Do as I say, not as I do.

Remember when leaders would actually lead? When leaders led by example? When a leader would say “follow me” and then actually lead the way into the unknown; assuming all the risks being asked of everyone else? When it was anathema to ask a person to do what you yourself wouldn’t do?

There are still instances where we witness this kind of leadership. The U.S. Military practically oozes it. One of the more popular (and literal) slogans of the U.S. Marine Corps is “First to Fight”; they mean it…and they live it.

U.S. Army Rangers say “Rangers Lead the Way”; they mean it …and they live it. Navy Seals say “The Only Easy Day Was Yesterday”…and I believe them.

Isn't it strange that kind of leadership exists in our military but is completely absent in our elected officials? Our elected officials certainly have no shortage of challenges available to demonstrate this kind of leadership…of course, without all that risk of being killed.

Take the matter of health care for example. Forget for the moment what your personal opinion happens to be regarding the soundness of a national health care plan, and instead focus on how our elected officials work themselves into the very plan they would impose on the rest of us.

As a quick primer; The Affordable Health Choices Act, drafted by Senator Edward Kennedy’s staff…with a little help from the Health, Education, Labor and Pensions Committee…is the legislation that the President is urging swift approval of. It would, in effect, create an HMO style health benefit plan administered by the government.

There is however, a curious item written into this legislation. Surprisingly (or perhaps not) the legislation specifically exempts federal employees and members of Congress from the plan. This little tidbit was covered in Friday’s Wall Street Journal. So in essence, we get one government plan for all of “us”…and a different (meaning better) plan for our “leaders”.

Again, it really doesn’t matter whether you agree or not that there should be a national health care plan. But it absolutely does matter if the people we elect have the audacity to make laws that ensure that they are better provided for than you.

I have been told that there was a time when public service was a noble thing. When elected officials actually took up the banner of the people; and worked diligently to serve them. I have also been told that dinosaurs once roamed the earth.

Sadly, I haven’t actually witnessed either of these events...and only the dinosaurs left any evidence of their existence.

I am willing to bet that I see a real Jurassic Park (with living dinosaurs), well before I see any elected official take up a principled position on any matter, if doing so carries with it any risk (no matter how small) of losing a re-election bid.

So here’s the only slogan that I could think of that our elected officials can say with meaning; and actually live up to: “Do as I say, not as I do.”

The Blind Leading the Blind

Did you know there is an entire market surrounding the nature and structure of executive compensation? Just go to Google.com and do a search for “executive compensation consultants” and enjoy looking at the more than 6 million search results.

I’m going to go ahead and assume that the parties involved in those companies are seasoned, experienced professionals who more than likely have specific industry expertise; and understand how to best tie compensation to performance. They probably even have specific industry expertise in areas like manufacturing, IT services, financial services etc.

Which makes me wonder why, with all that expertise out there, our government is putting the task of evaluating executive pay in the hands of the geniuses in Washington, DC.

(I will for the moment ignore the fact that the government has absolutely no business whatsoever in matters of compensation in the private sector…but will undoubtedly get to that another day)

One genius in particular seems to be leading the charge, and that’s good ol’ Barney Frank, the Congressman from Massachusetts’s 4^th congressional district; and the chairman of the House Financial Services Committee since 2007.

This of course strikes me as odd because Mr. Frank has absolutely zero experience in doing anything other than being a politician. According to the Biographical Directory of the United States Congress; the only thing Barney Frank has done in his life besides go to school is be in politics.

Nothing wrong with that I suppose. Unless of course you are going to take your utter lack of experience operating in the real world of business and attempt to restructure real world companies in a manner you see fit; based upon all that solid intelligence you receive from…hey who are you receiving your intelligence from??

You have no experience to look back on. You never ran a company. You never started a company. In fact, it doesn’t even look like you even worked in a company. You have never had to worry about increasing revenues, cutting costs, employee retention, competitive pressures etc. etc. How can you possibly even consider weighing in on matters about which you know nothing?

Oh I’m sure Mr. Frank would cite all the business leaders he talks to and the conferences he’s attended…but really, the only thing he seems to have ever been in regards to business, is an observer.

So by that logic, I should be a coach in the NFL…because I have certainly observed a lot of it.

Since Mr. Frank is so gung-ho to re-vamp compensation, I propose he starts somewhere he actually has some experience. Why not start at the place that has run more money into the ground than anyone else…Congress.

Congress has helped to run up trillions of dollars in debt while simultaneously failing to solve the enormous entitlement problem this country has. So how about we make Congress participate in some of that “shared sacrifice” I keep hearing so much about these days?

My proposal is simple and fair. Congress immediately forgoes the standard congressional salary which is $174K plus benefits (for rank and file members). In place of the standard salary, Congress’ compensation is reduced to the 2008 median family income of $50,233.

This new pay scale would remain intact until there is a balanced budget or a surplus. And whenever a deficit is run up again…right back to the median family US income for all members. Such a compensation plan would tie Congress’ pay to two significant outcomes; decreasing the deficit and increasing the median family income. Everybody wins.

Of course this would require self sacrifice, discipline, long term strategic thinking and an understanding of economics. In other words, Congress isn’t qualified to do the job.

And that kind of explains everything doesn’t it?

Realtarded....

Of all the monikers, titles, designations and certifications of which I am aware; the one that stands as the greatest beacon of meaninglessness is this: Realtor.

Problem number one is that to become a Realtor, you first need to get a real estate license; which isn't worth the paper it's printed on. A well trained monkey can get this license. I know because I have one....a license that is; not a monkey.

From there all you have to do is join the National Association of Realtors (NAR) and adhere to their "strict code of Ethics" and you have earned the right to call yourself a Realtor...provided of course you pay your annual dues.

Never mind that the "strict code of Ethics" is really just a list of common sense business practices that if transgressed, would probably get you sued anyway.

But boy do those Realtors like to tout that "code of Ethics" in all their ads. I assume they are banking on you (the consumer) thinking..."hey wait a minute; these 'non-Realtors' don't have any code of Ethics so they must be crooks. Quick...somebody find me a Realtor...!!!"

Don't get me wrong. I'm all for having your own little club where you can make up your own rules, play your own games and have your own secret handshakes. But when you pass it along to the consumer as a benefit to them...when it's really just for your own benefit...it rubs me the wrong way.

Far from being an organization that is working to drive down the consumer costs of buying/selling real estate, or from encouraging free market competition; NAR works diligently through its political action committee (RPAC) to accomplish consumer friendly goals like attempting to squash discount brokerage models and preventing banks from being able to sell real estate.

Oh wait a second...that doesn't help consumers. That helps Realtors at the expense of consumers.

Here's a quick math lesson to demonstrate how we are victimized by a pricing model largely insulated from any real competition:

Realtors will try to get a seller to agree to "the customary commission" of 6% of the sale price of a home; though in 2008 the average commission was 5.2%. Now imagine you paid $400K for a home and two years later are selling it for $500K. You will pay a commission in the amount of 5.2% of $500K or $26K.

But wait a second...you already paid $400K when you bought the house. All that money from the sale is going to pay off your existing mortgage and recoup your down payment (if you had one). Which means that you are paying a commission on money you already spent...not just on money you made.

In this example, $20.8K of that $26K commission is based on money you already paid to buy the house in the first place. As a percentage of your profit on the sale ($100K) that $26K commission is 26%...not 5.2%. How's that for being strictly ethical?

Fortunately we have the National Association of Realtors there to attack and discourage "discount" brokerages, prevent other entities from being allowed to sell real estate and to make sure all our Realtor friends can remain overpaid for the service they provide. These are the kind of shenanigans you can pull off when you donate more than $12 million to pro-Realtor candidates in Congress.

And by the way...have you ever seen a residential real estate sales contract? It's about 8 pages of standardized language, where all your Realtor has to do is fill in the blanks...literally.

What's that you say? Realtors are experts in negotiation? Without their expertise you would surely negotiate a lesser deal than you would with their assistance? That would be true if you were referring to Realtors selling their own homes...not yours. Unfortunately for you, in the typical residential real estate transaction the word negotiate is a euphemism for working to get a deal done any which way, so long as a commission check gets cut...and soon.

I have negotiated countless deals over the years. Some were real estate transactions; others were multi-million dollar highly technical business to business sales; and I have been trained in negotiation by Fortune 500 and global Fortune 50 (yes 50) companies during my career. I mention this only as a qualifier to my opinion that what passes as "negotiation" in the Realtor community is barely recognizable as such in other circles.

For example, have a look at the inane drivel that passes in the Realtor community as instruction on how to negotiate better:

"Help sellers put a lower offer into perspective. On a $200,000 home, an offer of $198,000 is only a 1 percent reduction. That's like offering $.99 instead of $1."

This pearl of wisdom comes directly from the Realtor.org website. You tell me if you think that foregoing $2,000 is the same as foregoing $.01. But then again it's not $2,000 to the Realtor...it's only about 5.2% of that; half of which is paid out to the other agent in the transaction so really, it's only 2.6%. In other words, your $2,000 actual loss is a mere $52 of commission to your agent. How's that for properly aligned incentives?

Now I know some will say, wait a minute, those Realtors work hard. They pull up available properties, tour buyers around those properties, manage the offer/counter-offer process, market homes for sale with ads, fliers, open houses, signs etc. etc. To which I say...so what?

Unless or until a Realtor's commission is tied to the profitability of a sale (or is pre-negotiated according to a meaningful cost structure in cases with little/no profit or where homes are sold at a loss) your Realtor is, according to the laws of mathematics, always benefiting themselves more than you. Naturally, they would take exception to this...but I think primarily because most of them can't add.

Let's face it, fliers can be printed for pennies per page, MLS membership costs a few hundred dollars annually, a sign costs about $20, and if you rented a limo to take you from house to house to house until you bought one; none of this would likely cost more than a couple thousand dollars in total.

That extra $20K+ is one mighty generous tip.....

Birds of a Feather???

Mandatory Marcus

Every once in a while I hear something so magnificently preposterous that I am forced to pause and wonder if I could actually have just heard it. Like last night (5/28/09)

I heard a radio ad from the Los Angeles County Federation of Labor on KABC 790 TalkRadio; the home of Dodgers Baseball. The ad is running during live broadcasts of Dodgers home games and supports something called The Employee Free Choice Act (EFCA); which is public relations spin to describe the elimination of the secret ballot method of voting to unionize in the workplace. The EFCA is designed to create a system whereby a union can be recognized without a formal election once a majority of members of the bargaining unit has signed union cards. In other words, it abolishes free private elections.

Now I could go on and on about what a horrid idea that is...but my problem here is actually with the ad itself; which you can listen to yourself right here. So you can really soak it in I have transcribed it here verbatim:

"Hi everybody, this is Rick Monday for the Los Angeles County Federation of Labor. There's only one thing more all American than baseball, that's service in the United States Military. Americans joined the service by signing their names and they ought to be able to join the union the same way.

The LA County Federation of Labor believes that every veteran deserves a good union job in a country they fought to protect."

This is so mind numbingly dumb, that I am forced to dissect it line by line in order to prevent my head from imploding as a result of spontaneous brain shrinkage brought about by the massive dose of stupidity this ad delivers.

So let me address it line by line, with my interpretation and response in bold:

"Hi everybody, this is Rick Monday for the Los Angeles County Federation of Labor."

I am an ex-athlete that played so long ago, nobody under the age of 45 even knows who I am. So thank God somebody is willing to throw me a bone and let me read some lines for money.

"There's only one thing more all American than baseball, that's service in the United States Military."

Actually there is no comparison. Generations of US Military personnel have served and some have died, in service to this country. Although it is "America's Pastime"...baseball is still just a game...on steroids.

"Americans joined the service by signing their names and they ought to be able to join the union the same way."

That this line could actually be written, let alone spoken, is a disgrace. An American joining the military is by no means an analogue to somebody joining a labor union. Union workers make cars, teach, fix some plumbing etc.

Oh and unions also artificially drive up the cost of US manufacturing and drive entire industries into bankruptcy; like the United Auto Workers; just ask GM and Chrysler. Other times unions work to ensure failing systems continue to fail, that competition is legislated away and that nobody can get fired; like the American Federation of Teachers. (see my previous blog)

American servicemen and women on the other hand, fight and sometimes die, to preserve our rights and freedom.

Odd. I can't seem to find any common ground here. Hmmm...let's see...going on strike to preserve above market wages vs. getting shot in some god forsaken desert in service to your country...nope, I can't seem to find a connection.

"The LA County Federation of Labor believes that every veteran deserves a good union job in a country they fought to protect."

I'm pretty sure that amongst the many things that every veteran deserves, is to be able to live and work in an environment that upholds the basic principals that they served to protect. Like the fundamental right to vote in privacy in a free election...even in the workplace.

As importantly, what every veteran deserves, is not to have the honor and nobility of their service cheapened and manipulated into a sales pitch by some pro-union lackey; especially when their service is being pimped out to drive support for a concept completely antithetical to the spirit of their service.

Now show some respect and take this ad off the air.