Dubya's Ownership Society – The Economy's Great… for the Owners
Why is it that the administration touts all of these figures about the burgeoning economy, yet Chimpy’s approval numbers are still stuck in the mid-30’s? Simple. Zogby and Gallup aren’t talking to enough CEOs:
Even after a decade of sharply rising CEO pay, 2005 proved a watershed for a select group of executives. Their paydays — or potential paydays — broke $100 million.
Median 2005 pay among chief executives running most of the nation’s 100 largest companies soared 25% to $17.9 million, dwarfing the 3.1% average gain by typical American workers, USA TODAY found in its annual analysis of CEO pay.
Hey, average American worker, how’s that 3.1% raise doing for you? What’s that, you actually lost wages when you consider that the average rate of inflation for 2005 was 3.39%.
Coming off 2004’s 25% jump in big-company CEO pay, the sharp rise in executive compensation perplexes corporate governance experts who expected temperance following scandals at Enron, WorldCom and Tyco, increasing scrutiny by regulators and shareholder activists, and starting this year, new accounting rules requiring expensing of stock options.
Matt at MyDD points out the other obvious issue: there’s plenty of money to pay workers a living wage:
It’s not as though corporations don’t have the money to spare:
U.S. corporate profits have increased 21.3% in the past year and now account for the largest share of national income in 40 years, the Commerce Department said Thursday.
Strong productivity gains and subdued wage growth boosted before-tax profits to 11.6% of national income in the fourth quarter of 2005, the biggest share since the summer of 1966.
For all of 2005, before-tax profits totaled $1.35 trillion, up from $1.16 trillion in 2004 and just $767 billion in 2001.
Meanwhile, the share of national income going to wage and salary workers has fallen to 56.9%. Except for a brief period in 1997, that’s the lowest share for labor income since 1966.
And it’s not as though corporations balance sheets are hurting. According to the Federal Reserve’s Flow of Funds report, corporations are the only economic sector to actually increase their savings during this expansion. Undistributed Corporate have increased from 192 billion in 2001 to 418 billion in the third quarter of 2005. Clearly, they have the money.
Note that this issue of ballooning CEO pay is the flip side of the
illegal alien undocumented worker coin. The “Ownership Society” term coined by Bush is just too scarily accurate, as it describes the days when those in society had ownership over the workers, whether they were outright slaves, sharecroppers, indentured servants, or today where they are minimum wage workers who haven’t seen a raise since 1997 (40 hrs / week @ $5.15 / hr = $206.00 before taxes), workers with no union protection, and undocumented workers who can be paid a sub-minimum wage pittance and suffer gladly any abuse or maltreatment for fear of La Migra. Ah, those were the days and the Ownership Society can’t wait to bring ’em back full force.
America is addicted to cheap labor, and it is only through cheap labor and a shrinking middle class that the fat cats at the very top are able to command egrigiously high salaries and compensation packages — even when they do a lousy job. They got their cheap foreign outsourced labor through NAFTA, GATT, WTO, and CAFTA, and everything they can’t outsource they’ll “insource” by bringing the cheap labor here, whether it’s engineers from India on an H1-B visa or it’s fruit pickers from Mexico sneaking across the border and being hired by these businessmen and paid under the table.
The big “winner” in the CEO pool sweepstakes is Capital One Financial CEO Richard Fairbank, who leads the list after exercising 3.6 million stock options that were set to expire for a gain of almost $250 million. What’s in your wallet, indeed?
There were 131 CEOs whose total compensation for 2005 exceeds $10M. Six of those made more that $100M. Now, I don’t begrudge anyone getting rich, and certainly running a large corporation is at least as hard as starring in “Mission: Impossible III” or dunking a basketball. Still, there should be some sort of supply and demand effect on CEO pay, shouldn’t there? We’ve got a list here of 131 CEOs; is CapitalOne’s $280M CEO really 28 times more effective than Dow Chemical’s $10M CEO? I guess so.
Economics is not my strong suit, and I’ll admit that I don’t know enough about business to know how much work, dedication, and risk that CEO job entails. I don’t really know how scarce the talent for CEOing is, nor what sort of practice, study, and mental and physical hardships one must go through to be a CEO.
But at first glance, I can’t believe that it takes more high pressure mental focus than sinking a 30′ birdie putt at the Masters (Tiger Woods: $80M in 2005). I can’t believe it is more demanding and stressful than driving an IRL car at speeds approaching 200 MPH (Michael Schumacher: $80M in 2005). I can’t believe it takes more quick thinking and split-second decision making than setting the NFL single season touchdown pass record (Peytom Manning: $42M in 2005). I can’t believe their skills are more rare than a 7’1″ 325lb. man who has dunked his way to three championship rings (Shaquille O’Neal: $32M in 2005). I can’t even believe it’s as tough as running a daytime talk show and production company (Oprah Winfrey: $255M in 2005).
I’ve always liked the Ben & Jerry idea of maximum wage, where the CEOs pay is tied to the wage of the average employee’s wage. After all, if you are the leader, you shouldn’t prosper at the expense of those you lead, but rather in cooperation with those you lead.
When I write these things, I get accused of hating America, capitalism, rich people, baseball, apple pie, and Old Glory, which is ridiculous, because I only hate baseball. I like capitalism… to a point, and that point is where some players make it to the top and no longer have effective competition.
The way I see it, capitalism is like evolution, but with a system of keeping score. Like evolution, there are all these organisms competing with each other for resources. Each organism has only self-preservation and replication on its mind. Effective organisms survive, others die. Some organisms mutate and become more effective organisms. Some organisms merge with other organisms to become more powerful. As they evolve, the big fish eat the little fish, and all the organisms must adapt or die to changes in the environment.
The motivating factor for these kind of organisms is greed, which, as Gordon Gecko reminded us in Wall Street, is good. The greed is these organisms’ will to survive. Just like cavemen who would chow down on a mammoth, eating as much as they could and storing the rest for fear of the next famine, guarding their spoils from other predators.
This stasis is maintained, so long as all the organisms balance one another. Where things go awry in nature is when the ratio of predator to prey is out-of-balance. When there are too few bats, we get too many bugs. When there are too many fishermen, we end up with too few fish.
In capitalism, greed is good when there
is a balance between competitors. If Joe opens up a coffee shop across from Jane, they can compete against each other fairly. Whomever makes the better coffee and provides the better service will survive.
But if Starbucks opens across the street from Joe and Jane, both of them will wither and die. Starbucks is big enough that Joe and Jane cannot compete fairly. Starbucks (or Wal-Mart, or Home Depot, etc.) can leverage the profits from their other stores to prop up a fledgling store. They can take a loss on the new store for months. They can drive down prices to starve the competitor. Thus the big boys get bigger and bigger, the bigger they get the less competition they face, which makes them even bigger, to the point where they really have no competition and they have become a monopoly, duopoly (Coke or Pepsi, anyone?), or cartel.
That’s why I support strict regulation and oversight over corporations. The only predator big enough to police these multinationals is government. Government is akin to nature in that it is the force that equalizes the playing field. Government is the 300-mile asteroid that can obliterate the dinosaurs of crony capitalism in favor of the smaller, nimbler, more adaptable mammals of small business
However, in the Cheney Maladministration, government is just another business, run by an out-of-touch entitled rich white male CEO. His government exists to fatten the corporations, not hold them to account. They’ve never been interested in checks and balances from Congress or the Judiciary, so why should they be a check or a balance to runaway corporate greed and malfeasance? If proper government is a coyote that keeps the ranks of the ultra-rich corporatist herd thinned down to manageable levels, then Bush’s government is a corporate rancher illegally shooting the coyotes and pumping hormones and steroids into the cattle to make them unnaturally big and fat.
Ay, that’s my limit of tortured metaphor for the day. To recap: CEOs way too rich, working Americans way too poor, and somehow, it’s George W. Bush’s fault.