Logo Background RSS


1% Plus $15: The Math of Poetic Justice

  • Written by Syndicated Publisher No Comments Comments
    January 26, 2014

    Way back when, as a staff writer for a state business magazine, I used to do an annual feature on the state’s highest-paid executives. In compiling that list, I noticed that CEOs had come up with a very sweet scam: Their boards’ executive compensation committees would hire a consultant to figure out how to set CEO pay. The consultant would survey other similar companies and calculate an average. And then the compensation committee would tack on an extra 10% to account for the fact that their CEO was extraordinary.

    This bump would raise the overall average, allowing the next CEO in line to make even more, and so on, until the gap between pay at the top and pay on the factory floor became a chasm. Meanwhile, a lot of the “performance” these companies were celebrating was the result of laying off local workers and moving factories overseas. I remember thinking at the time that once a left-wing version of Rush Limbaugh came along he or she would have a field day with these corporate mediocrities making tens of millions of dollars while their workers languished.

    That didn’t happen, and the CEO pay scam was augmented in recent years by the modern monetary system’s practice of giving newly created currency directly to big banks, which give it to their richest clients to use before the added supply makes everyone else’s savings less valuable. So the gap between rich and poor has continued to widen to the point that:

    The world’s 85 richest people have the same wealth as the 3.5 billion poorest

    And the most outrageous wealth concentration is taking place right here in the US:

    Wealth disparity 2014

    But as the super-rich use their control of the banking/government nexus to vacuum up ever-greater amounts of other people’s money, they seem to be overlooking the fact that for a market-based democracy to function, the rest of us have to have a stake in the game. Take away the possibility of moving up to the next rung on the ladder and workers lose interest in voting for the system’s continuance. Instead, they start using the machinery of government to take resources away from the corporate/political class that no longer seems to care about them. In much of the world this happens via riots, revolutions and other physical manifestations of mass rage. In the US, you get the $15 minimum wage:

    Minimum wage fight erupts: Landmark $15/hr. wage sparks legal showdown

    Following a county judge’s ruling dramatically narrowing the scope of an airport town’s landmark $15 wage law, labor groups plan to take their case to the Washington state Supreme Court.“The legal issue in front of the court will be whether the airport is a legal island immune from decisions from the voters – in this case Seatac – to bring back good jobs to our community,” Service Employees International Union Local 6 president Sergio Salinas told reporters at a New Year’s Eve press conference. “The larger issue is about multinational corporations making huge profits at our publicly owned entities and airports, when thousands of people doing the hard work these days don’t make enough to feed their families.” Salinas cited the profits of plaintiff Alaska Airlines; in October, Alaska Air Group CEO Brad Tilden celebrated “our best quarter ever” and “Alaska’s 18th consecutive quarterly profit,” according to the local News Tribune. Alaska Airlines did not immediately respond to a morning inquiry.

    Massive Black Friday strike and arrests planned, as workers defy Wal-Mart

    Defying the nation’s top employer and a business model that defines the new U.S. economy, Wal-Mart employees and allies will try to oust shopping headlines with strike stories, and throw a retail giant off its heels on what should be its happiest day of the year. By day’s end, organizers expect 1,500 total protests in cities ranging from Los Angeles, Calif., to Wasilla, Alaska, including arrests in nine cities: Seacaucus, New Jersey; Alexandria, Virginia; Dallas; Minneapolis; Chicago; Seattle; and Ontario, San Leandro, and Sacramento, California.

    “Like my mom always said, ‘You see something that’s not right, it’s your turn to fix it,” said 45-year-old Chicago Wal-Mart employee Myron Byrd, who plans to be arrested in his first act of civil disobedience today. “And you can’t do it by yourself — you have to do it with others.” Byrd said he was driven to action by “high school”-level pay and workplace disrespect, and inspired by the courage of fellow workers and his mother’s civil rights legacy. “I’m sacrificing myself, along with others, to do this,” he told me, “to show Wal-Mart that hey, I’m not afraid, they not afraid, we not afraid.” In an e-mail to reporters, Wal-Mart spokesperson David Tovar said that “planned arrests” were “just another way to make these orchestrated events seem newsworthy,” and that “these aren’t real protests by real Walmart associates.”

    Wal-Mart’s first 50 years were free of Black Friday strikes – indeed, free of any coordinated walkouts in the United States. Then, 14 months ago, a wave of Wal-Mart supply chain strikes that started with crawfish-peeling guest workers and subcontracted warehouse workers spread to include the corporation’s retail employees, first in Southern California and then in cities across the country. Strikers were members of OUR Walmart, a fledgling non-union workers group that first announced itself in 2011; it draws funding, staffing and direction from the United Food & Commercial Workers union.

    Poetic Justice
    This movement will almost certainly spread, for a variety of reasons including:

    • All those college graduates tending bar and driving cabs and waiting on fat people at Wal-Mart and McDonald’s are concluding that they have little to lose by demanding a bigger slice of the pie. It’s not like their current life is so great or their prospects so bright that they can’t afford to mess it up.

    • The numbers have become really easy to grasp. 1% and $15 comprise the kind of simple mental construct around which political movements tend to coalesce.

    • It’s morally justified. Today’s economy is not capitalism and the people running it are not capitalists. They’re actually committing crimes against the economic/political philosophy that they claim to espouse. The current US model has more in common with feudalism than with the free market, and it will end the way feudalism did, with peasants expropriating the wealth of their former masters.

    • It will be an incredibly messy process with all kinds of unintended consequences. One big one is the evaporation of millions of today’s low-wage jobs as companies replace suddenly-more-expensive workers with robots that tend bar, flip burgers and wait tables. For example: Meet “Smart Restaurant”: The Minimum-Wage-Crushing, Burger-Flipping Robot

    Images: Flickr (licence attribution)

    About The Author

    Post image for About

    DollarCollapse.com is managed by John Rubino, co-author, with GoldMoney’s James Turk, of The Collapse of the Dollar and How to Profit From It (Doubleday, 2007), and author of Clean Money: Picking Winners in the Green-Tech Boom (Wiley, 2008), How to Profit from the Coming Real Estate Bust (Rodale, 2003) and Main Street, Not Wall Street (Morrow, 1998). After earning a Finance MBA from New York University, he spent the 1980s on Wall Street, as a Eurodollar trader, equity analyst and junk bond analyst. During the 1990s he was a featured columnist with TheStreet.com and a frequent contributor to Individual Investor, Online Investor, and Consumers Digest, among many other publications. He currently writes for CFA Magazine.


Closed Comments are currently closed.