Thursday, August 09, 2012


The Anglo-Saxons had a legal concept called weregild, basically the worth of a man.  If you killed a low ranking man the restitution fee was lower than the fee if you killed  a nobleman.  In Democratic societies we like to think we're beyond that -- that all men are equal.

Not quite.

For evidence I offer the contrast in two stories from the Wall Street Journal late last week..

"Michigan city outsources all of its schools," by Stephanie Banchero and Matthew Dolan (8/03).  All of the school district's schools will be run by a private for-profit charter company, Leona Group LLC.  Note this: " Leona has budgeted about $36,000 a year for Highland Park teachers on average, the company said—compared with almost $65,000 a year the teachers received in the 2010-11 school year."

And a day earlier, Kate Linebaugh and Joann S. Lublin wrote an article, "For retiring GE executive, $89,000 a month not to work," (8/02).  The headline says it all.  GE reorganized and a vp was going to be out in the cold.  To prevent him from going to work for a competitor, GE is going to pay him $89,000 a month for three years.  He does have a new job, at a venture capital firm, so he isn't sidelined completely; he just can't work for a GE competitor. 

That's right, the former GE executive is going to be paid every month more than twice what the Highland Park Michigan teachers will earn in a year.  And he is being paid to do nothing.  A simple non-compete clause in his contract would not seem to do the trick.

Should you think they are a private business and can do what they want, read "Loophole helps GE benefit from Bank Rescue Program," by Jeff Gerth and Brady Dennis (ProPublica and Washington Post (6/29/2009).  It starts out by stating:  "General Electric, the world's largest industrial company, has quietly become the biggest beneficiary of one of the government's key rescue programs for banks."  The article goes on to say one of the loopholes was that executive compensation oversight was excluded under the bailout program. 

So part of that "do nothing" money might be our money and I, for one, am not happy with how it is being used.  How much tax does GE pay?  According to the New York Times, the company paid no US taxes in 2010, and in fact received a tax benefit of $3.2 billion (see "G.E.'s strategies let it avoid taxes altogether," by David Kocieniewski 3/24/2011)

Looking at the GE board of directors I noted a few with recognizable PA connections:

Roger Penske, graduated from Lehigh U; some Penske businesses based in PA
John J Brennan, recently retired chair of Vanguard
James S Tisch has a Wharton MBA 

I also do not understand how a school district thinks it is going to get talented certified teachers for $36,000 a year.  Maybe next time a conglomerate decides to pay a guy for doing nothing they could put in a clause that he has to teach school for a year.

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