A new way of doing business
I“We can’t solve problems by using the same kind of thinking we used when we created them.” — Albert Einstein.
t’s a message everyone has to take seriously including businesses, governments and average families. In Canada and around the world, working class people are mired in stress, wondering how the deepening economic crisis will impact their lives.
Many are wondering “Will I have a job tomorrow?” or thinking “I am 50 years old and worked in this particular industry all my life; can I find another job at my age?”
Over the past few months hundreds of thousands of workers faced the reality of those questions as they were handed a layoff notice. Now they face other questions, “How will I pay my mortgage? How will I put food on the table?”
Canadian unemployment numbers are far worse than expected. In mid-March Prime Minister Stephen Harper admitted he expects the unemployment rate to rise above where it stands at 7.7 per cent, the highest since September, 2003.
In February, 82,000 Canadians were sent to the unemployment line. What’s worse is those numbers are on top of the 129,000 jobs lost in January. Since Octo- ber , approximately 295,000 Canadians lost their job and south of the border approximately 12.5 million Americans are out of work.
Now some economists suggest the current recession could be a much longer and deeper affair than expected. Where will it end? That is a billion dollar question.
And out of all of this economic uncertainty comes news out of the United States that has left people across the globe enraged.
In the midst of the worst economic crisis since the Great Depression AIG (American International Group) is paying out $165 million in bonuses to some of the very executives who plunged the company into red ink in the first place. This is the same company that has gobbled up $170 billion in bailout money from the American government.
Greedy, unethical, reckless, deplorable. Whatever you call it, it is exactly this kind of self-serving corporate thinking which plunged the United States into this economic crisis; the very economic crisis which precipitated a global recession.
Rest assured, AIG is not the only company rewarding its executives with exorbitant bonuses, even when those same companies are losing money hand over fist.
You only need look at Wall Street which paid out $18.6 billion in bonuses last year. Most of those bonuses were paid out by the same companies asking the American government for a bailout.
And it’s not just a U.S. problem. In Australia, Pacific Brands was handed a cool $15 million assistance package from that country’s government only to grant $7 million in salary increases to board members and senior executives who then proceeded to ship 2000 jobs overseas. How’s that for a slap in the face?
Apparently the more money a company loses, the better the bonus for executives.
Last year Merrill Lynch boss Stan O’Neal retired, taking a final paycheck of $161 million. That’s right after the company announced $8 billion in losses.
The head of Citigroup, Chuck Prince, in 2008 received a farewell package amounting to $38 million in bonuses, shares and options. That was, again, right after the company was forced to make multibillion-dollar writedowns.
Across the Atlantic in Britain, Barclays president Bob Diamond took home a salary of £250,000 last year; his total pay, including bonuses, reached a whopping £36 million.
Any company handing out this kind of bonus has absolutely no right to be looking to government for a bailout. And governments shouldn’t even entertain the thought of giving them one red cent of taxpayers’ money.
Is this kind of abuse hap- pening in Canada? It’s likely a case of none of them have been caught yet.
It’s fine to live in a free enterprise system but the underlying rule has to be fiscal responsibility and accountability. Before any company receives financial assistance there has to be a detailed plan in place and that plan had better not include executive bonuses.
A better idea would be for government to get out of the business of supporting and, in fact, rewarding corporate greed with bailout money.
The economy has to be allowed to correct itself without billions in taxpayers’ money doing nothing but bolstering executive lifestyles.
Compare it to a frost bitten foot that has developed gangrene. You do what you can to save the foot but there comes a point where you have to sacrifice the foot to save the body.
The same applies to the economy. These troubled corporations are like that rotting foot; if they can’t manage themselves financially and stay alive, it’s time to sever all ties.
Government has thrown away far too much money in stimulation and recovery packages. As yet it has stimulated little and the economy is still heading into an even steeper nose dive. It’s simply a bailout that went bust.
Government meddling into economic affairs has solved nothing. In fact it has likely done more harm than good.
It can be summed up by saying, “If you always do what you always did, you will always get what you always got.”
— By Kirk Squires, a freelance writer living in Shoal Harbour.