Whining and Dining (A reprint of Vol. XXIV, Art. 35 .. Three years ago today)
We began our Vol. XIX, Art. 12 commentary with Louise Story’s astonishing revelation in The New York Times that, “After an Off Year, Wall Street is Bouncing Back”. Here are some excerpts:
– “Workers at the largest financial institutions are on track to earn as much money this year as they did before the financial crisis began …”
– “If the pace continues all year, the money set aside for compensation suggests that workers at many banks will see their pay – much of it bonuses – recover from the lows of last year.
– “‘As you see a recovery, you’ll see everybody’s compensation beginning to rise,’ according to a Wall Street analyst.
– “Of the large banks receiving federal help, Goldman Sachs stands out for setting aside the most per person for compensation … it would add up to average pay of $ 569,220 per worker – almost as much pay as the pay in 2007, a record year …”
– “Some analysts point to Morgan Stanley as an example of the compensation conundrum. The bank had a dismal quarter, losing $ 578 million, but still put aside $ 2.08 billion for compensation. But according to Morgan Stanley’s chief financial officer, ‘The number of fat cats making loads of money is much less than you think'”. [“Yeah, right. They’re all on food stamps,” was our comment.]
Those numbers were “astonishing”, alright, but those guys were just pikers. That analyst who predicted that everybody’s compensation will begin to rise “as you see a recovery” was just half right. He should have said that compensations will rise even if there isn’t a recovery.
On September 17th Les Leopold had an article in the Huffington Post. “Poverty Rises as Wall Street Billionaires Whine”. He began with some information from Gulfnews.com:
“The ranks of the working-age poor in the United States climbed to the highest level since the 1960s as the recession threw millions of people out of work last year, leaving one in seven Americans in poverty. The overall poverty rate climbed to 14.3 per cent, or 43.6 million people, the Census Bureau said yesterday in its annual report on the economic well-being of US households.
“While 43.6 million Americans live in poverty, the richest men in finance sure are getting miffed. First, Steve Schwartzman, head of the Blackrock private equity company, compares the Obama administration’s effort to close billionaires’ tax loopholes to ‘the Nazi invasion of Poland.’ Then hedge fund mogul David Loeb announces that he’s abandoning the Democrats because they’re violating guaranteed protections against persecutions of the minority, and an inexorable right of self-determination.’ Instead of showing their outrage about the spread of poverty in the richest nation on Earth, the super-rich want us to pity them? Why are Wall Street billionaires so whiny? Is it really possible to make $ 900,000 an hour (not a typo – that’s what the top ten hedge fund managers take in), and still feel aggrieved about the way the government is treating you? After you’ve been bailed out by the federal government to the tune of $ 10 trillion (also not a typo) in loans, asset swaps, liquidity and other guarantees, can you really still feel like an oppressed minority?
“You’d think the Wall Street moguls would be thankful. Not just thankful – down on their knees kissing the ground the taxpayers walk on and hollering hallelujah at the top of their lungs! These guys profited from puffing up the housing bubble, then got bailed out when the going got tough. Without taxpayer largess, these hedge fund honchos would be flat broke. Instead, they’re back to hauling in obscene profits … and standing before us as troubled souls, haunted by visions of persecution. Why? The world changed. Before the bubble burst, these people walked on water. Their billions proved that they were the best and the brightest – not just captains of the financial universe, but global elites who had earned a place in history. They donated serious money to worthy causes – and political campaigns. No one wanted to mess with them.
“But then came the crash. And the things changed for the big guys – not so much financially as spiritually. Plebeians, including me, are asking pointed questions and sometimes even being heard, both on the internet and in the mainstream media. For the first time in a generation, the public wants to know more about these emperors and their new clothes. For instance:
– What do these guys actually do that earns them such great wealth?
– Is what they do productive and useful for society?
– Is there any connection between what they earn and what they produce for society?
– Did they help cause the crash?
– Did these billionaires benefit from the bailouts? If so, how much?
– Are they exacerbating the current unemployment and poverty crisis with their shenanigans?
– Why shouldn’t we eliminate their tax loopholes?
– Should their sky-high incomes be taxed at the same levels as during the Eisenhower years?
– Can we create the millions of jobs we need if the billionaires continue to skim off so much of our nation’s wealth?
– Should we curb their wealth and political influence?
“How dare we ask such questions! How dare we consider targeting them for special taxes? How dare we even think about redistributing THEIR incomes – even if at the moment much of their money comes from our bailouts and tax breaks?
“It’s true that billionaires live in a hermetically sealed world. But that doesn’t mean they don’t notice the riffraff nipping at their heels. And they don’t like it much. So they’ve gotten busy doing
what billionaires do best: using their money to shield themselves. They’re dipping into their bottomless war chests, tapping their vast connections and using their considerable influence to shift the debate away from them and towards the rest of us.
“We borrowed too much, not them. We get too much health care, not them. We need to tighten our belts while they pull in another $ 900,000 an hour. And if we want to cure poverty, we need to get the government to leave Wall Street alone. Sadly, their counteroffensive is starting to take hold. How can this happen? Many Americans want to relate to billionaires. They believe that all of us are entitled to make as much as we can, pretty much by any means necessary. After all, maybe someday you or I will strike it rich. And when we do, we sure don’t want government regulators or the taxman coming around! …
“Unfortunately, if we don’t adjust our attitudes, we can expect continued high levels of unemployment and more people pushed below the poverty line. It’s not clear that our economy will ever recover as long as the Wall Street billionaires keep siphoning off so much of our wealth. How can we create jobs for the many while the few are walking off with $ 900,000 an hour with almost no new jobs to show for it? In the old days, even robber barons built industries that employed people – steel, oil, railroads. Now the robber barons build palaces out of fantasy finance. We can keep coddling our financial billionaires and let our economy spiral down, or we can make them pay their fair share so we can create real jobs. These guys crashed the economy, they killed billions of jobs, and now their cashing in on our bailout. They owe us. They owe the unemployed. They owe the poor.
“Dwight D. Eisenhower was no radical, but he accepted the reality: If America was going to prosper, and pay for its costly Cold War, the super-rich would have to pony up. It was common knowledge that when the rich grew too wealthy, they used their excess income to speculate. In the 1950s, memories of the Great Depression loomed large, and people knew that a skewed distribution of income only fueled speculative booms and disastrous busts. On Ike’s watch, the effective marginal tax rate for those earning over $ 3 million (in today’s dollars) was over 70 percent. The super-rich paid. As a nation we respected that other important American value: advancing the common good.
“For the past thirty years we’ve been told that making as much as you can is just another way of advancing the common good. But the Great Recession erased that notion: The Wall Streeters who made as much as they could undermined the common good. It’s time to balance the scales. This isn’t just redistribution of income in pursuit of some egalitarian utopia. It’s a way to use public policy to reattach billionaires to the common good.
“It’s time to take Eisenhower’s cue and redeploy the excessive wealth Wall Street’s high rollers have accumulated. If we leave it in their hands, they’ll keep using it to construct speculative financial casinos. Instead we could use that money to build a stronger, more prosperous nation. We could provide our people with free higher education at all our public colleges and universities – just like we did for WWII vets under the GI Bill (a program that returned seven dollars in GDP for every dollar invested). We could fund a green energy Manhattan Project to wean us from fossil fuels. An added bonus: If we siphon some of the money off Wall Street, some of our brightest college graduates might even be attracted not to high finance but to jobs in science, education and healthcare, where we need them.
“Of course, this pursuit of the common good won’t be easy for the billionaires (and those who identify with them). But there’s no alternative for this oppressed minority: They’re going to have to learn to live on less than $ 900,000 an hour.” – Les Leopold
[“A stronger, more prosperous nation”? Right on! “Free higher education”? Right on! “A green energy Manhattan Project”? Speculative fantasy at this point … but, right on!
A “Manhattan Project” that wouldn’t be just fantasy though, would be the kind of Emergency Shipbuilding Program that ended the Great Depression. That’s how to put millions back to work.]