Stop welfare! That sounds familiar doesn't it? During my 73 years on the planet I have heard it again and again. This time it is a little different! Harold Meyerson tells us about this go around in today's Washington Post column entitled Capitalist Punishment.
We are in some ways still a nation of Puritans, and we don't much cotton to people who can't take care of themselves and end up sponging off our generosity. We demand that welfare recipients do an honest day's work for their checks. And now, since President Obama laid down the law Wednesday, we demand that the guys who ran our banking system into the ground abide by our pay scales in return for our bailing them out.
More beneath the break.
Here we sit on a day when we have basically been had one more time by that crew and their cronies in the Senate. Maybe the gutting of the stimulus plan was payback? Telnaes had a great cartoon yesterday showing an exec bawling about his half-million pay cap as people were lining up for jobless benefits. Meyerson says:
After all, what's the moral distinction between welfare recipients and the wizards of Wall Street, other than that the welfare recipients aren't the ones responsible for tanking the global economy?
I'm sure there are more distinctions than that, but that one sure hits the mark right now. It goes a lot further than what most commentators are saying. The need for jobs that pay a living wage and for health care and retirement security is not a debatable issue. To pretend it is harks back to the worst aspects of this country's growing pains as if the struggle were never fought. Welfare comes for the powerless as a step short of "Let them eat cake". It is not worth anyone losing their heads about , but it is serious stuff. The loss of the ability to make unlimited money while others suffer is not such a bad thing by comparison.
Meyerson goes on to show us that it makes economic sense to impose these limits:
But Obama's move isn't just good politics; it's good economics, too. Over the past two decades, Wall Street's reward system has showered the most money on the guys who took the most risks with other people's money. The financial structure that emerged from the New Deal ensured that small investors, pensioners and depositors wouldn't be exposed to high levels of risk, but the repeal of the Glass-Steagall Act and other follies of deregulation plunged everybody into the same high-risk pool. Congress and the president are working to devise new regulations that will restore some safety to the act of investing, but Obama's pay directives -- under which executives can cash out their shares only after they have righted their banks and repaid the government's investment -- are also intended to reward long-term performance over short-term gain.
More broadly, the president's guidelines are an opening salvo to stop the wave of legal looting that American CEOs routinely inflict on their shareholders and employees.
Shareholders? you ask. How could shareholders be hurt by these gurus who make all that money for them?
Figures compiled by Lucien Bebchuk of Harvard Law School and Yaniv Grinstein of Cornell's school of management show that the pay of the top five executives in publicly traded firms amounted to 5 percent of those companies' earnings in 1993-95 and 10 percent in 2001-03. Improvements in those companies' performance and increases in their size accounted for just 20 percent of this increase, they calculated, leaving 80 percent of the increase in top-executive pay "unexplained."
Well, let's hazard an explanation. If you stack a corporate board and its compensation committee with top executives from other firms, what you end up creating is a cross-corporate club that rewards its members with the stakeholders' money. If the stakeholders are either doing well enough not to object (such as shareholders during an asset bubble) or aren't doing well but lack the power to do anything about it (such as workers during a time of deunionization), then voilà: Your CEO ends up owning the Fifth Avenue flat, the Hampton beach house, the Aspen ski lodge, the Mayfair menage and at least two-thirds of the Senate Finance Committee, unless the public protests. (Which they are: Scratch the Senate Finance Committee.)
Beach house, ski lodge and the Senate Finance Committee, oh my! And a good time was had by all. All except for the working stiff or the people whose jobs were sent overseas. Welfare for these scum? Indeed! Let them try working for a living. Like ...like... like who? Certainly not these CEOs. Wrong! I am told. These folk work so very very hard. So when do they get to do the ski lodge or beach house thing? I hate to even contemplate their suffering. As Meyerson says it:
Is this any way to treat our best and our brightest? The guys who shuttered our industrial base, indebted us to Communist China, hooked us on plastic and subprime mortgages, bought our politicians, eluded our regulations, wiped out our retirement plans -- and then turned to us for help when their house of debt collapsed? Damn straight it is. Bring on the pillories.
See! They always said that Socialists were mean and nasty people. Now I am proving them right. Or am I? Thanks again Harold for telling it like it is.