THE SPINE MARCH 10, 2008
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It was Matthew Arnold, I think, who exhorted 19th century England to "choose equality and flee greed." It did nothing of the sort, of course. And neither did Labour Britain in the 20th century, except smoothing out some of the sharp edges of penury and birth. So England remains a class society, though one that, if you accumulate sufficient capital, opens at the top.
America is a less stratified society than Britain. The poor of the U.S. are less permanently and structurally poor, although there does not exist in our country the ethic of reciprocal obligations across classes that binds people together in what we used to call a long time ago the "mother country."
Still, there was more than a thread of resentment towards the very rich in England which the quaint and patronizing ritual of Boxing Day (the day after Christmas in the U.K. and throughout the Commonwealth, including Canada) could not neutralize or efface. Maybe it was the fact that, parallel to the reality of deep strains of social conservatism, there was also in England a bumptuous socialism, bolstered by social gospel Methodism and dry-as-dust Fabianism. (Pat Moynihan blamed the miseries of post-independence Africa on the Fabian professoriat at the London School of Economics, with whom the continent's nationalist elite came to study.)
Aside from populism in the states of south and in the Great Plains, aside also from a Communist movement psychologically indentured to the Soviet Union, America has been spared the convulsions of class hatred. But I believe that it may be coming because of the gross rewards accumulated by a corporate and banker class that has utterly failed in its own entrepreneurial and counting houses obligations.
Read in Saturday's Times an article by Jenny Anderson that is titled, "Chiefs' Pay Under Fire At Capitol." After leading Merrill Lynch into the deep muddy, E. Stanley O'Neal left the investment house with $161 million. "Meanwhile," says the Times, the company "has announced write-offs totalling $10.3 billion." With more to come.
Angelo Mozilo took home more than $410 million in the eight years he has been CEO of Countrywide since he founded his company to specialize in risky lending.
And it's not only the banks, the investment concerns and the lenders who are rewarded for failure. Companies fallen on hard times due to the sagacity of their leaders also pay up to those who have led them astray.
The fact is that at the top of the corporate class compensation is so lush that you can hardly tell that the executives have led their companies into deep red ink...and therefore fired more and more employees. Sometimes it is the only real rationale for their extravagant "letting go" pay package.
It used to be that American capitalism rewarded those who brought prosperity to their companies, wealth to their shareholders, steady employment at decent wages to their employees and improvement in their customers' ways of living. Not so anymore. The social contract has been broken and traduced. People will notice that the engineers of failure and decadence are still living the lush life.
15 comments
Martin Peretz writes:
-- Still, there was more than a thread of resentment towards the very rich in England which the quaint and patronizing ritual of Boxing Day (the day after Christmas in the U.K. and throughout the Commonwealth, including Canada) could not neutralize or efface.
I wonder if Martin Peretz would expand on the quaint and patronizing ritual of Boxing Day because I can assure him that the Wikipedia description is wrong:
-- Boxing Day is a traditional celebration dating back to the Middle Ages, of which the primary practice is the giving of gifts to employees or to people in a lower social class.
The primary practice of Boxing Day is NOT and probably has NOT BEEN in living memory (if at all) the giving of gifts to anyone - employees or otherwise. There is certainly nothing quaint or patronizing about the day.
- ndmackenzie
March 11, 2008 at 1:08am
Excellent post Mr. Peretz. Excellent indeed.
And what's worst is that these moguls hide behind a "legitimating" ideology according to which all they've earned is deserved, being them the very few that actually know how to invest and make money. All going down to the construction of a new kind of chaste society dominated by the absolute wealth of the few, simultaneously venerated by the masses, after being glorified by the "bibles" of the "brave new world", such as Forbes...
And now they even try to make it all legitimate in "scientific" terms, constructing delirious theories on genes and on the "alpha male" (see the latest titles by Harvard Business School).
Nothing that the brilliant John Kenneth Galbraith did not know and explored profusely: the thought of Mr. Adam Smith had to be complemented by the social darwinism of Mr. Spencer... the contemporary recovery of the most vile liberal thought had to be complemented by delirious contemporary forms of social darwinism.
Anyway it is probably good that their mediocrity and greed is finally being exposed by the present crisis. Maybe finally someone will understand that these "masters of the universe" are nothing but uncultivated and souless kids that like to play "games" simultaneously creating the most vile inequities.
The problem is that American capitalism was probably perverted for ever. Since once that capitalism was the capitalism of the entrepeneur worried with the welfare of his community, as you said very well... It no longer is... And it shows...
- luispc
March 11, 2008 at 3:31am
Peretz, clean up your post. It is riddled with typing errors and it is unfinished. The substance is however good.
- sleepyavl
March 11, 2008 at 3:37am
The near simultaneous sacking of O'Neal--with his $161 million severence--and his firm's write-off of $10 plus billion, well, let's just say you couldn't make that up. That Mozillo would appear on Capitol Hill last week to defend CEO compensation given everything he's done to manufacture the current economic crisis is crass shamelessness to the most obscene degree. I'd like to think that these things run in cycles; that the hoary pendulum, having swung so far this way, will swing back. But I'm not betting on it. Still, it's good to express the outrage. We need a lot more of it. A lot more.
Scott Hanlon
- wscothan
March 11, 2008 at 3:51am
"Still, there was more than a thread of resentment towards the very rich in England which the quaint and patronizing ritual of Boxing Day (the day after Christman in the U.K. and throughout the Commonwealth, including Canada) could not neutralize or efface. Maybe it was the fact that, parallel to the reality of deep strains of social conservatism, there was also in England a bumptuous socialism, bolstered by social gospel Methodism and dry-as-dust Fabianism. (Pat Moynihan blamed the miseries of post-independence Africa on the Fabian professoriat at the London School of Economics, with whom the continent's nationalist elite came to study.)"
Excellent point, Marty. I would also add that these movements have given us an England full of resentment and antisemitism.
- jacksondyer
March 11, 2008 at 6:08am
What sleepyav1 said.
Dreadfully full of typos - is this what your writing normally looks like before somebody comes in afterwards and cleans up the mess?
Still, CEO pay in this country is a national scandal (and has been for over a decade). Any time we can take the opportunity to point this out, we should do it.
- buffaloboy
March 11, 2008 at 7:31am
It is much more than CEO pay; that is a pinnicle indicator. We are accelerating toward the time when the final junior VP can claw his way up by dumping some thousands of US jobs overboard to make a mark. Pushing the capacity to have incomes out of the country will leave no one to buy things and then who will support those pay packets?
The top corporate people will eventually have to go where the markets can grow - they will not need the US any longer.
- jemerk
March 11, 2008 at 10:40am
Fear not Marty, the Titans of American capitalism are busy feasting on the seed corn, in a generation I doubt there will be many Americans who will be a the top of the emerging Asian dynamo.
I have a friend who is the director for the middle region of M&M Mars in China, with net sales into the billions of dollars. His salary is in the neighborhood of $60,000. Shanghai's SunTech Holdings, for instance, has moved from being a bit player in solar panels to becoming one of the largest manufacturers in the world. Most of the company's panels end up overseas, and it can produce those panels more cheaply than American competitors for various reasons. Among them: the company isn't lavishing huge compensation packages on its executives.
"There aren't 10 executives in the company that make more than $200,000," said Steve Chan, vice president of business development at SunTech Power Holdings.
U.S. execs make far more. In a survey conducted by Forbes last year, the magazine found that the average big company CEO made $3.3 million in salary and bonuses.
The funny thing is I made my living training these top executives in how to speak English, so in a way I am partly responsible for the future downfall of many American companies, and I don't feel guilty one bit.
- blackton
March 11, 2008 at 11:25am
"The top corporate people will eventually have to go where the markets can grow"
Yes. Where the market can grow without any sort of social and environmental protection.
And by that day -- if that day comes, I hope we can all see the light where we still have time to -- we will understand that the political power in western societies has been subservient to a irrestricted market logic that privatizes benefits, socializes damages, destroys the communities that supported their "growth" and offers protection to the most grim forms of labor and environmental exploration overseas...
A political power that was placed in a situation of blackmail by the moguls and their "economic thinkers" since it wished to save the "markets" that believed would work to the "greatest benefit of the greatest number" in the long run (blackmail: either you play the game or we are going to produce to Walmart in China and leave you with thousands (millions) of jobless, homeless people...)
And guess what! They are already producing everything in China and keeping a chaste society of high paid smartasses in the "services industries" of their countries (the same that build delirious financial systems that lead to an increasing mass of jobless, homeless people)... All this within an absurd ideology based on "freedom" and on Reagan as "the last jeffersonian".
I've already said here that either the US and EU finally remember that they still have cards to play - demanding the compliance of international standards of social and environmental protection that they themselves do not offer still (particularly in the case of the US) IF the markets are to stay open - or globalization will end in disaster. SInce the mass of jobless, homeless people will not be quiet for ever, unless they have been completely brainwashed (then saying: not only am I in deep shit but I deserve to be in deep shit... which is what the moguls wich them to think, simultaneously keeping the ideological basis for their childish, selfish, undeserved and self-absorbed wealth...)
- luispc
March 11, 2008 at 11:41am
Rockefeller and Carnegie were rapacious on the field, but they were role-model philanthropists. Isn't the question thhis: Now that they have all that loot, what are they going to do with it? If they end up giving it away, then maybe the money is in better hands than company coffers. I understand Boesky and Milken are quite generous. (Atonement?)
I wonder what that particular scorecard is, amongst the super-rich. How generous are they, compared to the concerns which made them rich?
- jm_rice
March 11, 2008 at 12:16pm
The notion that the Schumer-Emanuel Dems will bite the Wall Street hands that feed them is about as plausible as the notion that Kristen of QAT would turn in Client-9 for soliciting.
It's not just campaign contributions, either. Look at where nearly all of our pols end up when they tire of public service: money-fuh-nothin' gigs at hedge funds, 7-figure lobbying posts, corporate directorships at $50k a pop for doing nothing more than... rubber-stamping the heads-I-win, tails-you-lose pay packages for chump CEOs like Stan O'Neal and Carly Fiorina and Debbie Hopkins and Bob Nardelli and...
Oligarchy lite. the only way to break it is to institute real corporate governance AND wean the parties off of big donors. Not impossible, actually. Give it time.
- teplukhin2you
March 11, 2008 at 4:32pm
jm_rice -- no one in our era, not even Billy G, comes close to what Carnegie and their ilk achieved. They built mass institutions. cf that innovative, ubiquitous culture-on-demand offering for the masses aka the Public Library system. Plus, their net worth was far, far higher relative to US GDP and US financial market activity than the fortunes of today's masters of the universe. Morgan's clout and wealth makes Gates look like a piker.
Also, today's silicon valley gazillionaires will look at you funny when you talk to them about philanthropy, because in their blinkered view of the world, the innovations that made them rich are as supreme blessings to grubby mankind. Fund libraries? Hey, I founded eBay and gave a livelihood to a million little merchants! Fund the symphony? What's that, again?
Clue: _very_ few people make a decent living via eBay, or AdSense. Clue #2: if you want to have a huge impact on many millions of lives, nothing even comes close to the public sector. Gates' entire net worth is about the size of the annual US expenditure on school lunch programs.
- teplukhin2you
March 11, 2008 at 5:02pm
Mr. Peretz has a good post here and this is one starting point into what is wrong in Amercia.
It's funny how free trade is a mantra when they are cutting jobs and getting competitve, but the market for Executive Compensation is skewed higher.
Used to be that they justified it by claiming taxes took most of it, or how it was justifed by the Stock Performance. Now it is just market economics and the Jack Welshes of the world are worth it.
Blackie is closer to the truth than anyone here. China is coming and they pay their executives a lot less.
Funny thing is that the Chinese are pouring out Ipods for pennies on the Dollar and Steve Jobs is reaping the huge benefits. Oh yeah, he has a few Amercian Designers and Software Executives. No one ever asks why there are no Apple Manufacturing plants in America.
Because Apple is so celebrated and profitable, the American Car companies are setting up on the same model. Hopefully you are one of the Designers or Software Engineers and not one of the chinese laboring class.
- CRS9TNR
March 11, 2008 at 7:46pm
Blackie,
Speaking of SunTech, did you see the AndrewSullivan.Com link today?
earth2tech.com/.../the-dark-side-of-solar
Evidently the Chinese are cutting a few Eco Corners and the pollution is getting pretty bad. Maybe the US CEO's do do somthing to justify the exorbinant salaries?
- CRS9TNR
March 12, 2008 at 7:19am
thanks, i got it. I lived in China for 7 years, it has been bad for years. Scary bad.
- blackton
March 12, 2008 at 7:30pm