Depending on whom you consult, the United States is either barely slogging along economically or already in a recession. Joblessness is way up, and housing prices in some areas have fallen more in percentage terms than they did during the great depression. And how did this all come about?

In general terms, it occurred because mortgage lenders and the largest lending and brokerage institutions in the United States, in order to maximize their own short-term profits, colluded in developing various mechanisms to take marginal or even less credit-worthy home loans, bundle them together, and then sell the securitized and combined mortgages to various institutions under the fraudulent presumption that combining lots of risky loans made them somehow less risky.

As a result, ten or the world's largest financial institutions have lost over $275 billion, just to date, and those losses don't include the total dismantling/acquisition of Bear-Sterns, or the billions in losses at smaller institutions. But what happened to those in charge? To date, five of those institutions, including Merrill Lynch and Citicorp, have sacked their top executives.

While the departed CEOs were presiding over this debacle, they collectively earned hundreds of millions of dollars, and when they departed, they left with millions more in severance and retirement benefits. In short, they were highly rewarded for misjudgment and incompetence. The other five CEOs also lost billions and yet they still remain in their positions.

The major U.S. automakers have continued to make and sell enormous cars, and not a one really made a significant investment in developing more efficient smaller cars and SUVs. In addition, over the last twenty years, they have paid for and mounted a continuing lobbying effort to keep Congress and EPA from requiring better mileage standards for vehicles sold in the United States. As a result, when gasoline prices soared, sales of enormous vehicles dropped, and the U.S. automakers all lost billions in the last quarter, and will lose more billions of dollars in the next. But their CEO were paid multimillion dollar salaries to preside over this fiasco. In effect, they were rewarded for failure to anticipate and react to the obvious, and worse, to pay lobbyists to mislead Congress.

This is nothing new. The same sorts of excesses and CEO "rewards" occurred during and the bursting of the "dot.com" bubble, or with Enron, or with... [fill in the blank].

I once lost a job because I listened to the people who used a product and reported to my superiors that the new product would flop miserably. Six months after I departed, the new product did indeed flop miserably, and the marketing vice-president who created the disaster retired with a very decent golden parachute. For me, the failure pushed me in the direction of writing, for which I am belatedly grateful, but for those who stayed with the company, it was the beginning of a long downhill slide from market leadership to buy-out after buy-out, until the company was less than an also-ran.

The question that strikes me about all of this is: Why do we continue to reward such mismanagement?

And my answer is that we pay CEOs and others far too much in terms of "present" profits and success and don't build in compensation -- or lack thereof -- for future success or failure. Just how much of these failures would have occurred if the CEOs' salaries were capped at a few measly million and their "rewards" were based on the company's value and profitability five or ten years after they left or were booted? Certainly, a lot of workers' futures are tied to the companies they work for. Why not the financial future of those who direct them?

Because I am a writer, not only my present but my future is determined by how well I write... how I do my job. But then, from what I've seen, all too much executive compensation, even senior administrator compensation in government and academia, is based on immediate profits, likeability, image, and charisma -- and not on long-term competence. Add to that the share-holder, media, and marketplace pressure for quick and unrealistically high profits -- or unrealistic "cost-effectiveness" -- and you get what we're now receiving.

Interestingly enough, in most of the futuristic SF I read, seldom do writers target this human obsession with excessive profit. It's usually always about power and the abuse of power in controlling people, while the greatest abuse of power -- seeking what the marketplace and the economy cannot support -- seems to be consistently overlooked. But then, institutionalized greed just isn't sexy enough to sell books... it just sinks economies and destroys futures, even while societies continue to reward and idealize those who practice it.

—L.E. Modesitt, Jr.:  8/22/2008 12:40:00 PM