Sunday, February 12, 2006

"terrorists with briefcases"

Usually smug capitalist cheerleader Ben Stein has written an impressive piece in today's New York Times. He describes the response to an earlier article about United Airlines "parent" UAL as it reorganized under bankruptcy court protection, firing tens of thousands of workers, cutting the pay of the remainder (by up to two-thirds) and terminating pensions. Meanwhile, it was spending $10,000,000 a month on lawyers, accountants, and investment brokers, as well as $18,000 a month to keep a hotel suite available for the new chairman whenever he happened to be in Chicago. After 37 months, UAL emerged from bankruptcy and provided hundreds of millions of dollars to reward its top executives. One of UAL's board members is chief executive of Delphi, which appears ready to embark on a similar program.

Stein writes about the 1950s president of General Motors, who was paid about 40 times the average wage of the line workers, 80 times with a bonus during his peak year. In most companies, Stein writes, 10 to 20 times was the norm. Today, the norm is hundreds,
"whether or not the company is doing well. The graph for the pay of C.E.O.'s is a vertical line in the last five years. The graph for workers' pay is a flat line -- in every sense. ... it isn't the free market at work. It's a kleptocracy at work."
Stein is quick to note that the management of most companies, even if they are ridiculously overpaid, are "still honest and hardworking" (working hundreds of times harder than the average wage employee in the company?).
For centuries, the idea has held that the stockholders own the company. They are the trustors. The trustors select directors who in turn hire a chief executive and other top officers and then keep an eye on them for the stockholders. They ... are all agents for the stockholders ....

But what has happened is that -- as in a corrupt, failed third-world state -- the trustees in too many cases are captives of the C.E.O. and his colleagues; they owe both their places on the board and their emoluments to the chief executive, and they exercise no meaningful restraint at all on managers. The directors are instead a sort of prætorian guard, protecting management from its real bosses, the stockholders, as management sucks the blood out of the company.

... Government, meanwhile, does nothing, or next to nothing. Courts, especially bankruptcy courts, do nothing. And the employees and stockholders and the whole society are looted. ... In the capitalist society, the most basic foundation is trust. But in today's world, trust is abused, mocked, drained of meaning.
And why doesn't government do anything to protect society, to protect individuals? It doesn't require much of a leap of insight to notice that the U.S. government is now modeled on the very kleptocracy Stein describes in business. Alas, Stein doesn't make the little leap, instead calling for President Bush (who?) to rally for
common decency for the workers and the savers and investors of this country, and an end to the hideous breaches of trust that build great mansions in the Hamptons and wreck a free society.
You might as well ask him to rally for animal rights, too. Two pages before Stein's article is an item about war profiteering. The value of stock in the six leading war contractors has increased 350% since (pre-Bush) March 2000. Elsewhere in the paper, an article described the intensive investigations triggered by the revelation of Bush's warrantless spying on his fellow citizens (for those of us who aren't "unitary executives" it's called voyeurism or stalking). But the investigations are not to find out the extent of the illegal program -- which most analysts suspect is a actually a massive data mining operation -- but rather to find out who told on them.

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