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Jennifer Granholm on Corporations
Democratic Governor (MI)
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Executive pay imbalance is improper from moral standpoint
Corporate executives think in terms of numbers. When it comes to compensation, they see a fraction: Their pay is on top, with corporate earnings on the bottom. The resulting value is very tiny, meaning that their income is not a big deal, they reason.
Workers think in numbers, too. But the traction the workers see is quite different. They see an executive's bonus on top and their pay on the bottom. THAT fraction is top-heavy--an "improper fraction," as we learned in math class.
Such imbalance was also improper from a moral standpoint.Alienate the workers through continual demands for one-sided concessions, and it's not just morals but also morale and productivity that deteriorate. Fairness at both ends of the pay
scale is not just a legitimate moral end but also an essential element of sound leadership. Morality and morale are deeply interwoven in credible leadership. If leaders destroy the former, they will eventually destroy the latter.
Source: A Governor's Story, by Jennifer Granholm, p. 80
, Oct 1, 2005
Tax cuts are minor compared to talent recruitment
The notion that tax cuts are the magic elixir of business growth ignores the realities of contemporary business. As one of our interns remarked, "The old tax-cuts-only mind-set is SO 20th century." In 21st-century knowledge-based economies, tax rates
play a minor role in business location decisions. For the kinds of advanced-manufacturing, high-tech business we were recruiting, TALENT is what matters. Quality of life, culture, and the "coolness" factor of host cities are also key to those decisions.
Companies need to recruit smart, ambitious innovators--people who want to live in cool cities with exciting things to do and great schools for their kids. And where do talented young employees and the cool cities that attract them come from? From public
investments in schools, the arts, universities, and training--the very things we've been cutting for years under the mantra "Government doesn't create jobs. Only the private sector creates jobs." It's a half-truth we've swallowed whole for much too long.
Source: A Governor's Story, by Jennifer Granholm, p.124
, Oct 1, 2005
Carmaker government-run bankruptcies saved GM & Chrysler
When, on May 24, 2011, Chrysler announced that it was repaying the loans years ahead of schedule, the same Mitt Romney who'd used the pages of the "New York Times" to declare "Let Detroit Go Bankrupt" boldly sought to claim credit for the auto industry's
turnaround. "Mitt Romney had the idea 1st," said Eric Fehrnstrom, a Romney spokesman. "You have to acknowledge that. He was advocating for a course of action that eventually the Obama administration adopted."This was doubly wrong.
In the first instance, without the governor's investment, which Romney condemned, there would have been no auto industry left to save. Second, it was the government's intervention and the high-speed bankruptcy orchestrated by the Treasury Department
that saved GM and Chrysler. A traditional bankruptcy without the US government's participation would likely have meant liquidation and the loss of the backbone of American manufacturing.
Source: A Governor's Story, by Jennifer Granholm, p.256
, Oct 1, 2005
We pick winners & losers to compete against other states
Governors and politicians who constantly proclaim that "government should not pick winners and losers" are doing precisely that, and for good reason: Virtually every state is locked in head-to-head battle with other states for business sitting decisions.
To survive such competition, state governments are forced to practice economic policy, whether they choose to admit it or not.- Indiana's tax code boasts 8 different credits, including those for industries like media and alternative fuels,
that the administration has chosen as "winners."
- The New Jersey Economic Development Authority favors specific "business sectors critical to the State's economy."
- In Ohio, 12 different tax incentives and credits are offered to businesses in
particular sectors from manufacturing to technology.
- In Texas, in addition to the usual targeted tax incentives, the governor has doled out over $250 million to emerging businesses in 5 specific industry clusters.
Source: A Governor's Story, by Jennifer Granholm, p.242
, Oct 1, 2005
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