Thursday, 27 May 2010
Canada vs. USSR - Executive Compensation Edition
Good evening - I have not blogged in some weeks. Chalk it up to chaos and disorder in real life. It happens from time to time. Plus, it's summer. People want to party and go on vacation, not talk about the issues, right? Wrong. The media and the blogosphere are ablaze with controversy, anger, and hot issues (summits & oil spills, just to start) and the government at home's perpetual spin and the excuses-why-people-don't-care calendar it exploits to propound its dim, cynical vision for the country (xmas, olympics, spring, NHL playoffs, cottage, summer, back to school, repeat, we're focussed on the economy, you hate our troops, W E A R E R O B O T S who are not allowed to talk about anything else) seem finally to be wearing a little thin.
Rather than just rant and rave like I usually do, I am proposing a series this month that I conceived during my time off. Since our country (or at least, the politicians who represent it) seems to enjoy nothing more these days than giving lessons and talking-tos to other countries while actively encouraging the apathy and complacency of its own citizens to reach previously unforeseen heights, my series will focus on comparing Canada to some other countries it has parallels with (in my humble opinion). They may be a bit of a stretch for some but if you want to reinforce your preconceived notions, you could always go read the paper or watch CP24
This first one is a bit stale - from late May - but I have refurbished it
It's funny - I was pondering the title of this posting for a couple days when yesterday I find out the jersey that Paul Henderson was wearing when he scored the famous goal in the 1972 Summit Series is for sale. Not that I'd be buying; it seems like something that would only in the price range of a Russian oligarch. One of these guys like Roman Abramovitch whose main achievement, besides buying professional sports teams, sailing on aircraft carrier-style yachts off the Côte d'Azur, and dating much dumber and younger trophies, is having been in the right place at the right time. The place was Russia and the time was the early nineties. And in the frenzied chaos of the aftermath of communism, many of the country's enormous assets were sold to guys smart enough to be in the loop and capitalist under the soviet economy at bargain basement prices. When the dust had settled, something like 90% of the country's wealth was in the hands of 40 guys.
Why bring this up now? Well, things have just fallen into place. Last week in my facebook status, I mocked the Canadian government's crusade against the global bank tax. They argued against it, saying the "Canadian" approach worked best. And the Canadian approach is, well, an impenetrable oligarchy whose distinction from the government can become, well, fuzzy. And somebody I know, whose challenge I appreciated and whose opinions were thought out and well articulated, said to me regarding my comment that Canada had changed into the USSR. I said, what do you mean? He said CEOs were economically productive in the grand scheme of things and people should turn their populist anger on Lebron James and Brangelina's salaries instead. Not a bad point about the double standard, but then this bomb comes out. There it is, people. The top 10, the top 100, sliced, diced, and chronicled for your amusement by the Globe and Mail, who in my opinion have done the public an excellent with this very thorough executive compensation series.
There are people making absurd amounts of money in this country. Not, for the most part, Russian Oligarch levels of absurd, but far bypassing any human being's talent. The argument is always that they need to be compensated for their "top talent", whether its with public money or publicly traded money. Sure, they're salaries are always some pithy amount like a million dollars but add stock options and golden handshakes and the rest and these people make tens of millions, often on the way to billions. And this, I'm told, is the only thing that works. 40,000 years of human existence, but this is the way that it's always been.
So what I'm to understand is, fifty to a hundred white guys (no, there's maybe 1 brown guy, 1 chinese guy and 1 white woman now to show "diversity", we've come so far with that glass ceiling thing) are responsible for orchestrating all of it. The whole kit and kaboodle. The massive, building crescendo of Canadian consumer and real estate debt (big five banks), plundering resources from remote areas in Canada and in some of the poorest countries in the world where there are few to no white people (Toronto & Vancouver based, TSX listed resource companies), perpetuating telecom and media monopolies who inspire the national past time of bitching about them yet manage to keep acquiring and consolidating (Bell and Rogers and friends), and the cozy consumer staples - agribusiness (Metro, Loblaws, Sobeys) sector who sell the 99.9% of the populace that doesn't shop at Whole Foods and Pusateri's their grub.
In Russia, big, bad evil corrupt Russia, these sectors are all cornered by 1 monopoly each. In Canada we have 2 or 3 giants who pretend to be in competition with each other. In Russia, the political boss controls all of what get's said and authorizes the monopolies, talks to them regularly and probably has quite a heavy hand in running them. All very behind the scenes and unspoken, of course. In Canada the monopolies are also authorized, and talk to government regularly and receive government's authorization to keep doing what they're doing. That's why the federal finance minister asks the CEO of the biggest insurance company to go on a cross country tour (presumably to chat up some initiatives of his) and the biggest province's budget is now created by TD Bank, to name two examples. In both countries part of the population believes a ruthless small-man control freak leader is directly responsible for their perceived economic well being and to hear them tell it, stays up half the night worrying about it. And both countries have big, industrial, belching black resource extraction open pits (asbestos in the Urals + tar sands) way up their where nobody can see them or take any responsibility for them. Other than the monopolistic-oligarch interests which control them. This is changing, in this country.
The corporate culture of Russia has not, could not have been expected to, shed the baggage of control plan economics after only 25 years of "capitalism". And while our small business owners do not have to pay bribes to burly guys in black t-shirts named Vitaly, we suffer the same problems of too weak of a tax base that has been further weakened by cheap political posturing. Read this rap on the cost and headache of doing business in America, so-called world capital of capitalism and "champion of small government". The U.S. government gave out more money in the first three months of 2010 than any other time in its history. We are not far behind. This "small, reform" government hands out goodies and entitlements like nobody's business. And when talk moves to hitting up the monopolies for some of what they take from us (which is everything), who rises quickest to their defence? The government.
I'm reading Jane Jacobs The Nature of Economies right now and she talks about how an economy is successful, even though none of it is accounted for, when it follows the intricacies of something like the human body or nature. Adam Smith, capitalism's founder, understood that in 1760. But unfortunately, his ideas have had the very monopoly he warned against on the modus operandi of the market for 350 years, and a perverse version of it is killing different societies in different languages. Two of these societies are called Canada and Russia. Where a tiny kleptocracy continues sapping the population of the fruits of its innovation and productivity in the name of "growth" and "management".
Posted by Christopher Lackey at 21:17