Hubris everywhere

I can’t get the word hubris out of my mind. O’er-weening pride. In a rising market, CEOs convince themselves that their genius accounts for the vast profits washing through their companies. Citigroup, Lehman Brothers, Bear Stearns, and on and on.

Oops! Turns out it wasn’t genius; it was gambling. Oh well, which of these current and former CEOs isn’t sitting on tens or hundreds of millions of dollars? If pay was related to performance, these guys would be in the stocks and the villagers would be practicing their egg and tomato hurling skills. How about a quick amendment to the tax code raising CEO personal tax rates to 95%. And let’s make it retroactive for ten years. Only applies to executives earning $5 million or more per year. That should spare the little guys and gals.

Then there’s the (Not So) Big Three. Hubris T-shirts for their management! Fly down to DC in their private jets to beg for a handout. How about starting by taking a pay cut right down to zero. Then give back 90% of all compensation received since they became bosses. Somehow I think they would still have a lot more money than the rest of us. No? Well, let’s say that you were paid sixteen million dollars last year. If we claw back 95% of it, you’ll still wind up with $800,000 which for most of us would be a huge pile of money. (Like: twenty years’ wages for the person earning $40,000 per year...).

Have they no shame?

Silly question.

So along with all the other changes we need, perhaps big salaries should come with big delays. When Mr. Big accepts his $10 million per year salary, he also accepts that his actual salary will be $250,000 per year and the balance will be delayed for five years and then spread out over some lengthy period, during which time he will be paid only during profitable years. And in years the company loses money, his salary balance scheduled for that year goes poof.

So it will be very much in his interest that the company grow and stay healthy over the long term, because if it founders, bye bye big bucks.

Now that I’ve vented, let’s be serious. The auto industry situation is a terrible conundrum. On the one hand, adding a couple of million workers to the ranks of unemployed Americans sure sounds like a formula for economic disaster. On the other hand, no matter how much we give to the US car makers, until they offer us products worth owning, they are doomed to fail. Gas prices are low for the moment because demand has plummeted, but everyone knows that sooner rather than later, the prices will climb again. I do not see any chance that Americans will return to buying SUVs. Asking for money without a plan for spending it wisely is pathetic. Asking for money without first accepting responsibility for their own poor leadership is disgusting. Flying to DC in private jets to ask for money? That starts at ‘out of touch’ and lands on Neptune, or maybe in another universe. Give us a break.

I don’t have a solution, and I’m not even sure the US auto industry can be saved regardless of what we do. What if we’re on the edge of a total transformation in how we travel? Maybe the Age of Cars is about to morph into something else. Anyone who thinks they can predict the future is lying or suffering from, well, hubris, by golly.

And a final note, about which I will write more in the future. Diversification is something we should, as a nation, be thinking about as we plan for putting our national house in order. Having a third of the jobs in Michigan, for example, in the auto industry is fine till the auto industry collapses. (I don’t know if it’s a third; I do know that Michigan is in terrible shape.) We need to diversify our sources of energy, our food production, and lots more. It’s not always ‘efficient’ to diversify, but it’s a helluva lot safer than putting all the proverbial eggs in one basket.