Saturday, April 30, 2016

The High-Low On The American Economy

Here’s what Robert Reich had to say this morning about exorbitant executive pay in America:

"Exxon Mobil chief executive Rex W. Tillerson is delivering bad news to shareholders: Profits were down 63 percent in the first quarter financial results, announced yesterday. They were down by half in 2015. Low petroleum prices have forced Exxon Mobil to cut spending, reduce capital outlays, and borrow to meet dividend payments. This week Standard & Poor’s downgraded the corporation’s credit rating.

"But don’t cry for Tillerson. He’s scheduled to retire next March with a nest egg of $218 million in Exxon stock plus a pension plan worth $69.5 million. His salary this year alone is about 500 times the median U.S. household income.

"Even when big corporations and their shareholders lose, their CEOs seem always to come out winners. Isn’t it time CEO pay was capped at, say, 100 times the income of the median household? Shareholders should set this standard, and the government shouldn’t allow a company to deduct any executive pay in excess of $1 million. Alternatively, as I've suggested before, tax corporations in proportion to the ratio of their CEO pay to the typical U.S. worker's pay."

The Washington Post reports on how the CEO of EXXON earns many millions whether the company has a good year or a bad year. How fair is that?

The departing CEO of Yahoo! (is that company still around?) is being paid $55 million to go away.

How we got to where we are now: The Washington Post reports on how "high finance" thinking has warped our values and our policies.

What makes it worse is how our policies are shaped by Big Money and their lobbyists and superPACs. These forces are far more powerful than organized labor, which is shrinking every year, more powerful than the Republican controlled Congress, which the lobbyists carry around in their pocket. Bloomberg reports on how hard the US Chamber of Commerce has pushed our tax policies to the extreme.

This disparity in power is more significant than the disparity in pay. Americans have bought into the myth of Rugged Individualism, that each of us is better alone than as a part of a group. (Because groups are communist…unless it’s the American Legion or the Rotary or the Chamber of Commerce.)

This is a distortion of American tradition. The tradition of barn raising and helping your neighbor, of standing together the way the original colonists did, despite their differences. This idea of individualism has helped the 1% reduce the voice of the rest of us to nothing. It has persuaded millions of working Americans to rush to get the anti-union bargains at Walmart. It has organized the workers to break up the unions that won their parents a middle class life.

Salon explains the rise of individualism and the decline of America's sense of teamwork.

Meanwhile, at the high end of the economy the members of the owning class are paid more in an day than ordinary workers are paid in a year. Some are paid that much every hour.

The Wall Street Journal reports that CEOs now make 373 times what average workers do.

If you wonder why healthcare keeps costing you more, look at the multi-millions their CEOs are paid each year.

At the low end, working people get next to nothing. Millions of low end jobs don’t pay a living wage, so people have to work two jobs, and the workers are subject to rampant wage theft. Still, Republicans block every proposal to raise the minimum wage.

The Wall Street Journal, the favorite newspaper of America's 1%, published a story blaming the sluggish growth in the U.S. economy on the refusal to raise working people's wages. After 30 years of suppressed wages and nothing growing but CEO salaries and investment bubbles you'd think it would be clear that economic energy doesn't come from the people who spend at Cartier and the local Jaguar dealership, it comes from the broad spending of ordinary working people...when they have enough money to spend.

Even the middle class is feeling insecure, a story told in this month's Atlantic.

But the working poor and the unemployed have it much worse.

Why not do what the Republican gods Hayek and Friedman both proposed: have a guaranteed minimum income for all Americans? Why not? Because people who earn money from their money, who own for a living, dislike anything that shares their luck with other less fortunate people. The people who own for a living don’t want to give anything to the people who work for a living. VOX explains the idea of a guaranteed minimum income and how it would work.

The rich are always discussing how they wish the poor were better people. Who really needs to fix that problem? The rich do. They are extremely lucky but they believe luck had nothing to do with it. If they were reminded where their fortunes came from they might be less arrogant and less greedy. They might become better people, to the benefit of all of us. Robert Frank (author of the new book Success and Luck: Good Fortune and the Myth of Meritocracy) discusses this at VOX.

Labels: , , , , , , , , , , ,


Post a Comment

<< Home