Sunday, June 24, 2012

What I Know About Our Corporate Overlords

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To understand the last 40 years, and how we got to the place we are now is hard to understand on the macro level for many people. That's why a simplified lie - give more to the rich and all will benefit -- has worked so well, even though history has shown us again and again that this well worn myth is untrue. So why does it work on so many people? Well, Americans are peculiarly ignorant of history, their own and the history of other nations and cultures. Our own culture preaches self-reliance, independence and the rejection of charity. Follow these simple rules and you too can achieve your goals, you too can have the "American Dream" of wealth and comfort.

And that is why the lie is so appealing. We want to believe that in America there is this dream that anyone can make it rich. We feast on stories of hard working individuals who came out of poverty, who came literally from "nowhere" to become rich and famous. We live under the hazy mists of a cloud cuckoo land, one where the individual is all powerful and controls his or her own fate. A myth that has never been true for the vast majority of people. Yet even today, we here from the generations that benefited the most from government programs and subsidies that whatever they accomplished they did it all by their lonesome.

Yes, you will always find stories of individuals who made it up from the depths of poverty (though most of them these days seem to be sports stars), but more likely than not you, if you dig hard enough will find that those who allegedly "made it" on their own were actually the children of rich people who became even richer than their parents. And those who do become extremely rich typically do so with the support of governments and by exploiting the labor and health of others. In general, the rich as a class are more ruthless, less generous and more willing to act illegally and immorally than the poor. Just ask any one who works for a hedge fund manager or a major company's CEO and ask them how they got to the position they did. In general, most of them did it by stepping on other people (especially subordinates but also their peers), and by practicing the arts of lying, cheating, deceit, fraud and ruthlessness.

In my former life as an attorney, I had a chance to observe many of these people close up. Almost without fail they had no redeeming moral qualities (and no I don't call contributing a pittance of their money to philanthropic endeavors or regular church attendance prima facie evidence of morality). They enjoyed power and money and they would do anything to ensure that regardless of the outcome of their actions to the company, its employees and customers, they themselves would come out ahead. Many were blatant narcissists and many tended to exhibit traits similar to sociopaths. Other people to them were objects. They could be extremely generous to some individuals but only if those individuals were people they needed or relied upon to help them achieve or maintain their position at the top of the food chain.

Toward others they could be extremely venal or callous. Certainly the lives of their workers meant very little. To them, their workforce was not an asset but an expense on the balance sheet, one that they did whatever they could do reduce. If that meant shipping jobs overseas, or moving plants to "right to work" states, or filing bankruptcy to get rid of unions, pension funds and other employee benefits, well what was that to them?

I personally worked on merger transactions in which the principal assets to be acquired were the brand names, trademarks, patents, customer lists and trade secrets. Rarely was an experienced labor force seen as valuable to them. Labor was seen as fungible (except their own, of course). It was, more often than not, something of which the buyers intended rid themselves as quickly as possible. The real estate on which the manufacturing plants were located was often valued less than the brand names and other intangible assets, including that nebulous accounting term, goodwill.

As a lawyer who worked on a nummber of in corporate bankruptcy reorganizations, I saw how, over the years, the corporations, with their bought and paid for congressional representatives, expanded their ability, legally, to get rid of "costs" such as pensions and union contracts. There is a term bankruptcy lawyers have for obligations that they can eliminate over the objections of those who trusted their companies to take care of them, whether shareholders, workers or small creditors. It's called "cramdown." In the context of workers and their pensions and benefits, it means they get squashed flat so the new company can avoid ever having to pay the value of those pensions or other benefits for which employees collectively bargained. Often this comes after the pension funds themselves have been raided for years by the prior management of the (pre-bankrupt) company, leaving those costs to be paid out by the government in terms of unemployment insurance or, to retirees with pensions, payments by the Pension Benefit Guaranty Corporation.

One can argue the economics of eliminating good paying jobs and eliminating unions until the cows come home, I suppose. Certainly such piratical practices as I have described above have benefited Wall Street, CEO and "golden parachute" protected executives, but the destruction of our middle class, the true engine of the enormous economic growth and stability our country enjoyed during the fat years between WWII and the Reagan Presidency, cannot be denied. In addition, one need only look to a country such as Germany, with its worker protections (including Union seats on most large companies' boards of directors) to find a more equitable model, that has led to not only a fairer distribution of wealth but also a more robust economy in good times and bad.

That is not the mindset of our economic elites, however. They measure economic benefits strictly in terms of how their stock portfolios are doing. If a "slash and burn" approach raises stock prices, then what do they care about the employees thrown out on the street? If lack of regulation (or lack of enforcement of existing laws -- derivatives fraud and the Justice Department's failure to prosecute the Masters of the Universe, anyone?) leads to greater worker and environmental harm, what is it to them? They don't have to apply for unemployment benefits or work two or three part-time jobs to make ends meet. They don't live in communities impacted by water, air and ground soil pollution.

The rich are living the American Dream after all. They got theirs, and everybody else can go to hell. There are exceptions of course, to these generalizations, but in all honesty, in my years of practice, I never met an executive or "business" owner who, when push came to shove, was willing to save employee jobs if it meant lower profits, a lower stock price, or a higher purchase price for the business that was being acquired. "Hey, it's nothing personal, it's just business, pal." That has always been their motto.

Well the wealthy got their American Dream. We live in the world they worked so "hard" to create through legal bribes to politicians, the corruption of our government and the deregulation of laws that protected workers and helped maintain a large and vibrant middle class. And if you think that all their added wealth is going to be spent helping you get a good job, well, all I can say is you must still be plugged into the Fox News/Tea Party/Conservadrivel matrix. Must be one helluva an addiction.

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