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.

Goodbye Middle Class Life

A milestone was passed this month: America’s middle class is now a minority of the population.

The story on NPR.

How much income have American workers lost? The details from MarketWatch.

Reaganomics has divided the population into haves and have-nots, and has done so with a vengeance. Initeconomics has that story here.

Joseph Stiglitz on the politics of inequality.

The revolving door between our lawmaking branch and the corporate lobbying industry is part of a vast engine of inequality.

Robert Reich discusses the problem of income and wealth inequality.

From that bastion of communist orthodoxy, MONEY magazine: an examination of the cockeyed economics of the Republican candidates.

Power once lost is hard to regain. Workers’ rights and the prosperity that came after were won after a century of sacrifice and outright battle with corporations’ strong-arm tactics. This is the kind of history they don’t like our kids to learn in school. If we turn the dial back they won’t have to worry; we are on the way back toward child labor instead of universal free education. Get a quick review of labor history here.

Young workers are going to experience their work lives as one long slump. This is exactly how the 1% want it and Republicans have made it happen. This important story in the Atlantic.

Of course not all rich people are against working Americans. (Some Republicans actually like Bernie Sanders.) Working Americans are the consumers who make the economy hum. Can it still hum?

One of the things forcing incomes down is what’s called The Gig Economy. In place of full employment (with benefits) workers learn to come when an employer whistles. The Gig Economy explained by MarketWatch.

And those safeguards and benefits? A relic of past times. ProPublica describes how Tyson Foods has carved up its employees' workers' compensation. And their workers suffer a lot of injuries.

The safety net? The 1% succeeded in persuading the other 99% that Welfare protections made people lazy. Actually it doesn’t. The story about the welfare laziness myth from VOX.

How does the 1% get the rest of us all worked up? They own the media for one thing. And a worried, fearful public is easier for them to hustle. Panic is good for the 1%. Krugman explains why the rich love generalized panic.


Workers used to have certain rights. An expectation they weren’t being spied on being one of them. No longer. Who's behind this? Walmart, of course.

Income inequality tends to show up in key areas: how inequality is perpetuated by housing.

And while the 1% is scooping up money that used to trickle down to working people, they are sharing one thing. They are letting working people have all the tax obligations. Another in a very thick file of similar stories, from the Guardian.

The Systematic Looting of the American Dream

Who owns the shining new residential towers going up in New York and other major cities? Don't answer; you wouldn't know them. The dream home used to be a widely shared American Dream, but this is no longer the case. (Because of Citizens United our political system is now owned the same way by secretive billionaires, many of them foreign, using piles of hoarded cash to buy residency and public policy.)

Increasingly the American Dream of homeownership is reserved for billionaires. They have extremely expensive pieds a terre in places all over the world, where they may only live a few days a year thereby evading the usual obligations to pay for local infrastructure and public services. What do you want to bet their real estate fees and taxes, if any, are paid by their companies and deducted from their income taxes, again, if any. The top 1% have learned to levitate above ordinary concerns and obligations of citizenship. What they want, they buy. What they don't want to do, they buy out of.

And what has happened to middle class homeownership? The opposite. Going, going, gone. Homeownership has become a privilege of the few who own for a living and those who work for a living are increasingly excluded.

The daily sermon fed to us for years by the banking industry and by the Republican Party was that homeownership was next to godliness. It was a measure of how responsible and hardworking you were. Now they seem to be saying that working class homeowners are to blame for the recent financial collapse. Not true, in fact. Middle class homeowners are the playthings of the 1%. The investment schemes that benefit people who own for a living are devised to skim fees and penalties and ownership from people who work for a living.

With incomes down we see more working people looking for ways to make ends meet. Reverse mortgages are advertised as a simple way to balance the family budget. By looting the family’s wealth. What choice do some families have? Looting of this kind happens when there is an exploitable advantage. Incomes have lowered for most Americans since 1980, a gift of Reaganomics. That has made most Americans exploitable.

Where have we seen this systematic looting of value before? We used to read about mobsters who took over small companies and looted their value at the point of a gun. It was a crime back then.

But more recently we’ve seen this same model used by the great heroic Venture Capitalist. The gun isn’t necessary because the middle and working class household is already being made insecure and exploitable by the decline of working incomes.

The Venture Capitalist looks for decent companies who pay their employees decently and maybe have a fully funded retirement plan for them––companies that have been untouched by Reaganomics. What does this Venture Capitalist do? He charms the company’s owner, offers him a nice check, and then he buys the company. Before the check clears he sucks all the money out of the pension fund and uses it to pay the former owner. Then he lays off employees and pockets those savings. Then he has a balance sheet that shows all of this “profit” which he uses to sell the company at an inflated price.

I realize the Nazi analogy is completely forbidden today. But the Nazi miracle was financed in a similar way, by confiscation from Jews and liberals. Someday we may be able to see the criminality of what is going on, or at least its unfairness and dishonesty. But right now it is legal. And it is also sanctified by the sacred memory of Ronald Reagan who set this middle class decline in motion.