|June 10, 2013|
So how are average Americans doing so far in 2013? The latest indicator: Hourly wages, the Bureau of Labor Statistics informed us last week, fell at a 3.8 percent annual clip in the year's first quarter, the largest quarterly drop ever recorded.
Average Americans today are making less, after inflation, than they made in the early 1970s. Something has gone fundamentally wrong. American workplaces are simply no longer working for those who punch timecards — or play violins.
Musicians who play violins — and every other instrument of a modern world-class orchestra — spend years perfecting their craft. They bring great joy whenever they perform. But the musicians of one great American orchestra have done no official performing since October 1. Local plutocrats have silenced their music.
These plutocrats have demonstrated yet again why the United States has become, as sociologist Salvatore Babones points out, the world’s only major nation with inequality both high and rising. More on the new report that incited that observation — and class war with a cultured face — in this week’s Too Much.
|GREED AT A GLANCE|
The executives at the Japanese financial giant Daiwa Securities have had a fairly spectacular last 12 months. This past February, Global Finance magazine namedDaiwa the world’s “most creative global investment bank.” Then last week came the news that pay last year for Daiwa’s top 12 execs nearly doubled over the year before. The dozen execs averaged $674,000 each. But better not let the Daiwa execs see what their U.S. rivals are making. At Goldman Sachs, the top five execs last year averaged $18.5 million each. Daiwa CEO Takashi Hibino and the rest of Daiwa’s top dozen execs together took in $8.1 million, over 11 times less than the combined $92.5 million that Goldman’s top five collected . . .
Over the last decade, CNN calculates, the wars in Iraq and Afghanistan have left over 50,000 U.S. and allied service men and women wounded and scarred for life. But one celebrated U.S. warrior seems to have survived the long conflicts in fine fettle. That would be David Petraeus, the former four-star Army general and CIA director who has just joined, as a high-ranking executive, one of the nation’s most notorious private equity firms. No word yet on the pay deal Petraeus has inked with KKR, his new employer. But the compensation figures to be generous. KKR top execs Henry Kravis and George Roberts each collected over $100 million last year in dividends, on top of over $35 million each in annual pay. Whatever the 60-year-old Petraeus pockets from KKR willcome on top of his over $200,000 annual Army pension . . .
Eighty percent of success, Woody Allen once quipped, “is showing up.” Would America’s wealthy agree? Wealth analysts at the Spectrem Group asked a cross-sample of high-net-worth entrepreneurs — affluents with at least $5 million in assets above the value of their primary residence — to explain the secret to their “success.” Many responded with one or another predictable response: hard work, frugality, education. But 79 percent of the entrepreneurs also seemed to be on Woody’s wavelength. They listed “being in the right place at the right time” as a key to their fortunes. “Waiting for lady luck to find you,” says Spectrem’s Adriana Reyneri, may be an essential part of any recipe for entrepreneurial success.
Quote of the Week
“A country that cannot force wealthy and corporate taxpayers to pay their share of the tax burden is a country that will fail.”
Linda Beale, The Boom and Bust Cycle of Tax Shelters and Intimidation of the IRS, June 7, 2013
|PETULANT PLUTOCRAT OF THE WEEK|
In yachting's grandest competition, the America’s Cup, each race’s winner gets to set the next race's rules. What bloated-ego billionaire could resist such an opportunity? Certainly not Oracle software billionaire Larry Ellison, who won the last Cup in 2010, then set out to glamorize the competition. He set this year’s race in San Francisco Bay, not the open seas, and limited the field to high-tech, ultra-fast catamarans. Ellison predicted 15 boats would open the race this July. But the cost of competing under Larry’s rules — over $65 million per boat — has narrowed the field to four. Also depressing the field: safety concerns. One sailor has already died in America's Cup training. San Francisco now figures to lose millions hosting the race. Ellison’s reaction? No comment.
|IMAGES OF INEQUALITY|
Patriotic Millionaires/ An egalitarian action center for Americans of means without a mean streak.
|PROGRESS AND PROMISE|
Time to Make Plutocrats Choose?
Dean Machin, a political philosopher at University College London, would like to remind us that wise people have been worrying about how the wealth of the wealthy can distort our politics ever since Aristotle hit Athens. What can we do, in our contemporary democracies, to keep grand fortune from making more of a grand mess? Machin has a “simple proposal.” Give the super rich a choice: Either pay a 100 percent tax on the wealth that makes them super rich or lose their political right to lobby, bankroll think tanks and political parties, or control media outlets. The choice, says Machin, would let “the super rich who value money over politics keep their wealth.” These rich could even continue to vote.
|INEQUALITY BY THE NUMBERS|
Stat of the Week
The number of New York Times articles that mention inequality, notes University of California at Berkeley sociologist Claude Fischer, has increased from an average about 90 a year in the 1990s to 840 a year in the 2000s to about 2,700 a year since the start of 2010.
They Can't Stop Beethoven, Can They?
For the grasping managers of Corporate America — and the institutions their wealth dominates — no workers deserve dignity, not even the most amazingly accomplished.
What do bank executives who make $19 million a year do in their spare time? They do the same thing they do in the hours they spend in their executive suites. They squeeze America’s middle class.
That’s not, of course, what the flacks at U.S. Bancorp, the nation’s fifth-largest bank, will tell you. They’ll inform you that the CEO of their Minneapolis-based banking giant, Richard Davis, graciously gives of his spare time to serve on the board of the nationally renowned Minnesota Orchestra.
True enough. But CEO Davis brings to that board much more than a fondness for fugues. He brings the same corporate executive arrogance that has shoved labor’s share of the nation’s economic output down to modern-day record lows.
This redistribution — from worker to boss — has been rushing ahead now for over three decades. Since 1980, as analyst David Cay Johnston noted last week, “corporate pre-tax profits have grown at almost twice the rate of pre-tax wages.”
Behind this massive redistribution: a relentless corporate offensive to minimize labor bargaining power by any means necessary. Including “lockouts.”
Richard Davis chairs the negotiating committee at the nonprofit responsible for the Minnesota Orchestra. Last October 1, Davis and his fellow corporate managers who run the nonprofit “locked out” the orchestra’s musicians after theyrefused to accept a contract offer that would have cut musician pay by up to 50 percent and jumped annual health care premiums by up to $8,000.
Ever since then, the Minnesota Orchestra’s near 100 symphony musicians have gone without salary, health insurance, and pension contributions, the basic building blocks of middle class security.
These musicians are not striking. Quite the contrary. They offered to keep working while bargaining negotiations continued. They also offered to submit “to impartial, final and binding arbitration under the guidance of the Federal Mediation and Conciliation Service.”
U.S. Bancorp CEO Davis and friends rejected these offers. They chose instead to keep the musicians from working — and wait for them to cave.
Back in America’s middle class golden age, in the middle of the 20th century, such management behavior would have been unthinkable.
Back then, any corporate chiefs who locked out their employees in the middle of a labor dispute risked becoming pariahs in their communities, the sort of shady operators who would never be invited to sit on the board of a prestigious nonprofit like the Minnesota Orchestral Association.
But elite attitudes toward lockouts started changing in 1975 when an ostensibly liberal pillar of the business community, Washington Post publisher Katharine Graham, replaced striking workers with “replacement workers” and lived to tell the tale. Six years later, a newly elected conservative President, Ronald Reagan, fired and replaced striking air traffic controllers.
A new anything-goes corporate management approach to labor relations soon took hold. Lockouts, in this atmosphere, would become simply another option in the modern American management toolkit — and the federal regulator created to safeguard the right to good-faith collective bargaining, the National Labor Relations Board, would prove too feeble to offer up much resistance.
U.S. Bancorp CEO Davis has had an up-close chance to see how effective a management tool lockouts could be. Nearly two years ago, another major enterprise in Minnesota, American Crystal Sugar, locked out 1,300 workers.
The unionized workers at Crystal, the nation’s largest beet sugar producer, had solid middle-class jobs that averaged $40,000 a year, plus overtime. But in 2011 contract negotiations Crystal management demanded huge health care cuts and work rule changes that would undercut the job security of long-term workers.
The workers voted not to accept the offer Crystal labeled “final.” In August 2011, Crystal then locked them out.
The workers never struck. Crystal replaced them anyway. Last month, the worn-out workers, their unemployment benefits exhausted, voted to accept the same management attack on their middle-class contract they had rejected four times earlier. Crystal management had won a total victory.
U.S. Bancorp’s Davis expected total victory when his lockout began, too. But the musicians have hung tough, buoyed by widespread community support. Still, the hostile environment management has created has taken a toll. About a quarter of the orchestra’s 98 musicians have taken jobs elsewhere or retired.
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“This lockout is destroying the Minnesota Orchestra, musician by musician by musician,” viola player Sam Bergman told the audience at one benefit concert late in April.
Richard Davis personally took home $18.8 million in 2010 for his U.S. Bancorp labors, several million dollars more than the annual wage and benefit cost of the entire Minnesota Orchestra. Since becoming Bancorp CEO over six years ago, Davis has averaged about $10 million annually.
Imperial CEOs like Richard Davis owe their grand fortunes, in large part, to the grand squeeze American workers have suffered over the last generation. These execs have been squeezing so long they simply cannot operate any other way.
Even music, turns out, cannot soothe the savage beast.
Aficionados of fine music — and advocates for a more equal America — can now support the musicians of the Minnesota Orchestra online.
Mark Bittman, Welfare for the Wealthy, New York Times, June 4, 2013. The mega millionaires of agriculture continue to prosper off the tax dollars of ordinary Americans.
Bill Black, How Elite Economic Hucksters Drive America’s Biggest Fraud Epidemics, Naked Capitalism, June 6, 2013. A University of Missouri-KC expert on financial crime lays bare the M.O. of our plutocrats.
What Is Net Worth Really Worth? The Drucker Institute, June 7, 2013. What we need more than more wealth for the wealthy.
Asawin Suebsaeng, The Purge: A Horror Flick about . . . Income Inequality?!, Mother Jones, June 7, 2013 A new fright flick has as much to say about inequality as swinging axes into amoral, wealthy college kids trying to kill your family.
Looking for an ace summer read? Check outthis new history of America's first — and so far only — triumph over plutocracy.
|NEW AND NOTABLE|
A Close Look at Where Our Inequality Lurks
World of Work Report 2013: Repairing the economic and social fabric, International Labor Organization, Geneva, June 3, 2013.
This latest annual survey from the United Nations agency that addresses labor matters explores today’s most pressing economic realities in 57 major nations, 26 of them developed and 31 developing.
Of all these nations, only one currently has a level of inequality that qualifies as both high and rising. This one nation: the United States.
You’ll find the data that backs up this striking reality in the new International Labor Organization World of Work Report. You’ll find plenty more, too. Unfortunately, this dense document has too many pages of officalese to ever attract a general audience.
Sociologist Salvatore Babones, on the more fortunate side, has remedied that deficiency with a highly accessible rundown of what ILO researchers have to tell us. The new ILO data, he explains, reinforce a crucial point that all of us should take to heart: We need not consider high and rising inequality inevitable.