||March 25, 2013|
Apologists for our top-heavy economic order have a ready response
whenever anyone starts blasting CEO pay excess. Sure, they tell us, we
may have some power-suited stinkers out there, but most rewards are
going to deserving high achievers — and then they trot out our national
superstar CEO du jour.
In the financial sector, that superstar has been JPMorgan Chase CEO Jamie Dimon, “America’s least-hated banker,” the New York Times opined in 2010. The next year Dimon took home $23 million. Pundits did not protest. Hadn’t President Obama himself described JPMorgan as “pretty well managed”?
Now a new report from Senator Carl Levin has popped the tires on the Dimon bandwagon. Under Dimon, turns out, JPMorgan has routinely bet federally insured deposits on outrageously risky derivatives and dabbled in everything from illegal flood insurance claims to auto-finance rip-offs.
The lesson? We don’t have some CEOs who deserve their millions and some who don’t. We have some whose scams have come to light and others whose scams still lurk in the dark. We’ll continue, in Too Much, to shine all the light we can.
|GREED AT A GLANCE|
The most expensive condo in New York! The hemisphere’s tallest residential skyscraper!
The superlatives were flying last week when developers officially put
on sale apartments in Manhattan’s latest luxury tower. A third of the
tower's 126 units have already sold, and developers are hoping to grab
up to $82 million each for the remainder. They’re also rushing to
complete the unfinished tower's construction and collect their loot.
Maybe rushing too fast.
Last week panels crashed down the building’s face and badly injured a construction worker, the second major accident in less than a month. CIM, the building’s private equity firm owner, declined comment last week on the latest safety snafu . . .
How much did Election 2012 cost? The Center for Responsive Politics has just computed the tab at $6.3 billion, a figure that makes last year’s electioneering “the most expensive” ever. Over half the total spending, $3.6 billion, involved campaigns for Congress. What did these billions bring us? The most out-of-touch Congress ever. The nation's 94 newest lawmakers, the Center notes, hold “almost exactly $1 million more” in personal wealth than typical Americans. Overall, the 535 current members of Congress have a median net worth of $966,000, about 15 times the nation’s median household wealth. The richest lawmaker of them all? That’s now Michael McCaul, a Texas Republican. McCaul owes the bulk of his $500.1 million family fortune to his wife Linda, the daughter of the founding CEO of the Clear Channel radio empire. . .
Austerity? Hard times? Shaky futures? Maybe in your world. In the world people of mega means inhabit things are going swimmingly. Indeed, deep pockets can now go swimming with the fishes deep down in Davey Jones' locker. Harrod’s, the famous London emporium of all things stylish, is now offering personal submarines that start at just $2 million. The two-person Orcasub can stay submerged for up to 80 hours. The deluxe $9.3-million model looks like “an underwater fighter jet” and steers by foot pedals and a joystick. This Orcasub can descend to 6,000 feet, triple the max depth the entry-level model can dive.
Quote of the Week
“This is even more reason to worry about inequality. It’s not just year to year ups and downs that have gotten worse. It’s actually the rich are getting richer and staying richer. The poor, poorer and staying poorer.’’
Justin Wolfers, co-author, Rising Inequality: Transitory or Permanent, Forbes, March 21, 2013
|PETULANT PLUTOCRAT OF THE WEEK|
|Humble Scott Ginsburg has never been. As he told a Dallas newspaper in 1999, after making his first millions: “Let me suggest that I don’t have a small ego.” Top officials at Georgetown University, Ginsburg’s law school alma mater, did everything they could to stroke that ego. They promised, for a $5 million donation, to plaster Ginsburg’s name on the university’s new fitness center. Ginsburg would eventually donate $7.5 million to the university. But his name never appeared anywhere. The problem? A federal jury found Ginsburg guilty of leaking inside business info after the university signed the initial naming deal. Georgetown tried to redo the deal. Ginsburg balked. Now he has sued to get all his donations back. Georgetown, his lawsuit charges, has not been “committed to recognizing Ginsburg’s generosity.”||
|IMAGES OF INEQUALITY|
Picture Inequality, a global photo competition supported by the Nordic Trust Fund, has just named 11 winners. Photographer Juan Cruz Zorzoli entitled this winning portrait, shot in Argentina's Rio Negro province, A World without Wheels.
The Other 98%/ An online action center for confronting plutocracy.
|PROGRESS AND PROMISE|
|If Congress ever gathered up the nerve to take a swipe at plutocracy at budget time, what might the resulting budget include? Probably everything in the “Back to Work” budget the lawmaker Progressive Caucus brought to the House floor last week. In the plan: tax rates on high incomes topping off at 49 percent and applied to all income, even capital gains. A financial transactions tax on Wall Street speculation and a much higher estate tax rate, too. Some 84 lawmakers had the nerve to vote for the Caucus plan. But 327 didn't. The budget the House did bless last week calls for slicing the top tax rate from 39.6 to 25 percent. This GOP budget, notes Progressive Caucus co-chair Keith Ellison, winks a clear message: “Hey, rich people, we’ve got you covered.”||
|inequality by the numbers|
Stat of the Week
Swiss voters will this fall consider a national referendum proposal that limits CEO pay to 12 times the compensation of a firm's lowest-paid worker. The current Swiss ratio: 93 to 1. The Swiss ratio in 1998: 14 to 1.
Some Bailouts Taxpayers Seldom Ever Notice
All across Corporate America, top execs are feathering their own nests at the expense of their employees. The French have a better idea.
But Peter Drucker also cared deeply about enterprise morality. In his later years, he watched — and despaired — as downsizing became an accepted corporate gameplan for pumping up executive paychecks. Drucker could find “no justification” for letting CEOs benefit financially from worker layoffs.
“This is morally and socially,” he would write, “unforgivable.”
If Drucker were still writing today, he’d likely be even more unforgiving. CEOs these days aren’t just slashing worker jobs to add on to their own rewards. They’re slashing worker pay as well — and no CEO may be benefiting more from shrinking paychecks than Ford chief executive Alan Mulally.
Mulally has restored Ford to profitability, his many business and political admirers never tire of pointing out, without having to take any taxpayer bailout. But Mulally has indeed enjoyed a hefty bailout — from his workers.
Entry-level workers at Ford used to make $28 an hour. That rate fell by half when the auto industry financial crunch first hit five years ago and now sits a bit above $19. And since the crunch all Ford workers, not just entry-level workers, have given up cost-of-living wage adjustments and health benefits.
Auto industry execs have declared these worker concessions as absolutely necessary. Without lower compensation for auto workers, the argument goes, the auto industry would never become “globally competitive.” This same reasoning apparently doesn’t apply to compensation for Ford CEO Mulally.
Ford has just announced that Mulally's pay package for 2012 nearly hit $21 million. His personal rewards for the year almost doubled the pay that went last year to his chief German rival, Daimler CEO Dieter Zetsche, and even more stunningly dwarfed the $1.48 million Toyota CEO Akio Toyoda took home.
But the magnitude of how well Mulally has done for himself — since Ford workers started coughing up concessions — only swings into real focus when we step back and contemplate the towering pile of Ford shares of stock he now holds. In just over a half-dozen years, CNN Money reports, Mulally “has amassed holdings valued at more than $300 million.”
Among America’s CEOs, of course, Mulally hardly stands alone. The outrageousness of American CEO rewards has been building for some time.
Back in 1986, as Forbes noted last week, America’s ten highest-paid CEOs together pocketed $57.88 million in compensation. In 2012, the top 10 pulled in $616.4 million, about five times as much as the 1986 total after taking inflation into account.
Over that same 26-year span, average weekly wages for America’s workers barely increased at all.
So what should we be doing about CEO compensation? In France, the newly elected government of President François Hollande has placed a 450,000 euro cap — about $580,000 — on executive pay at the 52 companies where the French government holds a majority stake.
This cap will essentially limit executives at these publicly controlled companies to no more than 20 times the pay of their lowest-paid workers.
The French people, for their part, would like to see their government apply a similar cap to executives at all corporations, not just those companies where the government holds a controlling interest.
Earlier this month, just after Swiss voters passed a national referendum that bans executive signing and merger bonuses, a major French pollster asked whether people favored or opposed creating a “maximum wage” for all corporate CEOs. A whopping 83 percent of the French public supported the idea.
The French may have been reading their Peter Drucker. American CEOs, Drucker believed, should earn no more than 20 or 25 times their worker pay. Last year, in Great Recession-ravaged Michigan, Alan Mulally pulled in over 500 times the pay of Ford’s lowest-paid workers.
Olga Khazan, U.S. Corporate Executives Aren’t the Only Ones Making Tons of Money, Atlantic, March 19, 2013. Behind the recent European Union moves to limit CEO pay: soaring paychecks approaching U.S. levels.
Steven Hsieh, Rich CEOs Trying to Pay Even Less in Taxes, AlterNet, March 19, 2013. The new CEO drive to reduce the corporate tax to 25 percent and loosen limits on tax havens.
John Cavanagh, Inequality Is Hurting Us All, OtherWords, March 20, 2013. If 1968 levels of income equality still prevailed today, a new study shows, the poorest fifth of Marylanders would be earning twice what they currently take home.
Jeff Madrick, Day of Greed, Harper's, March 20, 2013. Scanning a day's headlines for signs of avarice.
Equality and Global Warming, Inequality Watch, March 21, 2013. How inequality complicates the work of gaining support for addressing climate change.
Benjamin Page and Larry Bartels, The 1% aren’t like the rest of us, Los Angeles Times, March 22, 2013.
New research suggests the wealthy have “very different ideas” on “a variety of policy issues.”
|new and notable|
The Great Grab for the Apple Cash Stash
Isaac Shapiro, $45+ billion for Apple shareholders, nothing yet for Apple workers, Economic Policy Institute, Washington, D.C., March 20, 2013.America’s corporations are currently sitting on huge stashes of cash. The tallest stash, over $137 billion high, belongs to Apple, and wealthy investors like hedge fund billionaire David Einhorn have been loudly demanding that Apple ought to start sharing much more of this hoard with shareholders.
This new paper by economist Isaac Shapiro aims to expand the “curiously one-dimensional” debate, at Apple and elsewhere, over corporate cash stashes, a debate that has totally ignored the men and women who actually create the wealth corporations like Apple are now hoarding.
Shareholder distributions mainly enrich the already rich. The workers who manufacture Apple products in Asia, Isaac Shapiro points out, remain already poor, and desperately so. Apple executives pledged a year ago to make major improvements in their pay and working conditions. Those major improvements, the latest investigations have concluded, have not yet taken place.
Meanwhile, stateside, 30,000 workers at Apple stores have annual take-homes that hover around $12 an hour. Last year, by contrast, Apple’s top nine execs took in over $400 million, or $21,000 an hour, at a 40 hour-week.
America’s overall distribution of corporate income, Shapiro adds, has never on record been more unequal than today. If workers here in 2013 were receiving the same share of corporate income they received just a decade ago, some $420 billion additional dollars would now be flowing, nationally, into worker paychecks.