Class Warfare in Reverse
The boiling, surging, churning and corporatizing economy of the United States is racing far ahead of its being understood by political economists, economists, politicians and the polis itself. Tidbits from the past week add up to this view, to wit:
–The giant, shut-down Bethlehem steel plant in Bethlehem, Pennsylvania will soon become a $600 million casino and hotel complex. With tens of millions of Americans lacking the adequate necessities of food, fuel, shelter, health care and a sustaining job, this project is part of a 25 year trend by the economy, moving away from necessities and over to wants and whims. Among the fastest growing businesses for three decades in America are theme parks, gambling casinos and prisons.
–Our Constitution launched “we the people” to “establish justice, —promote the general welfare and secure the Blessings of Liberty to ourselves.” We’re losing ground year after year on all three accounts. Yet to what does Chief Justice John G. Roberts Jr. devote his entire annual report on the federal judiciary this January 1, 2007? He called for a pay raise for judges, calling the current pay ranging from $165,200 to $212,000 (with a great retirement plan) a “constitutional crisis.”
–General Motor has introduced yet another prototype electric car—called the Chevrolet Volt—to distract attention from its ongoing engine stagnation and provide a little cover for its gas guzzling muscle cars displayed at the Detroit Auto Show. This procrastinatory tactic by GM has been going on since the 1939 New York World’s Fair to keep people looking far into the amorphous future so as to not focus on the dismal today year after year while gasoline prices sky rocket and oil imports swell. We’re still waiting for some of GM’s engineering prototypes from 1939 to hit the road in the 21st century.
–Just as there are stirrings behind more shareholder rights over the companies they own and more disclosure by management of large corporations relating to executive pay and accounting information, the rapid rise of huge pools of capital controlled by private equity firms and Hedge Funds are buying larger and larger public companies and taking them out of the regulatory arenas into secrecy.
Corporate morphing to escape public accountability has been going on for a long time. Note the coal corporations digging deep under residential streets in Pennsylvania and other neighboring states decades ago. As the homes began to cave in (this is called subsidence’), the coal companies disappeared by collapsing themselves only to be succeeded by their next of (corporate) kin.
Today, this corporate morphing is far more ranging and far larger in the economy, drawing trillions of dollars from pension funds and institutional investor firms which themselves are largely closed off from workers and small investors whose money they shuffle around. Corporate attorneys are super-experts in arranging ways for corporate capital to escape not just the tax laws of the U.S. but also the public regulatory frameworks of the Securities and Exchange Commission and other public “law and order” entities.
Independent and academic corporate analysts have barely begun to figure out the consequences of this seismic shift of capital structures.
–“Private Firms Lure C.E.O.’s With Top Pay” was the headline in the January 8th edition of The New York Times. The subtitle was astonishingly worded as “Less Lavish Packages at Public Companies.” The reporters go on to say, in essence, if you think that Home Depot’s departed C.E.O., Robert L. Nardelli’s $200 million plus take home pay package was a lot, you haven’t seen what’s happening behind the curtains at the large private equity firms buying up ever bigger public companies. “Public company chieftains are deciding that they no longer want to be judged by their shareholders and regulators, and are going to work for businesses owned by private equity,” write the authors.
One such migrant executive, Henry Silverman, went from big riches running the conglomerate Cendant, to making $135 million just from selling one piece of Cendant, Realogy, to a private equity firm. “There is no reason to be a public company anymore,” said this happy corporate prophet.
Now go to the other side of the tracks. In the last quarter century the value of the U.S. corporations has risen 12-fold, according to The Wall Street Journal. C.E.O. pay has skyrocketed similarly. But workers today, on average, are still making less, in inflation adjusted dollars, than workers made in 1973—the high point of worker wages!
Citing data from the Center for Labor Market Studies at Northeastern University, New York Times’ columnist, Bob Herbert, reports that between 2000 and 2006 the combined real annual earnings of 93 million American workers rose by $15.4 billion. That rise is “less than half of the combined bonuses awarded by the five Wall Street firms for just one year.”
Class warfare in reverse is what’s going on. The super rich and their corporations against the workers, redistributing the workers’ wealth into their own pockets and coffers. Mr. Herbert frequently frets about no one in the political parties saying or doing anything about this state of despair. He defines “political parties” as the two major Parties, though knowing full well that there are smaller parties and independent candidates who have campaigned across the country trumpeting the need for economic justice in very specific terms.
So long as most progressive writers ignore these people in the electoral arenas who are laboring to break down the barriers that keep these issues of economic justice over corporate power abuses from moving into elections and government, they will be bellowing in the wind.
Social justice movements in the United States have come from small starts that are duly recognized.