“The things that will destroy us…”
Last month’s column about Phony Capitalism (and its Siamese twin, Crony Capitalism) generated a lot of comments. Most people share the sentiment of Lee Iacocca: "Throw the bums out!" Even as I write this column, President Bush, driven to force his will upon as many areas of American life as he can before he leaves office in January, is advancing his outrageous plan to auction off on December 19th 300,000 acres of Utah’s Redrock Wilderness to oil and gas speculators. Environment Robert Redford says: “While America was voting for Barack Obama and his vision of a clean energy future, Bush and Cheney’s underlings were conspiring to plunder one of the crown jewels of our natural heritage for their fossil fuel cronies.”
Shortly after my column came out, a reader forwarded to me a piece that appeared December 3 in The Motley Fool, a highly regarded source of information about economics, investments, and politics. This article—A Modest Proposal to Reduce CEO Pay—began with a list of total compensation paid out in 2007 to the CEOs of various public companies. Here are a few: Larry Ellison, CEO of Oracle, was paid $193 million; Aubrey McClendon, CEO of Chesapeake Energy, $117 million; Howard Schultz, CEO of Starbucks, $99 million; Lloyd Blankfein, CEO of Goldman Sachs, $74 million; Leslie Wexner, CEO of Limited Brands, $56 million.
Do these amounts make sense? According to Selena Maranjian, the author of that Motley Fool article, “Limited Brands…stock sports a five-year annual loss of more than 11%. Starbuck’s is even sharper than that." Will someone please explain the logic behind those two CEOs each personally taking out more than $1 million a week from their struggling public companies?
According to the Economic Policy Institute, “CEOs have earned about 20 times the pay of their average employee for most of the past 100 years. That may strike you as too much, but get this: These days, that multiple has soared to about 400 times the average worker’s pay. If the average is $40,000, the CEO is getting $16 million.”
“By contrast,” Maranjian writes, “a recent Business Week article noted that the ratios of CEO pay to average employee wages in Britain, Canada, and Japan remain much lower—between 11 and 22.” Today, Bernard L. Madoff, chairman of Madoff Investment Securities, confessed that he had bilked investors of $50 billion. Note: That’s $50 billion which is far more than the bailout those auto “capitalists” are begging for. That $50 billion is a fraud of epic proportion, and according to the Wall Street Journal “nearly five times larger than the accounting fraud that drove telecom company WorldCom into bankruptcy proceedings in 2002.”
“Madoff has been conducting a Ponzi scheme since at least 2005, the U.S. said.” Madoff himself said that what he was doing was “basically, a giant Ponzi scheme,” and that “there is no innocent explanation.” Times Online called it “perhaps the largest swindle in Wall Street history.” Madoff, a former Chairman of the Board of NASDAQ, one of the largest stock markets in the world, now faces up to 20 years in prison. What does a man like that say to his children? Well, it was his sons (who were not involved) who turned him in.
Let’s hope that the younger generation can begin to lead America back up and eventually out of this bog of excrement that the “old boys” thought was a good place to bury America. I suggest at the same time we learn the Pledge of Allegiance, that we also memorize, and post in every home and office in the land, these words by Mahatma Gandhi, who offered this warning to the world: “The things that will destroy us are: politics without principle; pleasure without conscience; wealth without work; knowledge without character; business without morality; science without humanity; and worship without sacrifice.”
Let’s all work together to make this New Year a happier one for America and the world.
God bless you one and all!