Responsibility #60

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0><tr> <td valign="top" colspan=2 height=110 BGCOLOR="#666699" TEXT="#080000" bgproperties="fixed" background="04900840erlcjm.png"> <div> <FONT SIZE="5" COLOR="#FFFFFF" FACE="Arial" ><B>NATIONAL SECURITY--Structural,Moral,Economic,Domestic,International</B></FONT><B>     |     </B><A HREF="index.htm" TARGET="_top" TITLE="NATIONAL SECURITYStructural,Moral,Econom"><U><B>home</B></U></A></div> <div> <A HREF="id33.htm" TARGET="_top" TITLE="Responsibility Contents"><U>Responsibility Contents</U></A>   |   <A HREF="id34.htm" TARGET="_top" TITLE="Responsibility 1"><U>Responsibility #1</U></A>   |   <A HREF="id35.htm" TARGET="_top" TITLE="Responsibility 2"><U>Responsibility #2</U></A>   |   <A HREF="id36.htm" TARGET="_top" TITLE="Responsibility 3"><U>Responsibility #3</U></A>   |   <A HREF="id37.htm" TARGET="_top" TITLE="Responsibility 4"><U>Responsibility #4</U></A>   |   <A HREF="id38.htm" 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et al,"><U>Health Care Letters to President, et al, 8/24/94</U></A>   |   <A HREF="id123.htm" TARGET="_top" TITLE="Arguments for Delay in Enactment of a He"><U>Arguments for Delay in Enactment of a Health Care Bill</U></A>   |   <A HREF="id124.htm" TARGET="_top" TITLE="Post WORLD WAR IIPost COLD WAR Deja Vu"><U>Post WORLD WAR II--Post COLD WAR Deja Vu</U></A>   |   <A HREF="id125.htm" TARGET="_top" TITLE="Responsibility 89"><U>Responsibility #89</U></A>   |   <A HREF="id126.htm" TARGET="_top" TITLE="Responsibility 90"><U>Responsibility #90</U></A>   |   <A HREF="id127.htm" TARGET="_top" TITLE="Responsibility 91"><U>Responsibility #91</U></A>   |   <A HREF="id128.htm" TARGET="_top" TITLE="Responsibility 92"><U>Responsibility #92</U></A>   |   <A HREF="id129.htm" TARGET="_top" TITLE="Responsibility 93"><U>Responsibility #93</U></A>   |   <A HREF="id130.htm" TARGET="_top" TITLE="Responsibility 94"><U>Responsibility #94</U></A>   |   <A HREF="id131.htm" TARGET="_top" TITLE="Responsibility 95"><U>Responsibility #95</U></A>   |   <A HREF="id132.htm" TARGET="_top" TITLE="Responsibility 96"><U>Responsibility #96</U></A>   |   <A HREF="id133.htm" TARGET="_top" TITLE="Responsibility 97"><U>Responsibility #97</U></A>   |   <A HREF="id134.htm" TARGET="_top" TITLE="Responsibility 98"><U>Responsibility #98</U></A>   |   <A HREF="id135.htm" TARGET="_top" TITLE="The Structure of Our Nation is Unsound"><U>The Structure of Our Nation is Unsound</U></A>   |   <A HREF="id136.htm" TARGET="_top" TITLE="Ltr. to Editor, 3/19/96, Property Taxes "><U>Ltr. to Editor, 3/19/96, Property Taxes and Education Funding</U></A></div> <div> </div> </td> </tr><tr> <td valign="top" width=190 BGCOLOR="#CCCCFF" TEXT="#080000" background="04311c00egdysm.png"> <bR> </td> <td valign="top" height=370 BGCOLOR="#FFFFFF" TEXT="#080000"> <div> Responsibility #60</div> <div> (written prior to July 1992)</div> <bR> <div> To the People of the United States of America:</div> <bR> <div>      The last paper was closed with the statement: It is also high time that changes be made in how companies are directed, so as to provide internal checks and balances, that will assure major decisions reflect the health and welfare of employees and lenders, as well as top level managers and shareholders.</div> <bR> <div>      The abuses and usurpations, in pursuit of government through money and power, is matched by the scandalous performance in corporate America, to gain money and power in the 1980s and 1990s.  Generations ago America had Presidents and Congresses, who had the will and the morality, to slap down Robber Barons and monopolies (et al), who were destructive of the general welfare. Now our elected and appointed officials standby, wringing their  hands, while they and their Democratic and Republican parties continue to stay in power through campaign contributions from these very scoundrels.</div> <div>      Every once in a while the nation loses sight of the reason for being of investment bankers, Wall Street, other securities markets, etc.; i. e., to facilitate the capitalization of businesses that provide jobs, products and services.  At that time the markets become the ends rather than the means.  The overriding objective is speculation resulting in the quick buck; to hell with concern for jobs, products and services.  That happened in the 1920s, which culminated in the Depression of the 1930s.  </div> <div>      The nation lost its vision again in the 1980s.  The epitome of this era of greed have been variously named "the new Robber Barons", "Corporate Raiders", and "Takeover Artists".  [The last appears particularly a misnomer since the pictures they bring forth are so ugly.]  The papers and a number of books have been filled with the gory details of the various corporation takeovers (or nearly as bad the residual effects of threatened takeovers that were averted).  </div> <div>      As a couple of examples, the reader is referred to: (1) "Barbarians At The Gate--The Fall of RJR Nabisco" by Bryan Burrough & John Helyar; and, (2) the sixth of an eight-day series entitled "The Endangered Middle Class", published in the Philadelphia Inquirer (reprinted in a number of other newspapers), subtitled "Killing the goose for the golden egg--Raiders leave only bones of firm".  Suffice it to conclude that this practice must be purged from the American economy.  </div> <div>      It should also be brought out that Unions, for much of this century, provided a high degree of protection of employees' jobs, and company provided benefits.  Their effectiveness is now limited.  Even their prime weapon, going on strike, has been blunted.  This was demonstrated on June 25, 1992, when the state of the economy, and the fact of an election year, caused the government to order the termination of a two day railroad strike.</div> <bR> <div>      Most recently, there has been a hue and a cry against the disproportionate earnings, benefits, and perks of top executives in many corporations (including the fact that their compensation is often not negatively effected by poor corporate performance results).  How can this be?  To quote from a newspaper editorial of April 20, 1991:  "Easy. Corporations have little accountability to either their employees or the ordinary stockholder.  Stockholding has become institutionalized, boards of directors have become cozy groups of deal-makers, and lawyers have written up employment contracts that often make it easier to keep the bloated executive bureaucracy intact than to provide the 'golden parachutes' and other forms of severance that ease many a corporate backslapper into early retirement."</div> <div>      In response to the hue and cry, as reported in a newspaper editorial of September 2, 1991: "Congress is considering requiring better disclosure of compensation and strengthening stockholders' powers to control it.  But stockholder democracy is a weak reed to lean on, at least until large institutional investors get angry and involved."</div> <div>      We can do better than that.  We must have a solution that offers promise of precluding all the corporate scandalous performance, that has been experienced in the 1980s and 1990s. In many ways employees, shareholders, and lenders find themselves in positions analogous to those of the thirteen American colonies.  In the late 20th century, the Chief Executive Officer and the Board of Directors take actions and privileges not in the best interest of, and without adequate controls by, those providing the productive resources for the enterprise.  </div> <div>      In the late 18th century King George III, and the parliament, bled and maltreated the colonists until they rebelled.  Within a short time the citizens of the new nation profited from their mal-governance.  They set up a government of checks and balances designed to preclude abuses and usurpations of those in authority.  Although they are learning, through 205 years of experience, that they must ever be alert and active in the exercise of their franchise, American citizens live under the best governing arrangement proven to date.  </div> <div>      Isn't it time that we set up a new organization of corporations, to include checks and balances that will guard against the depredations suffered in the last 12 years?      </div> <bR> <div>      It is first necessary to acknowledge, that shareholders are not alone in having a vested (ownership) interest in the enterprise.  Employees and lenders share in providing the productive resources, that enable the corporation to perform its mission.</div> <div>   </div> <div>      Shareholders invest their dollars to work for the firm.  They commit their dollars for days or decades.  In return they receive compensation in the form of dividends, and/or hopefully gains when they dispose of their stocks.</div> <div>   </div> <div>      Employees devote their time, talents, education, and experience, as factors of production.  They cast their lot of dwindling man-years, anywhere from a single pay-period to a working lifetime.  For this they are paid wages, salaries, benefits, and opportunities for advancement; and hopefully their employment will be stable, secure, and of long duration.  </div> <div>      Lenders divert moneys in their charge, to meet the cash needs of the corporation, be they working capital or the purchase of long life real estate or machinery.  The debt instruments vary from over night commercial paper, to 40 year bonds.  The payoff is interest paid periodically, or accumulated as an increase in loan until maturity of the debt instrument.  Inferred (or required by restrictions in the debt instrument) are assurances that the corporation will not conduct business, so as to jeopardize the loan, or increase its risk beyond that upon which it was based.</div> <div>      It is proposed that the "new government" for corporations be based on the participation of all three of these groups.  They would act as checks and balances, on the Chief Executive Officer, and the Board of Directors, as well as among and within each other.  The hows will be provided in the next paper.</div> <div>                Publius IV</div> <bR> <div> <A HREF="id94.htm" TARGET="_top" TITLE="Responsibility 61"><U>Responsibility #61</U></A></div> <div> Back to: <A HREF="id33.htm" TARGET="_top" TITLE="Responsibility Contents"><U>Responsibility Contents</U></A> </div> </td> </tr></table></body>