America is still fascinated with “The Price is Right.” We watch HGTV to discover the right price of real estate. For many generations economists have searched for the right price, the just price.
How much rent should the landlord be paid by the farmer of his land? How much is a loaf of bread worth? The proper compensation for a farm worker is the subject of a biblical parable. These, in their many forms, are perennial questions.
Therefore it is no wonder that today we ask how much is an outstanding athlete worth? Kobe Bryant, Alex Rodriguez, Andrew Luck — are they worth what their clubs are willing to pay them? How about teachers, administrators, basketball coaches — are they paid appropriately?
What is the right compensation for a wholesaler or a retailer who operates between the manufacturer and the consumer?
We have a suspicion of middle-men, particularly when the commodity in question is money. Hence, we easily question the rewards paid to bankers, brokers, and bond sellers. Our society still operates with the ignorance and prejudice of the middle ages against money and services.
This biased thinking refuses to recognize the contributions to our lives generated by activities beyond agriculture, mining, and manufacturing. Even construction has to battle for recognition and respect.
In economic development, if our efforts do not result in tangible products that can be shipped, they are not called “goods.” The idea is not accepted that a community could benefit from another restaurant, barber shop, electrician, accountant or attorney. Just look at what types of firms get property tax abatements.
Contemporary thinking has people who trade money (modern money changers) painted as parasites. Wall Street types who invent new means to lower transactions costs are evil do-ers. The general public does not understand swapping risk, although that same public is easily enticed into betting on fantasy sports teams, Powerball numbers, and playing black-jack.
The extensive discontent with compensation for executives, particularly those in the financial services industry, is largely because we do not take the time to understand the function of money and the role of insurance. That is how we come to see other people’s rewards as “obscene” and “unnecessary.”
Economics has taught us that compensation is that sum necessary to bring forth the services of a worker of a given skill level. If you want an hour of work from an expert plumber, you will pay more than you would for an hour from a novice plumber. How much should you pay for someone’s advice on how to manage your money? Should you pay on the basis of past performance for advice to someone else or defer payment for two years until you see how successful his/her advice proved to be for you?
Outrage is natural when so many of us have seen the values of our homes decrease, our jobs disappear, and our pensions erode. We want to blame someone. We don’t know what a hedge fund is, so a hedge fund manager is a good target.
The truth is that we all contributed to the housing bubble. It was not solely the builders, the bankers, the mortgage brokers, or the federal housing agencies. It was generations of believing the American dream could be realized best by universal home ownership and that wars could be pursued without costs to our society.
Morton Marcus is an independent economist, writer and speaker formerly with the IU Kelley School of Business.
Business
EYE ON THE PIE: Compensation levels did not cause the recession
- Business
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‘500’ gas stations being sold to Speedway LLC
After several decades in business, the area’s familiar “500” gasoline stations and convenience stores will soon be missing from the roadsides of Vigo and Sullivan counties.
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Business Cents: Customers and companies: Sugar goes further than vinegar
Working with companies for more than decade I am still shocked to learn how not only companies react to customers but also how rude customers can be to companies.
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SOCIAL SECURITY: Can’t work because of disability? Let us help
Disability is something most people don’t like to think about. But if you’re not able to work because you have a disabling condition that is expected to last at least one year or result in death, then it’s a subject you may not be able to avoid.
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Naysayers should treat good news as good news
I like to complain as much as anybody else. In truth, I may do more than my share of finding fault and wagging a finger in warning. Nonetheless, I’m tired of commentators (including many economists) who find nothing good and only the darkest clouds for the past few months.
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All mothers appreciate extra help
Think of all the times and ways that your mom has helped you over the years — when you were a child, and after you became an adult. With Mother’s Day upon us, now is a good time to pay mom back with a little Extra Help — with her Medicare prescription drug costs.
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Upcoming meetings
The Terre Haute Chamber of Commerce is hosting a health care reform seminar for businesses from 2 to 3:30 p.m. on Tuesday at Old National Insurance at 925 Wabash Ave., suite 200.
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Indiana ranked best place to do business in Midwest
Indiana was ranked as the best place to do business in the Midwest and the fifth best nationwide in a survey of more than 500 chief executives by Chief Executive magazine.
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First Farmers rated among top 100 community banks
First Farmers Bank & Trust of Converse was named one of the 100 top-performing community banks for 2012 by SNL Financial.
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Newsmakers: May 12, 2013
Employer Support of the Guard and Reserve has recognized John Thompson, president of Thompson Thrift Construction, and Paul Thrift, president of Thompson Thrift Development, as “Patriotic Employers.”
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On the Move: May 12, 2013
Stacey Joseph, a realtor in Terre Haute, has earned the Certified Residential Specialist designation by the Council of Residential Specialists, the largest not-for-profit affiliate of the National Association of Realtors.
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Chamber lauds four with Business Recognition Awards
Congratulations to our Business Recognition Awards winners! Our Awards Luncheon at the Meadows Banquet and Conference Center was a great event to wrap up Business Recognition Week, sponsored by Union Hospital. At the Luncheon we recognized four local businesses as the 2012 Business Recognition Award winners:
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ISU students provide detailed grocery analysis
As the National Cooperative Grocers Association makes business decisions in the coming years, the organization likely will take into account an analysis of some of its competitors – about 4,000 of them.
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Construction firm holding grand opening in Marshall on Friday
Construction, H&H LLC is holding a grand opening and Marshall Chamber of Commerce ribbon cutting ceremony on Friday at 812 N. Second St. in Marshall, Ill.
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AP Source: Subaru to expand Indiana plant
Subaru plans to expand its Indiana factory and add workers to build the Impreza small car in 2016, a person briefed on the matter says.
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Transit proposals can prove to be game changers
After baseball, my favorite TV watching is the government channel. Here I can see the local government in action or local government inaction.
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On the Move: May 5, 2013
Melissa Schollaert, RDH, HHP, has been added as a counselor of holistic health and nutrition at The Maple Center for Integrative Health.
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ISU set to offer financial planning program in 2014
When Indiana State University junior Jennifer Groth began scheduling classes last semester, she planned them out by thinking of an academic program the university does not yet offer. Groth will be one of the inaugural students in the financial planning program that ISU will begin to offer in spring 2014.
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Newsmaker: May 5, 2013
Gov. Mike Pence announced the appointment of Jessica Robertson to commissioner of the Indiana Department of Administration, a role she will begin on Wednesday.
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U.S. Postal Service opens village office in Worthington
The U.S. Postal Service officially opened the 40th Village Post Office in the Greater Indiana District on Monday in Worthington.
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How consistent is your business?
There are six areas in which consistency is critical in the majority of companies. Too often, business owners feel as they are “chasing down” rather than “leading it along.” If you can get a high level of consistency with your standards and practices, then your company will benefit.
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Good time to try Spanish online service
Cinco de Mayo is May 5 — a time to celebrate Mexican heritage and pride. Why not join the celebration by visiting Social Security’s Spanish website, where you’ll find a number of useful services and a wealth of information in Spanish.
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First Financial’s net income up 3 percent
First Financial Corp. has announced results for its quarter that ended March 31. The Corp.’s net income increased 3.4 percent to $7.7 million, compared to $7.4 million for the same period of 2012.
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Curtain goes up on new theater owner
The Indiana Theatre in downtown Terre Haute is under new ownership with a new purpose.
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Indiana Theatre SOLD!
The Indiana Theatre at 683 Ohio St. is sold.
Rob Lundstrom, who owns the Copper Bar and Louise’s, took possession of the historic downtown theatre on April 25. -
Higher education completion rates questioned
Spring is really here. Baseball is being played, the Cubs are already tragic and Faye of the Forest reappeared on the back deck. She was parked on the railing as I sat down to write this column.
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Vectren Corp. awards $2.3 million in grants
Vectren Corp. has announced that it awarded more than $2.3 million in 2012 through the Vectren Foundation and corporate contributions.
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Hard work, good attitude produces success
Like clockwork, Indiana State University graduate Joe Evelo regularly provides monthly updates to the first client he signed up when he started his financial investment career more than 35 years ago.
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On the move: April 28, 2013
Old National Bank has promoted Howard Mills to vice president, mortgage loan originator.
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Newsmakers: April 28, 2013
Lenise Kohlway of Spencer was presented with the WorkOne Achievement Award last week for overcoming several employment barriers and pursuing a better life for herself.
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Ivy Tech offers free business counseling
The Ivy Tech Business and Entrepreneurial Services Center and the Terre Haute chapter of SCORE are offering free, confidential business counseling and low-cost high-impact training workshops to aspiring entrepreneurs and existing small business owners.
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