Senator Claire McCaskill took to the Senate floor last week and put into words what most Americans know, but much of the economic and media elite systematically ignore: there is no economic or social justification for the massive incomes earned by the barons of Wall Street - especially when their companies continue to exist solely because of massive infusions of taxpayer dollars.
Last week it was announced that Wall Street gave out $18.4 billion in bonuses - presumably to reward executives for their performance in 2008 when the markets lost 30% of their value - and when their irresponsible risk-taking threw the world economy into a nose dive.
This comes on the heels of the spectacle of Wall Street firms coming with tin cups to Congress while it rewarded itself with million-dollar CEO bathroom make-overs, swank executive get-aways, $35,000 office couches and new $50 million corporate jets.
What are they thinking? The answer is that they live on anther planet -- one where they tell each other that they actually "deserve" their massively disproportionate share of the society's good and services. The decades-long explosion of executive compensation - especially on Wall Street - has convinced many of them that the gravy train can - and should - go on forever. It's about time that someone like Senator McCaskill made it clear that the executive compensation "emperor" has no clothes.
Some facts:
* The CEO of the average company in the Standard and Poors Index makes $10.5 million. That means that before lunch, on the first workday of the year, he (sometimes she) has made more than the minimum wage workers in his company will make all year. That translates to $5,048 per hour - or about 344 times that pay of the typical American worker.
* Most people would consider a salary of $100,000 per year reasonably good pay. But the average CEO makes that much in the first half-week of the year.
* And that's nothing compared to some of the kings of Wall Street. In 2007 the top 50 hedge and private equity fund managers averaged $588 million in compensation each- more than 19,000 times as much as the average U.S. worker. And by the way, the hedge fund managers paid a tax rate on their income of only 15% -- far lower than the rate paid by their secretaries.
There is simply no moral or economic justification for this kind of greed. This kind of executive compensation comes out of the pockets of other Americans, or--as it turns out - out of the mountain of speculative "wealth" that turned out not to really exist, and which sent the economy careening toward disaster.
In her Senate floor speech, Senator McCaskill proposed that none of the executives of the Wall Street firms receiving taxpayer money should be compensated at a level higher than the $400,000/year that the taxpayers pay the President. After all, it's pretty hard to justify why any of them have more responsibility than the President of the United States even in the best of times - but especially when their decisions just sent the economy into the trash heap.
The Hedge Fund Manager who makes $588 million a year makes 1,470 times more than the President. Isn't it ridiculous that the taxpayers should shell out their money to pay CEO's more - much less 1,470 times more - than the President of the United States?
Yet on this week's Sunday talk shows, you could hear "experts" and media commentators explaining that they need to do a better job of showing the rest of us why the best solution to our economic problems is more of the same kind of "benefit the rich" economics that lead to the economic collapse in the first place.
When you think about it, these people should be described by a word that they might be surprised to hear: Parochial.
Many of these Wall Street insiders, CEO's, commentators and "experts" think of themselves as being more "sophisticated" and "cosmopolitan" than ordinary Americans. In fact, they spend their time in the isolated cocoon of corporate jet travel, luxury condos, private schools, exclusive resorts, private clubs, and fancy cocktail parties. They talk to other people like themselves who are perfectly happy to validate their view that they "deserve" multimillion dollar compensation - that they deserve to be driven around in limousines and live in estates that are valued in eight figures.
They convince themselves that if the benighted masses just knew all that they know about credit default swaps or mark-to--market accounting practices, they would understand why it is somehow in America's interest that they should continue to be given a massively disproportionate share of the wealth created by our economy.
It would probably do them some good to become "cosmopolitan" enough to get out and talk to ordinary Americans. Ordinary Americans who work hard every day have a hard time justifying why the very people who caused the economic disaster--that may have cost them their job or their home-- deserve to be paid millions and millions of dollars.
They might also take time to study some history. Marie Antoinette would be a good place to start. She and her husband, King Louis XVI of France, shared their "cosmopolitan" attitudes. It didn't work out so well for them.
Robert Creamer is a long time political organizer and strategist and author of the recent book: Stand Up Straight: How Progressives Can Win, available on Amazon.com.
It also has some provisions for social aid for the "unemployed" which is very badly needed, well intended, but perhaps should not be in this particular Bill.
The point is, it is not a BAILOUT BILL for wealthy Corporations and CEO'S only, like the first Bill.
That POINT is why Democrats are trying to pass it, and most ALL of the Governors around the Country are FOR IT...... and Congressional Republicans are NOT.
The House Bill was not the Final product. The Bill needs tweaking for sure, and hopefully the Senate will improve it.....but too many people are knee jerk ranting against it because they are confusing it with the FIRST Bailout BILL....which we ALL have reason to be totally POed about.
18 billion $$ going to pay these fools bonuses?! They ask you and me, US TAXPAYERS that did not get a Bush TAX CUT for $$ to bail THEMout, and then they have the gall to take 18 billion $$ in bonuses while we are trying to figure out whether we should pay this month's mortgage payment or buy groceries?!
They spent the first bailout handout on WHAT? No body knows for sure except for the redecorating of a CEO'S office to the tune of a million, and a fancy SPA visit, etc....but, WE THE PEOPLE who are bailing them out with OUR tax dollars are told there is nothing that can be done because Bush and Paulson didn't require any oversight or put any REGULATIONS on HOW OUR BILLIONS were to be spent? There's NOTHING WE CAN DO? WE CAN'T HOLD THEM ACCOUNTABLE... OR... ask for OUR $$ to be returned?
WTF?!
I mean this would be a hilarious joke if it was a SNL skit, but it's not people, this is real! HOW is this REAL?
They are THIEVES. Plain and simple. There is no other way to say it, and We have to suck it up?
That's what OUR REPRESENTITIVES are telling us. There is nothing we can do. HA! and we are also PAYING our representitves salaries to add insult to injury!
The problem is even worse. While at the same time different in nature.
The problem is that the remuneration in finance actually contributed to the creation of the bubble.
But not by being excessively high in comparison to average pay. That's also a problem, but it's a different problem, and you could even call it a minor one - if you are sufficiently cynical, which I am trying to be, just for the sake of the argument.
The problem is that the incentives produce the situation where nobody cares about risk. Hence they have a destabilizing effect.
That's in normal times. In these times of bail-out, the real problem is that bankers can afford to blackmail the taxpayer.
I have no idea what to do in this situation. I only know what to do for the future. Roubini has said it and probably Taleb says it: charge the banks a too-large-to fail premium.
To wit: Even Alan Greenspan has thought about the necessity of this move, back in the Financial Times in April 2008. He also worried about income disparity - but only because that might actually lead to a situation where a democrat gets into power. How kind.
There's something to the too-big-to-fail-premium.
Elected officials will huff and puff and blow smoke up our asses, but they are not about to interfere with the people who pay for their campaigns. They may pick one out of the weaker predators, scapegoat him for the faults of an entire system, and hang him up by his heels, but that'll be the end of it. At no point will anyone admit that, after a dozen years of the government we deserved, we now have the economy we deserve.
The disastrous reign of Louis XVI is a good example, but for a reason no mentioned in the article: his government was too invested in his excesses to reign in him or his clueless Queen. Average people did it, violently.
If you want this system to change, be prepared to march on DC. Not until a million or two enraged citizens are bellowing their lungs out on the Mall will our officials seriously consider changing anything. The only responsible government is one with a healthy fear of its citizens. Given that the corporation is the dominate institution of our time, similar treatment of corporate Boards could only help.
We have been phoning our representatives, signing petitions, writing Congressmen, emailing the media, donating to organizations to create videos, commenting on blogs till our fingers fall off, and voting for change...(I know I have been doing these things)...yet, it all stays the same.
We are under the impression that our representitives in Congress are "representing us" They call us "their constiuients" They preference their statements with "The people want" this or that.
How do they know what we want, think, or demand in return for our tax dollars? "I" never see them or have never heard from any of them, directly. Have you?
How often do any of you actully ever see or hear from your representitives, asking you personally what you think or want?
How many times have you written to them about something important to you, only to get a nice form letter back thanking you for your letter and assuring you they have read it? No direct feed back, no follow up questions, no actual answers to what you wrote?
Claire McCaskill actually said something in plain language that most of us have been thinking, in the WAY WE HAVE BEEN THINKING IT about these Wall Street and Banking thieves. Obviously SHE has actually been talking to the PEOPLE.
I'd sure like to hear more of that!
Americans are incapable of class war.
Every lumpen proletarian with elementary school education fervently and naively believes he/she can become a Bill Gates.
Hence the gradual weakening of the unions. Hence the further alienation of the working and middle classes. Hence the domination of bourgeois liberals.
Hence, utter inability of lower and middle classes to organize and produce pressure on governing structures.
American socialists and communists that should obsessively focused on producing class consciousness are a joke.
Their platform consists of some liberal babble about Gaza, and fawning on the re.ligious fundament.alist new Prez. this is ajoke.
CPUSA is now ran by community college students.
WHERE IS ANY OPPOSITION to the Demo-can oligarchy?
There is NONE.
I'm ready.
I want my tax dollars to go towards things that will help fix the economy---NOT towards CEO's luxuries.
A child understands the concept of----If you fail in your responsibilities---no dessert!!
If you lost trillions of $ you don't have top talent!
I won't make a lot of money,... but I won't lose much either.
When was the last time the "politicians" got a "deal" like this for the PEOPLE?
When they passed the Law years ago that gave CORPORATIONS the same RIGHTS as Individual PEOPLE....that was the end of our Country, "OF, BY, and FOR the "PEOPLE"
Big Corporations have a "MONOPOLY"...they have a monopoly on the MONEY. Wall Street has one job only. To get all the MONEY. MONEY is WALL STREET'S product. The playing field is not even available to Individual People...working class people... when stacked up against BIG CORPORATIONS and WALL STREET. THEY have the "COLLECTIVE" CASH FLOW, the HIGH DOLLAR LAWYERS, the LENDING INSTITUTIONS, and GOP POLITICIANS all working for them...deregulating everything to help THEM get MORE money, legislating tax loop holes so they can pay LESS taxes, even turning a blind eye and doing NOTHING about off shore accounts to aviod paying taxes all together. They can lie, cheat, and steal and get away with it. WHY? ALL of the above that's why. He who has the $$ has the power and our Government Politicians have seen to it that "Corporation" Wealth is advanced, protected, and RULES, and if we "people" are lucky, we'll get a "TRICKLE"
How is an everyday INDIVIDUAL average citizen supposes to COMPETE for THE MONEY in our Capitalistic Country when up against that stacked deck?
the bailout itself was absolutely necessary. Alternative would've been a world depression.
This was prevented. So far.
How will this laid-off and aggrieved employee get into the CEO's gated, mega-mansion community with Blackwater-grade private army (oops, I mean "security.")?
Paul Craig Roberts on the economy.
Well, the system is a victim of its own success. So much money has been accumulated by those at the top that there isn't enough left for the rest of us to make the system work properly.
Unfortunately, the conservatives, represented by the GOP, value the preservation of this unsustainable system more than they value the preservation of the people of our nation.
Their ideas, based upon a flawed concept, are therefore inherently flawed from the start, and should be disregarded as such.
A. There aren't many "conservatives" in Congress, conservatives care about out of control Government spending, the GOP has not.
B. If the Demorat's goal is not to allow these companies to "accumulate money with no limits" then why on Earth did the bank bailout pass with little GOP support giving them billions of dollars?
The above, from Sam Stein's article. The Bailout is a republican animal. The Stimulus, democrat, and only because the repubs refuse to work with the dems. Let's Remember that Bush gave us the largest deficits and national debt of any president in history, and he did it with the help of a Republican Congress.
Oh they weren't real conservatives I'm sure you would say. Well maybe this thing you call "conservatism" is just a heaping ladel of bullshit, promoted by certain wealthy donors that care more about their bottom line than any ideological purity.
And if you are a member of the middle or lower class and you support conservatism, you may just be a mark in this con game.