Monday, November 30, 2009

Corporate Jets: Extravagance or Efficiency?

The Obama administration and its allies in Congress—not to mention their political supporters in the news media—lose no opportunity to demonize business leaders, doctors, others with high incomes, and big companies themselves as “enemies of the people.” The business executives' salaries are said to be too high, their bonuses too generous, the corporate life style too extravagant; doctors charge too much; oil companies are gouging the public, etc. All this is grist for the propaganda mill of the Marxist doctrine of class warfare. The wealthy, the successful are singled out as greedy, wasteful public enemies—but the government will do “justice” by dictating how much doctors can charge, what executives salaries should be, how large bonuses should be, how businesses should be run (or merged or sold off), what products they should sell (e.g., “green” cars) and what kind of fuel should power the factories. And even what kind of transportation business leaders should use. All these things are not to be decided be any economic measure—in fact, the intent is to bypass economics entirely in favor of an anti-capitalist ideology. Economic disparity is in itself taken as evidence of a “problem” and a need to “spread the wealth”. Only the government, we are told, can correct the situation. Only government can know what is the right price for bonuses, doctor's services, etc., and only it has the power to enforce such “fairness.” Whether the government has the constitutional authority to do so or violates people's rights or liberty seldom comes up in discussions of these government interventions.

When the heads of the three American auto companies were summoned to Washington for a Congressional hearing, they were roundly criticized for arriving in their corporate aircraft. As far as I can tell, the question never came up as to whether corporate jets were an efficient, economic use of resources. It was just automatically assumed they weren't. No evidence was deemed necessary. They were simply guilty. Bad people, whom everyone should despise.

But companies invest in corporate jets for the same reason they routinely invest in telecommunications equipment, computer software, machinery and other things that promote efficiency and productivity. With private aircraft, business people can make several stops at different locations and return home the same day, saving time and travel expenses that would occur it the same trip were made over several days via auto, train or commercial aircraft. The latter can land at 500 airports, while corporate aircraft can land at 5,000. Commercial carriers have rigid schedules and destinations while private jets can fly at times of convenience and have great flexibility of destinations. Those are the same reasons so many people drive automobiles instead of taking buses.

Business aircraft also allow several employees on the same plane without the expense of additional tickets that would be required on a commercial aircraft. And those employees can meet, plan and work with each other in complete confidentiality and security aboard business aircraft.

Of course, not every business has its own aircraft or would benefit by doing so. But certainly the politicians in Washington do not know how to make such decisions for businesses. Clearly the management of companies that choose to invest in corporate aircraft have found it helps them become more efficient, productive and competitive. A recent study by Michael Dyment concluded, “In conducting this study, we found that companies using business aviation outperform non-users across every key financial and non-financial measure of business success.” Here are some specific findings of the study, which covers 2003 to 2008, the latest six-year period for which complete data was available:

-Average annual earnings growth was 434 percent higher for users of business aircraft than for non-users:

-Total stock and dividend growth was 252 percent higher for users...

-Total share price growth was 156 percent higher for users...

-Among Business Week magazine's 2009 “50 Most Innovative Companies,” 95 % of the S&P 500 companies were business aircraft users.

-Among Business Week's 2009 “25 Best Customer Service Companies.” 90% of the S&P 500 companies were business aircraft users.

-Among Fortune magazine's 2009 “100 Best Places to Work,” 86 % of the S&P 500 companies were business aircraft users.

-Among Fortune's 2009 “World's Most Admired Companies,” 95% of the S&P 500 companies were business aircraft users.

Friday, November 13, 2009

Taxing to Reduce Obesity and its Costs?

Of the more than ninety columns on this blog, I have written all but one. Now I have found one more by another author that I would like to share with you. It was written by Gregg Cavanagh in response to a proposal by two professors for a national tax on sugar-sweetened beverages. The professors claim a tax on soft drinks would provide about $150 billion in tax revenue over ten years and about $50 billion in direct health benefits. They claim it would help Americans lose weight and that the U.S. spends $147 billion on medical costs associated with overweight and obesity. But Cavanagh, with wit and logic, shows such a tax would be unfair, ineffective, and downright ludicrous if its basic idea is consistently applied. More importantly, he also shows that the real solution is not another government program, more taxes and government intervention but rather individual responsibility and action. Here is his article:

In February, I weighted 280 pounds. I'm 5 feet 10, and my claim that I was “big-boned” was wearing pretty thin. Even a mastodon my height wouldn't weigh that much. So the recent proposal by Kelly Brownell and David Ludwig to tax sugar-sweetened beverages got me thinking.

My first reaction was that Brownell and Ludwig didn't go far enough. If sugar-sweetened soda should be taxed, how about ice cream, cake, doughnuts, cookies and candy? They have plenty of sugar in them. And what about sugar? It has plenty of sugar in it, too. We should tax anything with lots of sugar in it.

Unfortunately, I don't think that tax would work for people like me. Ive been drinking sugar-free soda for 30 years. I cut out sweets long ago. No, under even an expanded Brownell-Ludwig tax, certain categories of overweight people would fly (all right waddle) under the radar. We need a wider net.

Maybe we need a tax on foods high in fat and carbs, too. We all know what a diet of fast food can do to the figure. But it wouldn't be fair to stop at the fast-food restaurants, would it? After all, regular restaurants, vending machines and even grocery stores are loaded with sugar, fat and carbs. Let's tax 'em all!

But wait a minute. I know plenty of people who eat sugar, fat and carbs who aren't overweight. Why should they be discouraged from eating or drinking the things they like? Why should they be taxed for a problem they don't have?

Maybe the real problem is quantity. People who eat in moderation tend to be slimmer, and people who overeat tend to be heavier, right? Maybe we need a portion tax. The person who says, “supersize me” pays a percentage. The person who orders the regular combo gets off with a warning.

Still, there are those freaks of nature who eat like horses and stay skinny as rails. Something about metabolism. Sure, we may hate them, but is it really fair to impose a portion tax on them? If we discourage them from eating those big meals, they may just waste away entirely. Hmmmmm.

I've got it! Why don't we just enact an obesity tax? After all, that's what we're really trying to prevent, isn't it? We can mandate that everyone go to the Department of Body Mass once a year and weigh in. A person's body mass index will determine his or her obesity tax for the year. Heavier people tend to emit more carbon dioxide, so the tax will encourage them to reduce their carbon footprints, too.

Of course, poor people can't afford an obesity tax, so rich people will have to pay more. Rich people can afford weight-loss programs and personal trainers anyway, so it's only fair. Flexibility can be provided through a cap-and-trade system, under which people can trade fat credits on the open market. Al Gore would benefit in more ways than one.

I hope I'm making my point. “Experts” like Brownell and Ludwig invoke their credentials to push their personal agendas, and the federal government legislates those agendas to herd us like sheep. The government that declared the failed wars on poverty, crime and drugs stands ready to declare a new war on obesity. The government with the $12 trillion debt can't wait to tell us to stop overindulging. And once more, freedom yields.

So what's the solution? Well, in February, I stopped blaming my ancestors, my body, my job, the food industry and the advertising industry, and took responsibility for myself. I changed the way I eat.

It hasn't been a piece of cake. Exercising freedom isn't always easy. But so far, I've lost 82 pounds. And I've done it without a federal stimulus, a cash-for-calories program, or Brownell's and Ludwig's sugar tax. Granted, it's just one little gesture in support of freedom. But I figure I'm bigger—and smaller—for it.