About Business “Fat Cats”

“You shall do no injustice in judgment, in measurement of length, weight, or volume. You shall have honest scales, honest weights, an honest ephah, and an honest hin…”
Leviticus 19:35-36

I read an article in USA Today on 5/8/14, front page of Section B, bottom half: “Profiting From the Unkindest Cut of All.” There are two main thrusts of the article. First, companies are making lots of money by cutting their workforces. Second, CEO’s are racking up HUGE paychecks by doing so.

First point, making money by cutting the workforce. The evidence clearly shows that companies that cut workers outperform the stock market in general. The article cites that share prices of “chronic job cutters” have increased 18.8% vs. 15.5% by Standard and Poor’s 500. Pitney Bowes showed a whopping increase of 72.9% in stock price after cutting their workforce by 41% last year. Safeway cut workers by 19.3% and was rewarded by Wall Street with a 20% increase in stock price.

Second, CO’s make huge paydays as a reward for increasing stock value. Quoting USA Today, “The biggest raise went to Sandeep Mathrani, CEO of General Growth Properties, a real estate investment trust. The company paid Mathrani $22.1 million in fiscal 2013, up 424%…” The first thing to realize is that the money wouldn’t be there to pay him if the stock hadn’t gone up as it did. Stock makes up a large portion of the value of a company. The more the stock and company are worth, the more money is available to invest, the better terms they get on short term loans, etc. The financial performance skyrockets on a number of fronts. That’s how a publicly held company can afford such large payouts. The money to pay the CEO simply wasn’t all there prior to the stock rising.

Now, why am I writing about this on a Christian blog site? There is the obvious point that companies should be more a part of their communities and care for those people. Look at another portion of Leviticus 19:

“9 ‘When you reap the harvest of your land, you shall not wholly reap the corners of your field, nor shall you gather the gleanings of your harvest. 10 And you shall not glean your vineyard, nor shall you gather every grape of your vineyard; you shall leave them for the poor and the stranger: I am the Lord your God.”

God is essentially saying “Don’t get greedy. That’s not how I intended a community of people to behave. Care for each other. Take what you worked for, but leave something for the less fortunate.”

By the way, I’m not in favor of government taxing as a means to redistribute wealth. That mechanism takes away personal responsibility to act in a Godly way. It forces charity, which is not charity at all! Again, from Leviticus 19:

“5 ‘And if you offer a sacrifice of a peace offering to the Lord, you shall offer it of your own free will.”

Taxes to fund social programs that encourage a “gimme society” are not beneficial! And we all know there are plenty of freeloaders. That includes bureaucrats who increase the rolls to ensure their own job security.

So, are the CEO’s evil people? Not necessarily. There are many who use their wealth to help others, contributing millions to charities. CEO’s do the job they were hired to do: preserve and increase the value of their company’s stock. How do they do that? They do what Wall Street tells them to do. Repeat: WHAT WALL STREET TELLS THEM TO DO!

Now we get to the crux of the matter. Who is Wall Street? Answer: we are. Don’t believe me? Do you have a 401K? Do you have money in mutual funds? Do you switch funds to the best performers? I do. So the funds need to compete.

That brings us to traders on the exchange floor with their colored vests and shouting. Ever notice how old they are? They are all fairly young. Why? Because they all want to make their fortune and get out before having a heart attack. Their decision horizon lives right about at the end of their nose. They are not long-term decision-makers. They make the market forces we hear about in addition to stock trading houses and day traders who are constantly trying to outguess the market. They make their money by buying low and selling high and using computer programs to decide and trade FOR them with more than lightning speed.

That’s not how the stock market was originally intended to work. It was made to raise capital for business and reward investors with dividends. Ask any truly savvy financial investor. He or she will tell you to make your picks and let them ride. Do not buy and sell, trying to make profits. That’s a very risky game and not for amateurs. Over the decades it has turned into something akin to a Las Vegas craps table.

Why? The answer is very simple. Greed. Loss of compassion for our fellow man. We let the government be compassionate for us through taxes. Unless we can find a way to squirm through a loophole in the tax laws. Then someone else can take up our slack. Sorry about your luck. We live IN a community, but do not act like we are PART of that same community.

Obviously, no one’s hands are clean here. Including mine, as I try to manage for my retirement. We all contribute to the problem, either in a miniscule way with trying to manage our meager retirement savings or in major ways as day traders or stock brokers who act in the market in unethical, if legal, ways.

My overall point, ultimately, is that society, our community, is broken. As a nation we showed God the door years ago and continue to grab Him by the arm and pull Him there. If we were more cognizant of God and how He wants us to live, we wouldn’t be in the pickle we’re in financially and in other ways.

What can you and I do about it? Be charitable. Study the bible to get a better understanding of how God wants us to live. While none of us can change the country, let alone the world, we can influence our corner. Get enough people doing a better job with their corner, and pretty soon those corners will form a community, then a country, then a world.

And don’t get too uppity about those so-called Fat Cats. While I’m not necessarily excusing them, remember that we may have helped make them. So take care of your business in a way that God approves, that supports community.

What do you think? This is a Gordian Knot, not easy to untie. I and other readers want to know what you think!

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