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Posted: May 01, 2009

The economist: What is legal vs. what is right

Calling into question the role of personal responsibility in the current economic downturn

Tucker Hart Adams

As the country moves through this economic downturn and the government struggles to take appropriate actions to ease the severity of the contraction, I am struck by the conflict between what is legal and what is right and troubled by our unwillingness to share in the responsibility for what occurred.

Take, for example, financial institutions and the measures being adopted to deal with them. Was it right to pay management tens of millions of dollars a year? Of course not – no individual is worth that much, whether he leads a football team or a bank.

Was it legal? Certainly. CEO pay is set by boards of directors who are elected by the shareholders to look out for their interests. Do you and I share in the responsibility for what occurred?  Of course we do. If we voted for the directors who approved enormous pay packages, or kept our money in mutual funds that voted for them, then we put
our stamp of approval on their actions. 

Should employees be required to pay their bonuses back if their institution received money from the financial stabilization package? It’s probably not legal to require it, but it may be right, not for the junior level employees who had bonuses tied to performance goals – the secretary who increased her typing speed by 10 words per minute, the salesperson who brought in 100 additional customers – but for the senior officers responsible for the company’s performance.

The bonus system, legal but clearly not right, needs to be revisited and reformed. It is the board’s responsibility to see that this occurs and we, the shareholders, have a responsibility to vote against directors who don’t insist on this. It may be legal to say that’s too much work, that the government take care of it, but it isn’t right.

What about taking people’s words out of context to make it look like they support something they actually oppose? We do that to our political leaders all of the time. Was it legal for the Colorado Republican party to take an accurate quote out of context and make it the centerpiece of an anti-Obama ad the day he came to Colorado to sign the stimulus bill, making it look like I was a participant in their rant?

Probably, although lots of people told me I should sue or call a press conference to denounce them and switch my party membership to the Democrats. I’m not going to do that – there is no point in voting in the primary in Colorado Springs, at least on my side of town, unless you are a registered Republican –  but, legal or not, it wasn’t right. 

Is it legal to attempt to govern the state of Colorado by constitutional amendment? Apparently, since we have dozens of amendments. Is it right? I don’t think so. The U.S. form of government is not a pure democracy; it is a republic, a sovereign state ruled by elected representatives. We choose the best people, expect them to make thoughtful, informed decisions and, if we don’t like their choices, vote them out of office.

Instead, something like 97 percent of all incumbents win re-election and, in Colorado, we just amend the constitution if we disagree with their actions. It’s why we have such a mishmash of conflicting laws that are worsening our economic decline.

What about keeping everything we earn for ourselves, giving nothing to those who are less fortunate? What about working the system for all you can squeeze out of it? What about selling a television or making a loan to someone who is unable to afford it? All of these things may be legal, but many are not right.

Rather than abdicating more personal responsibility to government, rather than looking for scapegoats while we ignore our role in creating the problem, rather than returning to our profligate ways of spending more than we earn, I hope we
will rethink our values. In small-town Arkansas, I was raised on aphorisms.

“A man’s word is as good as his bond.”

“All things in moderation; nothing in excess.”

“A penny saved is a penny earned.”

Maybe my parents were right.

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Tucker Hart Adams, president of the Adams Group, monitored and analyzed the Colorado economy for 30 years. She can be reached via her website, coloradoeconomy.com.

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