Corporate Excess Is Good For America - Millennial Money with Cliff Mason

BIO

Cliff Mason is the author of Millennial Money. He is the Senior Writer of CNBC's Mad Money with Jim Cramer, and has been that program's primary writer, in cooperation with and under the supervision of Jim Cramer, since he began at CNBC as an intern during the summer of 2005. Mason was the author of a column at TheStreet.com during 2007, which he describes as "hilarious, if short-lived." He graduated from Harvard College in 2007. It was at Harvard that Mason learned to multi-task, mastering the art of seeming to pay attention to professors while writing scripts for Mad Money. Mason has co-written two books with Jim Cramer: Jim Cramer's Mad Money: Watch TV, Get Rich and Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). He is 100% responsible for any parts of either book that you did not like. Mason has also had a fruitful relationship with Jim Cramer as his nephew for the last 23 years and will hopefully continue to hold that position for many more as long as he doesn't do anything to get himself kicked out of the family.

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Jan.28

3:52 PM ET

Wednesday, 28 Jan 2009

Corporate Excess Is Good For America

Posted By:Cliff Mason

Topics:Airlines | Executive Compensation | CEOs and CFOs | Stock Market

Companies:Boeing Co | Textron Inc | Bank of America Corp | Citigroup Inc

Now that Citigroup's [C Loading... () ] gone and cancelled delivery of that $50 million corporate jet that it ordered and John Thain, the profligate former CEO of Merrill Lynch [BAC Loading... () ] is being needled by Andrew Cuomo, New York's Attorney General, I'm reconsidering my position on corporate excess.

Sure, as I wrote the other day, it's idiotic for executives at companies that are taking government assistance to flaunt the perks of their positions. It makes them look horrible and entitled. But does that mean they should stop spending money on private jets, office renovations, and custom-built commodes?

Stuff that looks bad may not actually be bad, at least from a broader social and economic perspective. From an ethical standpoint, it's wrong for John Thain to spend $1.2 million on office redecorations, or for Citigroup to drop $50 million on a new jet. But stop thinking in terms of ethics and start thinking in terms of economics.

More spending, whether it comes from individuals, businesses or the government, helps create jobs and get us out of this recession. It doesn't really matter what that spending is on as long as money circulates.

So when Citigroup says it's not taking delivery of that jet, and on top of that, wants to sell two of its four airplanes along with its corporate helicopter, I can't help but see this as yet another case of a bank trying to dispose of distressed assets at fire-sale prices.

True, Citi had ordered a foreign-made plane, a Dessault Falcon 7X, so that doesn't really help us. But suppose they had ordered an American made jet?

Textron's [TXT Loading... () ] Cessna Aircraft, the the largest manufacturer of corporate jets in the world, plans to lay-off 2,000 workers, 13% of its labor force, by March. Those are jobs in Wichita, Kansas. That's the heartland of America! And Boeing [BA Loading... () ] intends to fire 10,000 people this year.

Our aerospace sector needs a kick in the pants, and instead we're sucking all the life out of it.

When we crack down on CEO's jet-setting around the country, what exactly are we trying to accomplish? Who benefits? We all feel a little schadenfreude because the fat-cats are getting punished, but beyond that we're not helping anyone. Meanwhile, it's not the executives who really get punished. They'll just fly first-class instead.

By discouraging lavish corporate jet purchases, we're only harming the people who build those jets, those poor Cessna workers who are losing their jobs as you read this.

Banks don't want to lend their TARP money, but they seem perfectly willing to spend it on luxuries. I've never really bought into trickle-down economics—any theory where the best analogy is urination isn't a theory I'm comfortable with—but when it comes to lavish expenditures by CEOs, it works.

Who are we to try and put a stop this kind of behavior just because it's immoral, and bad for the shareholders?

It's good for America!