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August 22, 2006


james higham

"As Warren Buffett said, "When you put a good manager into a bad business, it's usually the reputation of the business that remains intact.""

Just as when you put a super-coach/manager into a rubbish team, he doesn't take the cup. Then his reputation certainly takes stick.


Paul Klugman's standard speaking fee is $25,000. He justifies it because he claims he could save a company millions. A Marxist probably couldn't get anything for a speech because we live in a capitalistic society. It's doubtful he could save a company anything.

For those who hire Kurgman ideology and pragmatism are in play. Which counts more? Since there is no guarantee with Kurgman's advice I suspect that ideology counts more when it comes to speaking fees. What his speeches do is to reassure companies rather than guide them. It's worth $25,000 to the company's directors to have an economic star say they are right or be seen as directing them.

I see $25,000 speaking fees as obscene based on my ideology that they are bad for society. Such fees are symbolic of the activity that leads to the growing inequality between the haves and of have not's in society. Growing inequality cause both groups to feel disconnected from society.

When it comes to equality in society mine is a utilitarian philosophy that people will be happiest when they can fulfill their interests. People on the bottom have little opportunity to fulfill their interests while people on the top who have the means and the desire to spend $3,000,000 on a birthday party for their wife seem to be living beyond the bounds of social approbation. Or more correctly the approbation of one who takes a utilitarian approach to society.

If the tax code made a years worth of $5,000 speaking fees comparable in take home pay to a year's worth of $25,000 speaking fees, then one would expect a $5,000 fee to be the standard one for economic superstars. Those who weren't in such demand would be happy with a $1000 fee, plus expenses.

If this were true, and I see no reason to think otherwise since in my scenario the tax code would effect earnings in the same way no matter how economists spent their time making money, then the difference between $25,000 and $5,000 would now be rent seeking. That's so because Kurgman would be willing to do the same thing for $15,000 less.

Kurgman is right, ideology largely accounts for the growing difference in equality.


Surely trade unions add to inequality by keeping people out of work? Anyway, CEOs - they pillage the shareholders. The explanation presumably lies either in the detail of company law, or in the identity of shareholders - mainly pension schemes and the like. Since one should not be a judge in one's own cause, the power that axiomatically should not be entrusted to the CEO and his cronies is the fixing of the pay rates for that circle. Ditto MPs.


Oh, and thanks for the link to that paper: marvellous indeed.

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