Unions believe in miracle of compounding
To the editor:
Only the best and brightest, a few top performers within any private company, ever receive a 10 percent pay raise in any one year. But as the Review-Journal pointed out in its Sunday editorial, "Police contract reflects tough times," the Las Vegas police officers' union secured a combined 40 percent pay increase for most cops over the past four years.
This was done while the annual cost of living increase averaged 2.9 percent. How did they do that, and who knew about it?
The Review-Journal also rightfully pointed out that a cost-of-living increase for a highly paid Las Vegas officer isn't nearly the same as one for a lower-paid employee. Albert Einstein's miracle of compounding applies here. A 3.75 percent "cost-of-living" raise on a $50,000 salary is $1,875, while the same percentage raise on a $100,000 salary yields $3,750. Gasoline and food still costs the same -- driving a Lexus versus a Chevy Malibu is optional.
Federal income taxes on $3,750 may be slightly higher, but all things being equal under this contract, the highly compensated employee is still better off over time. This is because in the following years, the officer receives an even larger compounded increase than that of the lower-paid employee. These increases don't even take into consideration the additional and fully automatic annual 4 percent "step" or even larger "longevity" pay percentage increases.
The overall gross distortion in salary and benefits resulting from a multiple compounding employee wage system, with absolute wage increase guarantees, is not a rational way to operate any business. Most rational businesses put a cap on wages and benefits. There are no guaranteed, automatic pay increases just because you managed to keep your job.
But here in Clark County, the opposite of this seems to be rational -- at least from the union's perspective. Once an employee becomes entrenched in the system, just move up the ladder if you can, out of harm's way. Then it's just sit back and watch that multiple compounding pay increase meter go to work so maybe you don't have to.
It's time for management to fish or cut bait with this kind of union contract. These employees need to receive either automatic cost-of-living or step/longevity increases, but not both. Unlike the current socialist-style union contract, in the real world additional "merit" pay is normally reserved for the top 20 or 30 percent of employees, not simply "estimated" and then automatically distributed to everyone just because they still have a job.
Richard Rychtarik
LAS VEGAS
Ponzi scheme
To the editor:
In response to your March 20 editorial, "Inflating the dollar":
The recent purchase of U.S. Treasury bonds by the Federal Reserve is akin to a shell game wherein the U.S. taxpayer is tricked into believing that a serious financial transaction has occurred that will somehow aid our economy. It is also somewhat similar to past efforts of companies to buy back their stock shares, except that we are the unwilling shareholders of the corporation known as the United States of America.
In reality, that the Fed is printing money suggests that it is getting ever more difficult to find money to borrow anywhere to fund our economic "stimulus," which seems primarily aimed at rescuing failed institutions, thus going against the laws of nature pertaining to the survival of the fittest and encouraging further irresponsible borrowing. Honestly, who would want to buy a 30-year Treasury note with no interest when the dollar is depreciating?
The ultimate result of this Ponzi scheme will be a catastrophic devaluation of our currency, which will cause the prices of everything we hold dear (food, energy, houses, etc.) to dramatically increase as our unemployment rate skyrockets, encouraging foreign exploitation.
Our leaders are merely applying short-term Band-Aids to a systemic problem that will only grow worse with time. It's time to go back to being a nation that saves and produces more than it consumes and squanders.
Michael Pravica
HENDERSON
Honest incompetents
To the editor:
You have to love the new Democratic Party gambit employed by Treasury Secretary Timothy Geithner, Sen. Chris Dodd and others once they were caught on video making absolutely conflicting statements pertaining to their involvement in the AIG bonus scandal.
Their explanation is essentially, "I am not dishonest, I am merely incompetent."
Are we now to feel secure with our government in the hands of the merely honest incompetents? Absolutely amazing.
JOHN TOBIN
LAS VEGAS
Jet setter
To the editor:
Is it just me, or does anybody else have a problem with our president jetting off to California, appearing on Jay Leno's show and making videos for the people of Iran when he should be working on filling vacancies in the Treasury Department?
Does Barack Obama want to be a celebrity or the president of the United States?
Vivian Scott
HENDERSON
