Friday, March 20, 2009

Bonus Schmonus

I'm not going to dwell on the AIG bonus debacle, per se. Because the real issue isn't the fact that a bunch of people who played roulette with other people's money and lost are now being compensated for it. The issue isn't the absurd claim that only the people who got AIG into its current mess are the only ones who know how to get us out, or even that those same people are in no small part responsible for for our current mess by enabling companies to take unreasonable risks by insuring credit default swaps. I'm not even sure the deregulation of the banking industry that allowed all of this to take place is the issue.

As I see it, the true problem continues to be overlooked.

No, the real issue we should be discussing, and the fact that has avoided almost all scrutiny, is the fact that no one seems to be willing to ask the thorny questions, and so we're being run over day after day.

There was a time, not so very long ago, when a household was able to survive comfortably on a single income. Conservatives, in particular, love to hearken back to those halcyon days of traditional values when fathers worked, women stayed home, children were raised in bliss, and gay people were afraid to come out of the closet. And in those bright and golden times, say, 1950, the average ratio of executive-average compensation in America was just about 20-1.

Now, it's true that we've moved away from the economy of those times. That economy was in no small part based on an industrial and manufacturing base, whereas our current (or most recent) economy is (was?) based primarily in our financial sector and a service economy. But that can't possibly explain the trend of the last 30 years.

In 1980, the average CEO earned 42 times the amount that Joe Blow took home from the same company. In 1990, that ratio had more than doubled, reaching 107-1. By 2000, the rate of stratification had increased until the ratio reached a whopping 525-1. The numbers have shrunk slightly since, but the most recent numbers show that the average CEO beats out his/her average employee by a rate of 364-1.

Admittedly, the CEO of Wal-Mart or Target is going to make a hugely larger salary than the average cashier, and rightly so. And, for the most part, CEOs deserve a high compensation relative to the average employee. But the shamelessness of this is surpassed only by the degree to which we've been willing to swallow such rampant disparity. Where was the outrage 3 years ago when the outgoing CEO of ExxonMobil took with him a golden parachute totaling more than $400 million in overall compensation? Where were the questions as CEO pay exploded while average salaries grew slightly, stagnated, or, in the last 8 years, shrank?

Can we really cry foul so loudly now, when we were virtually silent for years of abuse? How can we pretend to be so outraged now over bonuses when those same bonuses, and ones much more egregious, were being paid year after year without a peep from the concerned masses? The argument that "taxpayer money is subsidizing bad behavior" rings absolutely hollow. Our money has been subsidizing these bonuses all along, in the form of lower and lower relative compensation and benefits for the average employee, the usurous policies devised and enabled within the upper eschalons of these corporations, the repeated destruction of shared wealth caused by the collapse of an Enron, an AIG, a Lehman Bros., and the added burden on average Americans as the Bush tax cuts allowed these bad actors to keep a larger portion of their bonuses and earnings that at any other point since the income tax was established (Tax rates now, even if raised to proposed level of 39.5% at the top bracket, are dwarfed by those of the past. Under Reagan, "wealthy" americans paid 50%. Under Nixon it was about 71%. Under Eisenhower, a whopping 91%).

Every few years, there is some extreme example of greed run amok. Whether it was the savings and loan scandals of the 80s, the overzealous rush and push into tech stocks in the late 90s, the deregulation of California's energy industry that led to the Enron collapse, or our current debacle, the outrage remains targetted, misdirected, and generally short lived. In the end, no one raises the true questions that lie at the base of the problem. Why have we come to settle so easily for a world in which the very few earn hundreds of times what the average worker brings home? How does it benefit society at large to allow this type of stratification to continue unabated? Why are we willing to silently bear the added weight when millions of people are forced into the corners of the system and the taxpayer foots the bill so that CEO compensation and stock prices can continue to rise? And why are we unwilling to ask the real questions and demand the real answers, settling instead for pitchfork and torch bearing riot mobs that are grossly and intentionally misdirected every time a scandal erupts?

Until we wake up and realize that it is not the culture of corruption, the stream of wreckless choices, repeated tries at deregulation, or even the egregious stratification of wealth that has us pinned down, we'll stay right where we are. It's not the Bernie Madoffs, the or the Ken Lays, or the Wal-Marts or Bear Stearns of the world that are to blame for our repeated and continued inability to maintain a just system. Our own unwillingness to ask tough questions, demand real answers and maintain pressure until changes are made is what is to blame. Most of us would rather watch back to back to back to back to back NCAA basketball games than educate ourselves about fiscal policy, and god forbid we should stick our necks out to ask a question. So before we play judge, jury and executioner for a group of bonus recipients at AIG who were only repeating a violation they've made year after year, ask yourself what you ever did to prevent it from happening. Sure, integrity is what we do when no one's looking. But how can we blame people for breaking the rules of common decency when we see them violating our social contract, then simply look away?

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