Ring For Liberty

While the wound is still open for the 50% of us that actually pay Federal Income Taxes, I could not help wondering how this administration feels about profits on April 15th. On Jan 30, 2009, Obama said, “There will be time for them to make profits, and there will be time for them to get bonuses. Now is not that time.” Perhaps, profits and bonuses are alright on Tax Day? Of course, his blathering was before the people who now have voter’s remorse figured out that was primarily an effort to draw attention away from his administration’s lack of real solutions. It is easy to incite the masses by saying, "… we need to limit CEO salaries" or "…control their day-to-day operations", etc. However, coming from Obama, who has never operated a cash register, much less make a payroll, or this Congress that is orchestrated the longest jobless recovery in recorded history, this rhetoric is insulting and hypocritical.

At a dinner party shortly after Obama began publicly demonizing, ostensibly just the CEOs of companies “requiring” government bailouts, I engaged in a conversation about the “stimulus” and CEO bashing with a liberal friend. At a certain point, her husband cut short his own conversation to come into the room we were in to blurt out, “No one person is worth that much money.” His wife could wind up in a cardboard box begging for cheese from her local congressman and still pull the “D” party line at the ballot box, so I decided to get her all worked up more for fun than anything else. However, I could not let her husband’s outrageous comment be flung into the air like something that would foam out of Chris Matthews’ mouth, so I decided to turn that into a teachable moment. As the great Margaret Thatcher said, “First you win the argument and then you win the vote.”

Less than twenty four hours later, I decided to do a little research, put together some data and send an e-mail to everyone in the room to address that brilliant comment. As an employer myself, I wanted to give these friends a more thoughtful perspective. My response went something like this….

The notion that, "no one person is worth that much money" may or may not be true, depending on the person and the circumstances. It certainly warrants a deeper look into how much they actually earn, what they produce, how much society gains and how many people benefit from their success. Can you really put a price tag on Bill Gates' value?

We can certainly discuss who’s to blame for the financial crisis and how, both the existence and lack of regulation, created this horrible crisis. However, we cannot transform our society into European Socialism or replicate the Lost Decade of Japan to correct it.

After that discussion, I thought these figures and the attached supporting spreadsheet might better explain how the government and media are using class warfare and the usual rhetoric to make people think this economic crisis is the fault of greedy CEOs:

The Top 50 Employers of the Fortune 500 provide:

11,950,157 jobs or 239,000 jobs on average

At $30K per job (which is an extremely conservative number just for illustration), that would produce $7.17 Billion in employee salaries

By using an average tax rate of 30%, these salaries would generate $2.151 Billion in Income Taxes (not including PP Taxes and Corporate Income Taxes)

The Top 50 CEOs by Compensation:

Earn an average of $79.6 (mil)

That average drops to $52.5 (mil) if you simply drop the top 5

Fortune 500 CEOs:

Earn an average of $15.0 (mil)

That average drops to $11.89 (mil) if you simply drop the top 5

How much does Angelina Jolie make per film?

While an average salary of $79.6 (mil) or even $52.5 (mil) is undoubtedly an enormous amount of money, you have to consider the salaries and taxes generated under that person's leadership. I don't know of any single movie star or athlete that employs 239,000 people or generates $2.151 Billion in income taxes alone.

Now take all of this information and put this into real perspective. These 500 CEOs, who on average actually earn $15.0 (mil), represent far less than 1% of all CEOs in the country. These CEOs actually represent only .167% of all CEOs!! The mean annual wage of a CEO in this country during 2007 (the year I used for all of these statistics) was $151,370.

Once our government starts throwing around language like… "…not the time for profits and bonuses" or "controlling executive compensation," everyone should be concerned. Despite their continuous encroachment on our liberty through our wallets, we must keep in mind the people of this country and around the world depend on our private sector and their executive leadership to produce goods, services and livelihoods.

I can tell you that there is quite a bit of truth to the belief that the quickest way to silence a liberal is to introduce them to the facts.