I was born in 1948, at the foot of an enchanted mountain whose spirit enjoins me to rise higher

Ordinary citizen, empathetic contemplator (maybe a little too empathetic to be fully comfortable in the world, as it is). Don't look for academic credentials; this guy has none, save those gained over the course of many interesting (and, at times, difficult) life chapters, spent surviving on a shoestring budget.

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Wednesday, March 17, 2010

The general approach of the Second Leg

Once again, just to be clear, in this Second Leg, we are turning our focus away from influencing the shape of the company pay graph towards finding a mathematical approach to achieve the following:
a.) quantifying the impacts that given individual pay packages might have on social equity (by assessing whether such disparity as may be contained within said pay packages is warranted, in light of the context of that person's service, and, if not, to what degree it exceeds or falls short of what is warranted).
b.) responding in a socially constructive way to address the portion of pay that our approach deems unjustifiably excessive, using methods that a fair-minded person would deem reasonable.
Improbable though it may seem, by putting in place a social response system that uses information and math to discourage inappropriately generous company compensation before it occurs, we can do much to rein in what is, arguably, the main driver behind most of the ensuing social frictions that currently dump so many onto the tender mercies of the nation's streets, in lieu of having a real home (among other travesties).

Accordingly, in this, the Second Leg of the POPE system, our focus homes in on three distinct objectives:
1.) providing a mathematical meter for payroll planners to gauge, in a very general way, how lucrative individual annual compensation might be, relative to the context in which that money has been earned - specifically company size and the employee's pay rank;
2.) crafting a numeric tool that would function as a preemptive disincentive to excessive executive pay in POPE-participating companies by subjecting such excesses to context-responsive penalties, on a case-by-case basis, for the top three earners in company payrolls and
3.) raising the appropriate revenue needed by government to respond to the negative effects of social inequity indirectly attributable to the nationwide impact of general point-of-pay inequity (in the event of the above-mentioned discouragements failing to temper excessive top-end compensation even as the company elects to continue participating in the POPE program for the business advantages offered under the First Leg).

To do the above in an elegant way, the approach needed to begin with a generalized measure of the comprehensive quotient of service being rendered by any given top rank employee -broadly reflected in that person's annual pay - and assess the generousness of such pay, relative to what might be normal for anyone carrying similar responsibility in a typical company of that size.
Some will say that this cannot be done in a practical or precise way, even before they explore my proposal any further. Actually, it can; at least well enough for what is intended here.
The real question is whether we dare do any good with the fact that it can. Certainly, the factors underlying the math are surprisingly simple to enter on prompt from a basic computer program.
Note, I'm not claiming that my approach yields a precise measure, but if progress is to be made, the perfect should not be allowed to become the enemy of the good. The math involved yields a close enough approximation to be useful in the derivation of a membership surcharge geared toward inducing the kind of change we so sorely need.
Others, no doubt, will argue that one cannot hold all companies' payrolls to the same standard and that there are certain kinds of work that are more specialized and, therefore, justifiably more lucrative. There's an implication behind this line of argument that people who get big bucks for what is, for them, a perfectly normal day's work, doing precisely what they've freely elected to do, are, somehow, hapless victims of life's inescapable relativisms - regardless of whether they come out on the lavishly compensated end of things. It's no fault of theirs, they claim, that they're socked with such a big paycheck, so why should society want them to pay what amounts to a surcharge of sorts? It's their money, afterall.
Some even claim that getting less pay would seriously undermine their incentive to do good work, as if there were a complete absence of capable and willing people waiting for a chance to take the helm, even if being able to do so entailed taking a bit of a haircut in pay.
Society gravely disserves its own best interests by buying into such nakedly self-serving rationale as this. It's the epitome of the minor part - the executive elite - dictating terms to the major - greater society - and we do well to plant our feet in democratic authority and assertively deny it the primacy it seeks.
Before they leap to judgment, let those who would be naysayers first take the time to really study this proposal and test the formulas. This isn't a finished work of art; it's a proposal intended to open a new area of discussion. If they find points they don't like, let them propose alternatives before junking the whole approach. Any input given by anyone who has failed to do that should not be mistaken for a cogent appraisal of the method laid out here or given undue influence over whether this course of options should be more exhaustively looked into. The tendency to dismiss new options, more often than not, has more to do with old habits of thought than clarity of understanding.
Let us not forget that it was belief in the voices of the past that led us into the swamp we're presently struggling to get out of. The problems we now face are so massive in scale that it is highly unlikely that more of the same old tapped-out thinking will somehow defy the odds and magically yield a mother-load of fresh and effective ways to turn things around. To escape the swamp, we're going to have to take the time to examine the conceptual innovations of many thinkers the public has never heard from before. The arrival of information technologies on the scene completely changes what we can do efficiently. This single fact, alone, demands a sweeping review of the way we use government in serving the interests of the People, and the right use of math will have to be part of it.
Granted, many in government are not comfortable with even rather basic math (one of the great national challenges facing the U.S. in today's world of competing economies). They either prefer - or consider simpler - processes based primarily on verbal concepts backed up by psychological arm-twisting. Unfortunately, in today's world, that approach no longer suffices.
While it ought to be pretty obvious that I have nothing against verbalization, when you're attempting to impose rather precise influences on the way money moves around in society, math is an essential companion to prose. Rhetoric may have kicked off the Apollo missions to the moon, but it was lots and lots of math, exclusively, that got them there and back.
Up to now, an over-reliance on political rhetoric, political clout, generalities and compromise trading - as opposed to the rigors of scientific method - has led to how we do business at the highest levels of government; and look where it's got us! There's no way to pretend it isn't a big part of the reason our liquidity flows are so screwed up and why all the king's horses and all the king's men don't seem to have any clue how to put Humpty-Dumpty back together again.
Given the realities of our time, I believe it essential - a patriotic obligation, no less - for us to work together in establishing and preserving equity in the distribution of the nation's general wealth. In this, we should strive for as high a measure as is able to be achieved under the Constitution with the assist of law and standard government procedure.
O.K., so if you were a senator or house member looking at this proposal, you'd need some basic math skills to fully comprehend the way a mathematically reflexive tax works on different levels of income covered under the POPE system and how that would encourage a significant number of top executives to redirect more of the profits from enterprise toward the better remuneration of their company subordinates. Is that too much to expect? Teaching young people to master precisely that kind of math is what we fund high schools for, isn't it? If that expectation is good enough for high schoolers, it ought to be good enough for those whose service in high elected office we collectively pay for.
While the mathematical tools I have made may not be absolutely perfect for measuring how equitable any given measure of pay is in the eyes of God, taken together, as a system, they're certainly a vast improvement over sitting back and simply tweaking the existing system. For sure, they're a good deal more useful to promoting social equity than any point-of-pay system I know of that has come before. Just as important, the system offers a great beginning point for initiating a new kind of free enterprise diametrically different from the existing one of constant, often highly antagonistic, maneuvering between management and labor that consumes so much in material and human resources.

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