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March 08, 2008

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Adam

This isn't capitalism. It's corruption.

I want to be clear about this. I have absolutely ZERO problem with people like Bill Gates raking in billions of dollars. But if you want to do that, you need to OWN THE COMPANY. The wealth someone like Gates earns is a reflection of the enormous wealth that the company he steers has generated. That is capitalism, and there is nothing wrong with it at all.

On the other hand, the wealth people like Mozilo and O'Neal are earning is not a reflection of the success of their companies; rather, it is robbing that much more from a company that is already hemorrhaging money. They pack the board with their friends and allies, and take turns voting each other sweetheart deals. It's really that simple. It's a lot easier to justify when the company is doing well, but honestly, it's just as corrupt in that situation.

Until recently, Japan (certainly a free market capitalist state with powerful corporations) has a "10-1 ratio" law - that is, no salary at the company can be more than ten times greater than the lowest salary at the company. I'm not sure I would support that sort of law, but I'd certainly get on board with a law that said any extreme exception in executive compensation requires an explicit stockholder vote. After all, there are some genius managers out there who are worth multimillion-dollar salaries. Somehow, I doubt Mozilo and O'Neal are among their ranks.

This isn't capitalism. It's corruption.

D. Cupples

I agree. Corporate corruption (starting with Enron and WorldCom) was one of the topics I used to research (then I moved on to contractor fraud).

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