Redistribution: From Joe the Plumber to Robert Rubin
Okay, as we all know now that almost everything about Joe the Plumber is a lie. He doesn't own a plumbing business and apparently is not even licensed as a plumber, but he does raise a legitimate concern about "spreading the wealth around." The only problem is that in this country, when the government spreads the wealth around it usually means redistributing it upward.
That is certainly the case with the hundreds of billions of dollars being used to bail out the banks. The public has a real interest in keeping the banking system functioning. It has zero interest in subsidized the pay checks of wealthy bank executives or enriching the bank's shareholders, which Secretary Paulson is now doing.
There is no question about what is going on here. The public is providing massive subsidies to the country's major banks. The terms of the bailout were far more generous than what the banks could get from the private market. As a result, banks that might not have survived otherwise, or at least would have been forced to make serious cutbacks, can now keep operating as they had been.
This means that their high level executives will continue to draw salaries in the millions or tens of millions of dollars. It also means that the shareholders will continue to receive dividends.
This was not inevitable. Paulson could have imposed serious pay caps on executive compensation. In Germany, the banks that are getting government money can't pay their executives more than 500,000 euros, about $680,000. The United Kingdom also limited executive compensation as part of its bailout.
In addition, the banks in the UK are prohibited from paying dividends as long as they have public capital. This makes sense not only as a punitive measure, but it will also help them to build up the capital they need to stay in business.
It has sometimes been argued that the healthy banks would not take part in a bailout under such conditions. Let's see.
Suppose we apply the compensation limits/no dividend bailout rules, and then give everyone the option to opt in or out. Those taking the opt-out route will not benefit from the government's extension of deposit insurance nor will they be able to count on access to the Fed's discount window. My bet is that no banks go this route, but if any do, there will be plenty of investors happy to short their stock, assuming the government allows it.
But, Paulson went the bank welfare route. Joe the Plumber and everyone else should be very upset about this method spreading around the wealth. The top executives at the big banks will be getting the equivalent of several thousand years of TANF checks for a mother with two kids. And, unlike the mother receiving a TANF check, the bank honchos inflicted serious damage on the economy.
The big question is, which candidate is opposed to this sort of spreading around the wealth?
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This may be the first time in history when the bank robbers robbed the bank and then collected the reward.
Excellent post. Good points. Whatever happened to the transparency of the bailout? Looks to me that they (the bankers) are worse than the Cadillac welfare mamas. They have a golden Cadillac. They need to be held accountable. Remember the neighborhood banks where you knew the officers and could tell if they were taking home too much of the spoils? What we have now are banks without a soul...the
Who indeed will look after the hardworking Americans, The latest ReScrew program continues taking from the middle class and redistributing it upward a full 56% of the 125billion Paulson doled out to his buddies a the top nine deemed to be worthy banks will be redistributed in the form of salaries and discretionary bonuses.
Maybe Joe is pissed off about having to pay one cent of tax for a 28 year old banker's Maserati, coke and hooker habits. The quants and algorithm snots are the same ones that holed us in the first place.
When does this end?
Both Candidates voted for the bailout and the poorly written or considered language off the bailout bill, rescue, rescrew bill.
What Americans who sweat for a living know they don't have two pennies to rub together after being holed by Government whores and the Bankers who pimp them.
What I find disturbing is that no one asks and discusses how a society functions! Without taxes, who pays for the common expenditures – from defense to highways? How is civil society possible without members of the polity making financial contributions towards the upkeep and advancement (e.g., investment in research) of the collective? It should be easy to realize that if one lives in isolation, i.e., not in a society, there would be no need for the dreaded tax; yes, there is a cost to living in a society. That is the basis of the idea of ones social responsibility. And further, social living is the only way human beings can survive, and it is exactly how we have become humans! It should also be recognized that the rich are rich because they live in a society. If they do not contribute proportional to their income, they can not become rich.
I do not recall who said that if not for ones responsibility for the fellow human beings, what would be the purpose of society? We have to vigorously defend the position that individual good can not be attained without advancing social good.
And we need to reintroduce teaching of civics and citizenship in our schools and colleges!
EXACTLY...
Of course there are those who don't believe in Evolution. They can't understand the process that built the wiring in the human species that DEMANDS community for the organism to function properly.
They refuse to recognize the fact that for the first 3 million years or so the human animal lived in tightly knitted communities of cooperation and common purpose.
They think that 8000 years ago people cavorted with dinosaurs.
So everything from the "nucular family" to the Industrial Revolution, from the design of cities and towns to the YOYO economics (Your On Your Own - thanks Jared Bernstein) unraveling before our eyes, from the criminal-injustice system and the prison-industrial complex to the design of our school systems is working against the primary wiring of human brains.
And they wonder why we're going nuts...
And they wonder why we're sowing the seeds of our own environmental destructio
And they'll wonder why a few new regulations ain't gonna fix it...
You left out global warming. If one chooses to believe the world is less than 10,000 years old, then it has to have always been like this, ie. no geological changes from earthquakes, floods (except for Biblical ones), ice ages, etc. Therefore, there cannot be global warming.
At least I think that is how the non-thought process works . . .
There was a question after listening to the following exchange on Fox News Sunday:
MCCAIN: "So is one of the tenets of socialism redistribution of the wealth? Not just socialism — a lot of other liberal and left wing philosophies — redistribution of the wealth? I don't believe in it."
....
WALLACE: But, Senator, you voted for the $700 billion bailout that's being used partially to nationalize American banks. Isn't that socialism?
MCCAIN: "That is reacting to a crisis that's due to greed and excess in Washington
....
MCCAIN: ...But the point is that, of course, when a — when a — that's the reason why we have governments, to help those who need help, who can't help themselves, and when time of crisis to step in and do what's necessary to preserve the lives and futures of innocent people."
Doesn't the redistribution of resources during a time of crisis need to derive from a redistribution of the wealth - not to the few, but to the many - required to create them?
Concerning "Amusing post; socialism has never worked unless mediocrity is the goal". I guess that's why, at least in the last 8 years our banking institutions were never more than mediocre. If they were top notch capatialist banks then they would have never loaned money to people who could not have paid it back. They would have been honest in their appriasals of that property, they would have loaned only money they could have guaranteed, they would have know what securities they were buying from other banks, and lastly they would have never asked the government for bailout money. The only "Socialist" I know are the ones now asking to be bailed out.
It's called "socialism" if it benefits people directly. It's called "bailout" if it benefits big business.
This is probably a fine goal but until the root problem is fixed nothing is going to change.
Once a politician is truly held accountable by law things will change! Right now an one in Congress or the White House can stand in front of the American people and say what ever they want and get away with it.
We need to make it a federal crime to deliberately lie if you are in an elected or appointed position (both federal and state). Would you have a job if your employer caught you lying about stealing from the company?
I've watched most of my life as politicians have stood up before the tv cameras and said one thing and did something else.
Remember when Bill Clinton was in office and everyone was carrying on about the "Spin Doctors"? What they were saying was they have to lie and distort the story so the public will accept it! This is not how an open government is suppose to work.
So, nothing will happen until the politicians are held accountable for what they say or do! And the punishment must be swift and harsh.
And most importantly we cannot rely on Congress and the White House to police their own actions. Too many things have been swept under the carpet .
Finally, any member of Congress that knows about an criminal or ethical violation and does nothing to stop it then they are an accessory and just as guilty!
That is the job that the 'press' USED TO do
Now they are bought off by one side or the other
or both
"This was not inevitable. Paulson could have imposed serious pay caps on executive compensation. In Germany, the banks that are getting government money can't pay their executives more than 500,000 euros, about $680,000. The United Kingdom also limited executive compensation as part of its bailout."
That pretty much sums it up. Just one more way that the people of the rest of the world can think we're stupid and spineless.
I wondered about this too. Why was there no cap put on the execs? And how can they justify taking millions when people are losing everything? I live in an area infested with these 'NY brokers'. They're like locusts...
THE JOE THE PLUMBER POLITICS IS INTELLECTUALLY DISHONEST
McCain-Palin ticket now hitches its wagon on three shaky outposts: Joe the "plumber", and the twin misinformation that Obama is a "socialist" and is aligned with "terrorists" circa Bill Ayers. McCain conveniently forgets his past questionable associations (Keaton, Gordon Libby, membership on the Board of Singlaub"s US Council for World Freedom that provided a forum for anti-Semites and racists ; celebrating his seventieth birthday in Montenegro in August 2006 at a yacht party hosted by CONVICTED Italian FELON Raffaello Follieri" (See The Nation, Oct.1/08). Joe the plumber is clearly a loser: for misrepresenting his earning; not even recognizing that he would fair better under the Obama plan; and that in fact McCain is using him as a pawn on the chessboard of his narrow political calculation. McCain is ending up as shady, mean-spirited, unsteady intellectu
And he voted for the $700 billion bailout for American banks and investment companies.
So did OBAMA
So did you unless you did something about it...by electing someone else, complaining to your senator or congressma
It is wrong to blame government deregulation policies for causing the recession when the government was responsible for making the laws that regulated the lending policies of the banking industry. They permitted banks to lend without a credit check or down payment on mortgages, and stood idly by as predatory lenders reaped a harvest. This was not letting free market forces rule but only giving special interests the freedom to rip off potential home owners.
And just which party do you think was responsible for deregulating the government, gutting government responsibilities? If you guessed the Republicans, you guessed right. The first thing that Bush did right after he was "inaugurated" in 2001 was to sign executive orders deregulating anything he could. His administration's sole purpose, until 9-11, was to go over every single regulation in every bit of public law and get rid of them if that was beneficial to big business.
Well, we haven't faired too well the last eight years, so I think I would rather work from the bottom up instead of staying at the top and never getting to the bottom
Several differences in the European and US plans. In Europe banks have to ask to get the money. In US goverment is FORCING the banks to take money. If the bank does not want to be part of bailout - it has no chance of saying no.
For the banks who need and ask for money - it would be fair to impose some limits. But to force the bank to accept the money and then try to impose the conditions
ok floater - tell us where its worked successfully, how, and what rights its "granted". oh, and tell me where its worked and there has not been a ruling elite class. go ahead.
As long as the word socialism remains a profanity in this country, we will not have the economic discussion we need to have. What it really is, what it isn't, what it does, how it works and has worked or not in the past, etc. A shame that reactionaries force us to act like juveniles.
Amusing post; socialism has never worked unless mediocrity is the goal.
Not to be combative here, but how are you defining mediocrity? As both an Army brat and active-duty servicemember, I've lived in several European countries that Republicans term as "socialist" and they seemed to be doing just fine. In fact, when you quantitatively evaluate the US against foreign countries, free market capitalism doesn't seem be to helping us very much:
% population above poverty line: US ranked No. 20 worldwide
Student math skills: US ranked No. 24 worldwide
Infant survival rates: US ranked No. 36 worldwide
Life expectancy: US ranked No. 42 worldwide
Literacy: US ranked No. 44 worldwide
% of population employed: US ranked No. 67 worldwide
Income equality: US ranked No. 71 worldwide
(Data from wikipedia and gepgraphyi
Interestingly, the US even comes in second to a "socialist" country - Norway - in hourly worker productivity. A report issued last year by the International Labour Organization, a United Nations agency, found that in 2006 the U.S. ranked second, at $35.63 per hour, compared to Norway’s $37.99. US workers do hold the lead in total productivity, due to employers' success in wringing more hours per week from them than in any other industrialized nation.
Going by the numbers, how do you make the case that "socialism has never worked" as opposed to free-market capitalism?
Thank you both for making my point. Rather than a consideration of the attributes of the economic approaches commonly lumped together as "socialism," you immediately become emotional and irrational, resorting to name calling, goading, and generalities. THAT'S the problem I'm referring to.
Very amusing post from a Chavez lover.
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