Monday, May 28, 2012

This Memorial Day, No Millionaire Left Behind

U.S. disparity of income is setting records by some measures

It's 2012 -- the financial crisis happened over four years ago, and the Great Recession is supposed to have been over long ago. After all this time, the American people, or at least the ones with the most juice, don't seem to have learned a thing.

Corporate profits hit record levels in 2011, and with that increase, compensation for CEOs went up about 6% as well. The CEO of a typical public company made (off with) $9.6 million in 2011, as CEO pay was largely in the form of stock awards tied to "performance."

For more particulars about this report, here's a link to an online story in The Seattle Times.

The way some fools have spun this is that shareholder activists can claim a victory of sorts, because the corporate boards aren't just shoveling over as much "pay for pulse" as they once did. More of CEO compensation is tied to "performance," in the form of higher profits.

The U.S. business press, in its usual myopia, does not perceive the hideous structural problem that this represents. The CEOs making a killing now, it appears, are the ones who run their corporations in such a way as to squeeze the maximum profit from American consumers that they possibly can. Bleed them white, milk them dry, and you get more stock awards!

The shareholders are then happy, I suppose. But what of the consumers? Do those schmucks even matter? It would appear that they matter only to the extent that they pay up, to the max -- even if they have to go heavily into debt. And then, of course, the banking companies can own their very souls. It's like a modern version of the company store.

The Seattle story did touch upon the fundamental problem here:

CEOs managed to sell more, and squeeze more profit from each sale, despite problems ranging from a downgrade of the U.S. credit rating to an economic slowdown in China and Europe's debt crisis.

Still, there wasn't much immediate benefit for shareholders. The S&P 500 ended the year unchanged from where it started.

Including dividends, the index returned a slender 2 percent. ...

And the main concern of many shareholders -- that pay is just too much, no matter what the form -- has yet to be addressed.

"It's just that total (compensation) is going up, and that's where the problem lies," says Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.

The typical American worker would have to labor for 244 years to make what the typical boss of a big public company makes in one. The median pay for U.S. workers was about $39,300 last year. That was up 1 percent from the year before, not enough to keep pace with inflation.

The main problem is that, even after the sobering experiences of a financial crisis CAUSED by the misconduct of financial institutions themselves, and the Great Recession, the U.S. economy continues to grow top-heavy, prolonging a disturbing (and for most people, painful) trend that's been going on since the late '70s and early '80s.

An illustration of the dilemma lies in a labor anecdote involving UAW legend Walter Reuther (1907-70). A Detroit automaker wheel was showing Reuther the new robots that could perform tasks on the assembly lines.

"Let's see you try to get one of these robots to join your union," the wheel told Reuther with amusement.

Reuther's reply: "Let's see you try to get one of these robots to buy one of your cars."

The further these predators keep pushing ordinary Americans into debt, and the less they pay them, eventually the ordinary schmucks can't afford car payments, or fall behind on them. Then what happens to profits -- and then ultimately, CEO compensation?

A pungent Japanese observation about U.S. corporations is that they think in terms of the next 10 minutes (well, perhaps the coming quarter), while in Japan they think in terms of the next 10 years. Popular depictions are that the Japanese economy hasn't fared well in recent years -- but still, it might be wise to start thinking, as they do, more long-term. Their CEOs certainly don't make even remotely what their American counterparts do, and they pay their common workers comparatively well. They can't claim to have achieved utopia, but their way may ultimately prove more sustainable, long-term, than ours.

In any case, it should be clear by now to "the 99 percent" that what we've got going on here -- capitalism reverted back to its most primitive and cannibalistic forms -- can't go on much longer.

As a parting Memorial Day thought, I suppose there are plenty of "patriotic" Republican types out there who will be honoring those who died, and who returned as basket cases, (please check out this link) on and from the deserts and mountains of the Middle East. Yeah -- they got shot to pieces and blown up so that corporate CEOs could rake in $9.6 mil a year, buy their Montecristo cigars by the box and their single-malt Scotch by the case. Such sacrifice.

Postscript: I forgot to mention that two-thirds of U.S. corporations are effectively paying no income tax. Perhaps these patriots could ante up a little better, given all the glorious profits they are making, so that we could cut that deficit!

Manifesto Joe Is An Underground Writer Living In Texas.


Jack Jodell said...

This has become a land of opportunity almost exclusively for the rich, and that is simply NOT in the great American trafition!

Anonymous said...

Just like the Golden Age of the 1870's through the 1900's. The working man has no buying power, workplace protection, and is lucky to keep his job. On the other hand, the billionaire industrialists and banking types are all living it up in style while dumping their toxic derivative waste down the ladder while buying up the government. We need about 200 Teddy Roosevelts to clean house on Capital Hill...