, and it takes a long time to make it properly. If you’re unfamiliar with the dish, and find yourself in a good Italian restaurant that offers it, give it a try. Basically, it’s slow-cooked crosscut veal shanks in a wine sauce. Tasty stuff.

I can’t think of Osso Buco without remembering the first time I was ever made aware the dish’s existence. I was 16 or 17 at the time, and my brother was going to school at West Palm Beach Junior College (at least he was enrolled there, no strong evidence exists of any significant attendance on his part) in Florida. Mom, Dad and I flew down around Thanksgiving to visit him, and the first night we were there, we went across the bridge for dinner at a nice Italian restaurant in Palm Beach, where the really rich people live.

Even at my young age, I was not a stranger to fine restaurants. We dined regularly at the Mergus in Canton, which had a menu more than a dozen pages long, offering well-prepared specialties from various cultures, and my parents were kind enough to take me along to other great restaurants wherever we visited. The place we found ourselves at in Palm Beach was only mildly intimidating, with tuxedo-clad waiters (no waitresses) and a suitably dark and refined atmosphere. The menu had mainly recognizable entrees, and we sipped our cocktails (losing one’s hair at a tender age does have certain advantages, along with having liberal parents) and scanned the offerings, each of us making our choice in silence, without discussion.

The waiter came to take our orders in his very professional manner. Mom went first (we later learned that her menu didn’t have prices on it, since she was the lady and thus unconcerned with such trivial matters), then Gary and I, and finally Dad gave his order. “I’ll have the Osso Buco,” he said with the utmost confidence.

“Ah,” the waiter smiled his approval with a knowing nod of his head, then added, “the gentleman knows what he wants.”

We handed back our menus and waited until the waiter had returned to the kitchen before one of us asked: “What’s Osso Buco?”

“I have no idea,” Dad confessed. We all got a good laugh out of that, especially considering the waiter’s comment.

But it didn’t really matter to him. He reasoned that a dish listed as a “specialty of the house” in a really good restaurant would probably taste somewhere between good and exceptional, and he was right. His portion was adequate enough that he allowed us all a taste. I’ve ordered it in a few other restaurants, and made the dish at home, and I’m pretty sure that the first time I tasted it was the best I’ve ever had.

You see, there are times when it makes good sense to take a risk and try something new. What is there to lose? If Dad found his entrée lacking, he could always order a spectacular dessert (we had already seen the dessert cart circulating the restaurant and it was packed with goodies). He might be out the cost of his meal, but it was only a relatively small price to pay for an experiment that had a really good upside potential.

There are other choices we make in life that have more far-reaching consequences, and far worse negative outcomes. I’m reminded of the guy I knew who voted against every single incumbent in office, then found out that he had voted against his own interests in several cases. We face major choices in the upcoming election as well.

The incumbent candidate for President seems to have a less than stellar record with regard to our nation’s economy, until you consider the situation he faced when he took office. Having faced a financial abyss brought on by the previous administration’s lax oversight combined with a love of deregulation and tax cuts for the wealthy, our current President has done the best possible job that he could, under the circumstances that he operated under. Our largest bank, once on the verge of bankruptcy and requiring government assistance to stay solvent, has declared a record a profit. It cited an improving housing market as a major contributing factor. Manufacturing is improving, and unemployment is gradually trending downward.

The challenger in the race for President says that his opponent hasn’t done enough, and promises more action. He has promised that cutting taxes for the truly wealthy of our country will free-up capital that will be used to create more jobs. He doesn’t add that more action will only be possible with cooperation from our legislature, which currently has a terrible record for both action and cooperation.

What is the right solution? Who gets the most precious thing we have to offer in this situation: our vote? I read recently that history is circular, and often repeats itself. Having seen this phenomenon, I tend to agree. History tells us that cutting taxes for the wealthy usually results in a large amount of money seeking speculative investments, not in job creation. If tax cuts did work as promised, why did we just go through the most adverse economic period since the Great Depression? The wealthy got their tax cuts, but we got the Housing Bubble and a stock market crash.

The last time we had a two-term Democrat for President, we got a budget surplus, a healthy economy and more peacetime jobs created in the private sector than at any time in our nation’s history. The last time we had a two-term Republican we got the Housing Bubble and the Financial Meltdown. The time before that, a two-term Republican left us with a devastated Savings and Loan industry, a ballooning deficit and a stock market crash.

Former Governor Romney has made lots of promises, but they are built on a foundation of speculation and half-truths (not to mention a few outright falsehoods). True, he seems so reasonable and so presidential. He better, he has billions of dollars of the best media money can buy behind him. The one thing he lacks is a strong foundation in historical perspective. Our past experience points to the flaw in his argument, but are enough people paying attention to reality? Let’s hope so.

So what do you plan to do with your vote? Should you throw caution to the wind and try something new? When Dad did that at the restaurant, he knew that if he left hungry there was a McDonald's that he could stop at on the way back to his hotel. If you try that at the polls this election, you may not even be able to afford to stop at McDonald's in the near future. Choose wisely.

Osso Buco (veal shanks)

   

Damned Bureaucrats

It’s a familiar scene, a staple for sitcoms, and an annual event on “The Simpsons”: a visit to the Department of Motor Vehicles. Busy people stymied in their effort for a renewed driver’s license by dimwitted, agonizingly slow bureaucrats.  A woman watches as an elderly gentleman, responding to the call of his number, slowly shuffles up to the desk. My god, she thinks, they’re not going to renew that old fossil’s license, are they? Lord help him if he gets in the way of my gargantuan SUV when I’m late for brunch at TGI Friday’s, and the special on cheap mimosas ends at noon. I’ll run the old bastard off the road and do society a favor. Oh wait. Looks like he failed the eye test. Good, now send him on his way and call my number. I’ve got more important things to do. Hurry up you damn bureaucrat! The word “bureaucrat” has taken on a bad meaning in our vocabulary, immediately associated with a needlessly ponderous government functionary. A new acquaintance in a bar may tell you that she “works for the government”, but will never say, “I’m a bureaucrat.”

Ronald Reagan was our 40th President and was known as “The Great Communicator”. He is remembered for telling us that the most dangerous words in the English language are: “I’m from the government and I’m here to help.” He also said: “Government is not the solution to our problem; government is the problem” as well as: “A government bureau is the nearest thing to eternal life we'll ever see on this earth.” Obviously, he wasn’t a big fan of government, nor bureaucracy. Reagan is remembered fondly by Republicans, primarily for lowering the top rates for income tax, not once, but twice. The first time he lowered the top tax rate, it was considered too high, and the economy improved. The second time he did it, economists warned him that he shouldn’t do it. After he went ahead with it anyway, the stock market crash combined with the Savings and Loan Scandal (caused by an easing of government oversight as well as an excess of newly freed-up investment money in search of a good bet) wiped out the savings of many hard-working Americans.

The truth is that no one is a fan of “big government”, myself included. As we sit waiting at the DMV, we think: if only the government didn’t interfere so much in our lives. Consider the woman in the example above leaving the DMV with her new license (fuming over the poor likeness in the photograph, no doubt). She climbs into her SUV, and likely forgets that the fees she just paid help to fund the nicely paved roads that speed her to her destination. She doesn’t associate that the traffic lights and police officers that keep her trip safe do so by means of a functional government bureaucracy. Sadly, like many of us, she has a short memory. The truth is that there are many aspects of peaceful existence on this planet that requires more than the effort of a single person, or even a group of like-mined individuals. An even bigger truth is that the best way to run a government is through bureaucratic controls.

It would be a mistake to allow free market economics control such functions. Suppose a wealthy man’s limousine ran a red light and crashed into our harried SUV driver? Would it be OK if he could offer a large payment to the arresting officer to forget the whole thing, even though his driver was at fault? No, that wouldn’t be fair. We need the government to equalize the situation in order to protect what is right. We hear a lot of talk these days about the need to privatize Social Security and Medicare. What worries me most is that we would surrender any type of control in these situations to a free market that is populated by human beings. Human beings are by human nature predisposed to their own self-interest. That means we are greedy by nature, and don’t always do what is right for everyone unless something compels us to do right. Deregulation may be more efficient, but in the long run it may not be the most effective course of action.

Today’s paper had several news stories that caught my eye, and all had a common theme. The first story concerned a report published by the Government Accountability Office. In case you forgot (or perhaps are just so busy that you don’t care), the GAO is an independent, nonpartisan agency that works for Congress. The report in question concerned the emerging technology of getting gas and oil from the process of hydraulic fracturing, more commonly known as fracking. Environmentalists are concerned that fracking will have adverse consequences on our groundwater, which is a major source of our drinking water. The report stated that the part of the drilling process called fracking has not been identified as a cause of groundwater contamination. No doubt proponents of fracking will seize on this portion of the report as proof of the safety of the process.

However, the report went on to say that risks to the water supply have been found to exist from migration of underground gases and chemicals. In one case a faulty seal on a gas well allowed gas to build up and migrate into the local aquifer, contaminating wells used for drinking water. Contaminated wastewater from the drilling process can also leak into aquifers from faulty well casings and other studies have shown air quality problems around gas wells. The industry points out that the practice is safe when it is done properly. Government officials echo this claim, and point to recently strengthened regulations to assure us that fracking will be done safely. Another report indicated that it was a challenge for state regulators to hire and retain the staff needed to police the newly strengthened regulations. In other words, they can’t find enough well trained bureaucrats, and when they do, private industry will likely pay them more money to come work for them.

A second news story focused on a recent deadly outbreak of meningitis that has been linked to contaminated pain injections from compounding pharmacies. Pharmaceutical compounding (done in compounding pharmacies) is the creation of a particular pharmaceutical product to fit the unique needs of a patient. Since the recent outbreak, Congress is seeking more authority over the industry, citing a lack of specific laws and uncertainty over how much power the FDA has to regulate compounding pharmacies. Experts see the current state of inactivity and Congressional gridlock as preventing any significant action in this regard anytime soon. Perhaps not enough people have died yet for Congress to actually act, or maybe they think deregulation will work best in this case, since bureaucrats might just muck things up worse.

So what is a bureaucrat? German sociologist Max Weber defined a bureaucratic official as the following: “He is personally free and appointed to his position on the basis of conduct. He exercises the authority delegated to him in accordance with impersonal rules, and his loyalty is enlisted on behalf of the faithful execution of his official duties. His appointment and job placement are dependent upon his technical qualifications. His administrative work is a full-time occupation. His work is rewarded by a regular salary and prospects of advancement in a lifetime career. He must exercise his judgment and his skills, but his duty is to place these at the service of a higher authority. Ultimately he is responsible only for the impartial execution of assigned tasks and must sacrifice his personal judgment if it runs counter to his official duties. Bureaucratic control is the use of rules, regulations, and formal authority to guide performance. It includes such things as budgets, statistical reports, and performance appraisals to regulate behavior and results.”

Are you still awake? I know, even the definition tends to bore you to death. But do you think that we need to regulate certain aspects of our lives for our own personal safety and well being? If so, then we need bureaucrats. Unfortunately, we also need to reward them amply. The next time you see a story about some former government retiree making a decent pension with great benefits, remember that he or she was once a thankless bureaucrat, working to ensure your safety or even protecting your life.

The last story that caught my eye this morning doesn’t directly deal with bureaucracy, but is concerned with regulation. The Republican candidate for President of the United States has called for a loosening of federal regulations relating to banks. This is the sort of deregulation that led to the Financial Meltdown of 2008, when many of our major banks were on the verge of becoming insolvent, and had to be rescued. These banks included JP Morgan Chase Bank, the nation’s largest bank, which received $94.7 billion in federal bailout money, which has since been repaid. The article reported a record profit for JP Morgan of $5.3 billion, in excess of what had been forecast for the third quarter of 2012. The results were helped by a surge in mortgage lending, with the CEO commenting that the housing market “has turned a corner” and is improving.

This little blurb points out some very fundamental points relative to the upcoming election. The first is the claim of the opposition party that our economy is unsound. Their policies of deregulation almost caused the collapse of our entire financial sector. Now they’ve said that they’d like to have another go at it. It seems to me that if our housing markets are improving and our banks are earning record profits, maybe the economy isn’t so bad after all. The second point is that we had to have big government in order to bail out this bank. If it hadn’t done so, the results would have been difficult to comprehend. Massive unemployment, unprecedented lost savings, and a worldwide depression of enormous proportions would have been likely. Just because the economy suffered, and times have been tough on us all, don’t make the mistake in thinking that it couldn’t have been worse. If we allow for less regulation, it’s likely that it will get worse again.

So next time you’re at the DMV, remember to smile and thank the person behind the counter for their service. You’ll show a better and more informed view of their function as bureaucrats in keeping our lives in order, and your driver’s license photo might look better, too.

“Bureaucratic administration means fundamentally domination through knowledge.”

— Max Weber

Willard's Second Week (a short story)

President Willard swiveled in his new chair in the Oval Office, obviously enjoying the well-lubricated mechanism of the seat of power. The telephone on his desk buzzed. He stared at it quizzically for a moment, sat the cup in his hand down on the desk and then shouted in the general direction of the phone, “Yes?”

“The Vice-President to see you, sir,” the female voice on the intercom announced.

“Send him in,” the President replied.

“Paul, come in. Sit down. Beautiful day, isn't it?”

“Very nice, sir. Much warmer than Wisconsin this time of year. Had to get past a pretty colorful group of protesters at the White House gates though.”

“Colorful? Were they minority groups?”

“No, sir,” the VP chuckled. “It was Big Bird and some of the other Muppets from Sesame Street.”

“Oh, you mean because I cut funding to PBS? I told Lehrer that I was going to do that. Shouldn't have been a big surprise. Besides, PBS actually educates people, and we can’t afford too much of that, can we Paul?”

“No sir, we don’t really want a well-informed electorate. Could spell the doom of our party. So anyway, how was your weekend, sir?”

“Just splendid. The boys are still in town, and we all went to church together. The bishop told us that we doubled the size of his normal choir. How about you Paul? Did you manage to find a nice service for your family?”

“I didn't go to church sir.”

“Really?” the President looked surprised. “Aren't you a Catholic?”

“Only during the election season sir. I’m really a follower of ‘Objectivism’. We don’t have regular meetings.”

“Objectivism? What’s that?”

“It’s a philosophy developed by Ayn Rand. It’s based on ‘rational selfishness’.”

“And they say Mormonism is a cult,” Willard muttered under his breath. “You know, I've been thinking about finding jobs in the government for my boys. Think we could do that? I’m a firm believer in public service, you know.”

“All of your boys, sir? We might have to expand the government to do that,” Paul chuckled nervously.

“Well that shouldn't be a problem, should it? All of the Presidents do it, don’t they?”

“Well…you did campaign on the concept of reducing the size of government, sir.”

“Oh fiddlesticks!” Willard chortled. “Every President breaks campaign promises. The people expect it.”

“If you say so sir…”

“Can I get you a cup of this stuff?” he asked his visitor, holding up his own cup. “It’s really amazing. I feel energized when I drink it. They tell me the White House would cease to function entirely if we didn't serve gallons of it every day.”

“Yes sir, it’s called coffee,” Paul replied. “It’s quite popular.”

“Never had the stuff before. Help yourself,” Willard gestured to the sterling silver coffee service on the table in front of his desk. The Vice-President poured himself a cup, and then topped-off his boss’s cup as well. “Have you seen my desk? They tell me it used to be a boat at one time.”

“Yes sir, it’s called ‘The Resolute Desk’. President Kennedy made it very popular when they took photos of his children playing under it.”

“Kennedy, huh?” Willard scoffed. “Wasn't he an adulterer and a Democrat?”

“I believe that is true sir.”

“I was never unfaithful to Ann, you know.”

“Can’t imagine you ever had the time sir.”

“Maybe I’ll get rid of this desk. I can do that can’t I?”

The Vice-President nodded in agreement. “I’m pretty sure you’re allowed to redecorate anyway you want, sir.”

“Maybe I’ll get something sleek and modern. I sure don’t need all these drawers. Can’t imagine I’ll need to store much of anything. Except for this,” he added, holding up the ‘veto’ stamp. “I’m going to keep this close at hand, just in case those pesky legislators manage to pass something that wasn't approved.” Willard looked mysteriously skyward, as if at some unseen power.

“Well, that really hasn't been a problem so far, sir.” Paul smiled. “They've done everything we've asked for so far. Repealed Obamacare, tax cuts for the super-rich, a hike in taxes for the middle class, a huge increase in defense spending. We've got everything in place to privatize Medicare and Social Security. It’s been quite a successful honeymoon period for you sir. Now we’re ready to put the rest of your programs into place.”

The President stared back blankly at his visitor. “What programs are those, Paul?”

“You know, sir. Like Romneycare, your own version of a national healthcare system.”

The President looked around and lowered his voice, as if his every word and action were monitored by an unseen force. “That was never…approved, Paul. I just said that to get elected.” He then spoke up, smiling. “I said lots of things during the campaign that I didn't really mean. Don’t even remember most of them.” The Vice-President’s eyes widened in disbelief. The President’s intercom buzzed again. “Yes?” he shouted back at it.

“The Secretary of Defense and the National Security Advisor are here to see you, sir.”

“Send them in.” Two conservatively dressed gentlemen entered the Oval Office, and were offered coffee by the Vice-President. Both declined.

“I’m afraid we’re facing some fallout over the Iran situation, sir,” SecDef began.

“Fallout? What do you mean?” the President replied.

“Well, sir,” SecDef continued, “most of the world is a bit upset about us using nuclear weapons against Iran, without warning and all.”

“We didn't nuke Iran,” Willard protested. “That was the Israelis.”

“But we used our planes, sir,” the NSA added, “and our bombs.”

Willard’s eyes sneakily swept the room before returning his gaze to his new visitors. He then whispered: “But they were stealth bombers.”

“Yes sir,” SecDef rolled his eyes. “But apparently an Iranian spy saw them land in Tel Aviv before the mission.”

“Spies?” the President seemed perplexed.

“Yes sir,” his NSA added, then explained, “seems the Middle East is full of them. Fairly ubiquitous in fact.”

“Then there’s also the matter of the actual fallout sir. It seems that a vast cloud of radioactive material is now sweeping across India and heading directly toward China. I've heard that they’re both pretty pissed-off at us right now,” SecDef added.

“India and China?” the President mused. “What do they matter to us?”

The Defense Secretary and National Security Advisor exchanged a worried glance, and then the NSA spoke up. “Their combined population is about 2.6 billion people sir. That’s almost one-third of the world’s population.”

“Oh,” the President answered, still unsure of the consequences. Just then his intercom buzzed again. “Yes?” he shouted toward the device.

“The Secretary of the Treasury is here to see you, sir.”

“Send him in,” the President replied wearily.

“Sir, I’m afraid we've got big troubles,” SecTreas began without the usual pleasantries. “The capital markets are collapsing. The Dow lost half of its value already, including all of last week’s big increase. I've already ordered all of the exchanges closed until further notice. I’m afraid the bubble burst a bit prematurely. Oh, and I just heard that China is demanding that we repay all of our debt to them immediately.”

“Oh no,” Willard moaned, “that will wipe us out.”

“Not really sir,” SecTreas explained. “The Chinese hold only about 8% of our total debt. That’s really the least of our problems right now. It will increase our borrowing costs a bit, if we can still borrow from anyone, that is. We may actually have to default on our debt obligations. Seems most of the rest of the world doesn't want to do business with us right now.”

“Eight percent? So that was true then. I thought the Democrats just made that up. You know, like most of the figures I used during the campaign.” The President’s intercom buzzed again. “Yes, what is it?” he screamed at the device.

“Your personal financial advisor is here to see you sir.” The woman’s voice responded wearily.

“By all means, send him right in,” Willard beamed.

“Sir,” the Vice-President interrupted. “Do you really think that’s wise? We seem to be dealing with important matters of national security right now. Besides, I thought all of your personal wealth was held by blind trusts.”

“Well yes, Paul, they are held in blind trust,” the President explained. “But I’m not looking at my money, am I? Just discussing it. The trusts are blind, not deaf and dumb.” Willard acknowledged the bespectacled newcomer to the room, and offered him a cup of coffee, which he declined. “What have you got for me, Smithers?”

The accountant glanced around the room, recognizing the powerful men standing next to him, and gulped before beginning. “Well sir…um…we’re in a bit of a fix right now it seems…um…the banks sir…the off-shore banks…in the Caymans, and Ireland? Well…it seems they've nationalized the holdings of all American investors.”

“What?” Willard exploded, “even mine?”

“Especially yours, sir. Seems they’re blaming you for the new worldwide financial collapse.”

“Worldwide financial collapse? When the hell did that start?”

The accountant checked his watch before replying. “About thirty minutes ago, sir.”

“What about Switzerland? Certainly the Swiss didn't nationalize my accounts. They do business with everyone.”

“That’s right sir. Those funds are safe. Your Swiss bankers noticed a small uptick in the U.S. Treasury Bond futures market last night and put all of your money in good old, safe T-Bills.” The accounted smiled for a moment, until he observed the stricken look on the President’s now ashen face.

“But we’re about to default on all of our debt obligations you idiot! I’ll be completely broke!”

“Oh…that is bad news. Perhaps you’ll excuse me for a moment, sir? I've got some other calls to make. I need to switch some of my really rich clients into gold futures.”

As the accountant beat a hasty retreat through the door of the Oval Office, with his cell phone at his ear, the President’s intercom announced the arrival of the Secretary of State, who entered the office before waiting for the boss’s OK.

“Ah, I’m glad I've found you all here,” SecState observed. “Paul, the helicopter’s outside ready to take you to your secure location in West Virginia. Everyone else come with me, we've got to get to the underground bunker right now. Seems the missiles are in the air and we’re under attack.”

“Do you have any orders for us, sir?” SecDef asked.

Willard appeared shell-shocked, blinked twice, then responded: “I don’t know. Just do whatever it is you normally do.” In the hall, as he headed for the elevator surrounded by his Secret Service detail, he heard the  alarms going off. Then he realized that they sounded exactly like his alarm clock.

Willard opened his eyes, and feeling the 1000 thread count Egyptian cotton sheet beneath him, rolled over to face his wife.

"Good morning, dear," her smile was bittersweet. "Did you sleep well dear? You seemed to be moaning right before your alarm went off. Are you alright?"

"Fine dear, just fine...the election...I didn't...?" he remained a bit groggy, having gone to bed much later than he was accustomed.

"No dear...Don't you remember?"

"Yes...of course. Just a bad dream is all...Ann, we're still rich aren't we?"

"Yes dear, as far as I know. We have more this morning than we did last night. Just like every morning."

"Good."

Note to readers: Willard's Second Week is a work of fiction. Names, characters, places, and incidents either are the product of the author’s imagination or are used fictitiously. Any similarity of the characters to persons alive or dead, events, or locales is purely coincidental, and not intended. 

Consequences

As soon as we are old enough, we are taught to discern the difference between “right” and “wrong”. Since humans are in reality only sophisticated mammals, it is necessary to establish boundaries of decent behavior in order for society to function smoothly. Otherwise we might revert to our basest animal instincts, and then all hell would break loose.

There are various methods used to establish what behaviors are acceptable in our culture, and what is taboo. As small children, it was once enough for us to know that bad behavior would be promptly punished, usually with a quick whack, so our primary point of reference was whatever our parents or other adult authority figures told us constituted good or bad. The primary lesson was that doing something that was unacceptable resulted in swift and sure punishment. As our society has become more enlightened (although many might argue that it does not really represent progress), this has changed to the concept of rewarding good behavior, and discouraging bad behavior. We have been introduced to the concept that our actions have consequences, and should behave accordingly.

We also painfully learn that not all consequences in our young lives are enforced through adult authority. Jumping off of the garage roof can swiftly and painfully lead to a broken arm or leg. Riding a bicycle too fast down a steep hill can result in scrapes, bruises, a destroyed bicycle, or worse. Thus we learn that we must pay careful attention to the physical laws of nature as well as the metaphysical laws imposed by our parents. An additional layer is imposed in the metaphysical realm as well. Philosophy, generally in the form of religion, is usually added to the mix.

Right and wrong, and the consequences of improper behavior, attain a whole new level of punishment under the laws imposed by religion. A bad Christian will suffer the damnation of hell’s fire. A bad Buddhist could be reincarnated as a bug. Morality is imposed in the most theoretical of universes, but apparently is not enough. At the same time that we are taught the moral aspects of society, we are made aware of legal limits to our actions: the laws imposed by the state. Punishment for violation of the laws of man range from monetary fines, through involuntary incarceration, to the ultimate forfeiture, loss of life.

At some point in our maturation process, many of us open our eyes to see the world as it really exists. It is not a pretty picture for the most part. Some of us choose to remain ethical human beings, content to do what is right and behave with civility toward our fellow beings. Some perceive, perhaps correctly, that society actually rewards those who do injury to others.

When we think of Eli Whitney, the inventor of the cotton gin, we think of a man whose advancement of technology freed people from a difficult and time-consuming task. The actual result of this laborsaving device was to make upland short cotton into a profitable
crop, which strengthened the economic foundation of slavery in the United States. The mass production of the automobile put many wagon manufacturers out of business, however, many companies simply joined the transformation to the new technology and displaced workers found ready employment in the new industries. The innovators were rewarded and society overlooked the short-term consequences for the greater good. In this case, the rewards for innovation were justified. Modern innovators have also been rewarded by society. The advances in computer technology have increased productivity in the business world and the innovators have been correctly rewarded despite a dislocation of some workers. Progress appears to be the most important god in our culture.

Recent history has provided new examples of behaviors that are rewarded despite adverse economic consequences. The masters of the leveraged buyout gain great personal financial rewards while leaving economic misery in their wake in the form of displaced workers and ruined companies. I’m not talking about corset makers or buggy whip manufacturers, but viable firms whose only problem was being at the right place at the wrong time. The wizards of Wall Street finagle laws and capital markets, skirting regulation or having it eliminated entirely through political lobbying (what used to be referred to simply as bribery). In the process they may reduce the value of the life savings entrusted to them by gullible investors, but their own rewards are enormous.

Thus it is that we learn the morality of the rich. Anything that increases their personal wealth is good. Too bad if others get hurt in the process. I may not be considered a good Christian or an ethical Buddhist by my society, but I try to remain a morally civilized human being, and such behavior by the rich bothers me greatly. I have been personally wronged by a wealthy individual who has suffered no adverse financial setbacks while I have suffered greatly. There may be other, less tangible consequences to his behavior but superficial observation of his current status reveals that he has been richly rewarded for taking advantage of others and myself.

Obviously, morality and religion have failed to protect us from the all-powerful human desire for more. The laws that we have implemented to protect our personal interests are no longer effective or enforceable. The wealthy scream that if we would only unshackle them from ruinous regulations they would be able to grow our economy more efficiently, providing new employment opportunities for the little guy, the working poor and our rapidly vanishing middle class. I think their position is utter nonsense and ask if you, kind reader, believe that they really have the best interests of their country, or humankind as a whole, in mind when they make these statements?

While we may not need more regulations, we certainly do not need less. We need to adjust the consequences of violation so that they are no longer taken lightly. Corporations are known to regularly violate environmental and financial regulations. If they are caught, they typically face a fine. Such fines, sometimes representing only a minor fraction of their net income, are regarded simply as a cost of doing business. Just as the legal prohibition against suicide rarely has any meaningful consequence to the successful violator, monetary fines levied against the corporation have no impact on those who decided to violate regulations. Like the child of old that faced a whipping if caught stealing, we need to put some teeth into the consequences of violating economic regulations. Fines should have a significant impact on the personal fortunes of the decision-makers. Tear aside the veil of protection offered by the corporation and punish the individuals responsible. Let us devise new laws that prevent the looting of companies for personal gain, eliminating the adverse consequences of the leveraged buyout.

All great societies in history have reached a zenith and then declined. If that is your vision for the future of our country then elect to office those who would maintain the status quo and increase the advantages that the immoral usurpers currently enjoy. Personally, I have a grander vision of the type of country we should have. We need to tell our elected officials what is expected of them when we vote them into office, and what the consequences will be if they fail. Remember that failure on their part may only cost them an elected position, but the cost to our nation will be too terrible to contemplate.

“It has always seemed strange to me... the things we admire in men, kindness and generosity, openness, honesty, understanding and feeling, are the concomitants of failure in our system. And those traits we detest, sharpness, greed, acquisitiveness, meanness, egotism and self-interest, are the traits of success. And while men admire the quality of the first they love the produce of the second.”

 -John Steinbeck

“Anyway, no drug, not even alcohol, causes the fundamental ills of society. If we're looking for the source of our troubles, we shouldn't test people for drugs, we should test them for stupidity, ignorance, greed and love of power.” 

 -P.J. O’Rourke

Censorship and Man's Best Friend

A friend of mine asked me to sign a petition to remove a page called “I Hate Dogs” from Facebook. Now the person that made the request is someone that I have known for decades, although we don’t really socialize much anymore. In fact, I haven’t seen her for years, although if she were to call to ask a favor that was in my power to grant, I would most likely do it. I’m a firm believer in the Golden Rule, and also in old friends. I also like dogs, although I don’t have one right now, and don’t really understand how anyone could possibly hate a dog. They mostly just want to please us.

But I just couldn't bring myself to sign the petition. For one thing, I doubt if it would work. Considering the plunge in the value of Facebook’s stock, I don’t think they can afford to get rid of anyone at this point, even if the group in question espouses an asinine philosophy involving hatred of a species that is commonly known as “Man’s Best Friend”. In the spirit of fair play, I went to the page in question. I didn't spend too much time there; most posts included a variety of misspellings, bad grammar, and basic mental vomitus. But the sad truth is this: you have the right to be an idiot in this country (indeed, viewing the slate of people vying for political office in our fair land, it may even be a prerequisite). Furthermore, I support your right to idiocy wholeheartedly.

Not that I wish it weren't so. Imagine what a fabulous world this would be if all of its inhabitants shared my views of fair play, equality, justice and pursuit of the truth! However, I know for a fact that there are people who do not share my views (heretics and fools to be sure, but they do exist and their numbers are large). If their aim is to remove me, or remove my voice from the general conversation, rest assured that I would fight them to my last breath. But they have the same right to their opinion as I have to mine. The one thing that I cannot support is censorship.

Ay, there’s the rub, as The Bard of Avon would say. There’s a whole lot of people that I wish would just shut-the-f**k-up. Take my district’s current U.S. Congressman for example. I just watched his ad on TV where he speaks of being a cancer survivor, and how it’s personal for him to see that all Americans with cancer are treated. Yet he has also said that he wants to repeal the Affordable Care Act, which might just be the only way that millions of Americans have a ghost of a chance to receive needed treatment. I’ll tell you what’s personal, dude. My brother, who worked for years as a self-employed paint contractor and couldn't afford health insurance, died from cancer a little over four years ago. That’s personal you moron! Not that I’m bitter about it or anything. But my Congressman (who has much better health insurance than almost everyone else) has the right to spew nonsense across the airwaves, just as I have the right to do my best to make sure that he is no longer my Congressman next year.

In fact, politicians have more opportunity than ever to spew whatever they think (or at least what they think will get them elected) thanks to the Supreme Court ruling in the Citizens United v. FEC case that says anonymous money is free speech. I tend to think that free speech is one thing and well-funded propaganda is something else entirely. But where is the line drawn? Who should be able to make the call? The Supreme Court has clearly demonstrated that it is no longer an impartial body of jurists, but has been undermined by political philosophy. In reality it has always been swayed by the underlying beliefs of the nine justices since they must, by necessity, interpret the Constitution, deciding how new laws and situations fit into that cherished document’s guidelines. It is clear to me that one of our President’s most important jobs is making appointments to the Supreme Court. Therefore it is extremely important to choose the person that will make the best choices possible, since it is typical for Supreme Court justices to far outlast the President that appointed them.

Our system of government is becoming an increasingly polarized institution that appears to have forgotten that they are elected to serve the people of our country. Unfortunately, our citizens include groups of illiterate dog-haters as well as billionaires that favor tax cuts for the extremely wealthy, even if it shatters the economy in the process. Our citizenry also includes millions of kind, thoughtful people, but we don’t hear much from them. That’s too bad, because it’s this group that needs to express itself more forcefully.

Maybe we should start a new political party. Call it the Dog Party, designed to serve the needs of those whose hearts are big enough to provide care and comfort for our canine companions. But we’d probably need another name for it, since these folks should be kind enough to see the need to include cat owners as well. Of course we can’t forget tropical fish…and ferrets…hamsters…ah hell, it’s tough to please everyone.

“The better I get to know men, the more I find myself loving dogs.” 

―Charles de Gaulle

Paying Our Best and Brightest

E. Gordon Gee, the energetic, 68-year old, bow-tie-wearing president of The Ohio State University was the subject of a news article in today’s paper. The story seemed to be critical of Gee’s lavish spending for travel and entertaining over the past five years, and made comments about “his” 9,600 square foot mansion. I’ve been critical in the past regarding excessive compensation for America’s Chief Executive Officers, and being president of a major university is very similar to running a large corporation. Since I’m an OSU graduate, the article caught my attention and caused a wince of shame. We think of academics being more like the impoverished Mr. Chips than the wealthy Daddy Warbucks.

However, my finance degrees from OSU gave me a strong foundation in analyzing the underlying numbers, which I did. The paper reported that Gee’s compensation was $8.6 million, but buried the fact that it was over a five-year period, so he earned an average of $1.72 million per year in salary and benefits. He had travel and entertaining expenses of $7.7 million over the same period, so $1.54 million per year. During a 38-month period approximately $895,000 was spent entertaining guests at the residence, which numbered about 16,000 over a five-year period. As close as I can figure, that’s a little over $88 per guest. Gee’s 9,600 square foot residence is not really “his”, it belongs to The Ohio State University Foundation, and was donated by a local resident. The foundation is not funded by taxpayers, but with private donations.

During the five-year period, the popular university president presided over an increase in the university’s endowment of $2.6 billion dollars. In other words, for every dollar spent by Gee, he brought in almost $160. Too bad my stock portfolio never achieved that kind of gain. It doesn’t really seem like Gee has been terribly over-compensated.

Compare that with the performance of the CEO of Home Depot in 2006. Over a five year term he had been paid $123.7 million, excluding stock options, or almost $25 million per year. During that period, Home Depot’s stock price decreased by 10%. When he was finally ousted, he left with a wonderful "golden parachute" whereas the company was left with a financial mess. Last year, the Bureau of Labor Statistics reported that median CEO pay had increased 27%, while median worker’s overall pay increased only 2.1%. The rich are truly getting richer, while the rest of us are getting screwed.

A story produced by ABC News last year showed 26 CEOs received more in compensation than the company paid in income taxes, and added that tax breaks that contribute to excessive executive pay cost taxpayers $14.4 billion annually.

How can we change this? There is already a limit of $1,000,000 on executive pay that can be deducted for tax purposes. Companies have already circumvented this problem by compensating executives with stock options, allowing them to purchase stock in the future at below market prices. Even if they mess-up the company, they can still profit.

Famous management consultant/economist/professor Peter Drucker said that CEO pay should be no more than 20 times the rate of worker’s compensation. Higher CEO pay tends to erode worker morale and productivity. The CEO of the company that I work for made well over 350 times what I’ll make this year, and there’s lots of people in the company that earn less than I do. Incidentally, the morale at our company really sucks.

Again I ask, how do we remedy this situation? It is argued that CEOs must have large compensation packages in order to bring in the “best and brightest”, executive compensation is a market-based figure, and “the market” always knows best. Obviously, companies like Home Depot in the situation described above were not correctly gauging the market. I’ve always wondered what the effect on such things would be if corporate income taxes were eliminated entirely.

The argument is that corporate income taxes are simply another cost passed along to consumers. One way or another, we end up paying the tax. The ability of corporate accountants to play the system and allow CEOs to be paid more than the company pays in taxes is already documented. If all business decisions were made based on the immediate impact on the bottom-line profits, instead of being based on an after-tax basis, would the decisions change? I don’t know, but I think they might. There are a whole lot of other effects to consider, and major changes to individual income tax laws would have to be made in order to compensate for the loss of corporate taxes. Corporate income taxes remain popular with the government simply because they’re easier to collect than personal income taxes. But large companies are playing games with accounting to escape paying significant taxes anyway.

I would love to hear your take on the matter. Leave a comment. The issue is complex, but any idea could have merit. Should we continue to allow our country to morph into an oligarchy, where the richest rule over all, or should we implement laws to return power to the electorate? It is no longer an issue of the merits of capitalism over collectivism; I’m still a firm believer in capitalism. It’s really a matter of civilization over…I don’t even want to imagine the eventual alternative.

“ When a man tells you he got rich through hard work, ask him: Whose? ”

— Don Marquis

   

E. Gordon Gee

President, The Ohio State University

Civilization and Government Housing

United States Congressman Paul Ryan spoke out today in defense of his running mate’s earlier comments, which had not been well received by…well, apparently no one liked them, not even the guy that said them. Romney, upon reviewing his remarks, didn’t really like what he had said, primarily because he angered almost half of American voters. No doubt one of his strategists told him that he would need to get more than 50% of the votes in order to win. Pity that you can’t simply buy this one, isn’t it?

Ryan stated that “…what we’re trying to achieve is getting people off of government dependency and back to a job that pays well and gets them onto a path of prosperity.” Then he added “We have too many people becoming too dependent upon government because of the poor economic policies of the Obama administration.” Perhaps the young man needs to glance at his own resume. Too many people are dependent on government? Like…um…a certain U.S. Congressman who would like to get promoted to Vice-President? Dude, it’s a government job. Taxpayers pay your salary, provide you with the best health care insurance available, much better than most plans available to the millions of Americans that you would like to have vote for you (so that you can spearhead the drive to deny an inferior level of health care coverage to them), and offers a host of other perquisites. If you get elected to the job of Vice-President, it includes some pretty swanky government housing as well.

What was totally ignored in Ryan’s remarks is that our current President has been trying to put more Americans back to work in the private sector (through his proposed jobs bill), and has been trying to do so for some time now. The problem is that the opposition party has been blocking his initiative in the U.S. Senate, in order to make him look weak. What nonsense, what hypocrisy, what lies are these idiots willing to spew in order to attract the votes of other fools? If you guys want real change, use real facts to support your position because the BS ain’t flyin’.

Ryan went on to say “President Obama said that he believes in redistribution, Mitt Romney and I are not running to redistribute the wealth, Mitt Romney and I are running to help Americans create wealth.”

Well, first things first, as my old Economics professor used to say. The redistribution of wealth through the use of a progressive income tax has been considered a very sound and equitable arrangement for many years. By the way, it is called a "progressive income tax" not because it is favored by liberals, but because the percentage of tax paid increases slightly as one earns a higher income. Personally, I’ve never been opposed to paying a little more than someone else that couldn’t afford it as well as I could at the time. Call it a basic tenant of Judaism, Christianity or Islamic tradition, or call it good Karma, or just call it being civilized. It has always seemed to me to be the right thing to do. I’ve also had the great good fortune to have friends do the same for me in my time of need. A progressive income tax has been considered reasonable for many, many years. It isn’t socialism---it’s called civilization.

What kind of wealth are Romney and Ryan seeking to create? If history is any judge, they seek to enrich the few at the expense of normal, hard working Americans. Romney’s wealth is the result of money made through leveraged buy-outs (I was going to say earned, but he really didn’t earn it through hard work, or even spectacular insight, did he?) He figured out how to scam the system by borrowing heavily, and bankrupting frequently, that all too often left the company they acquired no longer productive.

We need an economically strong middle class and a healthy, functional economic climate. We don’t need people to screw-up functional enterprises. True, not every company deserves to survive. The first ones we need to get rid of are the ones that prey off of the misery of others. One such company is named Bain Capital and it was started by a guy who wants to be our next President. These guys already don’t pay as much tax (as a percentage of income) as a good secretary or a store manager, and yet they whine that they have to pay too much. Boo-freakin’-hoo. America’s top marginal tax rate is lower than it has been for many decades. That means that the very wealthy in this country pay lower taxes than their parents or grandparents ever did. I never heard my grandfather bitch about taxes.

Our country provides opportunity at unequal levels, and likely always will do so. The children of wealthy parents are far more likely to succeed at whatever they try than the offspring of poor parents, or at least have an easier time if they fail. Our system of taxing people who can afford to pay more has been considered fair for a long time. Why is there such a sudden need to change that? A civilized society considers it greedy to desire more than one really needs, especially if you have to hurt someone else to get it.


“Thus did a handful of rapacious citizens come to control all that was worth controlling in America. Thus was the savage and stupid and entirely inappropriate and unnecessary and humorless American class system created. Honest, industrious, peaceful citizens were classed as bloodsuckers, if they asked to be paid a living wage. And they saw that praise was reserved henceforth for those who devised means of getting paid enormously for committing crimes against which no laws had been passed. Thus the American dream turned belly up, turned green, bobbed to the scummy surface of cupidity unlimited, filled with gas, went bang in the noonday sun.” 
           –Kurt Vonnegut, Jr., God Bless You Mr. Rosewater: A Novel

One Observatory Circle

Official Residence of the U.S. Vice President