Why So Little Media Coverage of How the Rich Are Becoming Richer and the Middle Class Wages are Being Squeezed?

I’m seriously behind in highlighting an article by Ryan Grim and Mark Gongloff on one of the key mechanisms by which CEO pay has risen to stratospheric levels: cronyism and backscratching among board members, many of whom are also CEOs. While this behavior is well understood by most people who know the workings of the top levels of large corporations, the general public is largely in the dark. In addition, it’s one thing to recognize on an anecdotal basis that this sort of favor-trading goes on, quiet another to have it proven in a more rigorous manner. As the Huffington Post article explains:

The rise in U.S. income inequality in recent decades is largely due to massive wealth accumulating at the top of the income scale. The press and popular culture treat this phenomenon almost as if natural forces were guiding it — an invisible hand dealing out different shares to different people.

But the hands doing the dealing are in fact quite visible. They belong to the directors of the boards of the major companies in the U.S. and around the globe. One key source of wealth at the very top is the pay of the executives of our largest companies. That pay is approved by corporate directors, who are themselves paid for their service. Many of those directors are also executives at other companies, meaning they sit on both sides of the arrangement…..

The system operates largely in the open, with corporate records filed publicly for shareholders to view. But there is little practical transparency around the issue. Based on research conducted by [Dean] Baker’s CEPR, which combed through Securities and Exchange Commission filings, HuffPost has built the first-ever interactive database of every director of every company in the Fortune 100.

The database is here, and the article names and describes how this corporate incest works, for instance, describing how as Erskine Bowles approved hefty pay increases for CEOs at underperforming companies.

And remember, even the board members who are not executives at public companies benefit over time from this largesse. As CEO pay zooms upward, board member pay is also reset higher, since the board members are of the same class as the corporate officers they are overseeing and need to be paid appropriately.

Gee, but don’t board members have a duty to shareholders and the corporation to make sure its assets aren’t squandered by paying top executives too much? How can they justify all this wink and nod overpayment? Not to worry, they have all sorts of procedures in place that both make it look legitimate but are guaranteed to keep compensation levitating to the stratosphere. We wrote in 2008 about the pay double standard:

While most commentators on CEO pay correctly focus on the role of options-based rewards in goosing pay from generous to stratospheric, the role of compensation consultants seldom gets the attention it merits.

One practice that I have seen get perilous little mention is where the pay targets are set. Based on their belief of what constitutes good modern practice (influenced in no small degree by the pay consultants) most boards set general target ranges for how they would like the CEO to be paid relative to peers. The comp consultant then helps define and survey the peer group’s pay ranges, setting a benchmark for how the CEO in question is to be paid.

That all sounds fine, right? Well, except just as all the children at Lake Woebegone are above average, no board likes setting a target below peer group norms. I have heard of numerous examples of targets being set somewhere in the top half (66th percentile, top quarter, top 20%), hardly any at the mean, and none I know of below average…

So with this mechanism in place, any CEO who has fallen below median pay who is targeted to be in a higher group will have his pay ratcheted up, independent of performance, merely to keep up with his peers. This increase raises the average and creates new laggards. The comp consultants have institutionalized a leapfrogging process that keeps them busy surveying competitor reward levels and keeps top-level pay rising relentlessly.

Oh, and it gets even better. The fact that CEO compensation has risen so much allows for all the service providers to charge higher rates too. In the days when I was at Goldman (a LONG time ago), the investment bankers were careful not to dress too ostentatiously (well, one broad-shouldered man over 6 feet tall did manage to pull off wearing fur coats) precisely so as not to rub the noses of the less well paid CFOs in the fact that the senior investment bankers made a lot more. Now that CEOs routinely make tens of millions of dollars, they want to engage someone they think is a top or at least a pretty good practitioner, and that means he needs to be well paid, since pay is assumed to be a proxy for quality. After all, an attorney that makes only $300 an hour, or a consulting firm that bills its top partners at a mere $500 an hour can’t be good enough to be doing top executive level work. So a whole raft of professionals gets to ride the slipstream of rising CEO pay (and you see that even more with the professionals who serve the even better remunerated top hedge fund and private equity firm managers).

And in case you missed it, if you aren’t part of any of these elite clubs, a similar process is being used to your disadvantage. From our double-standard post:

Consider the way in which views that are contrary to most wage earners’ interests have been internalized (or at least are promulgated in the media). One meme I have noticed surfacing in the debate over the automaker bailout is that UAW employees are paid more than average workers.

Now in and of itself, that statement is meaningless. You need to have an idea of worker productivity to see whether that it out of whack (and for some odd reason, the bloated and highly paid management cohort almost never gets mentioned in these discussions, nor do the massive state level subsidies to the foreign transplants). Perhaps I missed it, but I do not recall seeing any longitudinal work on labor costs (that sort of analysis would help bring some badly needed facts to the table).

But why is framing the discussion around averages alone dangerous? Let’s say we collectively want to bring car worker pay down to some sort of average. That has the effect of lowering the average. You will have groups that were formerly at the average that are now above it. And if you accept the implicit logic “above average pay is bad” (fill in the blank as to why), you have a race to the bottom due to pressure on the relatively better paid to take less which puts pressure on aggregate pay.

And it is not hard to see that that is precisely what is happening. Not all that long ago, people chose government jobs explicitly because they were lower risk/more stable employment in return for lower pay. They turned out to have made the right bet on the “lower risk” part. But the people who made the bad bet and took the riskier private sector jobs and have now seen pay levels outside a few select sectors (finance and the minions to CEOs and the 1%) have been encouraged, not to demand better pay or insist that the top brass also make sacrifices, but instead have had jealous of those government workers stoked very successfully. Demanding that their wages and benefits be lowered simply paves the way for further grinding down of ordinary worker pay.

As robber baron Jay Gould said, “I can hire one half of the working class to kill the other half.” Today’s uber rich have done Gould one better by getting the lower orders doing their dirty work by undermining each other for free.

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  1. Hugh

    If you had a sliding income tax (with income defined as revenue from whatever source and the tax rate reflecting the overall tax burden, local, state, federal) from 40% at $500,000 to 66% at $999,999 and added a marginal tax rate of 95% for any income (again from any source) above $1 million, this problem would largely go away. Income would essentially be capped at $350,000/year. If anyone can not live well on $200,000-$350,000, they are either a greedy bastard or an idiot. Neither condition offers a persuasive argument for increasing their salary.

    1. harry

      Or they live in Central London or Manhattan and they only recently bought their place. A lot of that income goes straight to the landlord/bank

      1. Vatch

        So after the greedy creeps start being evicted because they can’t afford to pay their rent or mortgage, the real estate rates will come down. Problem solved. It’s happened to millions of middle and lower income people over the past few years; why should the rich be excluded from the “fun”?

        1. Harry

          Well I prefer to go by the name Harry, but if living in Manhattan or London makes me “Greedy creep” then fair enough. However at the moment the situation is I make huge amounts of money which I then pass over to my landlord for him to enjoy somewhere up in CT. I could of course choose to join him in CT but then I would have a miserable commute every day instead. My landlord of course doesnt have to do that commute cos he doesnt work for a living.

          And your ire is directed at me?

          1. Vatch

            My ire is directed against people who “earn” more than they deserve. It doesn’t matter what kind of luxuries or exorbitant rent you spend it on. How many city workers or employees of the upscale boutiques and restaurants in Manhattan can afford to spend a couple hundred thousand on their rent or mortgage? Not many. They have to endure a commute. Why are you better than they are? Oh, yes, I get it — you “earn” more money, so you’re entitled to forgo the miserable commute.

            1. hayden

              And so you are indirectly presuming that you are a more fair determinant of a worker’s value than the market? How are you defining what each person “deserves”? Is this a “school teacher deserves more than a CFO” type comment? Deserves what, more respect, or more salary? They can be two different answers, and the practical point is–the market will always compensates people for their VALUE (in an economic, not moral or social sense) determined by supply and demand.

              1. Yves Smith Post author

                Wow, a real reading comprehension fail. Do you always stick your foot in mouth and chew in public?

                1. As we discuss long form in ECONNED (Chapters 4 and 5) the idea of a “free market” is an oxymoron and breaks down when scrutinized. Markets operate according to rules set up by legislation, regulators, and enforced by courts (government officials!) and by custom. They are social constructs, not neutral machines, and they reflect the priorities of the elites who determine their structure.

                2. CEO pay, as we described, is not market based. It’s a collusive, gamed system run by insiders who are scratching each other’s back.

                3. As a derivative of 2, executive pay has NOTHING TO DO with value. The post mentioned CEOs whose pay increased significantly as corporate performance fell. Numerous studies has found that there is no relationship between CEO pay and performance, and the best paid CEOs are at companies that seriously underperform.

                4. So if CEOs and top execs are effectively unionized (and professions like doctors, nursing, law and accounting impose market restrictions via education and certification requirements) what is wrong with other workers also pushing for higher pay?

                5. As for falling pay levels among ordinary workers, that is the result of policies implemented by the Fed starting with Volkcer. Volkcer was explicit that he wanted to create enough unemployment to keep inflation down. Unemployment levels in the US have been much higher since the Volcker era as a result of it targeting lower levels of inflation than in the 1950s and 1960s. And that trend has worsened. Reagan intervened in the markets (the Plaza accords, for instance) when unemployment was at LOWER levels than in the post-crisis era when Obama was sitting pat.

                1. allcoppedout

                  Pikerty and Saez (2004) note using IRS data that the income accruing those in the top decile of income earners declined from forty percent in 1940 to thirty percent in 1944 (in the USA).

                  Piketty, Thomas and Emmanuel Saez. “Income Inequality in the United States, 1913-2002.” (2004). http://emlab.berkeley.edu/users/saez/piketty-saezOUP04US.pdf.

                  It seems pretty obvious no relentless ‘market law’ produces today’s obscene inequality. In HE the ‘unionised elite’ have looted whilst utterly failing to produce a modern, price competitive system. None of this is about market forces, but rather opportunism and restrictive practices. The media produces one bankster after another claiming they have special skills and no evidence at all of these skills – or why an elite needs so much more now than in, say, 1943.

                2. Doug Terpstra

                  Brava, Yves. The rigging, levers, and harnesses in the market are now so blatant it’s impossible to respect the intelligence or integrity of any shill who pretends not to see them or defends a mythical “free” market. The bailouts and free money to cartel insiders, multi-front resource wars and drone murders, Stazi surveillance, rigged trade scams, CIA coups, and suspension of constitutional rights are simply too glaring for any reasonable person to claim ignorance.

                  And yet they do, like boiling frogs. We live in a confederacy of dunces, ruled by murderers and theives.

                3. j gibbs

                  You are entirely right about executive pay, but your detailed criticism may only dignify what is in fact simple looting. The only conceivable solution to this problem is federal legislation limiting executive pay and outlawing stock and option giveaways. Absent this, there will always be a cottage industry like consulting that rationalizes the thefts, even thought what it boils down to is that A, B, C and D are stealing ten million, so E deserves 10.2 million.

                  The truth is that executives get the money because the money is there to be gotten. Technology has created the surplus value and they control it, so they steal it.

            2. harry

              Well forgive me for taking your words out of my mouth and putting my words in their place.

              1) Im not better than them. Im a little fatter than most of them and I know how to work the system slightly better. But I dont think that means Im better than them. Im not sure what would.

              2) Where did you get the idea that we are talking about a couple of hundred thousand in rent? I think you may have mistaken me for my boss or his boss. However regardless, you are also mistaken about who is rent poor and rent rich in this City. Many of the boutique workers or restaurant workers you speak of may have been in the City for years and have either bought a place much cheaper or be in rent controlled or stabilized apartments. I have a good friend who pays 700 bucks a month for his place in the East Village. I pay quite a bit more. I also earn quite a bit more but I happen to have dependants and he doesnt. So while you defend my poverty stricken friend he is the one you will find in the trendy E.Village restaurant, and I am the poor sap who buys his food in the Associated and cooks.

              3) What makes you think I dont deserve what I earn? As a professional assassin specialising in targetting poor people who make silly comments on websites I think I earn every penny. Of course, Im joking, but how do YOU know whether I deserve my money? For all you know Im a sex worker. As it happens I agree with you. I dont deserve what I earn. However I suspect I would think you dont deserve what you earn either.

              4) I spent the vast bulk of my years before 23 living in neighborhoods where I suspect you would fear to tread, and commuting long distances to get to jobs you would probably refuse to do (short order cook, cleaner etc). I didnt like it. Forgive me for trying to avoid it now that I am older. My father did the same types of job and it didnt suit him either. He failed to find a way out.

              Any other points you would like me to address?

              1. elboku

                Not to be trite, when you say you earn what you deserve, what exactly does that mean? If x makes one million dollars a year writing a book and y makes 26k a year (the median wage in america by the way) hauling garbage, who works harder? Who has the more disgusting, more difficult job? Earning something because we have our priorities screwed up and deserving it are two different things.

                For example and this is my favorite example: who has the more difficult job a k-3 teacher teaching twenty young kids daily or a college professor who teaches three classes a semester three times a week? Who has many students who are unprepared for school; who do not know how to tie their shoes, their colors, or how to spell their names? Who ahs students who want to be there and have some basic skills?

                Who deserves more?

                Who gets paid more?

                Deserving of your pay is a tricky thing to argue. Very few people deserve in either direction what they are paid..

                (The above is in my mind why k-3 teachers should be paid 100k and college professors a lot less.)

                1. hunkerdown

                  Careful. The idea that any harm or hassle can be made whole with money ensures that harm and hassle will eventually replace utility value as the basis of such an economy. (see also “value-add”, which today most often manifests as “gratuitous-interference subtract” or “license to do something you ought to have been able to do anyway”.)

                  It also ensures that more such positions will be filled by people who are indifferent to honest service to some degree. (I saw plenty of this up close and personal in the first dotcom boom.)

              2. Vatch

                Hi Harry. You said:

                2) Where did you get the idea that we are talking about a couple of hundred thousand in rent?

                If you reread Hugh’s original message, you’ll see where I get that number. In your response to him, you said:

                Or they live in Central London or Manhattan and they only recently bought their place. A lot of that income goes straight to the landlord/bank

                Well, if Hugh’s tax plan is a great burden for someone in Manhattan, then that person probably does pay huge rent or mortgage. When I entered the thread, I did not specify you by name. My ire was definitely not directed at you. I used terminology similar to what Hugh had used, and I think that terminology is appropriate: “greedy creeps” (Hugh said “greedy bastards”). For some reason, you thought I was specifically addressing you. Since you volunteered yourself, I went along with you. It’s quite possible you are not one of the greedy creeps. You are rather defensive about your financial situation, though.

                If you really do earn the sort of money that Hugh was discussing, you don’t deserve it. Sorry, nobody deserves that kind of money.

                1. harry

                  I stand corrected.

                  I am defensive although not because of how much I make but rather because even though I make good money it doesnt generate the kind of lifestyle that people outside of NYC or London might expect or indeed have.

                  But yes, life is pretty comfortable for someone on 300k per year. The problem is if you have 300k per year for 5 years and then 30k a year for the rest of your life. Progressive taxation can disproportionately affect lumpy incomes. But it wouldnt be much trouble to design a system with a look back.

                  1. Vatch


                    I apologize for being more harsh than I should have been. The anonymity of the internet sometimes encourages that sort of mistake.

                    1. jonboinAR

                      Unbelievable! A civil, nay, affable, end to a blog-comments conversation that began in disagreement. This needs to go in the “books”. Kudos to you both!

          2. Vatch

            One other point: under any plan resembling what Hugh suggested, your landlord would be heavily taxed. He might even have to get a job!

      2. somedo mite

        your privilege is showing …faq… the ‘injust’ masses don’t care about your living standards … we will devour you, scumbag

          1. grunt

            that is ‘truth’ such as it is.. ‘discussion’ (and what not) don’t mean shPt…
            Honestly, do you think reasoned discussion are what will change this political economy? I know Kant, but it seems like Cant.. and i am not a Nietszchean… You can try to wrangle with orthodoxy for decades; but it’s as if you were trying to blow out a bonfire.. YOUR febrile efforts to maintain the ‘middle-class lifestyle’ only reinforce the hatred we scum-sucking lumpens have for your -kind.. it doesn’t matter how many conversations you have… WE are coming… maybe…!:coughcough:

    2. taunger

      This. I would like to see a coalition for confiscatory taxes before fighting for a $15/hr “living wage.”

    3. tawal

      I think we should tax wealth. We can start with the several trillion estimated to be in tax havens. Since it will not be repatriated, I consider it a missing asset. The US government can simply send every American adult a check in an equal amount to repatriate these assets.

      1. Kunst

        Yes. The real problem is not so much income inequality as wealth inequality, and especially passing down large fortunes (and the political influence that come with them) to succeeding generations that didn’t earn them. This is the path to oligarchy, and we’ve pretty much arrived.

  2. harry

    And while we are asking these types of question, why so little coverage of the corruption of Russian Oligarchs and the State?

    What makes me think the answers will be related?

    1. 12312399

      “and while we are asking these types of question, why so little coverage of the corruption of Russian Oligarchs and the State?”

      1/ americans don’t care about foreign affairs unless you “scarify” the news by saying that they’re out to kill us.

      2. mainstream American journalism is totally co-opted. every major outlet is owned by a large corp. or has rich person as a significant minority owner. Being overly zealous as a news editor/journalist brings out the ultimate death penalty…..banishment from A-list dinner invites and weekend brunches!

      1. James Levy

        Your last point about the dinner invites and the brunches opens up a big question: how much downward social mobility can one tolerate? For various reasons due largely to my wife’s hatred of where we lived and the high cost of living there, I gave up my full-time job at what a colleague called “a really good second-rate university.” Where I’ve moved, there are no jobs. And, being a naval historian, everyone assumes what my skill set and attitudes are (prejudice against and/or disinterest in military history is rife in the profession) and so getting hired is a huge uphill struggle to being with. So how far down the academic food chain, after having a good job for ten years, can I tolerate falling?
        Well, I’ll adjunct again. I’d teach high school but a Ph.D. and 19 years of teaching experience mean nothing in the public school, and most of the private school, sector. I’d work in a library, or even a stationary store, or a book store. But at 49 years of age I’m feeling distinctly out of luck and the bills are piling up and the thought of losing all my social standing and sense of self-worth and self-importance by taking on a job at a grocery store or Walmart really terrifies me. Perhaps this is false pride or bad character, but how many of us, in our heart of hearts, want to lose the autonomy and prestige that goes with being a university professor? Shove a huge paycheck on top of that (no, not my old one, but one that an editor or senior reported gets at a big-time media outlet) and their predicament becomes a bit more human and tragic. I walked away, and it saved my marriage, which was a good thing. But the cost, oh the cost, in lost wages, anxiety, and humiliation has been higher than most could imagine who haven’t experienced it.

        1. ChrisCairns

          Feel for you J. Am 52 and feeling that my last ‘big’ job is behind me, despite two degrees and 34 years in the workforce, mostly public sector.

          Govt is talking about raising retirement, yet again, the age when you can get the old age pension (if you are without other means from superannuation, for example) from 65 to 70. That’s a long time to be sitting on unemployment benefits or doing gardening jobs, which has what life has forced me to do while I wait to see if my books are going to sell.

          Glad your marriage was saved. Don’t give up.

          1. John

            The Washington elite with their policies are deliberately committing genocide on people over 50 in this country.
            That’s the way they plan to “save” Social Security and Medicare.
            By killing off people over 50 with no jobs and no access to health care.
            It’s called the street and you don’t last long at that age.

        2. rur42

          Common lament of all those who have a profession or skill that no one (or few if any) values. I have a nephew who’s a skilled glassblower, had a decent job in Seattle until the Chinese destroyed the market. Now he lives in a tent in my backyard and makes glass trinkets which he sells for tobacco money — he could make some bucks making dope pipes, but his aunt won’t let him (regulatory pressure). Now he’s in his 40’s has no job, no prospects.

          I myself am a poet manque, and believe you me it don’t pay bull pucky. I have more education than you can shake a stick at, perfessored a couple of years, bailed, volunteered in a poverty program in Indiana, hiked the Bighorn Crags, worked many minimum wage jobs, rags to rags in two generations.

          Many’s the time I swallowed my pride and took rotten jobs because I had bills to pay. And I suspect there are many on this site who have done the same. Lots of us have fallen downwards, and lots more to come.

        3. linda/chicago

          Dr. Levy, it sounds like you have plenty of background to use for writing a good novel. Why not study the genre and put your talents to work? We certainly go through a lot of novels in our household, many of which were purchased at airport bookstores. My favourite author in the military history & crime genre is Alan Furst.

        4. Jess

          Just curious: what’s your wife’s view of all this? Is she happy now? Does she work? If so, make much? Enjoy her job? Seems to me you gave up a lot for this woman and I just wonder how much she realizes it and how much she appreciates it, or if she just considers it one of her entitlements?

        5. jonboinAR

          Have you tried using Internet connectivity to create a kind of service? I don’t know what they are, those who do them are a little secretive, but not criminal acting, more like they’re afraid to share, but I know that there’s some kind or kinds of services that several of my customers provide from their homes, some kind of paperwork-type documenting or something. That’s terribly vague, but man, there’s something you can do. I don’t know just what it is, but you’re used to research and you can find it or invent it.

          Me, I’m an exterminator, now, in a small town. It’s somewhat brainless work, not particularly environmentally sound, at all, with the chemicals, plus I burn beau coups of gasoline every day. IOW, I myself don’t particularly approve of what I do for a living, but I’m in a position now of doing this thing I sort of lucked into which pays my pretty modest bills or having a really hard time of it, and man, I’m just not going to give it up.

          Another fellow I know has made a career of administering stuff. Awhile ago he was managing part of a quasi-governmental organization that builds homes for the disadvantaged. Now, I think, he spends a lot of time with one or more organizations that chase disasters such as hurricanes and make estimates, maybe for insurance, I donno.

          You’re self-employed now and you have to be very creative. There’s stuff out there and where you live geographically is not a huge barrier. You can do it er,… bro.

          1. James Levy

            Thanks to everyone up the thread for your support and to Jess, no, my wife is terrific and works very hard to keep the roof over our heads. It’s just that I’ve got too much invested in my bloody career. All I wanted to be from the time I was 12 or so was an archeologist, a physicist, or an historian.

            As for skills, I have published quite a lot and write considerably better than academic average. I’ve sat down and written out my skills and my weaknesses, but have trouble translating the strengths into a niche, especially since job ads are written with such odd, stringent qualification parameters and I’m bad at faking my way through things or saying I can do something I haven’t.

          2. jonboinAR

            Okay, you’re an administrator now, a self-employed, or free-lance, administrator. Now, go “out” and find some sh!t to administer. (Sorry for being so forward. Hope I’m not being too rude or invasive. It’s just that in my travels I see a number of folks who are free-lance, self-employed, “consultants”, whatever you want to call it, using their home as their office while “working”, it seems, all over the country. And it doesn’t seem like it’s particularly specialty-type skills or knowledge they have.)

        6. j gibbs

          The hardest thing to face is the fact that there is virtually no job market for middle aged men, particularly intelligent and accomplished ones. Their only alternative is self employment. You have to look around for problems and position yourself to solve them. For this to make sense the problems have to be reasonably important and the people whose problems they are have to be willing and able to pay for solutions. Doing this isn’t easy but it is possible, and it certainly beats becoming a slave. I succeeded in making myself unemployable by age 40, but have still managed to live another 31 years without a job. Good luck to you.

        7. harry

          Sounds dreadful. You have all my sympathies. There but for the grace of God. But you have resources of wit and intelligence. You will prevail.

    2. human

      And while we are asking these types of question, why so little coverage of the corruption of Saudi Oligarchs and the State?

      There…Fixed it for ya!

  3. Alan

    Just curious, has the CBO ever issued a study (a la their recent minimum wage report) that attempted to estimate the number of job losses that would result from increasing average CEO pay?

  4. T.C. Stallone

    CEO pay is awful, given what J.K. Galbraith wrote decades ago, Corporations are committee driven and the CEO, can rarely reverse those decisions; how important is he? More importantly the middle class has been hollowed out by forty years of an anti-government electorate, and the war on labor unions. Suggested readings: “American Capitalism” John K. Galbraith, “Age of Greed” Jeff Madrick, “Dog Whistle Politics”, Ian Haney Lopez.

  5. Wayne Gersen

    The forces for privatization of public services ARE “…getting the lower orders (to do) their dirty work by undermining each other for free”… the privatizers are able to take over public services by playing to the resentful electorate whose jobs they eliminated as part of the downsizing and outsourcing movements that resulted from globalization. That is, the folks who lost jobs when corporations closed factories and moved elsewhere are bitter about their fates and unconsciously— or, in most cases, EXPLICITLY– resentful of public employees whose livelihoods have not been affected by the forces of globalization… ESPECIALLY when those public employees are funded with taxes! Bottom line: Public employees are getting no sympathy from former middle class workers who lost pensions, benefits, and salaries to low wage countries with no regulations…. especially when “their money” is stolen from them by taxes.

    1. cnchal

      Public employees are getting no sympathy from former middle class workers who lost pensions, benefits, and salaries to low wage countries with no regulations…. especially when “their money” is stolen from them by taxes.

      You are right. Not only that, when those former middle class workers lost out to having the work they used to do, sent to China, their loss was cheered on by the civil servant class with sentiments like who would want a dirty job like that, and good riddance to that type of work, and now I can buy my crapified stuff from Walmart at ever cheaper prices. Bluntly put, if your job couldn’t be exported, you were safe and could not care less.

      The CEOs were hailed as geniuses by getting rid of the $15 to $20 per hour worker and substituting the $3 per day worker from China. As geniuses they deserve the big paycheck, right? Oh, and let’s not forget the role Wall St played in all this.

      The way it’s turned out is that for government workers it is no risk all reward, and for the private sector that is vulnerable to globalization it is all risk no reward.

      Who saw that coming?

      1. Left in Wisconsin

        +1. I used to work as an analyst for the UAW in the 80s-90s and it was impossible to get (most) teachers or civil servants riled about the attack on unionized manufacturing. Even back then, lots of Toyotas and Hondas in AFSCME and teachers’ union parking lots and lots of complaints about overpaid factory workers.

        1. cwaltz

          It’s kinda ironic that teachers wouldn’t learn from history…..

          Apparently they missed out on this little poem:

          “In Germany they came first for the Communists, and I didn’t speak up because I wasn’t a Communist. Then they came for the Jews, and I didn’t speak up because I wasn’t a Jew. Then they came for the trade unionists, and I didn’t speak up because I wasn’t a trade unionist. Then they came for the Catholics, and I didn’t speak up because I was a Protestant. Then they came for me, and by that time no one was left to speak up.”

          Then again a lot of the very smart people aren’t nearly as smart as they think they are. The elite just let them believe they’re special long enough to segregate and pit each group against each other.

      2. James Levy

        Government workers, in case you missed it, have been getting laid off right and left now for six years, and their unions busted. The government workers like firemen and ambulance drivers and city hospital nurses in Detroit are getting their pensions hacked to bits. So get off your anti-worker high horse and open your eyes. It’s blinkered thinking like that that got us into this predicament and keeps us there.

        1. cnchal

          Look at cities like Washington or Ottawa. Swimming in taxpayer money living the good life without the threat of outsourcing. That is for the hinterland to absorb.

          Detroit is a special case. I would rather the police, firemen, ambulance drivers and city hospital workers were made whole than the “investors” that loaned money to the city. It turns out though that a lot of those “investors” are government worker pension funds. Whose ox gets gored?

          For some contrast, here is an article about those same type of government workers, right across the river. Only two years old but very relevant.
          The Sunshine list

          Please note, in Windsor, the ticket writer at your window is likely to earn two to three times what the average private sector worker makes. Handing out a ticket that takes a weeks pay or more is no sweat.

          The reality of outsourcing is that the pool of labor has grown exponentially while potential customer income has shriveled. There is not enough wealth being generated here, to pay for an ever expanding public sector and exponentially increasing CEO pay.

          McMike – no parties were held, I grant you that, but those sentiments were expressed to me personally. My “sending work to China” ox was gored a long time ago, but the memory still pisses me off.
          Twice, I talked to bankers about outsourcing, and the first time, was in essence called a dummy for not doing my research, when the government was negotiating a trade deal with China in secret, and the second time when I was simply advised to send my work to China. The second banker was from the Business Development Bank of Canada.

          Yep, I screwed up, my mistake, take the punishment for it.

          Fast forward seven or eight years, and what do the bankers do? Gore their own ox, but instead of taking their punishment, throw their bloody ox onto the rest of us and demand and get, a clean up for themselves.

      3. Left in Wisconsin

        Oops. +1’ed before I got to the end of the comment. Certainly not all reward for public employees and never was. But we are seeing (here in Wisco esp) the impossibility of having an organized public sector when the private sector unions are already destroyed.

      4. McMike

        Hmm, bit of creative license by you here. I do not remember banner waving demonstrations by my local civil servants demanding that their spouses’ and neighbors’ jobs get outsourced. Or the factory-closing parties they held down at the county offices.

          1. McMike

            Civil servants surely did a variety of things individually while the private sector destroyed itself – ranging from not noticing, to actively advocating against in favor of labor.

            A big chunk of the private sector labor force, on the other hand, is actively engaged in methodically trying to tear down their brethren in the public sector.

            1. cnchal

              The CEO’s destroyed the bargaining power of labor, capturing the difference for themselves.

              Globalization is imposed from the top. At no time did the average person walk into Walmart, and demand of the manager that the products be sourced from a slave state.

      5. MyLessThanPrimeBeef

        It’s better to unite together for common goals like One Pension Plan For All and Tenure Is For Everyone, Not Just Professors, for all workers, self-employed and small business owners.

      6. steelhead23

        You do realize that you’ve drunk the Kool-Aid don’t you. Yes, corporate CEOs purposely moved production to Asia. Yes, corporate CEOs pressed for “right to work” laws while downsizing domestic employment spectacularly. No, your local public sector worker had absolutely nothing, not one little thing, to do with this. You’ve been had. They’ve got you kicking your neighbor while the boyz in the gated community rob you blind. What we need is Worker Power, why are you trying to divide us?

        1. hunkerdown

          Fundamental attribution error. You’re falling into the trap They want you in: a romantic theory of mind that believes character conquers all, that only defectives can be persuaded or coerced or otherwise deflected from True performance of group membership. It becomes especially effective as persuasion and coercion become normal modes of relating in a society, as far as I’ve seen. And, of course, it’s self-serving bunk.

          The danger is not so much that you misattribute distrust to *them* — class war is war, after all — but that you misattribute an excess of trust to *your peers* and their misdeeds. Perhaps going full Sun Tzu for “goto fail;” is just a little bit much, though going full 10x Yakuza would certainly limit the risk of future harm via that avenue.

          It’s about recourse. Some kinds of recourse are banned, sometimes even from mere mention in polite company, because they’re accessible by those without incumbent power, effective when used against it, and therefore absolutely necessary to discredit by any effective means, up to and including the Jay Gould endgame. For example, the general strike. For another example, directed thuggery. As far as Western news would have it, these exercises of agency simply don’t exist.

        2. wanabbruin

          Exactly. Just because the gov union employees may have ignored the plight of their private brethren, that’s not a good enough reason for the latter to engage in schadenfreude now. It’s more a time for solidarity than ever. Unfortunately I was just recently in the house of a retired unionized employee who had Fox News on. While the featured pundits ripped the President as is their wont, he tightly lipped cursed any one who had ever voted for… OBAMA!! He couldn’t really tell me why he was angry with the current POTUS, but considering that fact, and where he appears to get his information, such as what sticks, I have serious doubts of hearing him in the near future expressing solidarity with public employee’s union members. The unfortunate part is I fear he may be representative of quite a number of working-class Americans.

      7. cwaltz

        A lot of that has to do with the Ponzi scheme known as Wall Street. Woohoo! Everyone cheer, big business just cut labor costs by shoving their workers under the bus and exploiting brown people. I’m gonna retire rich! *shakes head* The power brokers set up a heads we win, tails you lose scenario for workers that essentially says your retirement is dependant on your willingness to screw the other guy out of pay and benefits.

    2. jrs

      At a certain level why should they get any sympathy? Ok I don’t actually think cutting public sector pay particularly helps anyone. What I do think is where the bloody @#$# were these public sector workers when private sector blue collar and then white collar jobs were being outsourced? Ok if they’re too young they are immediately forgiven. But otherwise were they out in the streets protesting NAFTA etc.? Would they march in solidarity with unions when they actually existed? Or were they all about taking care of #1? If the latter, do they really expect those private sector workers to know be complete altruists filled with solidarity and not resentful? Yes turning against public sector workers is not in the self-interest of private sector workers but neither was letting the whole country be outsourced in those public sector workers who thought they were immune interests, not really, because there goes the tax base. Public sector workers are serious when they start expressing solidarity wtih striking maids, and fast food workers.

      1. McMike

        Lemme see, your argument is that since (in your view) the public sector as a group sat on the sidelines while private sector labor was killed, then they now deserve to have the un/underemployed former private sector workers drag them down to their level?

        That’s idiotic. The private sector fools couldn’t even express solidarty with themselves; voting en masse for Reagan et al even as they were being kneecapped by the right.

      2. Ulysses

        This is exactly what a lot of public sector workers (along with private sector Teamsters, and building trade union members) are doing right now– up in Providence, RI when they picket the Renaissance Hotel!!

        I am truly optimistic that we are beginning to see more solidarity these days. The broad support for striking fast-food workers here in NYC, for example, was impressive this past year.

  6. Aaron Layman

    Great post. Hypocrisy and cronyism are stinking up the debate for sure. The meme that CEOs are somehow smarter or work harder is a load of rubbish. There’s now way to morally justify the magnitude of pay scale differential, and that’s assuming the CEOs are actually increasing profits and shareholder value.
    The middle class also get squeezed in other ways as well. I couldn’t help but laugh when I read the news that a particular CEO wasn’t happy about the water tower near his Dallas home which would supply frackers…


    1. harry

      I like to think CEOs have better personal grooming habits, which explains why they are allowed to take our first born into slavery.

  7. M. Rains

    The reason pay has skyrocketed is as much a function of the mammoth size of these corporations. But of course the boards and CEOs all want bigger. Bigger gives greater power politically and in marketshare, etc. Recently our “local utility” Duke Power bought Progress Energy. There is no, none whatsoever, rationale for geographically spread utilities to buy up each other. Yet the deal goes through. And so, now the CEO and all the top chiefs make more money because they are responsible for more. In reality though, the top chief’s job is not that much different. They simply put in another layer of management and that’s that.
    Ultimately, the size of corporations across the board has to be reduced and capped. We lose accountability, we lose performance, we lose political power when these things get as big as they have allowed to get. And I ‘m not just talking Wall Street and banks. We should have a cap on all corp size and phase it in over time. Likelihood of happening? Nil.

    1. Banger

      Size is not an issue for me as far as corporations are concerned. What bothers me is their legal status. All officers should be vulnerable to fines and penalties when crimes are committed and the corporation should be seized by the courts and either sold off to compensate victims and creditors or held in receivership for a couple of years until it can be sold off. Corporations are not people and have no right to any rights guaranteed under the Constitution. Once we eliminate their special feudal rights society can begin to reform.

      1. James Levy

        Yes, I wonder if anyone has ever hit, over and over, the theme that if Republicans want personal accountability and individual responsibility for the poor, they have no business supporting an institution like the limited liability corporation. It would be a tough one for all those “liberty”-lovers to address, and would raise some serious consciousness among average people in the process.

        1. McMike

          LLCs start off on the wrong foot by proving legal liability shield, AND secret ownership at the same time.

          Nice work if you can get it.

          The right wing blind spot for corporate personhood paired with corporate impunity is truly remarkable. It is a sort of cargo cult of cognitive dissonance denied. As the story goes: native beach dwellers looking out at Spanish ships and literally unable to see them.

        2. MyLessThanPrimeBeef

          The rich may be able to hide behind corporate-hood only so much, as their homes, assets and bank accounts are held personally.

        3. Banger

          This issue is one good reason to have creative dialogue with libertarians–there is no excuse for the special status of corporations. Some provisions for some kind of special status could be argued for a very limited time say three years.

  8. NotTimothyGeithner

    1. News services are supported by ad revenues. Positive stories help ad revenues.

    2. News services are largely stenographers. They aren’t reporters by any stretch of the imagination. Unless someone of proper standing says X, X isn’t doesn’t exist. When Murtha came out against the Iraq War, reporting on Iraq changed dramatically. The audience was already there. The Democrats aren’t going to put this out there because it might raise questions about their behavior especially in light of prominent discussions about wealth inequality (Remember the 2004 Democratic VP nominee?) and Democratic claims to have saved the economy. The Republicans won’t do this because they don’t care. Its a Benghazi situation. They love the bombing and reckless imperialism, but they don’t want to put themselves into a corner which means they have to pick ticky tacky fouls about which to complain.

    3. Journalism school is a sham. Jon Stewart is the most trusted man in news because he went to one of those other state schools in Virginia (which doesn’t lead the ACC or belong to the ACC) where he majored in history, not advanced rolodex sorting. Even when Stewart is out of his area he can ask intelligent questions because he has had exposure to an education which was good enough for Mr. Jefferson. Rolling Stone is where the best reporting in the U.S. is. Even going back, Kissingers interview with Playboy may have revealed the then secret bombings outside of Vietnam and escalation.

    4. News is copycat league. FoxNews set the standard for a time, and MSNBC instead of becoming a network of Olbermann and Donahue (they don’t strike me as company men) became the Democratic version of Fox. Its less hideous but basically stupid. CNN is run by the guy who took NBC from 1st to 4th, sometimes 5th, because he helped the NBC morning show mimic the techniques used on Fox.

  9. Dino Reno

    Dress up in an expensive sporty outfit and go shopping at your local Walmart. First, you will see a level of despair that will shock you. Second, you will feel so out of place that you will be able to identify immediately with the 1%. Given the level of suffering on display, you may experience some discomfort regarding your personal safety and how that translates into a need for a security state that mitigates those fears. This is a visceral experience, not an intellectual exercise.

    None of the aforementioned elite in the boardroom or the media are even remotely aware of the
    current broad-level depressed state of this society. It hardly exists for them.
    I’m reminded of how the Romans considered their slaves to be dead. It made it easier for them rule.

    1. lambert strether

      The Romans considered their slaves to be dead? Literally, like zombies, or as a legal fiction?

      1. Dino Reno

        They were figuratively dead, as in capture in battle meant either death or slavery, both being equal in Roman eyes. A thousand year later, in the age of Chivalry, the notion of ransom for capture ushered in the enlightened concept of prisoner of war.
        Had the phrase “You’re dead to me” existed in Rome, it would have had a literal legal meaning concerning slaves.
        No need to restrain your behavior in front of your slaves since they were the living dead.
        Reminds me of the flagrant behavior of today’s wealthy as they carp for bigger and bigger payoffs.

          1. readerOfTeaLeaves

            To buy someone out of slavery was to ‘redeem’ them.
            To ‘restore them to life’, so to speak.

        1. diptherio

          “No need to restrain your behavior in front of your slaves since they were the living dead.”

          That attitude is still with us. This episode of This American Life has a story from a black attorney who got a job at an exclusive country club. What he discovered is rather disturbing.

          Lawrence Otis Graham reads from an account of how he left his job as a $105,000-a-year Manhattan attorney to enter the exclusive Greenwich Country Club the only way they’d allow a black man like him: as a busboy. He discovers just how invisible he can become once he gives up his seat at the table and starts clearing the dishes instead—so invisible that people make racist remarks right in front of him. The passage is from his book A Member of the Club: Reflections on Life in a Racially Polarized World. (16 minutes)

      2. Martin Finnucane

        A classical defense of slavery derived from the supposed origin of slaves – namely, as war bounty. Since the slave had elected to live as a slave vs. die on the field of battle, and since the slave-taker/owner had elected to spare the slave vs. do him in, as was his right, then the rest of the slave’s days were basically gratuitous. There’s no delicacy about a slave’s “rights,” when that slave had on the field of battle already (and rightfully, under the laws of war) lost his most fundamental right, namely to live. Supposedly, the primitive right of the archaic Roman patriarch was over the life and death of his slaves, or familia.

        Of course, this was mostly hooey, and the ancients knew it. The middle and late Republic were marked by violent slave insurrections, while the Empire was marked by increasingly humanizing measures toward slaves. At all times, most slaves were taken by entrepreneurs picking up excess population, not by Homeric heroes in the ecstasy of battle. This throughout the classical period, well before the Roman ascendency. Hence, Aristotle invented the myth of the natural slave, as a way out of the patent absurdity of the standard “war booty” justification of slavery. Aristotle was expressing the bad conscience of his class and age.

  10. m.jed

    Considering greater independence of Board memberships, transparency, and increased activist investing, I have a hard time believing that Board cronyism is worse now than it was 30 or 50 years ago. Also, why are CEOs of companies owned by greedy Private Equity firms paid so well and commensurate with, if not better than CEOs of publicly traded companies? Both of these assertions would serve to refute Yves vicious/virtuous cycle (depends on the eye of the beholder, I guess) of executive pay.

    1. James Levy

      I wouldn’t say they are less dominated by cronyism but that the overall shamelessness and feeling of invincibility has grown. Many if not most of the men who made up the Boards 50 years ago were very often World War II vets and had lived through the Crash and Depression. They were sober, adult, and cautious. They feared the commies and the working class and were generally nationalistic. The current batch are globalist and fear nothing and have contempt for the workers (and sure as shit didn’t spend any time in Normandy or a Pacific atoll getting shot at along side them).

      To personify the issue, think back if you can at how Bush Senior operated, and then consider Bush Junior. One was creepy but competent, the other creepy and feckless and inept. Senior raised taxes and cut spending; junior cut taxes and raised spending. Senior stopped his war while he was winning; Junior plunged in and fucked everything up and walked away. That’s your template for where corporate governance has gone.

    2. McMike

      I don’t know if cronyism is worse than three decades ago. But I do know that pay is far more disconnected from performance, or from reality. And that fifty years ago, the notion of buying a company just to cart off the loot while burning it to the ground was not widely celebrated.

      (A creature enabled almost entirely by tax policy and the Fed, btw.)

  11. McMike

    Gould got it exactly right.

    With the Dem leadership gone over to the other side, and the upper middle class social libs dominating the “rank and file”, there is no one talking about class. Let alone class unity.

    Most of the Dem/Obama voters I know are solidly Rockefeller Repubs economically. Fairly socially liberal, deeply compassionate for suffering, and pro environment. But also making upper middle and higher class incomes, and completely allergic to class analysis. Very solidly if not unconsciously tied into the corporate system that butters their bread, and thus heavily programmed not to peek behind the curtain too much. Sure, they’ll rail about climate change and energy company malfeasance or Goldman Sachs, but watch them tune out entirely and kill the messenger if you try and weave that into a broader narrative of crony corruption and systemic criminality.

    The left is too busy hating on right wing social troglodytes to notice the economy. The genus of stoking the culture war has been getting the left rank and file to forget about the class war. (While feeding the right wing rank and file economic myths)

    1. human

      That’s why they are called _neo_liberal. It would be funny if it weren’t so disastrous. Someone who claims to be “deeply compassionate for suffering, and pro environment” and has not divested of all defense and traditional energy related income is a hypocrite, plain and simple.

      “The left is too busy hating on right wing social troglodytes to notice the economy” look in the mirror.

      1. McMike

        Neo-liberal = socially liberal/libertarian, economically corporatist

        Neo-conservative = socially conservative/libertarian, economically corporatist

      2. McMike

        I disagree. They ARE looking in the mirror.

        They want to be social liberals. They recycle. They refuse to participate in gay-bating and feel bad about slavery. They go to church maybe but more as ritual. They look at suffering and suspect that there but by the grace of God…

        But they look in the mirror and see a middle/upper middle class professional. Whose income is tied to the corporate system, who has 401k money invested in the market, who hopes for putting their kids through a good school, who likes nice furniture and organic food, and has designs on retiring a bit early and in comfort, and dreams of maybe, just maybe, they might hit that top 5% or 10% income bracket and be able to take more trips to Europe and Cancun, and pay off the Volvo.

        1. jrs

          Yea, I understand the professional middle class. Worker empowerment (unions, better wages and benefits even in the lower level) and especially private sector worker empowerment is very much in their self-interest though and not solely because it leads to a better society to live in (although that’s not small). But also it provides a net if ever “there but for the grace of God” … actually happened. And secondly that stuff trickles up. If most of the economy was unionized even if all those middle class professionals were not it would improve their working conditions as well because employers would subconsciously understand you can only push so far.

          The trouble will telling everyone to divest of certain stocks is … well first off many stocks are just being sold on the secondary market and not profitting the company, and then I’m not sure most stocks are actually owned by the professional middle class (even if they have really nice 401ks is it anything compared to the percentage of stocks owned by the wealthy?), and third most 401ks and the like are actually just mutual funds, people aren’t buying and selling individual stocks, and I doubt most people want the hassle of actually becoming investors.

          1. McMike

            Indeed, divestment is difficult and silly at the personal level, especially if you have a 401k.

            The pension funds, on the other hand who do have some heft, ought to do better. But they are of course captured by Wall Street via Board cronies and advisory roles.

            1. human

              Had to take a work break…

              My point about looking in the mirror references Yve’s remark about having done Gould, “one better,” by getting the decimation for free. I see it as more insidious than that. By relying on economic/social/political policy that moves capital up (MIC, energy, pharma, agro, etc), and making honest discussion of it out-of-bounds for the enablers, the .01’s have got the 1’s not only doing their dirty work, but, implementing policy that is not in even the 1’s best interest. In other words, they are not only jockying among themselves, but, making psychosis inducing decisions within themselves. We see this played out sporadically as in the recent banker suicides.

              There is no pretense of compassion or caring here. And there won’t be until the beast is starved. Every little divesture helps if only to keep you sane. I’m fond of telling people these days that if you _don’t_ feel depressed you are sick.

        2. cwaltz

          I disagree that they want to be anything other than what they are, a bunch of left wing plutocrats just as oblivious of the dirty masses that labor as the right wing plutocrats. They sneer at liberals. We’re not pragmatic enough dontcha know. We couldn’t possibly understand how complex and difficult it is being them.They actually remind me of Republicans in the way they twist and turn themselves into pretzels to justify behavior and ultimately what I’ve seen is there isn’t much they aren’t willing to sell out(including gays, the environment, etc, etc) in order to put themselves in the “win” column. Nevermind that what they end up winning looks exactly like right wing policy.

  12. John Mc

    Too many dollars, too few media actors = a corrupt oligopoly

    The truth has become too expensive to share as our economy has been purposely taken off track, so as reinforce/strengthen existing hierarchies (Noreena Hertz), while systematically putting pressure on every lever of the social safety net. The Media know this better than most. This re-routing of resources to corporations ensures a massive period of stagnation for the United States, while also making it possible to move to a one world market ruled by the very same Neoliberal apparatus that provoked the degradation of the western democratic levers now under private-public-partnership control.

    This type of seizure depends upon a fervent individualism, hyper-competitiveness, and a religious belief in productivity (Arlie Hochschild). Why so little media coverage? We have become a country of specialists, who with elite propaganda, make it possible to outsource our critical thinking, atomize information, and create fear machines (Adam Curtis). Our power is located in not buying their products and finding alternate means to cope with this often vicious overreaching need to deregulate, privatize and protect the profits from everything from drugs and pharmaceuticals to Uncle Opie’s foot fungus.

    What amazes me is that there are still a few places here on the net I consider to be a viable source of information and shared knowledge. This may not be the case in ten years, if one believes the recent articles around internet propaganda trolls infiltrating the web to create havoc. Striking a healthy blend of skepticism, with antidotes of affection seems prudent.

  13. MyLessThanPrimeBeef

    Why little media coverage?

    Only a few people decide what we read.

    And only a few people decide what we wear.

    Not too good on both accounts.

    Way too many khaki pants and blue shirts.

  14. Ignacio

    For every percentage point of decline in labour share of income there is an enormous amount of wealth that goes to the 0,1% richest (CEOs and other privileged classes with some tickle down to their servants; think of well paid lawyers and economists). The 0,1% enlessly push for conditions that favor such wealth transfer. Since the loosers in this equation are so many, there is a lot to gain for the wealthiest in individual terms while the loosers just feel the pinch and a relatively slow transition to poverty as a group.

  15. Andrea

    The MSM is handmaiden for the PTB or anyone who cares or can manage to pressure them.

    The MSM is there to fool ppl, distract them, send them snoring supine, or into time-wasting ridiculous quarrels e.g. gay marriage, deporting Justin Bieber, etc.

    At the ‘serious’ level, they report ‘think-tank’ rubbish, which is not even open to debate, it is presented as MS opinion, set in stone.

    The MSM, to function, wants or needs to be paid a max for their services.

    Thus high-paying clients (automatic funding, whatever) that is those who are supremely rich / powerful / state, the Gvmt. / etc., are courted, supported, bowed to, in whatever agreement, alliance, deals, while anyone lower on the ladder is eliminated.

    Their power is tremendous but dependent on a complex structure that is inherited and costly. They are thus also vulnerable, as in fact grave missteps could see them being locked out or killed off. Immediately, with no recourse. So they can only posture and pander to their pay-masters.

    Income inequality is taboo. Except, from time to time, lip-service paid to ‘ordinary Americans’ with horribly fake grave faces and nod nod, frown frown, about the shame of it all until the show switches to Islamic terrorism and the death of Polar Bears.

    The poor cannot pay for prime time.

  16. JTFaraday

    “Why So Little Media Coverage of How the Rich Are Becoming Richer and the Middle Class Wages are Being Squeezed?”

    I don’t know, is that really true? Maybe I have a somewhat distorted picture of “media coverage” because over the years I’ve tended to read the liberal rags, but I think I’ve been reading the same stuff since Ralph Nader’s third party run vs. Al Gore.

    And despite the many complaints about “identity politics” to the contrary, this is one of the main ways in which the D-Party has been corralling voters at least since Bush II. ie., post-Ralph Nader. It is true the D-Party never delivers on these campaign tactics, but they never do anything for their other “identity politics” constituencies either. It’s all one big universal pander.

    Even outside the liberal rags, this topic has seen substantial coverage. I’ve read numerous articles in the NY Times over the years, for example, most of them generally critical of said growing inequality. I distinctly remember there was a whole series on stratospherically rising executive compensation relative to the peons, and how it got that way, in the NY Times all the way back in 2006.

    Naturally, not all of this verbiage is particularly useful or informative. A lot of it consists in the ritual mouthing of liberal politically correct pieties, but mouth them they did.

    1. JTFaraday

      In fact, I would say that is precisely this long term acknowledgment of a problem alongside the failure to act to reform anything, that has produced the growing anarchist convictions of left leaning young people.

      If everyone knows about the problem and no one does anything, then either the system is not reformable or it is not reformable “from within,” and the growing attraction of ideologies that openly acknowledge the failures of bureaucratic liberalism.

      1. JTFaraday

        “and thus the growing attraction of ideologies that openly acknowledge the failures of bureaucratic liberalism.”


      2. Lafayette

        The problem is well-known in economic circles. But the media has a resistance to handling it. Ask yourself why …

        Who owns the media in America today? The 1Percenters.

        For instance, who owns Fox News? That old fogy of an Australian that even the Brits cannot seem to put behind bars for his aggressive journalism.

    2. washunate

      Spot on. There is lots of coverage about this issue.

      It’s just that most of the educated upper middle class that leans Democratic is part of the system. It’s like it’s a secret that the highest paid lawyers and professors and hospital executives and university administrators and police chiefs and defense contractors and whatnot make far more money than most workers.

      All the while, Millennials have spent their entire childhoods – and increasingly, adulthoods – in this disconnect between massive problem and almost complete inaction to address it. If leftist thinking can’t produce explanations for the massive failure of bureaucracy, of centralization, from GM and Goldman to the TSA and the drug war, that leaves the door wide open for a more reactionary proposal from the right.

      1. JTFaraday

        Well, it is certainly a liberal truism that failure to respond to broadly perceived problems opens the door to the reactionary right. (I also sort of think that door has been wide open for a while already).

        However, the point I wanted to make is that the liberal failure to respond is, in this case, also opening up a door to a perspective “on the left” that has long held that the modern nation state is so captured by elite economic interests that it can only co-opt and subvert democratizing efforts.

        This (broadly anarchist) view of the modern state itself happens to roughly parallel what many people formerly affiliated with the D-Party already believe about that political party. It seems to me that younger left leaning people have been a little quicker to transfer that assessment to the state itself.

        Personally, at the moment, this assessment of the tendency of the state to co-opt reform seems valid to me. At another moment in time I could be more optimistic about the capacity for productive reform.

        Of course, it also depends on what those ideas for reform consist in. I frequently find some ideas presented under the rubric of “progressive” kind of reactionary in the first place– and that’s before they get “co-opted again,” so to speak.

        Apparently everyone negotiates from the right like Obama.

        1. hunkerdown

          But co-option is, in a way, just another level of negotiation. They just happen to have a highly privileged negotiating position and many structural opportunities to bite the apple again and again (and I wasn’t even talking about gotofail).

          The belief that systems are morally inert is common, widely promulgated, and wrong. As it happens, the very system of a cartel of sovereigns divvying up their subjects and granting one another absolute franchise to rule them as they see fit just so long as they are seen to be ruled, is right-wing. Granted, systems *tend to* seek equilibria, though sometimes that’s more visible in the frequency domain rather than the time domain. It’s also easy and common to mistake accretion for progress, but that’s another story.

        2. jonboinAR

          Really, it’s all just performed with the bread and circuses strategy. NFL, baby! Nachos and Bud-lite. Truthfully, I think, no one (that is, most) gives a sh!t, yet, or takes it seriously. And, as is so often pointed out, the average American is disasterously ill-informed, Internet or no. Among my circle I’m the only one who follows sites such as this. When I try to engage people I know on these subjects I’m met either with blank stares or completely ignorantly conceived rants (see my comment above accidently posted under the name “wanabbruin”.)

        3. washunate

          Certainly could be, and I think that risk is underappreciated by some.

          But personally, I think that’s actually part of what’s different about Millennials in aggregate. There is an expectation – born out of the experiential understanding that our system is unsustainable – that the nation state will work. That it must be made to work, because there is no alternative to addressing the various environmental and social challenges coming to a head.

  17. Real Black Person

    There has been plenty of coverage. The Middle Class in developed countries has just been framed as a something that is facing diminishing returns; someone who seeks to retain a middle class lifestyle, which is really $100,000 a year after taxes in most metropolitan areas, needs a graduate degree from a selective school.

  18. Ignacio

    This post is well focused and the mechanisms that favour wealth transfer from wage earners to CEOs and their cohorts of assistants are well explained. Nevertheless the text does not try to answer the question made in the title. Why so little coverage in the media about the wealth transfer? Well, there is an implicit answer. Journalists have internalized the arguments that favour this transfer. That may hold a lot of truth since one can frequently see those arguments about pays above average, or the focus on competitivity measured as unit labor costs. There may be some other reasons at play. For instance, it would be nice to know how and if the chief editors control their journalists and “correct” their articles so they reflect the parameters of this “general wisdom” of competitivity and productivity. If so, chief editors must be amongst the well paid elite of servants.

    1. Mark P

      I have witnessed that your two propositions here are generally correct:

      [1] Journalists have internalized the arguments that favour this transfer. One can frequently see those arguments about pays above average, or the focus on competitivity measured as unit labor costs.

      [2] The chief editors control their journalists and “correct” their articles so they reflect the parameters of this “general wisdom” of competitivity and productivity. If so, chief editors must be amongst the well paid elite of servants.

    2. Brooklin Bridge

      Nevertheless the text does not try to answer the question made in the title. Why so little coverage in the media about the wealth transfer?

      I agree. The question, Why so little coverage, is not really addressed in the post. I wish it were. What is covered is why the average Joe on the street is unaware of it and the answer, in a word, is obfuscation

      As to why any serous coverage is missing from the media, you might add to that list,
      3. Because we do not have any journalists or journalistic outlets in the MSM, at all. Instead, we have show people specialized in and engaged as propaganda retailers, David Gregory being one of the quintessential examples of the “species”, Hannity being another. The job of propaganda retailers working for corporate interests is antithetical to journalistic coverage of anything related to reality but particularly to any facts or information related to the gaping maw of discrepancy between the rich and the rest.

      Therefore, in print, television, and internet outlets of main stream media, what we get related to the subject of the great American PIG-DOG is a deluge of shallow misleading contradictory dog whistle intended pieces the volume of which is in direct proportion to the perceived need for obfuscation at any given point in a given administration.

      1. hunkerdown

        Television, being a visual medium and relatively scarce, is better suited to modeling than explicating. After all, what’s written can be challenged mano-a-mano. What’s presented for imitation needs unpacking, and aside from a few specific ideologies, generalized unpacking isn’t a common skill among the working class (for their own good lest they cut themselves, or something).

      2. Wayne Reynolds

        Just watch any “Morning Joe” episode to watch the glib, arrogant bunch in action, especially that moronic testament to nepotism, Mika Brezinski.

        1. Brooklin Bridge

          Agreed, they are particularly offensive.

          Fox: Via needle, mainlined (the poor man’s religion)
          MSNBC: Via rolled up dollar bill (lib-tards – champagne don’t make me lazy, cocaine don’t make me crazy)
          CNN: Via enema (pure sh*t round the clock)

    3. A Real Black Person

      When money (resources) is taken away from the poor and given to the non-poor, that is called Capitalism.

      When money (resources) is taken away from the non-poor and given to the poor, that is called Socialism.

  19. impermanence

    The corporation [among other things] is the most efficacious method to steal. This has been known for two centuries.

  20. allcoppedout

    Hugh’s tax is fine by me. We need some way of stopping offshore and the standard global excuses.

    The question is why the happy shiny people in our newsrooms don’t report the issues. I don’t know why but have a solution. I would reserve all such jobs for disabled people on a fixed wage. Frankly, I’m prepared for a ‘decorating lamp-posts solution’ that shows as much concern for the rich and media lackeys as the working class get on being sacked. My guess is that we need to collapse celebrity across the board and bring in a simple salary cap range. I believe the real questions not being asked concern our current abilities to make money fair and get proper investment now we have the technology. I’m still waiting to see a scientist in a newsroom, but do see crass undergraduate presentations every day.

  21. washunate

    Thanks for highlighting this Yves. Great read.

    I loved this bit in particular: “…an invisible hand dealing out different shares to different people…”

    That invisible hand has a name. It is called the United States Federal Government.

  22. huxley

    While it does bear repeating, really, this is old news. I saw it in Scientific American and elsewhere over twenty years ago, and even then the practice had been in place for some time:

    So with this mechanism in place, any CEO who has fallen below median pay who is targeted to be in a higher group will have his pay ratcheted up, independent of performance, merely to keep up with his peers. This increase raises the average and creates new laggards. The comp consultants have institutionalized a leapfrogging process that keeps them busy surveying competitor reward levels and keeps top-level pay rising relentlessly.

  23. allcoppedout

    Our media is only part of the reporting problem. How can you report fairly to largely poorly educated, apathetic (rendered docile) people. QE instantly looked like a trickle-down policy likely to fail on social justice to me, yet the FED and BoE were able to roll it out as though it wasn’t vile, right-wing and simply for the rich. Watkins makes the points and comparisons here – http://scholar.google.co.uk/scholar?cluster=6763326284769259397&hl=en&as_sdt=0,5&as_ylo=2014

    1. cnchal

      Thanks for the link. It was worth the read.
      A few choice lines from it.

      By purchasing assets, the FED has gone beyond rescuing the rentier (See Watkins 2010). It has empowered the rentier, resurrecting profits as a percentage of GDP accruing to financial institutions to almost the same level as before the crisis (See Figure 1). For the Federal Reserve Banks, profits as a percentage of GDP have not been higher in fifty years. The policy represents the ultimate in freeing business from “all restrictions of a non-pecuniary character” (Veblen 1975, , p. 69). The question remains: is the policy effective in stimulating output and employment?

      The answer is of course not. But it is effective in making sure the bankster don’t suffer.

      Between 1939 and 1944, real GNP increased fifty-five percent. Over the same period, military spending rose from 1.4 percent of GNP to 45 percent. Although consumer spending declined as a percentage of GDP, per capita consumption actually increased. As expected, inequality declined significantly. Pikerty and Saez note using IRS data that the income accruing those in the top decile of income earners declined from forty percent in 1940 to thirty percent in 1944 (Piketty and saez 2004). The data suggests that inequality falls when elites need the masses to fight wars.

      Wow. Do we need a war to straighten this mess out? How about a class war then.

  24. huxley

    Official corruption in America has become systematic in virtually every aspect you can name. If you think this is an exaggeration, try naming a few that aren’t. Your list will be short even if you are clever.

    The rot goes deep and is pretty much everywhere. In the coming years it will become obvious to most people that the country is actually becoming crippled and functions with increasing difficulty even in basic areas that most people still take for granted: food and water that won’t make you sick, gas that won’t damage your car, prices that keep going up, and so forth. Difficulty in making a living and keeping your home is already common, but just wait until it gets harder to stay fed or to go anywhere, and complaining to the government only gets you derision. At best.

    1. Brooklin Bridge

      Right! But as James Levy insight-fully and admirably points out above, many have a legitimate stake in a gradual or balanced resolution. Yet the longer and deeper the corruption goes, the harder it will be to avoid massive suffering that will make the current situation pale by comparison. The only given is that most of the 1% will escape most of the pain.

      1. Ulysses

        I think we need to stop imagining that the 1% are invincible. They certainly have won all the big battles in the class war for the last three decades or more, but it seems to me their propaganda has begun to be less effective in deluding the rest of us. They depend very heavily for their physical security on modestly paid mercenaries who have far less loyalty to their masters than they imagine.

        When Joe or Jane soldier in the National Guard is ordered to fire on friends and family rioting for bread, will they obey? If I were a 21st century kleptocrat I sure wouldn’t bet my life on it!!

        1. huxley

          In due course, people will have to bet their lives that they will not obey, but that could be a very bad bet. TPTB have often been pretty good at arming unemployed psychopaths who will obey. Feeding that is the softness of US firearms regulation and the prevalence of militarism and other violence in the entertainment media, both institutional and casual. As we have seen in Vietnam, Iraq, and throughout the US, it’s really not all that difficult to get Americans to commit heinous atrocities, and the perpetrators always enjoy excellent official protection.

          Until then, I’m standing by my predictions about the food riots and old people dying in the streets. Once poverty and relative food costs in particular have reached a certain point you can expect most of American society to go totally pear-shaped rather quickly.

          I’m sorry I cannot be more hopeful.

        2. hunkerdown

          The usual practice is to import forces from elsewhere, e.g. Bahrain called in Saudi Arabia to put down their protests for good. Governments lend each other the odd cup of sugar like that, because firing on their own and not firing on their own each carry grave risks to the credibile authority of the ruler or to the institution of sovereign authority itself.

          As far as the foreign soldier is concerned, those aren’t countrymen, they’re (insert soldier’s country’s favorite outgroup here). I wouldn’t bet against said soldier following orders once the first shot was fired somewhere and the precedent has been established.

        3. Brooklin Bridge

          As far as I know, history is very depressing on that point (even the French aristocracy are amazingly intact). True, the 1% is not all powerful, but they are powerful enough to – by in large – escape the catastrophes they themselves create.

          It will be somewhat of a moot point if were are indeed talking about extinction this time round.

      2. Wayne Reynolds

        Our future is unfolding before our eyes in Greece, Spain, Ireland, Portugal, Italy, Ukraine, Egypt, Latvia. We are on the same course and will arrive at the same destination within the decade. Berlusconi gave the Italians naked women on TV, we have the Kardashians, Ellen, and Honey BooBoo.

        1. huxley

          Greece, Spain, Ireland, Portugal, Italy, Ukraine, Egypt, Latvia

          Those were just for practice while they got the US softened up. Once it’s gotten creamy TPTB will drop the hammer, after which Americans will be digging out of their destitution like Haitians, and permanently.

          Jaysus, does anybody have any GOOD news?

  25. Globus Pallidus XI

    Hey, when you stand back and do nothing while the rich breed you like bloody cattle, I mean, what do you expect?

    This is all your fault for failing to confront the obvious. GP XI

  26. Lafayette

    Because media outlets are … uh, owned by the rich? ;^)

    I can’t remember the first time I posted on this (and other sites) data obtained from the World Top Incomes database that was put together by a team a the Paris School of Economics. (Just google the name of the database). It was almost certainly at least two years ago, when the database itself became accessible.

    For the US, and for the 10Percenter class – I thought the 1Percenters too restrictive a unit to demonstrate clearly Income Disparity – the numbers over the past 50 years on a decade-basis demonstrates clearly that the share of Total Income of the Top 10% of American households increased from 31.5% to 46.3% over the past five decades:
    1960 – 33.8%
    1970 – 31.5%
    1980 – 32.9%
    1990 – 38.8%
    2000 – 43.1%
    2010 – 46.3%
    (Note how the percentage changes considerably from 1980 to 1990. Who was Potus during the 1980s? And get this: The percentage for 2012 is 52%!)

    That’s half the total income generated by the American economy that goes to just the top 10Percent of American households! Do they spend it? Nope. They put it into Capital Gains investments, which does very little indeed to expand Consumption that would indeed put fellow Americans back to work.

    And we 90Percenters are left to scramble after the remaining half of the Income Pie. Who, in his/her right mind, I ask, can consider that as Fair Treatment?

    I’m still waiting for that answer …

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