Economies of Obsolescence, I
discussed how the Formula 1-like speeds of change we all
face in the twenty-first century are sending us rapidly
Blue collar workers got the chance to be the first in
line, but skilled workers whose jobs can eventually be done
by overseas penny labor will be joining their blue collar
brethren eventually. I
personally watched as an upper tier manager of a major
vacuum-cleaner manufacturer in my hometown saw his job dive
into the Chinese abyss.
His job didn't dive in alone.
One thing you can be sure of is that
the politicians will never be made obsolescent, as they seem
to operate in a world immune from the yardsticks the rest of
us are forced to measure up to.
They are truly masters of defying reality.
In the real world, someone or something is made
obsolescent when someone or something better comes along.
'Better,' in this case, can have several meanings:
less expensive, more powerful, easier to work with,
safer, more value.
By these definitions, politicians
should be obsolescent.
Compared with politicians a hundred years ago,
today's politicians are:
In 1900, an American senator earned $5,000/year (about $120,000 in today's money)
The same senator today earns $174,000.
Presidential salaries have fallen in real terms.
Factoring in inflation, Jimmy Carter earned more in
1980 ($200,000/year) than Barack Obama earns today.
But Presidential benefits packages are better than
they've ever been and no one can ignore the lucrative
speaking circuit and memoir-writing racket a recent
ex-President like Bill Clinton has pocketed millions of
Less powerful -- that is, less
powerful in what they can or will do for the people they
They're actually more powerful in what they can do
40% of all American senators as of 2003 were
Harder to work with.
I am talking about working with and for the people
they represent, not working with big business to facilitate
corporate and personal gain.
In the Soviet Union at least, everyone knew the guys
in government didn't represent them.
The stooges standing in as representatives for most
Western democracies are actors playing civil servants.
That's what you call people who get paid more for
The politician's ability to defy
reality is not limited to the United States.
The basic salary of a British member of parliament
(MP) is £64,766 plus a generous expense account.
MP's from constituencies outside London can claim up
to £24,222 in mortgage interest, rent, utilities, and
furnishings and have access to another £100,000 per year to
employ staff and hire office space.
This a huge jump from 1900.
Until 1911, British MP's earned nothing, and even
then, they were still expected to support themselves with
Members of the European parliament do
pretty well, too. Starting
in 2009, all European parliament members receive a basic
monthly salary of 38.5% of a European court judge.
This comes to about $10,000/month plus the expense
For members coming from poor Eastern European countries,
this is like winning the lottery.
The parliamentary reps can earn more money sitting
in Brussels than the President/Prime Minister of their own
Let's put all of this into perspective.
US Census Data from 2005, an American earning as much as
a senator would chart in the top 5.5% of earners.
An American earning as much as the President would be
in the top 1%.
To obtain these kinds of salaries in
the private sector, you would have to be highly educated
and/or creating some serious value for the company you work
Doctors can earn a senatorial salary, but must spend over a
decade in school and training and will probably have student
debts to pay off. Entrepreneurs
can make this amount and possibly much, much more, but they
incur great risks and have a better chance of making nothing
than they do of making a fortune.
No regular job is going to pay someone
$175,000/year unless that person generates more than
$175,000/year in value for the company.
And even if this someone generates more value than
his salary, he may still be made obsolescent because the
company feels they can find someone even cheaper who
provides a better return.
If we held politicians to this same
standard, each American senator and congressman would have
to generate at least $175,000 (plus all their vast expense
accounts) in value or else be booted.
But who assesses whether an individual politician has
The U.S. Congress doesn't.
The voters from that representative's constituency
don't. They have
nothing concrete by which to measure value.
Politicians are usually cast out, not because the
voter 'fires' them for not producing value, but because a
better-liked, slicker politico came on the scene and told
them what they wanted to hear.
Politicians are valued by how much they're liked,
not by how much they've achieved.
Indeed, in the case of Barack Obama, he
was being valued as a JFK reincarnate and savior revisted
during his run for the Presidency.
None of this value was based on his past
Congressional record, which was unremarkable.
It was all assessed on how he was perceived by the
masses of voters. A politician's job is to promise value but
he won't necessarily be chucked out if he doesn't produce
it, unless someone more likable comes along or his term
limits have been reached.
I remember when Bill Clinton was
running for the Presidency in 1992.
I was overseas at the time, but still caught his
appearances on the popular talk shows of the day and on MTV.
He was the first presidential candidate to treat the
job as just another celebrity position, a convenient job
from which to utilize perks and score babes.
We judge celebrities' "value" by how much we like the
movies or television shows they appear in and to a much
lesser extent, about his or her character as the media
Clinton and his wife personified youth next to the
aging George H.W. Bush.
They promised a balanced budget and national health
care, and everyone, including my parents, thought change had
what real value did the Clintons produce?
Forrest McDonald, acclaimed historian of the American
presidency, asks a similar question:
"Was there any major legislation he was responsible
approves of what he's doing, but no one can say anything he
slavishly sought expensive gifts and pardoned tax cheats,
cocaine dealers, trade embargo flaunts, and corrupt business
partners on his last day in office.
Clinton defaced whatever nobility of the Presidency
We'll outsource the programming tasks
to produce the code to run government software.
We'll outsource the security of U.S. personnel in
Iraq. But the
lucky politicians can rest easy that we won't ever outsource
The Prime Minister of China makes just
$6,000/year, equivalent to his country's GDP per capita.
The President of the United States makes
$400,000/year, 8 ½ times the U.S.'s GDP per capita.
If a widget maker in China makes 8 ½ times less
money for doing the same task his American counterpart does
(adjusted for purchasing power parity, as we've done here),
the American's job would be outsourced.
It doesn't matter an iota if the American widget
maker is fantastic at his job, and the Chinese man only
When the price differential between him and the
Chinese man becomes great enough, the American will lose his
job, and we might find lower quality widgets on the market.
Our politicians aren't doing a fantastic job nor are
they performing it for a decent price. Not by a long shot.
It's as if we're paying the price of a Ferrari for a
shoddily constructed Oldsmobile Omega.
Let's examine a few reasonable measures
of American politicians' value.
None show the group as a whole earning their keep.
Is the average man today better represented than the
average man in 1900?
Not as far as I can tell.
Since the U.S. population has quadrupled since 1900
with no change in the size of Congress, each
representative's attention per constituent has been diluted
by 75%. It seems
only natural that as the population of their constituencies
rises, reps will only focus on the most important concerns --
in other words, the concerns of their area's biggest
Has the average man today benefitted more from the
government's financial expertise than a man of 1900?
Hmm, let's see.
In 1900, the debt of the U.S. Treasury was $1.55bn
(equivalent to $40bn today),
$525 per person in today's money back in an age when
there was no income tax.
In 2000, the U.S. debt stood at $5.6tr.
A decade later, the debt stands at $11.2tr
or $36,684 per person. I think we can conclusively say that
our politicians haven't grown more fiscally responsible in
light of their own greater affluence.
I am not one of those people who
believe politicians are there to solve all our problems.
If they were earning the GDP per capita, no one would
expect them to.
But when they're taking home salaries in the top 1-5% of all
earners , we do have the right to expect these guys to be in
the top 1-5% of performance.
It almost begs the question why these
guys get a salary and expense account at all, when they
always have a back-door ticket into prestigious law firms
and industry -- the Carlyle Group is always hiring
ex-politicians -- and can receive huge speaking and book
Bill Clinton and his wife collected $18m in advances for
Newt Gingrich was offered $4.5m for his.
When Harry Truman exited the presidency in 1953,
there was no Presidential pension.
That law didn't come into existence until 1958, and
you have to wonder why it was ever needed.
Even in Truman's day, there were big bucks in
Life offered him the equivalent of $4m in
today's money for the exclusive rights.
With all the access to back-end deals,
future cushy private sector jobs, and government contracts
they can pass to their friends, you'd think bigtime
politicians wouldn't collect a salary for their "efforts,"
they'd pay to have the jobs.
What are our political office positions today but
And if one wants to buy a business, that business is
assessed a value based on its current and expected future
earnings and then the agreed-upon price is paid to the
business owner(s). Politicians'
supporters, lobbyists, and political cronies basically buy
the politicians their jobs, but this money goes for PR, ad
time, polls, good-will tours.
The money doesn't go to the ostensible business
owner, which in the United States' case is the American
Rather, the situation is the opposite:
the American people are bilked yet more cash to pay
for the politicians' crooked dealmaking.
Figure that out.
We have to pay them a salary so they can rip us off
yet more money.
rest of us are paid our salaries so we can create more value
for our organizations and even then we can be made
we were caught ripping off our bosses, we'd be fired and/or
face prosecution. When
they rip us off, they get rewarded after their term of
Politicians constantly remind us of the
reality we're forced to live in.
It's about time we demand them to live in the same
reality they impose on us.