Illustrations by Mark Nerys
Problem: CEOs make too much money.
Solution: Make them bid for their jobs, like contractors.
Plenty of smart people have tried to think up ways to rein in bloated CEO salaries: Treat stock options as expenses! Let shareholders vote! But Selena Maranjian of the investment newsletter Motley Fool recently suggested, audaciously, that if companies really want to save millions, they should start holding Dutch-auction-style competitions for their CEO slots. The idea is that the board of directors would identify well-qualified people they’d be interested in hiring as CEO and then have the applicants bid on the job, stating the least amount of money they’d accept. Lloyd Blankfein raked in $70 million last year for the top Goldman post, but who’s to say there’s not some well-qualified executive out there who’d do the job for a mere $30 million?
Problem: Politicians on the take.
Solution: Pay them more.
“I want to make money!,” Rod Blagojevich exclaimed as he was allegedly trying to sell off Obama’s Senate seat. Not to excuse Blago, but on some level, the impulse was understandable. Sure, he was pulling down $177,000 per year as Illinois’s governor— a salary most Americans will never touch—but when you’re hobnobbing with wealthy donors and high-powered lobbyists all day, it’s easy to feel like a have-not, which creates all sorts incentives for sleaze. It’s not just Blagojevich: In 2005, most members of Congress made just one-seventh of what the average partner at a large law firm made. That meager pay doesn’t just hurt the government’s ability to attract top talent; it also means elected officials are constantly worrying about their next private-sector gig instead of doing their jobs. The University of Virginia’s Ron Wilcox suggests paying public officials much, much more to reduce that undue pressure. True, higher incomes aren’t always a defense against corruption (just look at Bernie Madoff), but countries like Kenya have upped the pay of their bribe-prone bureaucrats with promising results.
Problem: Income inequality is growing.
Solution: Give every newborn a trust fund.
In the last decade, income inequality has skyrocketed to a level not seen since the roaring twenties, while economic mobility has declined severely. For a potential remedy, look to Great Britain, where every infant born after September 1, 2002, now receives a “baby bond” worth between $450 and $750 (with an additional deposit at age 7), which matures when he or she reaches 18. Thanks to compound interest, young adults will start life with as much as $7,500 at their disposal, which can be used for college tuition, buying a home, or starting a business. It’s a modest variation on the “Stakeholder Society” idea touted by Yale’s Bruce Ackerman and Anne Alstott, in which every 18-year-old would get $80,000, financed by a 2 percent tax on wealth—a hefty price tag, yes, but isn’t equal opportunity worth it?
Problem: The planet is heating up fast.
Solution: Paint everything white.
Many climatologists fear that the Earth is warming far more rapidly than anyone expected, and that we will not only have to curb our future carbon-dioxide emissions but find some way to slow or even reverse the warming that has already begun. Hashem Akbari, a physicist with the Lawrence Berkeley National Laboratory, argues that replacing our roofs, sidewalks, parking lots, and roads with whiter material that reflects more of the sun’s rays would have a massive cooling effect on the planet. (Refitting the 30 billion or so square feet of commercial roof space in the United States alone would be the equivalent of taking roughly 75 million cars off the road for a year.) As a bonus, buildings with white roofs tend to stay 30 percent cooler than their black-topped counterparts during the summer, helping to curb energy use.
Problem: An epidemic of home foreclosures.
Solution: Take control of mortgages away from investors.
In the old days, when homeowners struggled to make their payments, banks often had an interest in reworking mortgages rather than opting for foreclosure. But now that home loans have been sliced up and sold off to investors as mortgage-backed securities, dozens of investors could own a piece of your monthly nut. A “master servicer” is supposed to rework the loans if necessary, but many are reluctant to do so, partly for fear of being sued by security holders who can’t all be expected to readily agree on new terms. That’s why Yale economist John D. Geanakoplos and former Boston University law professor Susan Koniak suggest that Congress should enlist government-appointed trustees to take responsibility for reworking mortgages (rather than foisting the job on bankruptcy courts, as Congress is currently considering). Hiring a couple thousand trustees would cost far less than spending billions propping up home prices.
Problem: Too many gas-guzzlers on the road.
Solution: Offer cash for clunkers.
Detroit can’t unload its inventory, the economy’s wheezing, and there are too many inefficient cars on the road guzzling up too much oil. There might be a way to ameliorate all three problems at once: what Princeton economist Alan Blinder calls a “Cash for Clunkers” plan, in which the U.S. government would buy up (and scrap) old, pollution-spewing cars and give sellers a voucher to buy newer, more efficient models. Consumer spending goes up, the auto industry gets a shot in the arm, and the nation’s average fuel economy improves dramatically. (The voucher recipients wouldn’t even have to buy Priuses to make a difference—simply switching from an SUV that gets 10 mpg to one that gets 12 mpg actually saves more gas per mile than switching from, say, a 30 mpg sedan to a 50 mpg hybrid, since there are diminishing returns to improving gas mileage.) France recently initiated a version of this program, and has cleaner roads to show for it.
Problem: Newspapers are dying.
Solution: Offer them a Swedish-style bailout.
The Tribune Company has declared bankruptcy, the New York Times has mortgaged its headquarters to raise cash, and nearly every day another newspaper announces another round of cutbacks and layoffs. If Detroit and Wall Street can get bailouts, shouldn’t the free press get one, too? Last fall, in the Columbia Journalism Review, Bree Nordenson suggested that Congress take a gander at Sweden, where, in 1971, the government set up a system of subsidies to newspapers, allocated based on circulation and revenue data. (The formula is automatic, so that newspapers aren’t rewarded for complimentary coverage.) And it’s worked: Since then, Sweden has seen fewer news outlets shuttering, more competition in cities, and—unexpectedly—a press that’s become far more adversarial.