Wisconsin can lead the way… if its politicians will let it.
By Jack E. Lohman
Many things are wrong with today’s wealth inequality (see chart) and many on the Right like to excuse it as “free enterprise.” But when that free enterprise compromises the sustainability and safety of a nation it ceases to be free and it must be regulated. But it must be regulated by politicians not regulated themselves by the campaign contributions from those who benefit from the laws they write.
Where to start?
Corporate Reform: We must give control of corporations back to their owners; the shareholders. They must have authority to approve CEO salaries and pay packages, to (dis)approve of political expenditures, to call for an independent audit, and to appoint board members. We must eliminate proxy votes that automatically transfer to the Board, and the conflict of interest that results when CEOs of one company sit on the board of their buddy-CEO’s other company.
As one who lost over $100,000 because of investments in four corporations with arrogant CEOs, I feel the pain of those who lost their home or life savings. This legalized robbery must be stopped, but first we must stop the legalized political bribery that allows it.
CEO Pay: As it stands, $100 million CEO packages are simply written off as a company expense and the taxpayers end up subsidizing the CEO’s wealth. This write-off should be limited to $1 million, because there’s not a CEO in this country worth any more than that. But if the shareholders disagree they can divert some of their dividends to satisfy the CEO needs. Or they can fire him, whichever they prefer. But they can’t use any more taxpayer dollars.
Individual Tax Reform: The Bush tax cuts must be allowed to expire, and we must increase taxes on the rich. They helped us into this mess and they are the only ones that can afford to get us out of it. The poor people cannot.
Yea, I’ve heard it before: “The rich invest their wealth and create jobs!” That’s (usually) baloney… though IF that were true we should make their taxes zero and they could pull our country out of recession tomorrow. But instead they’d send their tax savings offshore and create jobs in China and India. They’re not dummies. You’d do the same thing now that our politicians have given foreign investments a tax break.
VAT and consumption tax: These must be taken totally off the table. The rich love them, because they are equivalent to a national sales tax and are “regressive” and disproportionately paid by lower-wage families who buy product. Aside from that, “consumption” is the last thing in the world we should penalize.
Corporate tax reform: Taxes on corporations that employ US citizens should be zero. And if they can’t find a way to do that, an increase of all corporate taxes but a heavy per-employee subsidy will help make US manufacturing attractive. Corporate taxes, in the end, are simply passed on to the consumer at the cash register and are regressive. Under this proposal only foreign product will be taxed.
Single-payer healthcare: Why we give away to the health insurance industry $700 billion per year, when this middle-man should go the way of first-class mail and other obsoleted technologies, is beyond me. It is, at least, until I look at the $125 million the health industry made in campaign contributions to our esteemed politicians.
Health costs are an unneeded corporate burden that is passed on to our nation’s consumers and should be paid by the taxpayers directly. They’ll save $400 billion in the process. That bureaucracy adds 20% to our costs and is killing American competitiveness and jobs (though admittedly it makes our politicians very rich, and they like that a lot).
How nice to be rich…
Indeed some wealthy folks, after pillaging the American people, will relocate to quieter countries to spend their wealth and last years. If they are lucky they’ll pick one that stays democratic and is not overthrown. If they are not lucky they’ll need to spend their wealth on their own army to protect them and their families from kidnapping by goon squads demanding ransoms. Or hoping the local politicians don’t confiscate it. It could be a very miserable life of isolation.
I found amusing the Billionaire Sea Castles, which of course faces only sea storms, pirates and torpedoes. But well-deserved anyway.
Even if you like some of these ideas, our corrupt political system will block them. Only passage of the Fair Elections Now Act will give them (and the nation) an opportunity to survive. Pressure your congressman to co-sign the bill. Our government is controlled by corporations rather than voters, and with political complicity they trashed our economy.
Your very first sentence is pretty disturbing. “Many things are wrong with today’s wealth inequality.” I don’t understand why a disparity between incomes is bad. In rebuttal to your first sentence, I will quote from several sections of a book. Let me know your opinion after reading it:
The book is called Slouching Towards Gomorrah, by Robert H. Bork.
Chris, I have never objected to disparities in income, just deep inequality and the fact that some CEOs have conspired with their CEO-buddies on the board to cheat the shareholders out of their wealth to pad their own income.
When I see charts of CEO pay growth I tend to wonder what caused the spike to $9.2M. In some cases it was cheating, like storing losses off the books to hide them while salaries are being negotiated. Rather than growing salaries at 5% or so, with the GDP, they grew by cheating people out of their 401(k)’s, their savings and their homes.
That’s what unjust salaries taken from other people’s profits do. They have trashed our nation’s economy but conservatives haven’t seen it yet.
I don’t care what Robert Bork put in his book. Because he said it does not make it right. If 100% of Americans were honest and not greedy we wouldn’t need laws and regulations. But they aren’t and we do.
And oh, Bork says: “It is not, after all, the case that the richer man’s income is extracted from the poorer man.”
And from where does this wealth come? GDP’s 5% growth? No, by his own admission it comes when CEOs out-maneuver the guy who is not as crafty (or greedy).
Bork’s is willful ignorance. I’d also suggest that you read The Richest 1% Have Captured America’s Wealth. I am far from being alone on this.
You say, “I have never objected to disparities in income, just deep inequality….” Which is exactly to say that you only object to disparities in income when it’s a BIG disparity. Because that’s just not fair that someone else had the ambition and brains to get TOO much further along than you. It’s envy, and that’s all.
What I want to know is, What is it in a man’s brain that makes him see that someone with a better job is making more than he is, and makes him think, “Hey, wait a minute, that doesn’t seem right.” The only reason it would occur to you to even WONDER why there is a disparity among employees is jealousy and envy. It speaks volumes about you that it would even pop up in your head, the thought of, “Hey, he’s making more than me! Why?”
Sometimes, though, as you said, but not often, it IS the case that someone gets rich by cheating others (or by mere inheritance). But even in those cases, the Constitution does NOT allow the federal government to intervene. For the federal government to intervene is unconstitutional. If crooked dealings are going on, it’s up to the individual and/or law-enforcement officials, not federal politicians.
The economy is in the tank not because of businessmen, but because of the Democrats in Congress. You know, when they took control in 2006 and when they blocked legislation proposed by Republicans, legislation that would have directly dealt with the coming collapse of Fanny/Freddie. There are C-SPAN videos on YouTube of Democrats denying there was any problem at all. Why? Because F/F is owned and run by Democrats. The current “financial reform” bills being proposed don’t even address F/F, even though Republicans proposed including F/F in the bill to reform them. But Democrats shot it down. Why? Because the intention of the Democrats in creating financial-reform bills has nothing to do with reforming anything. Otherwise, F/F would be included. It’s about control. Another Marxist takeover.
Please do not contort this to satisfy wild definitions. I only object to BIG disparities in income when they are not deserved or otherwise are gained through the dishonest ripping off of others. I know it when I see it, and I suspect that you and your Libertarian friends do too.
And no, I did not worry about people making more than me. As a former CEO of my own $6M company for 25 years, until I retired, I had about 6 employees (out of 70) making more money than me. Because they were good and deserved what they made, and because I took only what I needed to keep my living standard high. I suppose you call that jealousy and envy, eh?
So what I am hearing is that cheating is rare and Bernie Madoff is protected by the constitution and should be walking the streets. Interesting. You sound a bit naive. How long have you been in the business world?
And no, I care little about those wealthy folks that got theirs by inheritance, though I wonder how they then complain about others who also want money without working for it. Aren’t they the same?
And now it comes out: it’s all the Dems fault. It didn’t have anything to do with the 1999 Republican bill to repeal the Glass-Steagall banking regulations, or the 2008 Bush-Paulson bailout, or the passing of NAFTA, CAFTA or subsidies to companies that outsourced to India. And most of the CEOs and bankers are good guys. Wow!
It’s too long to reprint here, but you should read How our politicians sold out America. Our economy is in the tank because both Democrats and Republicans are corrupted by campaign cash. And if you don’t understand the effects of money, don’t go into business. You won’t like the results.
And if salaries were assigned by the owners of the company (shareholders) rather than the conflicted board of directors, they would be assigned reasonably. I personally don’t think there’s a CEO in the country worth over $1M per year, but because the CEOs sit on each others’ boards, they shovel them out at will. To justify and give themselves legal cover the boards hire outside “compensation consultants” to give them a so-called “independent” (stacked) review.
I liked your last two combacks based on your own real world experiences in corporate America, that pretty much stumped Graham. Reality has a way of shining a light on a failed theoretical ideology we now know doesn’t work.
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