Corporate taxation without representation

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Let’s take a simplified scenario of the mechanics underlying the remuneration relationship between a corporation and an employee in the knowledge economy.

The corporation pays a white collar employee a certain salary and benefits. The corporation in turn charges its clients for the work performed by said employee a much higher rate, double or more (!) what the equivalent cost of the employee’s salary and benefits. This difference pools into a so-called “overhead” budget. The overhead budget covers things such as facilities’ rent, but by far, the largest chunk goes to indirect labor, i.e. executives. They in turn are supposed to make life better for everyone: customers – innovative products and services -, employees – job security -, shareholders -profit.

So even though a knowledge worker’s yearly time is worth say $200.000 on the market, a corporation retains half of the value before giving the employee $100.000 in salary and equivalent benefits. If corporations were democratic institutions, the $100.000 would be regarded as a “tax”. Given that a particularly talented employee could make $200.000 as an unaffiliated freelancer, the question arises as to why he or she should pay half of his or her market value potential as tax to the overhead pool of the corporation that employs him or her. Said differently, what services does the corporation provide the employee in exchange for taking away more than half of the employee’s fair market value? The classical argument is that the corporation provides “job security”. That is all great, and it can be seen as the employee outsourcing the job of managing an unpredictable future to others for a tax. But if that’s the case, shouldn’t executives be accountable to the employee when they fail to shepherd the business in such a way as to achieve the job security objective while of course maintaining a profitable bottom line? Seen from the lens of a democracy, don’t we have a case of “taxation without representation”? The employee is being taxed significantly yet he or she can’t vote incompetent management out of their respective positions. How much longer will white collar talent in the knowledge economy humbly abide by this outdated and one-sided view of organized work?

Emotions

Emotions

Emotions – sometimes they save the day, and at other times are the source of embarrassment or outright disaster. Whether regarded as an initiator of success or source of failure, emotions are necessary. That is because emotions provide the illogical response necessary to address that portion of reality that is non-deterministic. When reality exceeds our ability to make sense, in lieu of emotions, we would behave like computer algorithms, stuck in infinite compute loops. For humans, emotions represent an effective mechanism for dealing with high uncertainty and complexity circumstances that would otherwise constitute veritable traps of logic. Quite simply, we have been able to get where we are today more based on our ability to ignore logic than follow it. Every leap of faith that preceded a ground breaking innovation had an emotional impulse behind it. Progress is in effect humanity’s recurring impulse to cut the Gordian Knot.

Communism is dead. Long live (corporate) Communism!

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Communism

The sensible consensus is that communism became all but extinct with the end of the Cold War. I say it may be so, but the mindset that fueled it continues to live unhindered. Your next thought may be that I am referring to North Korea. But I have something much closer to home in mind: the U.S. corporate sector. Yes, you didn’t misread. I will dare to say that the mindset of the corporate sector in 2014 is eerily reminiscent of communist thinking.

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Business – a form of human expression

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The tagline “people are our most valued resource” has been so abused by the corporate world that it no longer means anything to anyone. I suspect that in the near future it will be eventually qualified as an offensive truism, and rightfully so. The sooner it disappears off the face of the planet, the better of humanity at large will be.

The debate on the humanism of business continues to be part of a public discourse infused with various degrees of political innuendo – see the 99% movement, the shareholder value argument, etc.

I propose a simple new take on what business is: a form of human expression.

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When competence is offensive

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I remember vividly a meeting that took place a few years ago. I was a management consultant tasked by the owner of a large corporation with overseeing the creation of a new profit and loss business unit. My nemesis was a Vice President who did not want to see his power and “territorial” claims diminished by the new venture. Typical power games and office politics were very much at play. The owner liked to delegate and had a “survival of the fittest mentality” to mediating conflict.

The three of us had gotten together because the named Vice President was overtly sabotaging my efforts. He was making the case to the owner that, while the idea of the new business unit was great, the consultant was poorly fit for the job.

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Strategy vs. Resilience

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Back in 2006 I was part of Lockheed Martin’s strategy department. I had been with the company for 6 years, and had successfully graduated their 3-year long Leadership Development Program that groomed young professionals into future executives.

I would be traveling regularly to Europe, California, Florida and New York, overseeing a number of advanced research projects and international business partnerships. I was a firm believer in strategy, and the strategic planning process that was so carefully coordinated by smart, battle hardened people with white hair.

That’s when an idea took hold: would all my strategy acumen give me an edge in an emerging economy? Could I be a successful entrepreneur there as opposed to an employee in the U.S.?

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The greatest risk to democracy is intrinsic

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If democracy should eventually fail, it will be by popular vote!

No totalitarian or fundamentalist regime has the means to challenge the military might that results from the wealth generated by free enterprise. What crazed ego-maniacal self-proclaimed leaders opposed to freedom and free enterprise might be unable to do, advanced societies might still achieve on their own.

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Do you still make mistakes?

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I’ve taken my aliens seriously ever since I was twelve. As a kid, after reading a good Von Daniken ancient alien piece, I would open the windows to the house wide open in the dead of winter – in case “they” came, I would always have an escape route. They fortunately never came.

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