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Capitalist Villain Gouges his Employees   You are logged in as Guest
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Richard Jernigan

Posts: 3259
Joined: Jan. 20 2004
From: Austin, Texas USA

Capitalist Villain Gouges his Employees 

http://tinyurl.com/d9su292

RNJ
  REPORT THIS POST AS INAPPROPRIATE |  Date Nov. 25 2012 23:56:04
 
NenadK

Posts: 137
Joined: Jun. 6 2010
 

RE: Capitalist Villain Gouges his Em... (in reply to Richard Jernigan

Wow great find! I have to say even as a shameless pinko I wholeheartedly support businesses that actually share profits with their employees. I'm not talking about the occasional bread crumb here and there like some businesses do in order to create an image of caring about the community. This guy seems to be the real deal and I think if more businesses operated the same way I would have a different outlook on our current system.

Nenad
  REPORT THIS POST AS INAPPROPRIATE |  Date Nov. 27 2012 4:34:42
 
Richard Jernigan

Posts: 3259
Joined: Jan. 20 2004
From: Austin, Texas USA

RE: Capitalist Villain Gouges his Em... (in reply to NenadK

I worked for, and as a retiree still own part of an employee-owned company. It was the best job I ever had, including the time I ran my own consulting business.

I had almost complete autonomy. The company's 401K* contribution was 15% of my base salary. We had excellent health insurance, life insurance if we wanted it, and a retirement plan in addition to the 401K. We were audited by the government tax collectors every year. They told us that if we paid a penny more in employee benefits, we would be violating the law. We said, "Fine. We'll keep our accountant and benefit planner."

The way it was better than running my own business was that I felt I had a number of real peers to discuss things with. At previous jobs, and running my own business I felt pretty much on my own.

The company became employee owned in the same way as the one I linked to. It was started by a single individual. Some employees owned some stock, but the great majority was owned by the original entrepreneur. Under his leadership, the company accumulated some cash. When he decided to retire, at a fairly early age, the company bought his stock, giving him a retirement nest egg, and the stock was distributed to the employees over a couple of years' time.

When the entrepreneur retired, we had a picnic. He introduced a guy we all knew, who worked part time. He was a renowned management consultant. The entrepreneur thanked him for teaching him that a small company could be run like a happy family.

Traveling from California to a meeting in New England, I met up with engineers from General Electric, for whom I was working on contract. They were staying at a luxury hotel. They mentioned that their vice president had authorized the expenditure. I was staying at a more modest, but perfectly decent place.

They said, "Richard, you make more money than we do. Why don't you stay at a nicer hotel?"

"If I paid more, your company wouldn't reimburse me for the added cost. It would have to come out of my company's overhead account, reducing profits."

"It's the same for us. That's why our vice president had to authorize it."

I replied, "It would make my secretary angry when I turned in my expense account. She is an excellent secretary. I wouldn't like to annoy her."

"Why would your secretary care about your expense account?"

"She is one of the owners of the company."

Every economic system has its weak points that tempt flaws in human character. Good laws, good people and careful arrangements can ameliorate the abuses.

RNJ

* In the USA a 401K plan, named after the statute section that set it up, is a fund that the employer and employee can pay into. Neither contribution is taxed. There are legal limits to how much each can contribute. Another advantage to the setup is that the funds can be invested, with the investment proceeds being tax free.

When the employee retires, he or she periodically withdraws money from the 401K plan. This money is taxed, but since the person is retired, it is probably taxed at a lower rate than it would have been while he or she was working. When the owner of the 401K reaches age 70 1/2, money must be withdrawn each year at a rate determined by life expectancy tables. The withdrawals are taxed at the person's income tax rate. In my own case, the annual tax-free returns on investment handily exceed the required withdrawal.

The tax free contributions and the tax-free accumulation of investment proceeds is a significant advantage. Any company can set up a 401K plan for its employees, but many do not. A typical 401K plan for a non-employee owned company might be a 6% contribution by the employee, half of which (3%) is matched by the employer. When I would mention that my company contributed 15% of my base salary, without my being obligated to contribute anything--but I could contribute up to 15% as well--I was often met with disbelief. I don't remember ever meeting anyone working for a non-employee owned company who knew that 15%+15% was the legal limit.

RNJ
  REPORT THIS POST AS INAPPROPRIATE |  Date Nov. 27 2012 16:43:00
 
NenadK

Posts: 137
Joined: Jun. 6 2010
 

RE: Capitalist Villain Gouges his Em... (in reply to Richard Jernigan

Great post Richard. I'm happy to know that there are people out there that do have positive experiences in the private sector that aren't very high up the ladder. I myself have only recently finished school and am currently working at my first job so I certainly don't have a lot of experience to share in this discussion but I can say between my current public sector job and my placement in a private firm I can definitely see good sides to both.

Thanks for the explanation on 401Ks. I've heard of them but never knew much since I don't live in the US. I was actually going to ask you to clarify what you meant then I saw that you already did at the end of your post.

quote:

Every economic system has its weak points that tempt flaws in human character. Good laws, good people and careful arrangements can ameliorate the abuses.


I couldn't agree more. Lately I tend to just shake my head at the bickering between supporters of various ideologies most of which have never been applied in practice the way they are described in theory. Even though I'm not necessarily opposed to the private sector I am I would say quite left leaning but it's frustrating to discuss these ideas with people to whom concepts in their heads take precedence over actual events in the world.

Cheers,

NK
  REPORT THIS POST AS INAPPROPRIATE |  Date Nov. 27 2012 23:48:55
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