US corporate executives back at the trough

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US corporate executives back at the trough
16 November 2010

America’s corporate and financial elite has returned to the feeding trough and
is collecting huge salaries and bonuses while tens of millions of workers in the
US continue to face levels of social misery not seen since the Great Depression.

Annual bonuses rose by 11 percent for executives at the 450 largest US
corporations last fiscal year, according to a new survey published by the Wall
Street Journal. Overall, median compensation—including salaries, bonuses,
stocks, options and other incentives—rose by three percent to $7.3 million in 2009.

The increased payouts were the result of soaring profits at top companies, which
doubled from a year earlier, leading to a 29 percent increase in total
shareholder returns. This, in turn, was the direct result of the offensive that
corporate America has waged against the working class, with the full backing of
the Obama administration and both big business parties. Over the course of the
last two years companies have slashed payrolls, wages and benefits, replaced
full-time workers with temporary and casual workers earning poverty level wages
and ratcheted up productivity.

“Cost-cutting” and “streamlining” were the principal pursuits of all the CEOs
pocketing large pay packages last year. The top five were: (1) Gregory B. Maffei
of Liberty Media Corp., who got $87.1 million in compensation last year, four
times his 2008 package; (2) Larry Ellison, Oracle’s billionaire founder, who
received $68.6 million; (3) Ray R. Irani of Occidental Petroleum Corp., who got
$52.2 million; (4) Yahoo’s Carol Bartz, who took in $44.6 million; and (5)
Leslie Moonves from CBS, who got $39 million.

With the S&P 500 Index up 7.5 percent so far this year, top executives are
expected to see even bigger compensation packages in 2010. “Many companies are
beating earnings expectations, stock prices are up and performance is good, so
bonuses will be good,” Mark Reilly, a partner with the Chicago-based
Compensation Consulting Consortium LLC, told the Journal.

The payouts to the heads of media, energy and Internet firms pale in comparison,
however, to the grotesques sums hedge fund managers and private equity traders
will be paid when Wall Street issues its year-end bonuses. According to a survey
cited in the New York Times, overall compensation in “financial services” will
rise 5 percent in 2010, with employees in some businesses, like asset
management, getting increases of 15 percent. Goldman Sachs, Morgan Stanley,
Citigroup, Bank of America and JPMorgan Chase have reportedly set aside $89.54
billion for year-end bonuses.

In an article, entitled, “Wall Street Gets Its Groove Back, And Big Pay, Too,”
the Times noted that the lavish watering holes in downtown Manhattan were packed
with free-spending traders and investment bankers. John DeLucie, the chef and
one of the owners of The Lion restaurant, “one of Greenwich Village’s newest hot
spots,” told the newspaper that customers are buying vintage bottles of wine,
including a 1982 Chateau Mouton Rothschild, which recently sold for $3,950. “We
are seeing a lot of luxury purchases, like vintage Bordeaux, things that we
haven’t seen sell well in a few years,” DeLucie told the Times.

Just two years after the financial breakdown that brought American and world
capitalism to the brink of collapse, the ruling class is on the offensive
against the working class in every part of the world. Arguing that no measures
are permissible that undermine the “competitiveness” and “profitability” of the
corporations and financial markets, capitalist governments in every country are
demanding austerity, cost cutting and a “reduction in consumption.”

>From the very beginning of its term in office, despite all the phony talk about
“reining in CEO pay” and “regulating the banks,” the Obama administration has
done everything to secure the fortunes of the financial elite, whose
recklessness precipitated the 2008 crash. After handing over trillions to Wall
Street, the White House engineered the forced bankruptcy and restructuring of
General Motors and Chrysler, initiating a wave of wage and benefit cuts that has
spread throughout the economy. Rejecting any government measures to hire the
unemployed, the administration has deliberately kept jobless levels high in
order to force workers to accept ever-lower wages.

US corporations—which are sitting on hoards of cash—are insisting they will not
hire unless workers accept a permanent reduction in their living standards. In a
paper delivered to the Federal Reserve Bank of Atlanta meeting last Friday,
University of Chicago economist Robert Shimer complained that wages were not
falling fast enough and that only a 3-to-5 percent reduction in wages would
result in “significant growth in employment.”

This was echoed by Washington Post business columnist Steven Pearlstein—a
liberal supporter of President Obama—whose op-ed piece last month, “Wage cuts
hurt, but they may be the only way to get Americans back to work,” hailed the 50
percent pay reduction the United Auto Workers union imposed on half the
workforce at GM’s Lake Orion, Michigan plant.

“The fundamental economic challenge facing the United States,” Pearlstein wrote,
“is to get what we consume more in line with what we produce after years of
living beyond our means.” With “our labor costs too high to be globally
competitive,” Pearlstein insisted, “a further reduction in consumption and
living standards is necessary to bring the U.S. economy back into balance.”

The Post columnist expressed his exasperation that workers were opposing his
advice, noting that GM workers in Indianapolis defied the UAW and overwhelmingly
rejected a wage-cutting deal. He insisted that capitalism left workers with no
choice but to work for lower wages or not work at all.

In a revealing comment, Pearlstein says, “I’m sure many of you are reading this
and thinking that if anyone is forced to take a pay cut to rebalance the
economy, surely it ought to be overpaid investment bankers, corporate executives
and newspaper columnists. That’s how things would work in a socialist paradise,
but not in market economies, which are much better at producing efficiency than
fairness.”

Indeed, that is how capitalism works, but it has nothing to do with
“efficiency.” What is efficient about condemning millions to joblessness and
poverty while society’s most basic needs—for decent housing, health care,
education and infrastructure repairs—go unmet?

In all the talk about “over-consumption” the one thing that is never suggested
is reducing the consumption of the ruling class, whose bankrupt capitalist
system and criminal activities are responsible for the dire conditions facing
the majority of the world’s population.

The only means to break the grip of this modern-day corporate and financial
aristocracy is through the fight to reorganize economic life based on the
principle of genuine social equality. This can begin only by the working class
breaking from the Democrats and Republicans and building its own independent,
socialist party.

Jerry White

http://wsws.org/articles/2010/nov2010/pers-n16.shtml

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