Power and responsibility

With great power comes great responsibility. – Ben Parker, Spiderman’s Uncle

Opinion – Usually when I write these posts I wake up with the thoughts fully formed.  This usually happens on a Monday morning.  So yesterday when I woke up with nothing to write about I was concerned.  But this morning it happened.  Like and email that instantaneously appears in your inbox, this post popped into my head. 

The collapse of News of the World has sparked a sensational wildfire of accusations and resignations throughout the UK.  The crisis has become so severe that Prime Minister David Cameron is returning early from a trip to South Africa to ‘deal with the scandal’ (Reuters, 2011).  When power is concentrated in the hands of the few, whether in media, politics, or business, corruption will surely manifest.  

For ages powerful people have hand picked those who work for them.  They create an inner circle in order to keep them close and under tight control.  But in an interconnected world this perceived ability to control is fleeting.  The public values transparent processes because in our minds it is fairer.  But I have been around long enough to know that even these ‘transparent’ processes are often used as a way to legitimize the handpicked few.  

We need men and women in business and politics who will step up and wield power wisely and individuals and groups who will accept the responsibility that comes with power.  But as the saying goes, ‘power corrupts, and absolute power corrupts absolutely.’  In an age of globalization and conglomeration we have seen the devastating effects of absolute and concentrated power.  If a minority holds the key there will always be the temptation to lock up the majority – but they’ll be so cunning in the way that they do so that the majority will think that the minority is doing them a favor.  

No one, and no country, is immune from this type of behavior.  It was reported this morning that Earthquake Recovering Minister Gerry Brownlee handpicked a committee to review decisions made by CERA, the Christchurch Earthquake Recovery Authority (RadioLIVE, 2011).  Labour has called for a review of the selection process, which I think is wise.  There may be nothing to it, but in times of crisis we have to be particularly vigilant.  In our need to seek out security in uncertainty we will turn to anyone who looks or sounds like they have our best interest in mind.  When we bestow such power on individuals and organizations we must ensure that they wield that power responsibly.

Simple thoughts on avoiding America's credit default

OPINION – The Republicans and Democrats have been fighting over how to handle America’s debt crisis.  Moody’s has warned of a possible downgrade of America’s top rating if the issue isn’t resolved (Mason & Sullivan, 2011).  The Republicans want Democrats to reduce spending while the Democrats want to raise taxes on the ‘rich’. This is an old ideological battle between these two parties.  It has always been a way of scaring the American people. 

I have some solutions that might help the politicians out of this dilemma and allow them to avoid the downgrade.  These solutions are not new, but they will require politicians on both sides to actually lead the country instead of playing games with its future. It will also require Americans to exercise their rights and demand these changes of their politicians.  Leadership requires sacrifice.  Leadership that tries to avoid sacrifice is just self-serving.  I propose that the government cut spend and raise taxes. 

Raise taxes

I’ve read and heard over and over that the majority of the countries wealth resides in the nations top 20%.  This is Pareto’s 80/20 principle. Depending on which source you look at (you can Google it for yourself) you’ll find that between 70-90% of America’s financial wealth resides with only 20% of the population. Raising taxes on the top 20% means that the other 80% – the hard working and unemployed middle class will be spared.  Call or email your elected representative and demand that they do this.  Exercise your democratic right and don’t let the minority be the only ones that make the rules.  

I would suspect that most politicians are fundamentally opposed to tax increases because if they raise taxes on the richest 20% most of them would be affected.  The base salary for a US representative is $147,000 a year.  This is just over $100,000 more than the median annual salary in the United States.  I suggest in this case that the majority should actually take a stand and demand that taxes be raised on the riches 20%.  

For those who are afraid that this might hurt the economy or be bad for jobs take a look around.  The economy is already in the tank and many of the wealthy individuals who pushed America to the brink of the Global Financial Crisis in 2008 have done well for themselves at the expense of the 80%.  Americans in general need to stop waiting for their government to get them out of this mess.  Average Americans need to call on that entrepreneurial spirit that settled a continent, tamed the West, and created a country that the world wanted to come to (not destroy), and initiate opportunities for themselves.  Why shouldn’t the average person look after the interests of their families?  The government is busy looking after their own? 

Cut spending

Politicians might not want to raise taxes because it will impact them personally.  But if they were to raise taxes at the same time they cut their salary to the national median, they wouldn’t have to worry about paying more taxes.  There are 432 members in the House and another 100 in the Senate.  American taxpayer would save roughly $53,000,000 a year if Congressional salaries were pegged to the national median income. By taxpayer I’m referring to the 80% who pay most of the taxes because the top 20% have found ways of avoiding it.  We could also look at their health care benefits, to make sure they’re getting what the average American has access to.  If your company does well in the finance sector you get a big bonus. If our Congressional leaders got a pay raise when they enacted changes that helped to raise the median income they might actually get something done. If pay for performance works in industry – why not for our government officials?   

There’s more money to be saved in the lobbying industry too.  The health care lobby alone last year spent $123 million lobbying the government over Obama’s health care reform.  That’s $123 million of your insurance premiums that didn’t go to providing you with better health-care, it went to trying to make sure that that the health care companies were able to make more money from you. In banking, there are three lobbyists for every member of Congress – that’s 1,600 lobbyists paid by your bank fees and interest on your credit card and mortgage.  They’re lobbying Congress for ways to get more money out of you.  So let’s get more money out of them by lobbying Congress to pursue banking reform that will actually help create wealth for America – not destroy it. When was the last time you spent any money to lobby your Representatives about the things that matter to you? Invest some time in making a phone call or sending them an email this week.  Send them your suggestions about how to save some money. 

I’m sure there are more things that we could think of but I’m going to stop here.  Like I said, none of this is new.  These steps alone won’t keep America from defaulting on its national credit card, but it would save a few hundred million dollars, and that’s got to be worth something. 

Legal? Yes. Right? I'm not so sure

OPINION – Back in May my wife and I received a phone call from Sky Television.  They were offering an unbelievable deal – we could get their basic package for half price for a limited time. I’ve wanted Sky for a while now because I enjoy watching American sport.  Since moving to New Zealand I’ve seen the occasional football (gridiron), baseball and basketball game thanks to the generosity of a few friends. Sky's basic packaged included ESPN which meant that I could get access to all of these sports at home. We didn’t decided to subscribe at the first phone call, but we did ask if ESPN was included in the package just to be sure.  We did some research on the website to see what other channels were included.  We were able to distinguish that ESPN was part of the basic package, something we confirmed with the sales operator one more time before accepting the “to good to be true” deal. 

Sky was installed in time for me to enjoy the NBA Finals on ESPN.  It was an exhilarating match-up between the Dallas Mavericks and the Miami Heat.  But one month into our ‘contract’ ESPN disappeared.  I called Sky to find out what was going on and I was told that ESPN was no longer part of the basic package; it had been moved into one of Sky’s sports packages.  I asked the Sky representative why we hadn’t been notified about the change.  She informed me that their customer’s were sent a letter in April.  I pointed out that we only signed up for Sky at the end of May, and did so only because it included ESPN.  She suggested that if I had read my contract I would have known that Sky could change their products at any time without notice.  I was pretty angry at this point. I asked to have our subscription cancelled.  Before processing my request I was offered a free month of the new Sky Sport package.  I refused because I wasn’t interested in all the others channels.  I was then told that we would have to pay the early cancellation fee to break the contract. I agreed to pay the fee in order to honor our part in the contract.  I also made it clear that I felt we had been misled into entering the contract in the first place; we wouldn’t have signed up if we knew ESPN was going to be removed from the package. The icing on the cake is that they want me to return the equipment to their offices.

My wife and I felt completely let down.  We were misled.  In our view, the sales representative who sold us the subscription was merely telling us what we wanted to hear so that we would make the purchase. If this were the first time that this had happened, I’d probably just shrug it off.  But we’ve had a number of experiences now where the sales person has told us what we wanted to hear, as opposed to what was right.  It can be argued that the Sales Representative didn’t mislead us.  The fact is that ESPN was a part of the basic package when we signed up.  But isn’t it also reasonable to expect, that if Sky had sent a letter to their customers in April informing them of the change that their sales representatives would have been briefed to notify new customers of the change?

There’s not much we can do about this situation.  We were duped and we have to pay the price.  But I can tell others about what happened. I also plan to use this as an example case in ethics in my future leadership and management classes.  What does a company do when the legal thing isn’t necessarily the right thing?  If you’re a huge monopoly it appears you hide behind the law.  I’m not so sure a small company could do this to their customers and get away with it for long.