Sunday, February 1, 2009
The Fuss Over Corporate Jets
Aviation magazine editor William Garvey makes a strong and logical case for the business jet industry in a NYTimes op-ed this a.m., but he completely misses the point about why the purchase of these jets is being criticized.
Bill, it's not because they're expensive (they are), that they're bathed in luxury (some are, some aren't), that they're unnecessary (usually, they are not), that they're bling (most often not). It's because a bank wanted to spend $42 million on one, and it's a bank that just got a few billion dollars in public bailout money. That money's for lending, not for jets.
Former Citigroup CEO Sandy Weill jetted off in December with his family to Cabo for a luxurious Baja vacation shortly after his bank was bailed out with $45 billion of government money. Citigroup had just cut 75,000 jobs and announced the loss of $28.2 billion. The family stayed at a hotel where a four-bedroom suite costs $12,000 a night, according to the NYPost.
The Post says Weill "played a key role in forging the company into the behemoth that toppled under its own weight in the recent credit crisis." Even though Weill left his job in 2006, his golden parachute gives him access to the $45 million jet until 2016 (he'd be 82).
The criticism's the same for the Wall Street guys who are taking a bath in bonus money these days at a time when the bottom is falling out of their industry--at least partially because of their actions. You get bonuses in most industries based on your success. A bonus is not the equivalent of the Little League certificate of participation trophy. It's about winning, performing above the average, bringing money to your employer. It is about competition, reasonable compensation, performance, incentive and fair pay for good work. Not many of us--outside sports and entertainment--can look for million dollar bonuses without even being on the board of directors. (The sports and entertainment pay travesty is another seminar.)
I'm one of those "nobody gets two houses until everybody has one" liberals that conservatives just love to bash, but I'm not sure even they are comfortable with a group of money managers who are making more from my meager investments than I am, simply by pushing the money around from pile to pile. Let's equate what those bozos do to the work of physicians, scientists, teachers, emergency workers, editors (heh, heh, heh, had to slip that in) and the like. Not much to compare, but guess who makes the most money?
Bill Garvey's piece this a.m. is worth your time if only to learn that small jets can land at 5,000 public airports in the country, but commercial planes can set down at but 500; that most of these private planes are roughly the size of a van inside; that this is a $150 billion industry generating a million jobs; that Wal-Mart is successful partially because its execs can show up at your out-of-the-way plant in a couple of hours to seal a deal (and I don't know if that's a good thing).
But it doesn't explain the misuse of public funds granted for other purposes.