This insightful article in CFO Magazine alerts employers avoid the (apparently common) pitfall of paying employees too much:
The example they use is of a person earning $12.50 an hour for work that the rest of the market only pays $8.50 for.
Here are the perilous dangers, as noted by writers Doug White and Polly White:
- Overpaid employees don’t know they are being overpaid!
- Because they don’t know they are overpaid, they live beyond their realistic means
- When the inevitable layoff occurs, the sad employee cannot adjust to earning what he or she actually “deserves” to earn
“Paying significantly above market rates to employees who cannot justify the premium through increased output is not only irresponsible, it’s an abrogation of the company’s fiduciary responsibility to its shareholders.
Most people who find themselves out of work will try to replace the income they have just lost. They believe they can, because they think they are worth what they were making. Refusal to accept lower-paying jobs lengthens unemployment and makes matters worse. They try to hang on to the lifestyle they built, not realizing they will never again attain their former level of income. We’ve seen cars repossessed, foreclosures on homes, broken marriages, and even suicide.”
Note the paternalistic condescension. Wrap your brain around the assumptions made in this article.
Do the authors imagine that with the “extra” $4.00 an hour difference between the “overpaid” and the “properly paid” employee will mean the difference between a used Honda Civic and a Ferrari?
Unbeknownst to the likes of people who write for CFO Magazine, people making the wages described are quite capable and practiced at making the most of their meager wages.
The authors give no word on how overpaying CEOs of companies that lose tons of money is unfair to the all-important shareholders or to the poor CEOs.
I guess that’s because in the current corporate world, CEOs are like migrant farm workers, moving from place to place collecting a crop of benefits, stock options and bonus compensation without worry of having to adjust their lifestyles one iota — even after fucking things up royally.
It sounds to me that the compensation package of the Whites should be scrutinized to make sure they aren’t earning more than the market bears for shovelling bullshit.
We wouldn’t want to be unfair to them.
Via The Business Insider.
60 Minutes had a nice segment reported by Steve Kroft this Sunday.
The reporting makes clear that the notion that the Community Reinvestment Act (CRA) caused the subprime mortgage debacle is getting more and more ridiculous.
Eileen Foster was a senior executive at Countrywide Financial before the bubble burst.
On the program, Foster, who was in charge of finding and investigating fraud at Countrywide, said, “from what I saw, the types of things I saw, it was — it appeared systemic. It, it wasn’t just one individual or two or three individuals, it was branches of individuals, it was regions of individuals.”
It appears there was a gold rush on for selling as much “product” up the chain in the casino that was the deregulated derivatives market.
In overstuffed recycling bins she says she found signatures that had obviously been cut and pasted from old paperwork onto new mortgage documents — an obviously fraudulent practice.
Describing an environment in which employees were encouraged to process bad loans, she provides motive for what drove the systemic corruption:
“The loan officers received bonuses, commissions. They were compensated regardless of the quality of the loan. There’s no incentive for quality. The incentive was to fund the loan. And that’s — that’s gonna drive that type of behavior.”
Yeah. No mention of the poor people and minorities forcing them to make bad loans.
- Prosecuting Wall Street (cbsnews.com)
- Ex-Countrywide Financial Executive: Mortgage Fraud Was ‘Systemic’ (huffingtonpost.com)
- CBS 60 Minutes, 12-4-11: Prosecuting Wall Street (2012indyinfo.com)
- At Countrywide, protecting mortgage fraud involved firing whistleblowers (dailykos.com)
“It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again” – Venture Capitalist Nick Hanaeur
Hanauer has put his name on a growing list of 1 percenters who are boldly stating what most economists already recognize.
Writing on Bloomberg’s website, Hanauer observed:
We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.
“The wealthiest can afford to pay more in taxes. That’s a part of the deal. That makes sense. I don’t know anyone that doesn’t agree with that,” Porat said. “The wealth disparity between the lowest and the highest continues to expand, and that’s inappropriate.” “We cannot cut our way to greatness,” she added.
I hope this is the dawning of a new capitalist idea.
We have lived too long in the shadow of timid CEOs and their sycophants who look no further than the next quarter.
In order for capitalism to be sustainable, a robust middle class must exist.
The article goes on to note that one of the major factors driving income inequality is the outrageous compensation and bonuses given to the top tier of huge corporations.
Instituting practices that reward performance and sustainability would go a long way toward creating a healthy economy.
- Morgan Stanley Executive Calls For Higher Taxes On The Rich: ‘We Cannot Cut Our Way To Greatness’ (thinkprogress.org)
- Silicon Alley Insider: Venture Capitalist Shreds The Idea That Taxing The Rich Is A Job Killer (businessinsider.com)
- Millionaire Nick Hanauer Shoots Down Neil Cavuto’s Straw Men as He Explains Why His Taxes Should be Raised (crooksandliars.com)
- Who creates jobs? The middle class (dailykos.com)
- Study backs up “Buffett Rule” claims (cbsnews.com)
SF writer David Brin came back with a deconstruction of Miller’s world view by dismantling Miller’s history-challenged “300″.
Now, Alan Moore puts in his two cents:
I have always been a huge fan of Moore’s work. I love that the guy is crazy and always pushing the envelope. He’s unafraid of touching any material.
Miller, on the other hand, helped change comics in the late 80s with his take on characters who were at that point getting stale.
His work since then has been kinda Meh.
Miller’s work is riddled with right-wing fantasy and misogyny, and most criminal of all seems to have stayed absolutely still for decades, opting to move into film.
His last film offering, “The Spirit” in 2008 was a boring disappointment.
Miller’s comments on OWS really struck a nerve with comic book fans and now Moore:
“Well, Frank Miller is someone whose work I’ve barely looked at for the past twenty years. I thought the Sin City stuff was unreconstructed misogyny, 300 appeared to be wildly ahistoric, homophobic and just completely misguided. I think that there has probably been a rather unpleasant sensibility apparent in Frank Miller’s work for quite a long time. Since I don’t have anything to do with the comics industry, I don’t have anything to do with the people in it. I heard about the latest outpourings regarding the Occupy movement. It’s about what I’d expect from him. It’s always seemed to me that the majority of the comics field, if you had to place them politically, you’d have to say centre-right. That would be as far towards the liberal end of the spectrum as they would go. I’ve never been in any way, I don’t even know if I’m centre-left. I’ve been outspoken about that since the beginning of my career. So yes I think it would be fair to say that me and Frank Miller have diametrically opposing views upon all sorts of things, but certainly upon the Occupy movement.
“As far as I can see, the Occupy movement is just ordinary people reclaiming rights which should always have been theirs. I can’t think of any reason why as a population we should be expected to stand by and see a gross reduction in the living standards of ourselves and our kids, possibly for generations, when the people who have got us into this have been rewarded for it; they’ve certainly not been punished in any way because they’re too big to fail. I think that the Occupy movement is, in one sense, the public saying that they should be the ones to decide who’s too big to fail. It’s a completely justified howl of moral outrage and it seems to be handled in a very intelligent, non-violent way, which is probably another reason why Frank Miller would be less than pleased with it. I’m sure if it had been a bunch of young, sociopathic vigilantes with Batman make-up on their faces, he’d be more in favour of it. We would definitely have to agree to differ on that one.”
What he said.
Time has an article in posted on January 22, 2011 by Zachary Karabell titled The Big Bad Bankers, and Their Bonuses, Are Back.
The money quote:
“There was a period of remorse and apology for banks. I think that period needs to be over.”
This is from Barclay’s head Bob Diamond. He is expected to take home a $13 million bonus this year. Because he deserves it.
His shareholders have received meager dividends (if any) since 2008.
Goldman Sachs employees won’t go hungry either. The bank’s fourth-quarter earnings may have been hurt by weak trading results, but it is still hugely profitable. Like many other Wall Street firms, Goldman responded to public outrage over its billions in profits by adopting a lower profile when it comes to bonuses, instructing its executives to take more of their pay in deferred stock grants rather than cash and conducting internal reviews (the result of one such 63-page tome can be abbreviated to “We didn’t really do anything wrong”).
This is the kind of thing I reflect on when I get the talking point from the right that most rich people worked hard and deserve the amount of money they make.
Most is incorrect.
The blatant examples of compensation with no accountability and no ties to actual performance are the rule, rather than rare aberrations.
They are making money by holding tightly on to their capital and lending almost nothing to anyone. They deserve multi-million dollar bonuses for that?
Huge banks have their fingers in every aspect of our diverse economy. Unfortunately, their failure would inevitably lead to economic collapse. They are, indeed, too big to fail.
Three firms alone — Bank of America, JPMorgan Chase and Citibank — now control as much as 30% of all deposits in the U.S.
But the arrogance and swaggering irresponsibility exhibited by these asshats makes me wonder if letting the big bankers fail might not be a blessing — a clearing of the slate to rebuild on a stronger, better-regulated foundation.
It’s apparent these giants of finance haven’t learned a damn thing, so it’s likely we’ll get a chance to test this out.
I agree with Karabell’s proposed solutions to this mess:
The bottom line is that the financial reforms of the past year need to be revisited. One solution would be to break up large banks into discrete parts, creating a new Wall Street of boutique banks without as many conflicts of interest. If we aren’t prepared to do that (and there’s a good chance we aren’t, given the likely cuts in pay and staff that would impede regulators and other public-sector workers), we need to create incentives and mandates to lend. Period. It would have been easy to make those part of the bailouts of 2008 and 2009; now it will require carrots like allowing banks more latitude in accounting for bad loans. That will be seen as extending another hand to already flush banks. Unfortunately, it may be a price we need to pay.
- Barclays boss Bob Diamond to overhaul bonuses (dailymail.co.uk)
I watched for two years the coming of the slow-motion train wreck that was Tuesday’s mid-term election.
Of course, the right is crowing that this is a repudiation of liberals and liberal ideology, which of course is wrong.
If this were true, the Blue Dogs would have sailed to reelection, and progressives would have all gone down hard. Instead, it seems progressives did better than the conservative/corporate toadies who call themselves Dems:
Of the 54 seats occupied by members of the Blue Dog coalition, 27 of them were lost to Republicans. (That includes five held by incumbents who either retired or ran for the Senate.) On the other hand, all but three of the much larger group of Progressive Caucus members up for re-election won their seats, including six out of nine caucus members whose races were rated as competitive.
If anything the elections were the result of these things:
1) The timidity of the Democrats — and their inability to put their message out (and highlight their accomplishments)
2) The shit-ton of money poured into campaigns by secretive, unaccountable front groups in the light of the Citizen’s United Supreme Court ruling. Release the Kraken, indeed.
The New York Times has the critical article on this.
“Outside Groups on the Right Flexed Muscles”
While it is hard to sort out the exact difference they made, their success rate, particularly in races in which Republican challengers would have otherwise been badly outgunned, raises the prospect that a relatively small number of deep-pocketed donors exerted an outsize influence on Tuesday’s results.
Yeah. Classic understatement.
The principle right-wing shadow organ has been the hilariously misnamed US Chamber of Commerce. I’ve written about them before, and they look to be one of the most powerful money-laundering outlets for the Bankster set.
As a side note, I find it hilarious the way right-wing nutbags snarl the name “George Soros” (who funds liberal organizations) but can’t find their voice to say anything about Richard Mellon Scaife, the Koch Brothers, front groups like the US Chamber and media vampire Rupert Murdoch.
Until a way is found to get the oversized influence of huge multinational (and in many cases, foreign) money out of the election process, this country is on the fast march to Fascism.
The unbridled celebration of corporatism is about to begin, and the faith of the true believers is unlikely to be broken by any disaster visited upon us as a result.
If these deluded hordes could be swayed by reality, the BP disaster, Mortgage catastrophe and Enron certainly would have done the trick.
The inestimable Bill Moyers recently gave a speech honoring the late progressive historian Howard Zinn. Entitled “Welcome to the Plutocracy”, it should be read by anyone who gives a shit about this country.
The elder statesman of a dead art (journalism) crafts a lesson filled with all the history needed to highlight the consequences of the regressive direction American voters just chose.
Moyers captures the moment perfectly:
Now let’s connect some dots. While knocking down nearly all limits on corporate spending in campaigns, the Supreme Court did allow for disclosure, which would at least tell us who’s buying off the government. Senate Republican Leader Mitch McConnell even claimed that “sunshine” laws would make everything okay. But after the House of Representatives passed a bill that would require that the names of all such donors be publicly disclosed, McConnell lined up every Republican in the Senate to oppose it. Hardly had the public begun to sing “Let the Sunshine In” than McConnell & Company went tone deaf. And when the chief lobbyist for the Chamber of Commerce was asked by an interviewer, “Are you guys eventually going to disclose?” the answer was a brisk: “No.” Why? Because those corporations are afraid of a public backlash. Like bank robbers pulling a heist, they prefer to hide their “personhood” behind sock masks. Surely that tells us something about the nature of what they’re doing. In the words of one of the characters in Tom Stoppard’s play Night and Day: “People do terrible things to each other, but it’s worse in places where everything is kept in the dark.”
In the short term, I am extremely interested in how the alleged principles of the Tea Party zealots breaks against the wall of corporate adulation that is the Republican party.
I’ll be crying into my popcorn as I watch.
- Texas millionaire gives $7 million to GOP group (salon.com)
- Senate Elections: Democrats Take Losses But Hold Upper Chamber (huffingtonpost.com)
- More than half the Blue Dogs are out (dailykos.com)
In the wake of the Citizen’s United ruling by the Supreme Court, unlimited amounts of cash are polluting our election campaigns and buying politicians wholesale.
Robert Reich had a nice piece on his blog Monday about the “Perfect Storm” that threatens our democracy:
He hits all the bases:
- The top one-tenth of one percent of Americans now earn as much as the bottom 120 million of us
- Hundreds of millions of dollars are pouring into campaigns with no accountability whatsoever
- a handful of front groups is laundering the money, and some have taken donations from foreign companies
- Most Americans are in a bad position (unemployment, debt, mortgages) and taxes are rising and services are being cut
- Infrastructure is crumbling
- Politicians refuse to take the most modest step of restoring taxes for top earners (who are now “burdened” with the lowest taxation in 80 years)
We’re back to the late 19th century when the lackeys of robber barons literally deposited sacks of cash on the desks of friendly legislators. The public never knew who was bribing whom.
Reich is right. And there doesn’t seem to be any hope in sight.
I have no choice but to agree with his gloomy conclusion:
The perfect storm: An unprecedented concentration of income and wealth at the top; a record amount of secret money flooding our democracy; and a public becoming increasingly angry and cynical about a government that’s raising its taxes, reducing its services, and unable to get it back to work.
We’re losing our democracy to a different system. It’s called plutocracy.
Paul Krugman does another bang up job explaining a complicated issue in yesterday’s New York Times.
This time it’s the mortgage foreclosure mess:
Seems that many on the right think that the lack of documentation for foreclosures (much of which was lost in the relay of mortgages from banker to banker) is no big deal and we should take it on faith that when the banks say someone has defaulted on the provisions of their loan, we should believe them.
We shouldn’t. Krugman explains:
This is very, very bad. For one thing, it’s a near certainty that significant numbers of borrowers are being defrauded — charged fees they don’t actually owe, declared in default when, by the terms of their loan agreements, they aren’t.
Krugman properly nails the Obama Administration for its obeisance to Wall Street:
True to form, the Obama administration’s response has been to oppose any action that might upset the banks, like a temporary moratorium on foreclosures while some of the issues are resolved. Instead, it is asking the banks, very nicely, to behave better and clean up their act. I mean, that’s worked so well in the past, right?
As mentioned in the piece, there are some good ideas on how to deal with this mess:
…the Center for American Progress has proposed giving mortgage counselors and other public entities the power to modify troubled loans directly, with their judgment standing unless appealed by the mortgage servicer. This would do a lot to clarify matters and help extract us from the morass.
Of course, this will happen over the screeching undead bodies of the greedy bankers who caused this mess in the first place.
So it won’t happen.
It may be naive thinking on my part, but wouldn’t it be better to have someone in their home, paying a mortgage than to foreclose and try to get only a fraction of the value back in this terrible market?
Anyway, this is yet another datapoint indicating the claims that Obama is the first American Socialist President — Not so much.
- Why We Need Government Regulation To Protect Americans (alan.com)
- Editorial: The Foreclosure Crises (nytimes.com)
Yesterday’s Paul Krugman piece in the New York Times references an amazing article that was published in New York Magazine last year.
“The Wail of the 1%” details the beginning of the prolonged tantrum being thrown by the parasites on Wall Street over having part of their bonuses taken away. This, in light of the taxpayers bailing them out to the tune of billions of dollars.
These are not people who are about to be homeless, or facing medical bills they cannot pay. They do, however, possess a hubristic sense of entitlement — and are ready to go to war for their “principles.”
A typical expression of outrage from the Wall Street set?
“No offense to Middle America, but if someone went to Columbia or Wharton, [even if] their company is a fumbling, mismanaged bank, why should they all of a sudden be paid the same as the guy down the block who delivers restaurant supplies for Sysco out of a huge, shiny truck?” e-mails an irate Citigroup executive to a colleague.
The condescension toward working Americans is choice. Read the article. It’s incredible.
They felt picked on and embarrassed at the looks they got when wearing their expensive suits in public.
They were outraged and betrayed that the former Wall Street executives in Obama Administration didn’t go to bat for them.
Another passage that illustrates the mindset:
The argument that Obama has in fact done a great deal to help Wall Street—to the tune of trillions of dollars—doesn’t have much truck with these critics. “If you really take a look at what Obama is promising, it’s frightening,” says Nicholas Cacciola, a 44-year-old executive at a financial-services firm. “He’s punishing you for doing better. He doesn’t want to have any wealth creation—it’s wealth distribution. Why are you being punished for making a lot of money?” As a Republican corporate lawyer puts it: “It’s the politics of envy, and that’s very dangerous.”
Great argument. Wealth creation. So, if you follow that logic, since these giants of moving paper around in shadowy markets made inordinate amounts of cash, we should all be doing great, right? After giving the bankers billions of taxpayer dollars, the level of gratitude is amazing.
Now, Krugman writes, this chutzpah has spread outside of Wall Street:
For one thing, craziness has gone mainstream. It’s one thing when a billionaire rants at a dinner event. It’s another when Forbes magazine runs a cover story alleging that the president of the United States is deliberately trying to bring America down as part of his Kenyan, “anticolonialist” agenda, that “the U.S. is being ruled according to the dreams of a Luo tribesman of the 1950s.” When it comes to defending the interests of the rich, it seems, the normal rules of civilized (and rational) discourse no longer apply.
At the same time, self-pity among the privileged has become acceptable, even fashionable.
The popular sentiment is that “it’s my money, and I have the right to keep it”. Oh, and they deny they are rich, despite annual salaries of $400,000 to $500,000.
There’s no sense that taxes are the price to pay for all the infrastructure and stability that allows them to ply their trade.
So, when you hear their fevered complaints of class warfare, remember that they are on the ones bringing it. To keep things in perspective, ponder this: The whiners are winning.
Update: Robert Reich has a post from yesterday about framing this debate: “The Defining Issue: Who Should Get the Tax Cut – The Rich or Everyone Else?”
It’s a winning issue for Democrats, and it makes good economic sense:
The rich spend a far smaller portion of their money than anyone else because, hey, they’re rich. That means continuing the Bush tax cut for them wouldn’t stimulate much demand or create many jobs.
The rest is well worth reading.
- Op-Ed Columnist: The Angry Rich (nytimes.com)
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