Back in the Great Depression, even at the height of America's
misery, some people made quite a bit of money. Chase National Bank
chair Albert Wiggin, for instance, href="http://delong.typepad.com/sdj/2010/10/chase-national-bank-shareholders-as-losers-from-insider-trading-by-executives.html">netted
a windfall worth over $4 million after the 1929 stock market crash --
the equivalent of over $52 million today -- trading his own bank short.
But most of America's rich actually saw their fortunes sink,
and significantly so, during the Great Depression.
The average incomes of the nation's richest tenth of 1
percent, calculates
economist Emmanuel Saez, fell from $1,242,237 in 1928, the last full
year before the Great Depression, to $737,861 in 1931, as measured in
today's dollars.
Our current Great Recession is most
definitely not repeating this sinking-at-the-top history. Our
rich today are more than holding their own.
On Wall Street, business has hardly ever been better, with
profits this past year projected to settle at the href="http://www.businessweek.com/news/2010-12-22/banning-big-wall-street-bonuses-favored-by-70-of-americans.html">fourth-highest
all-time total. Wall Street bonuses, new data show, are enriching
bankers and traders at levels not far off the records set in the go-go
years right before the 2008 financial industry meltdown.
At JPMorgan Chase, news reports last week href="http://www.bloomberg.com/news/2011-01-19/goldman-sachs-cuts-its-compensation-pool-by-14-to-430-700-per-employee.html">detailed,
$9.33 billion in 2010 compensation will be divvied up among 26,314
employees, for a $369,651 per employee average, about the same as the
$378,600 average in 2009.
But few "average" JPMorgan employees will make anywhere near
that $369,651 figure. Bonuses at JPMorgan -- and every other Wall Street
giant -- go disproportionately to top bankers and traders.
At Goldman Sachs, 35,700 employees will
"share" $15.4 billion in compensation for 2010, a $430,700 average,
down somewhat from 2009's $498,246 average. For Goldman execs, not to
worry. The $15.4 billion 2010 pay total doesn't include any of the
stock trading windfalls that Goldman's top executives -- the bank's 475
managing "partners" -- will soon be reaping.
Back in December 2008, with Wall Street reeling and Goldman
shares selling at a bargain-basement $78 each, Goldman's power suits
awarded themselves options to buy href="http://dealbook.nytimes.com/2011/01/18/study-points-to-windfall-for-goldman-partners/?nl=todaysheadlines&emc=tha25">36
million shares of Goldman stock at that bargain price, ten times
more options than Goldman granted the year before.
Goldman shares have lately been selling around $175 each,
creating a potential $100 per share personal profit for Goldman's
elite. Overall, analysts href="http://dealbook.nytimes.com/2011/01/18/study-points-to-windfall-for-goldman-partners/?nl=todaysheadlines&emc=tha25">reported
last week, Goldman Sachs CEO Lloyd Blankfein and his family are now
sitting on a stash of Goldman shares worth $355 million.
All these dollars cascading onto Wall Street,
href="http://www.ft.com/cms/s/0/cde5e9da-1fd6-11e0-b458-00144feab49a.html">says
JPMorgan Chase CEO Jamie Dimon, signal "the foundation of a broad-based
economic recovery."
That signal, outside Wall Street, remains exceedingly weak.
Unemployment rates in the United States are running href="http://www.nytimes.com/2011/01/19/business/economy/19leonhardt.html?pagewanted=print">substantially
above jobless rates in Germany, Japan, and other peer nations. And
U.S. wages, the Wall Street Journal href="http://online.wsj.com/article/SB10001424052702304248704575574213897770830.html?mod=WSJ_hp_MIDDLETopStories">noted
earlier this month, "have taken a sharp and swift fall" all across the
nation.
One consequence: America's "doubled-up" population -- families
that have lost their homes and moved in with friends or relatives -- href="http://big.assets.huffingtonpost.com/doubling.pdf">has hit
the 6 million mark.
These hard times everywhere but at the top, New York Times
analyst David Leonhardt href="http://www.nytimes.com/2011/01/19/business/economy/19leonhardt.html?pagewanted=print">suggested
last week, most likely at root reflect contemporary America's
deep-seated power imbalance "between employers and employees."
U.S. employers, notes Leonhardt, now "operate
with few restraints." With labor protection laws loophole-ridden and
courts tilting aggressively the corporate way, companies can dictate
outright labor relations terms with their employees.
To maintain profit rates, these companies can downsize,
outsource, and replace full-timers with temps. Or shove down wages and
slash benefits. Or hoard cash and speculate on financial markets -- and
never have to worry that anyone in government will intervene.
We historically, here in the United States, have had a word
for power imbalances this striking and stark: plutocracy, or rule by
the rich.
The plutocratic rule we experience today can
seem all-encompassing. The rich and powerful href="http://www.bnet.com/blog/financial-business/bill-daley-wall-street-8217s-latest-revolving-door-emissary-to-washington/9433">appear
to slide endlessly and effortlessly from the summit of one sphere
of American economic and political power href="http://www.washingtonpost.com/wp-dyn/content/article/2010/06/03/AR2010060302740.html">to
another.
Some of these moves make national headlines. Peter Orszag,
after running the federal budget office for the Obama White House, href="http://www.theatlantic.com/politics/archive/2010/12/an-unfortunate-decision-by-peter-orszag/67822/">moves
to a plush senior global banking slot at Citigroup. Former JPMorgan
Chase executive Bill Daley becomes the new White House chief of staff.
Other moves go more under the radar. Former U.S. senator Mel
Martinez, a Florida Republican, href="http://www.opensecrets.org/revolving/departing.php">moves to
JPMorgan Chase. Theo Lubke, the lead derivatives expert at the New York
Federal Reserve Bank, href="http://www.washingtonpost.com/wp-dyn/content/article/2010/12/29/AR2010122902721_pf.html">hops
in bed with Goldman Sachs. The top exec in the New York City public
school system, Joel Klein, href="http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/11/rupert-murdoch-taps-nyc-school-boss-joel-klein-to-lead-news-corp-push-into-education-business.html">joins
the Rupert Murdoch media empire as an executive vice-president.
In this clubby atmosphere, backs get
scratched at the power summits -- and everyday people get shafted. New
York City's richest 1 percent, as one href="http://www.nypost.com/p/news/local/manhattan/towering_gap_ZtB2eOKBMBSbpMvhoVV9oM">new
report details, now average more income per day -- about $10,000 --
than New York's poorest 1 million residents average in a year.
How long can this state of affairs continue? History can be a
guide -- and an inspiration, too. In the Great Depression, over five
years passed before Congress felt enough grassroots heat to start
passing the landmark bills -- like the Wagner labor rights legislation --
that truly upended America's power dynamics.
We're still only three years into the Great Recession. Wall
Street's bonus boys may not be as home-free as they think.
Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up to receive Too Much in your email inbox.