Point 1: Rep. Charlie Rangel
In the run up to the 2006 mid-term elections, Nancy Pelosi who would become House Speaker framed the election as a way of doing away with the Republican's culture of corruption. She promised a clean, reformed congress under her watch. There's another watch going on and it deals with corruption in her leadership ranks. Charlie Rangel who is Chairman of the House Ways and Means Committee, which writes our country's tax laws, is under fire because he did not claim income from Caribbean properties that he owns. At least that's what we originally thought. It must be worse than that now because he's hired a forensic accountant to sort through his previous returns to correct it's many inaccurcies. Where does speaker Pelosi stand on this? She's allowing Rangel to keep his chairmanship. This is not exactly the sort of change we were looking for.
Point 2: Government Oversight
Two branches of government are responsible for oversight of the financial markets - Legislative and Executive (read Congress and the White House). The Bush Administration has shown an ability to clean up the mess after it became a mess - they've become good at cleaning up their own messes. But where's Congress been? They've been busy doing nothing. This Congress can barely pass a budget. They've taken more of an interest in digging up dirt on the Bush Administration than overseeing situations today that could impact us tomorrow. It's not simply their lack of an energy policy it's everything - financial markets, telecommunications, global trade practices, healthcare and education. This Congress is more interested in scoring political points to win the next election than they are putting together a stronger America for tomorrow. Social Security and Medicare? Forget that - they shot down's Bush's desire to change that nearly 4 years ago and haven't been back there since. I guess it's not enough of a problem, yet.
Point 3: Corporate Aristocrats
I'm all for free markets. I'm also for capitalists who risk everything they have to succeed reaping the rewards for their efforts. These capitalists are the business founders who put in the long hours, put their family assets at risk and bet big on themselves. The people who work long hours during the week, all weekend and take no vacations because they want to be a success and want their businesses to succeed. There are many examples of this in America both yesterday and today. In the past, think of names like Ford, Vanderbilt and Morgan. Today think Walton, Buffett (Warren, not Jimmy) and Munger (who badly gets overshadowed by his partner but deserves as much credit for Berkshire's success), Jobs and Woz, Gates and Allen, Michael Dell and Larry Ellison. You may not like some of these people but there is one common denominator - all started with little and grew their businesses.
Now compare these people to the new American Gentry. The people who inhereit companies built by others but expect the riches afforded to the founders because they carry the title of CEO or Chairman. These people rent their office space after being given title by their board and no matter if they do well or do poorly they are rewarded with multi-million dollar salaries, stock and options. If they last a while they somehow become a company's largest shareholder. This feat comes not because they had the fortune before but were granted the fortune by the board. If they fail, they walk away with tens to hundreds of millions compared to nothing but the shirt on the back of a founder who does not succeed.
Somewhere along the line boards forgot the risk-reward principle. You're rewarded for the personal risks you take not for being nursed by the company and punching a clock for a few years as stewart of a company.
In Washington and around the country there are two people who are talking about change. Both will likely bring change to some of these practices which I am happy with. However, the type of change is going to be radically different. Listen carefully and understand that we can be as punitive as possible on points 1-3. However, we need to understand that these changes, though necessary, should not go so far that we risk our competitiveness for years to come. I'm not talking slap on the wrist punishment for those who do wrong or light regulation. I talking about true reform that understands we live in a free, global market and change that puts the United States in a competitive position moving forward. This is possible and at the same time is necessary. In the meantime, time to throw the bums out - all of them.