Now that Citigroup's gone and cancelled delivery of that $50 million corporate jet that it ordered and John Thain, the profligate former CEO of Merrill Lynch 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 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 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!
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