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DesideriScuri -> RE: Why is US medical care so expensive? (3/8/2012 8:15:21 AM)
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ORIGINAL: SoftBonds
Regarding the executive compensation boards, shareholders don't have the power to change the system. Maybe the government could though. How about a law saying that to increase compensation for anyone if they would then be paid more than the President of the US will require a vote of the shareholders on that specific issue.
Was reading on another message board about this, but have yet to dig into it. If what was posted is true, then we could have a win/win by changing this. Here is the very interesting part of the discussion:
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Alan Greenspan:
"Why did corporate governance checks and balances that served us reasonably well in the past break down? At root was the rapid enlargement of stock market capitalizations in the latter part of the 1990s that arguably engendered an outsized increase in opportunities for avarice. An infectious greed seemed to grip much of our business community. Our historical guardians of financial information were overwhelmed. Too many corporate executives sought ways to "harvest" some of those stock market gains. As a result, the highly desirable spread of shareholding and options among business managers perversely created incentives to artificially inflate reported earnings in order to keep stock prices high and rising. This outcome suggests that the options were poorly structured, and, consequently, they failed to properly align the long-term interests of shareholders and managers, the paradigm so essential for effective corporate governance. The incentives they created overcame the good judgment of too many corporate managers. It is not that humans have become any more greedy than in generations past. It is that the avenues to express greed had grown so enormously."
Little understood part of our current situation, right there.
Tax laws were changed in the 1990's, directed at executive compensation. The net result was all the decision makers and power brokers were motivated no longer by profit and loss but by asset and liability. This is a fundamental economic issue with profound implications for the way our economy works.
Profit and loss is readily understood; sell a product or service for something more than it costs and you have a successful business, the world is simple, and makes sense to all.
Asset and liability is a whole other way of looking at the economy and doing business. Products and services can be delivered to customers at a loss and yet the business can still grow and growth means the stock takes off and that is good for people compensated not by profit and loss but my asset and liability.
Balancing the two is good. The tax laws emphasize and promote imbalance in favor of asst and liability.
Our current economic crisis could not have happened before this tax law change.
If this is, in fact, truth, then the there could be a relatively easy fix.
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Regarding your statement a few days ago that you were young and healthy and didn't see why you should need to pay for insurance... If you don't pay for insurance I have to pay for you. Nuff said?
If I stated that it was me that was young and healthy, then I apologize for that incongruity. I don't think I did that, though. What I probably did was frame the reference to the young and healthy in a way that it was unclear that I was not in that category.
If someone doesn't pay for insurance and gets care free (to them), then those who buy insurance are paying for that someone's care. If someone doesn't pay for insurance and pays everything out of his/her own pocket, then the cost of your insurance does not include the cost of that person's care. I do not believe you should have to subsidize my care. You should only subsidize the care for whom you choose. You can not do that via Gub'Mint.
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