Friday, March 20, 2009

Pity the Poor GM Engineer

From Nate Silver, via Andrew Sullivan:

The government has dictated that nobody at anybody of these companies is deserving of incentive-based compensation, unless their household income is less than $250,000 per year.

Just think about some of the implications of this. A senior engineer at General Motors, who shepherds the production of a new hybrid vehicle that will turn out to be a best-seller, shouldn't get a bonus for that. Really?

Well... yes. If this Sr engineer's great invention is supposed to be such a great seller, then why is GM's stock price scrapping along near zero? Apparently no one on Wall Street thinks he has a viable product, or that he can't break it through GM's no doubt impenetrable bureaucracy... so why should he be rewarded for it?

I thought the capitalistic system was about rewarding the winners, not just those who try.

If this Sr engineer's hybrid idea is so great, why hasn't it reached the market? And if it hasn't, why should the American taxpayers pay anything extra for it?

For that matter, why should this clearly intelligent, skilled Sr engineer not leave GM and go start his own company making hybrid cars. Let him put his idea on the line, not bury it under 8 layers of management at GM. We're not paying for his idea, we're paying for GM's implementation of it. This John Galt deserves no more than his company can achieve.

If he has any stones, he will quit his $250,000/yr job at GM and start his own company making hybrids, and if his idea is a good one he will be a significant impact in the market and make a huge amount of money.

Isn't that what all this is supposed to be about? Or are we just supposed to reward middling engineers too afraid to risk their ideas with their own capital and/or initiative, forever kowtowing to upper management to just please, please release their product, and if not, oh well, I'll still get a safe retirement.

By those lights, Bill Gates would be a division manager at IBM, living in a really nice house in Westchester County, with great ideas that never made it past his executive director. And we would all be the poorer for it. Should he be rewarded for just making a decent effort? And if he should, why shouldn't you or I?


9 comments:

Dano said...

Whoops, David, you've seen thru their patently false bullsh--. Shame on you. You aren't a good capitalist. What are you, a socialist?

Best,

D

Anonymous said...

Bonuses should be paid in stock options not cash. If AIG had this arrangement management would not have driven the company into the ground.

Management should be in the same "boat" as the shareholders.

charlesH

Dano said...

Bonuses should be paid in stock options not cash.

Well, sure, but this would be an ineffective way around tax law, and would require employees and upper management to act responsibly and not loot the company for personal gain.

This situation, were it to be enacted, would be unAmerican and break with history. We wouldn't want the wrath of Republicrats to rain down on us for suggesting such a thing.

Best,

D

Anonymous said...

Stock options are not a new idea. The norm in high tech companies.

I don't understand how the shareholders of financial companies allowed their boards to give out cash bonuses not tied to future company performance.

Stupid shareholders. Now since we tax payers are now the shareholders we need to be smarter.

charlesH

Dano said...

I don't understand how the shareholders of financial companies allowed their boards to give out cash bonuses not tied to future company performance.


They allowed it because it is a way to skirt tax law.

Best,

D

Anonymous said...

Dano,

How do cash bonuses skirt tax law?

charlesH

Engine Repair Man said...

I don't understand how they were able to give out cash bonuses not tied to future performance either. The whole thing seems awfully gray.

There are always loopholes that can be taken advantage of.

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electricroute said...

And about GM Volt. It's just like toy car. Because even in the 1900s electric cars passed two times longer per one charche than this fucking "American Revolution". They don't want to stop suck petrol pipe.