Today’s QOTD:

“Middle-class America experienced a lost decade in their retirement accounts, whereas executives enjoyed record compensation packages through the subterfuge of stock option programs. There has been a massive wealth transfer from middle-class America’s retirement accounts to the bank accounts of the privileged few. The social consequences of this wealth transfer bear scrutiny.”

-Albert Meyer, Bastiat Capital (NYT)

For more on how executive compensation has run amuck in America, read Roger Lowenstein’s 2004 book, Origins of the Crash: The Great Bubble and Its Undoing.

Category: Corporate Management, Options, Philosophy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

44 Responses to “On Executive Compensation & Wealth Transfer”

  1. Petey Wheatstraw says:

    The social consequences have yet to manifest themselves. Like a tsunami, they are in their earliest stages, and but a small wave in the deep ocean. That wave will come ashore, eventually, and when it does, all attempts to control it or stand up to it will be fatal. Fortunately, the seaside resorts are populated by the privileged few (some have anchored their yachts just off shore). As with the immutable law of supply and demand, the certainty that every action has an equal and opposite reaction has been forgotten, ignored, or downgraded in the minds of the public to a Rule of Thumb, and not a hard and fast law that it is. The price for this criminality will be paid. As with most things monetary/finance/investing, all that is unknown is when this event will take place — that it will take place is a certainty.

  2. scottinnj says:

    I don’t know where the rage is about some of the most corrupt CEO’s. I don’t think people will begrudge a Steve Jobs or a Mark Zuckerberg their fortunes. But this is a country where Angelo Mozilo – my vote for the worst CEO of all time (acknowledging that there is a tremendous amount of competition for the honor) walks the street as a free man. If this was more widely known my long position in pitchfork’s would pay off.

  3. FS says:

    The real story is in the increased social dependency programs, creating more and more people who depend on government rather than their own skills. Taxes crush the middle class, and our opportunity to succeed. The retirement account figures are a dodge by libs trying to accentuate the us vs. them mentality.

  4. BusSchDean says:

    Agree, Petey Wheatstraw. Stiglitz wrote in recent VF article: “When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.” If the CEO helps get legislation passed that effectively guarantees margins shouldn’t he/she get a nice raise? If the answer is “yes” than we know the transfer of wealth is the only goal.

    When we lived in a world of capitalism v. communism the capitalist worked hard to demonstrate two things: 1) the inherent connection between capitalism and democracy, and 2) the inherent advantage of capitalism to improve the human condition. What an attractive combination!! Now, with no communism boogeyman left the gloves are off in terms of who gets the lion’s share of resources. Democracy get subverted and average HHs hang on while the top 1% are off to the races, financially speaking.

  5. Robespierre says:

    I’m glad all these CEOs are getting record pay specially now that they got the congress they paid for to extend their Bush era tax breaks. We would not like them to have to contribute more than they have to the country they own.

  6. Robespierre says:

    @FS Says:

    “The retirement account figures are a dodge by libs trying to accentuate the us vs. them mentality.”

    To that I can only paraphrase:

    “Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge.”

  7. Petey Wheatstraw says:

    BusSchDean:

    (theoretical) Capitalism and (theoretical) Communism were so busy fighting each other, neither of them noticed that Fascism had only been playing dead – biding time until the heavyweights wore each other out. Fascism — the scheming, smirking little pussy that it is — thinks it’s smart, but has not accounted for the riot in the stands that will happen when the ruse is uncovered and the jig is up. A huge, burgeoning, and disenfranchised lower class is the 800 lb. gorilla in this match.

    FS:

    “creating more and more people who depend on government rather than their own skills.”

    Are you referring to the entire upper class?

    So . . . Americans are born disenfranchised from anything but a (questionably tallied or representative) vote? All of our mutually-owned resources and wealth are already claimed? There should be no social safety net? Have you taken your heritage/inheritance for granted? Do you understand that countries with large, poor populations are unstable?

    As for the “libs” (a fuckwit term, if there ever was one), being responsible for over taxation of the middle class, you voted it on yourself. You voted to make corporations the perfected constitutional person. You voted for the wealthy to be able to hoard their wealth, even though they derive it DIRECTLY from the government. You voted for your own disenfranchisement in the marketplace. Off shoring, blatant violation of labor laws (40 hr. week — with time and a half for overtime — and benefits were the standards in the science-loving, middle class, ultra wealthy America I grew up in). Look back at 20th century USA, and you will see what appropriate taxation can accomplish. New schools, new highways, new (affordable) medicines, libraries, and a functioning government and media. It made the likes of you. And it was ALL liberal.

  8. scottinnj,

    you state : “I don’t know where the rage is about some of the most corrupt CEO’s…”

    know that there was little, widespread ‘outrage’ about this Criminal..

    http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=%22Chainsaw+Al%22+Dunlap

    as a matter of Fact, many, including the MSM, hailed him as a “Management Genius” ..

    expecting peep to be ‘outraged’, now — when they weren’t, then — is, rather, expecting, too, much..
    ~~

    http://bastiat.org/en/the_law.html#SECTION_G009 for starters

  9. Robespierre says:

    @Mark E Hoffer Says:

    “expecting peep to be ‘outraged’, now — when they weren’t, then — is, rather, expecting, too, much..”

    On the defense of the “peeps” it is not hard to understand why there was no “outrage” then or now It can be argued that for the peeps to reach a level high enough for continuous outrage there must be a continuous and relentless outrage in the media. This however will never happen as long as the media is controlled by the same oligarchs that control the government. An alternative is of course the internet. But even this one is about to be censored by the corporations that own it (net neutrality being attacked). An interesting theory of why this is the way it is can be found @ Manufacturing Consent: The Political Economy of the Mass Media

    So yeah basically I expect no change

  10. Transor Z says:

    The “repair” of the economy through radical gov’t and central bank intervention continues — with no criminal prosecutions of top banking execs; soft “reform” laws; likely slap-on-the-wrist banking regulator settlement of multi-billion dollar systemic foreclosure fraud (http://www.nytimes.com/2011/04/10/opinion/10sun1.html?_r=2); change in accounting rules to improve optics from mark-to-market; languishing start-up of the CFPB; now spread out into its third year.

    Rhetorically, the purpose of this ever-so-ginger support of the financial sector has been to stave off the Apocalypse: runs on banks, soup lines, the spectre of Americans rioting around 50-pound sacks of rice tossed off flatbeds by U.N. relief workers while paramilitary technicals with pickup-mounted machine guns siphon off food and cash to enrich warlords: American Somalia.

    The Great American Experiment is now an experiment to see how long spin, deflection, deceit, and undermining of rule of law can be prolonged. It’s become pretty damned clear for whose benefit the attenuation of “repair” is: Time is on the side of the wealthy elite because people forget…

  11. [...] our QOTD is this interactive graphic from the Sunday NYT showing the relative compensation of 200 chief [...]

  12. farmera1 says:

    Another must read on this subject:

    THE BATTLE FOR THE SOUL OF CAPITALISM by John Bogle (the founder of Vanguard)

    “How the financial system undermined social ideals, damaged trust in the markets, robbed investors of trillions”

    Bogle’s main point is that we have moved from ownership capitalism to managerial capitalism. Companies are now run to enrich the management not the owners.

  13. Petey –

    How do you figure the “Libs” are responsible for over-taxation of the middle class . . . ?

  14. philipat says:

    Agreed. But Political Correctness has stopped anyone talking about the “Working Class”? It seems that society has miraculously transformed into only an “Elite” and a “Middle Class”? I would have thought that, by definition, there cannot be only an “Up” and “Middle” unless the ante is upped to a “Middle Class” being now somewhere between the two. But I think not. And I think the inability of America to “Call a spade a spade” is, actually a major part of the problem.

    Seems to me that the system is screwed, corrupt and rotten from within. Congress is a bought and sold subsidiary of Wall Street and Corporate America. US Corporations don’t care, don’t pay taxes and move all manufacturing offshore, so, therefore, don’t really care about America. So if the Tax laws change or an AMT Tax for Corporations is applied and the Corporations all move away offshore, who cares? Nothing lost really?

    London is going through this exact “Mind game” right now.

    When can we get some strong leadership?

  15. Orange14 says:

    You can also pin the blame on almost all mutual fund companies who never vote their shareholder’s interest in proxy elections. I don’t know what the % of stock holdings are in both non- and full retirement mutual fund accounts but but those of us who have such holdings don’t have any say in how the shares are voted. In my own trading account (23 companies), I have so far this year voted against two CEOs who deserve to be fired and against five compensation proposals because they rely too heavily on stock options. Unfortunately, this is probably like pissing in the ocean. Until the mutual fund companies really become interested in exerting control in the same way CALPERS and a couple of other large pension managers there is not much hope for us individual investors.

    Regarding Congress, as long as you get a Congress that is elected by 24% of the eligible voters (that’s the approximate number who voted for the current House members) you will get a minority, radical government rather than one that reflects what is needed in this country.

  16. bonzo says:

    @orange14: Mutual funds won’t vote against overpaid CEO’s because then the CEO’s will bar the mutual funds from participating in the 401K plan. The way to fix this is for Congress to mandate that all 401Ks must be open to all mutual funds. That might happen sometime in the future, if we get another collapse in stock values–this time a collapse that leaves prices down for a good long time so that the boomers are thoroughly screwed and angry.

  17. Arequipa01 says:

    All primates are thieves. All humans are primates. You do the math.

  18. GrafSchweik says:

    BusSchDean > “When we lived in a world of capitalism v. communism the capitalist worked hard to demonstrate two things: 1) the inherent connection between capitalism and democracy, and 2) the inherent advantage of capitalism to improve the human condition. What an attractive combination!!”

    If you were a devoted reader of National Review in the ’70s the way I was, you would have noticed the fascist/oligarchic element that Bill Buckley usually kept locked away in the attic/cellar the way the Victorians did their demented family members, peeking from behind the curtains.

    I first noticed it in a hymn of support for Pinochet and the Capitalist Paradise on Earth that he was constructing in Chile. The writer informed us that ‘economic freedom is ultimately more important than political freedom’ or words to that effect. [Don't have the exact quote---trashed my NR collection long ago]

    Never forgot that and enjoy, in a twisted way, how by a decade or so NR anticipated the Chinese Communist Party and their approach to government.

    To paraphrase Gertrude Stein: An ideologue is an ideologue is an ideologue…

  19. MayorQuimby says:

    “How do you figure the “Libs” are responsible for over-taxation of the middle class . . . ?”

    1. Property taxes (rising with flat wages).
    2. College tuition (up what – 400% in a decade?!!! with flat wages) by *subsidizing it* same as “affordable” housing. To a lib – making something ‘affordable’ means pouring gvmt money INTO it! Hilarious.
    3. Pension handouts to their favorite voting bloc – ie taxpayers don’t GET anything for their taxes in the form of goods and services.
    4. Consumption taxes such as phone taxes, cigarette taxes, gasoline taxes, sales taxes (up at 10% in IL and CA now) etc. I support some of those btw.
    5. Health care subsidies (supported by both parties).
    6. Bubbles and cheap money Fed policies (supported by both parties of course).

    Repubs are no better however.

  20. Winston Munn says:

    It used to be that corporations reinvested in capital improvements, but now it seems Capitol Improvement is more important to profits.

  21. iratherbe says:

    As an American who cares deeply about the current state of affairs & wanting to be an enabler of real change & a beacon of egalitarianism … like my colleagues I was going to join the aforementioned alluded impending revolution. But, then I realized, mmm … I’d actually have to get up off the couch, stop watching The Master’s, shut off the TV, gas up the SUV … plus, don’t have the time since I have to clean up the yard, take the kids to soccer, the wife’s got to go shopping & later we have dinner with the neighbors. So I decided to take up the cause by continuing to whine & complain to all my friends & family & rant over the interwebs.

  22. b_thunder says:

    The majority of “wealth transfer” is not a result of high CEO pay, but of the
    a) stagnant wages (globalization? poor educational system?)
    b) elimination of pension/retirement healthcare benefits, cuts and increased cost of benefits
    c) disproportionately HIGH tax on low-earners due to FICO: while wealthiest americans overall on average pay slightly more than 15% tax, anyone with McJob pay over 12.4% SocSec tax before they pay any income tax. It would have been all nice and good if that money was sitting in the “lock box” and compounding interest, but it isn’t (and the surplus that would have been generated over past decades has been also spent), so an individual with McJob pay 12.4%, and will see very little of that money back. At the same time, the use of SocSec funds as “general revenues” allowed tax rates for the wealthy drop from 70% to 36 now (and lower under Reagan) and capital gains to 15%.
    d) bank bailouts, bondholder bailouts, pumping of the stock bubble (equities disproportionally owned by the wealthiest) and 0% interest on savings.
    e) nothing has been done by the elective representatives to either stop or shield the population from byproducts of “crony capitalism” and “quasi-monopolies” – drug prices, oil prices, cable companies, etc etc.

    The transfer of wealth has been going on for over 35 years, and we still have thousands of brainwashed (or brain-dead) toothless social security and medicare recipients attend tea party rallies with the slogans “End Social Security Now!” and “Medicare = Socialism.” And on the other side, there’s Wall Street’s BFF Schumer, “toothless tigers” Dodd&Frank, and of course the “consensus before common sense) President….

    There’s no chance for “‘Tahir Square moment” in the USA…. no chance whatsoever if Lloyd, Jamie, Warren B, Jeffrey E. form GE, The Bernank, Blackstone, Blackrock and Blackwater have to say anything about that.

    ~~~

    BR: I do not believer anyone anywhere state excessive CEO pay to be the majority of wealth inequality. Rather, it is reflective of a wealth transfer from shareholders to insiders . . .

  23. Transor Z says:

    Gore Vidal said long ago that there is only one political party in the U.S. with two branches. I don’t think the truth of that has ever been more obvious.

    It’s fascinating that a forum that attracts many extremely intelligent people who make a living engaging in complex forecasting analysis of incredibly complex business structures and flows, distributing risk amongst complex and nuanced forms of investments, reveals such a glaring flaw in human wetware.

    Folks with brains that can simultaneously run apps like Structured Finance 2011 v3.5, Business Law 2011 v.2.3c, and Internal Medicine 2011 are quite obviously also running My Party Good, Your Party Bad 1.0 political software.

    You might as well believe in fucking Santa Claus as believe that contemporary politics is reducible to DEM vs. GOP or “Libs vs. Neocons.” Please, those might be entertaining as WWF headliner matchups, but not all that useful as reality modeling upon which to base political decisionmaking.

    There’s been a thread of fairly valid criticism that the missing element for the formation of a viable third party (or reformation of the two POS parties currently existing) is a well-articulated, intellectually and philosophically coherent manifesto tying together a world view. But do we really need to reinvent the wheel or has the constant barrage of high-tech and media-savvy obfuscation and manipulation we’ve all been subjected to for a few decades now just papering over the same ol’ same ol’ “self-evident truths”?

    I mean, seriously, do we really need an intellectual revolution to become aware of the shocking concept that social stratification without social mobility is corrosive? That undermining rule of law and faith in democratic institutions bodes ill for perception of legitimacy of public authority? That capitalism is undermined by regulators and political bodies picking winners and losers in the market through cronyism? That 90%+ of public programs designed to instill politically correct thought in citizens are hot-air make-work horseshit that have created a huge amount of cynicism and resentment? That enabling a cradle-to-grave sense of program entitlement is a really, really bad idea? That tenure in public schools needs to be immediately taken out back and shot? Are these concepts — and the dozens of items I could add to a pretty “centrist” laundry list — really that fucking revelatory???

    I don’t think my belief in any of those ideas are a) all that controversial or radical, or c) mutually exclusive. How stupid is it that I have to align with one of two political parties to get only half of what I want (and of course it’s actually idealistic and naive to think I’ll get ANYTHING I want on my list from the existing structure)?

    [/rant]

  24. Transor Z says:

    b) mutually exclusive.

  25. BusSchDean says:

    Re: Petey and BR.

    The negative impact of self-interest does not rest solely with the 1%. We saw “tacit collusion” between management and labor at GM, and between the public sector and public employee unions across the nation that led to bankruptcy for both. Some “liberal” backed policies were developed with blinders as to the long-term financial costs (e.g, generous benefits packages to retirees, starkly minimal benefits contributions from public employees, etc.), using unrealistic yet politically expedient assumptions regarding tax revenues, and ignoring rather obvious negative byproducts (e.g., Fannie and Freddie underwriting mortgage risk).

    That said, the collusion between Boards and CEOs that have led to run-away CEO pay, the ability to privatize profits while socializing risk to such a degree as to compromise the economic strength of the world’s largest economies, the increasing role of private money in shaping public policy, and the decades long stagnation and decline of the middle class all happened to the benefit of 1% of the population.

    Clearly old political labels now convey little meaning.

  26. MayorQuimby says:

    Transor gets the golden poster award. Nice job.

  27. hankest says:

    I love these sorts of comments (in this case by Transor). “That capitalism is undermined by regulators and political bodies picking winners and losers in the market through cronyism? ”

    It’s very quaint, reminds me of die hard commies who, when presented with the failure of communist systems, say “that wasn’t true communism.” Well, maybe some aspect of human nature just cannot do true communism, and maybe the same facets of human nature can’t do unfettered capitalism. Maybe the greedy, power hungry and generally scummy residing in either system will claw their way to the top to the detriment of the rest of us, unless there’s some active democracy keeping them in check. In other words, maybe the invisible hand is no less a fantasy than the “dictatorship of the proletariat.”

    FS brings out another well worn meme: “The real story is in the increased social dependency programs, creating more and more people who depend on government rather than their own skills…” sure let’s bring back the old days when the elderly starved, and the sick poor died because the were failed “by their own skills.” Yep, those were the days!

    Not only are the CEOs making more money than ever, because so much of their wealth is through “capital gains” they are being taxed at an effective rate lower than the a nurse or a plumber. Even the man who coined the notion of the invisible hand recognized that the rich should pay in proportion to their wealth. Here they’re not paying in proportion, they’re not even paying at the same rate, they are paying LESS than their proportion. And no one seems to have a problem with that. At least no one in a position to do anything about it.

    Next up, “they’ll” meaning people who won’t ever need it, will go after Social Security. IOUs. No Trust Fund. Money’s been spent. meme away.

    there’s my rant.

  28. Transor Z says:

    @hankest:

    Labeling a credo-type statement of first principles as “quaint” or “naive” is . . . easy. But you basically agree with what I was trying to say when you raise the point that there’s a lot more social justice content in Smith than people who have never read him and know him only as St. Adam of the Market realize. The guy lived before fractals and game theory but was he wrong in saying capitalism as a system has an innate self-regulating intelligence to it? I don’t think so.

    In this post-everything era it’s easy and fashionable to affect worldly bemusement at “quaint” assertions of principle or belief. Intelligent people can look at issues from many angles and choose to adopt a “half full” or “half empty” attitude. But ultimately, we all need to make decisions about what we believe, don’t we?

  29. Transor,

    I appreciate your attempt, @17:09, but, sincerely, make it easier..

    that dude, and his ilk, are a**hole*.

  30. willid3 says:

    MayorQuimby Says:
    April 10th, 2011 at 12:36 pm

    “How do you figure the “Libs” are responsible for over-taxation of the middle class . . . ?”

    1. Property taxes (rising with flat wages).
    well property taxes are based on home value. even though they were massively inflated by easy credit. that had nothing to do with Libs. or cons either. that had more to do with wall street and TBTF keeping wages down. and replacing it with easy credit. which is now down. but local governments take a while to lower the valuation of homes when they quit selling

    2. College tuition (up what – 400% in a decade?!!! with flat wages) by *subsidizing it* same as “affordable” housing. To a lib – making something ‘affordable’ means pouring gvmt money INTO it! Hilarious.
    maybe tuition took off because so many states quit supporting them much and to make up for that they raised the rates? thats what basically happened in my state. the legislature cut the appropriations and allowed them to set their rate them selves. and while a lot others were so busy exporting jobs. they couldn’t. yet

    3. Pension handouts to their favorite voting bloc – ie taxpayers don’t GET anything for their taxes in the form of goods and services.
    well thats not true. the bigger problem is why isn’t the tax payers incomes going up????? for most of the 20th century incomes went up, till late part of it. when they went into neutral and stayed that way. now the average incomes are less than they were at the end of the 20th century

    4. Consumption taxes such as phone taxes, cigarette taxes, gasoline taxes, sales taxes (up at 10% in IL and CA now) etc. I support some of those btw.
    i thought the big popular thing to replace income taxes. was consumption taxes

    5. Health care subsidies (supported by both parties).
    the biggest issue with health care is the monopolies . that are all local. so they can’t get into trouble with the monopolies laws. but the result is the same, its just by city/county or state instead. and it has been raising the cost of it even in the semi depression

  31. hankest says:

    Transor, i appreciate your response.

    “….but was he wrong in saying capitalism as a system has an innate self-regulating intelligence to it? I don’t think so.” I’m not sure he ever said that exactly, but regardless what evidence do you have that his or your belief is right? There’s plenty of evidence that it’s incorrect, that unregulated markets would not be “intelligent” if by intelligent you mean fairly distributing wealth. Besides, even Smith recognized, that capitalism: “doesn’t just generate wealth, it could create huge inequality, making some very rich and others very poor.”

    Anyway, like i said i feel it’s quaint when i here Marxist swear if we just tried real communism, all would be well or more fair or better (etc), likewise when people swear if we just tried real capitalism things would be fine, or more just or better (etc). Since there’s no empirical reason, aside from ideology to believe either theory, and plenty of evidence the theories are wrong, i find it quaint that people still cling to them.

    Mark, What is my ilk exactly? I’d be interested in finding out. Capitalism, it’s a great way to build wealth, it’s just perhaps not the best method to spread that wealth. So, yeah, I’m fine with capitalism, as long as it’s well regulated and workers have the ability to form unions and elect leaders and you know commie stuff like that.

  32. Francois says:

    @FS,

    The real story here is to witness how much fucktardism an infected brain can spew in such few lines.

    It is part of the social ills that are destroying this country.

  33. Francois says:

    People must first and foremost come to grips with the fact that wealth transfer on the scale we are witnessing now is the result of political choices, by action and omission.

    Just read Winner Take All Politics, Money For Nothing, Free Lunch, and other excellent works on the topic. It is a matter of getting one’s lazy intellectual ass out of the Beliefs Couch and start THINKING. A good starter is to read Jesse at The Café Américain, who has some choice words for the deniers. http://xrl.in/8rjr

    That said, we also absolutely must come to the realization of how incredibly slothful, morally depraved and captured our mainstream media are.

    The “capture” aspect is critical to understand, and for this, let me start with a question: Would anyone believe a newspaper that is wholly subsidized by the Administration?

    Not really, right?

    Now, what if said newspaper, while having no subsidized sources of revenues, depended on the good graces of the Administration AND Congress to survive? Could the political reporting be considered independent and fair?
    Hmmmm! Not really!

    Yet, this is the situation we’re in right now:

    http://www.salon.com/news/opinion/glenn_greenwald/2011/04/10/journalism

    The Washington Post this morning published a lengthy article detailing the fortune — and now the trouble — generated for its parent company, The Washington Post Co., as a result of its acquisition of Kaplan Higher Ed. While The Post continues to lose money, Kaplan — particularly its sprawling network of for-profit “universities” which the company began building in 2000 — generates huge profits for the company, profits on which the Post Co. depends almost completely for its sustainability.

    Indeed, the newspaper has become little more than a side vanity project for the Post Co. and the Graham family which continues to dominate it; it is now, at its core, in the business of profiting off of lower-income students who pay for diplomas, often obtained via online classes. “The fate of The Post Co. has become inextricably linked with that of Kaplan, where revenue climbed to $2.9 billion in 2010, 61 percent of The Post Co.’s total,” the article detailed; “the company is more dependent than ever on a single business,’ [CEO Donald] Graham wrote in last year’s annual report, adding that the newspaper had never accounted for as large a share of overall company revenue as Kaplan does today.”

    BTW, this situation is NOT limited to the WaPo, far from it.

    NBC News and MSNBC were long owned by GE, and now by Comcast, both of which desperately need good relations with government officials for their profits. The same is true of CBS (owned by Viacom), ABC (owned by Disney), and CNN (owned by TimeWarner). For each of these large corporations, alienating federal government officials is about the worst possible move it could make — something of which all of its employees, including its media division employees, are well aware. But the Post Co.’s dependence is even more overwhelming than most.

    How can a company which is almost wholly dependent upon staying in the good graces of the U.S. Government possibly be expected to serve as a journalistic “watchdog” over that same Government? The very idea is absurd. The whole point of the First Amendment’s free press guarantee is that adversarial journalism is possible only if journalists are independent of political power. Yet the U.S. now has exactly the opposite dynamic: most major media outlets are owned by corporations that are anything but independent of government: they are quite dependent upon political officials for their profit in countless ways. We have anything but an independent press, which is another way of saying we have anything but a free press.

    Do yourself a favor and go read the whole article. It is a keeper. The discussion about media stars is dead on and expose these REMFs for what they are; High paid Madams kowtowing to Power. It also answers the question as to why did politicians let press merger mania go unchecked in the last 2 decades. Because it was good for them.

    In conclusion, we’re going to need an extraordinary combination of factors to actually stop, let alone reverse the current slide slide into Banana Republic.

    The first order of business should be to primary all incumbents in 2012. It is the only way to make the DC whores understand who they really work for.

  34. MayorQuimby says:

    @Willi-

    1.”well property taxes are based on home value. even though they were massively inflated by easy credit. that had nothing to do with Libs. or cons either. that had more to do with wall street and TBTF keeping wages down. and replacing it with easy credit. which is now down. but local governments take a while to lower the valuation of homes when they quit selling”

    Nonsense, really. Just ridiculous. Tax RATES have nothing to do with home values and the entire bribe/kickback is simple theft from one worker (private) to another (public union special interest groups). They vote Democratic HEAVILY which is why this occurs.

    2.”maybe tuition took off because so many states quit supporting them much and to make up for that they raised the rates? thats what basically happened in my state. the legislature cut the appropriations and allowed them to set their rate them selves. and while a lot others were so busy exporting jobs. they couldn’t. yet”

    Tuition is high because gvmt subsidized LOANS support higher prices. IOW – no local bank would ‘lend’ some kid $120K to get a liberal arts degree at Wagner College in NYC but .gov sure will! Same as Fannie/Freddie and the end result will be the same as well.

    3. “well thats not true. the bigger problem is why isn’t the tax payers incomes going up????? for most of the 20th century incomes went up, till late part of it. when they went into neutral and stayed that way. now the average incomes are less than they were at the end of the 20th century”

    Of course it’s true. Property taxes paying for pensions provide absolutely no service to the taxpayer whatsoever. There are no lack of applicants for jobs so that argument goes out the window.

    I’d like to add – Dems are also heavily in favor of insurance mandates and those always go up AS WELL (even with flat wages).

  35. Transor Z says:

    Self-regulating system as in price discovery and finding winners and losers, not setting a minimum wage or standard work week. I thought it was pretty clear that I was responding to your Invisible Hand reference.

  36. Petey Wheatstraw says:

    BR:

    I think that either you misread, or I miswrote. My answer was to BuSchDean, who accused the middle class of bankrupting itself via taxation (or something along those lines). My answer was to indicate that the Right wing/conservatives are responsible for the middle class tax burden, having relieved the top tier of the tax burden that should rightly, and historically, did, accompany such wealth. They voted for it, they got it. Who TF did they think was going to pay the difference? The poor?

  37. philipat says:

    @PW

    The top 10% of Americans pay 80% of all Federal Income Tax revenues. Is that not a fair share?

    The problem is more that the bottom 50% pay NO Federal Income tax. And when a majority realise they can vote themselves a free ride, that is when democracy always, throughout history, collapses.

  38. BusSchDean says:

    Petey:

    Always difficult to paint a complete picture in a few lines. I would likely agree with you on some key points. We are living in an era of unprecedented wealth redistribution/accumulation that is not primarily the result of the middle class bankrupting itself. Hence my sentence: “Democracy get subverted and average HHs hang on while the top 1% are off to the races, financially speaking.”

    Nonetheless, I think an unhealthy dynamic developed between management and unions that led to some very short-sighted agreements with little thought to the long-term health of the firm (e.g, GM) or the public budget (e.g., CA, IL, NJ, etc.). To the extent this happened, it provided short-term benefits to executives, politicians, and current workers in the absence of honest, evaluations of the future. For some reason we seem unable or unwilling to adopt the view that we share a future. In my view, we need a very vibrant middle class to have a strong economy. The last time we had that we also had strong unions. While Henry Ford had some serious personal flaws and was no friend of unions, he recognized the fundamental relationship between what he sold and what his workers could afford to buy. Hopefully we can get some leading CEOs who see the same relationship.

  39. Petey Wheatstraw says:

    philipat:

    “The top 10% of Americans pay 80% of all Federal Income Tax revenues. Is that not a fair share?”

    They probably hold a greater share than that of the wealth of the nation. Those on the Federal tit suck tax money — they are net tax recipients. The best tax program for the average american was under Eisenhower, and we still had rich people.

    BusSchDean:

    GM’s problem (leaving aside the need for a financial arm like GMAC) was management. purely as a manufacturer, they had to be dragged kicking and screaming to do what the Japanese had already proven could be done better and still at a profit. State employee wages and benefits would not look out of line if the rest of the middle class hadn’t been decimated (yes, there are examples of blatant excess, but there’s also no denying that the entire middle is getting crushed). The modern CEO will never mimic Ford, because there is no incentive to do so. The government will bail them out if their industries crash.

  40. Jim Hancock says:

    Two things that don’t yet seem to appear on anyone’s radar…

    1) Capitalism and Democracy are the two best systems there are respectively for economics and government, but where they overlap they end up FUBAR. Lobbyists control this dark netherworld.

    2) The corporatocracy that runs our country has long since moved on from looting the present to looting the future. That huge sucking sound is the $s pulled forward via treasury debt to continue their income stream. They will suck the future dry and leave us with an empty shell by the time they are done.

    These are the two biggest threats to our republic and nobody seems to have even figured it out yet. :/

  41. Chad says:

    Our biggest problem is that we have elevated Capitalism to a religion. It’s just a tool, a good one, but just a tool.

  42. bsmi021 says:

    Many people know this has happen and will continue to happen until there are many changes at the top of government,business and the likes. (but here is the rub) the change will not happen, so this exchange will just continue to get worse for all but the elite. People in the elite club have to much power and money behind them for it to change,and this same group set up this great plan and will see it to it’s end!

  43. socaljoe says:

    I can see the bifurcation of wealth and income over recent decades has negative consequences for the country as a whole. I also expect that public policy response to this will be equally destructive. I see both as symptoms of latter stage empire, where society’s efforts are focused on wealth redistribution instead of wealth creation.

  44. BPLipschitz says:

    @Mark E. Hoffer said,

    “@Mark E Hoffer Says:

    “expecting peep to be ‘outraged’, now — when they weren’t, then — is, rather, expecting, too, much..”

    On the defense of the “peeps” it is not hard to understand why there was no “outrage” then or now It can be argued that for the peeps to reach a level high enough for continuous outrage there must be a continuous and relentless outrage in the media. This however will never happen as long as the media is controlled by the same oligarchs that control the government. An alternative is of course the internet. But even this one is about to be censored by the corporations that own it (net neutrality being attacked). An interesting theory of why this is the way it is can be found @ Manufacturing Consent: The Political Economy of the Mass Media

    So yeah basically I expect no change”

    There won’t be any widespread or mass outrage until the Shoe really Drops, and the 900 banks on the ‘troubled bank’ list fail, huge finance corporations are allowed to fail, and we are plunged into the biggest Correction (Depression) seen in a long time. Then (and only then), when the middle class can’t make it any more, will they get their pitchforks and shotguns and demand some change.

    While they still have cable TV, cheap enough gasoline and enough $$ to pay on their house/autos/boats/kids college education nothing will happen. Nothing.