When word got out this week that AIG executives had skimmed themselves $165 million in bonuses out of their $167-billion US government bail-out, America was outraged.
Political anger swelled to evangelical levels when President Barack Obama told a White House gathering, “I’ve asked Secretary Geithner to pursue every single legal avenue to block these bonuses and make the American taxpayers whole.”
Republicans and Democrats, press and public, saints and sinners, all are united in their zeal to make the taxpayers whole again. Congress is hard at work on a bill that would tax the bonuses back. So far they haven’t been able to agree on a formula that will claw back the AIG pork without hurting other million-dollar salary earners, some of whom have very good friends in government.
In all the furor there’s not much said about the fact that the great bailout-bonus grab is simply another way of achieving what the economy is designed to do, and what it has been doing for decades—to concentrate wealth and power in the hands of a few, at the expense of the many.
In 2007, Prof. Emmanuel Saez, University of California Berkeley, and Prof. Thomas Piketty of the Paris School of Economics, released an analysis of US government data for the year 2005, showing that the top one per cent of American earners raked in their highest percentage of the national income since 1928, while the other 90 per cent lost ground, earning on average $172 less than the year before. The thinner you slice it—top 0.1 per cent, to 0.01 per cent, the more their share increased.
In 2008, the Organization for Economic Co-operation and Development released a report titled, Growing Unequal, that showed similar figures in all 30 of its member countries, a trend that has been accelerating since the 1980s.
It’s been common knowledge, dating back at least to the Bible, that the rich get rich and the poor get poorer. Since the birth of the globalization movement, it’s also been the focus of public policy. Due to the hard work of politicians and CEOs, employers seeking to fill working-class jobs now roam the world in search of the cheapest possible labour, while countries compete to offer the best corporate tax deals.
As profits soar, so do executive salaries. As an example, Martin J. Sullivan, CEO of AIG, made a bit over $14 million in 2007. Six other executives in the company pocketed upwards of $6 million apiece. Staggering as these figures are, they fall significantly below H. Lee Scot’s $31.5-million pay packet from Wal-Mart.
The situation is even more pronounced in Canada, because our rich are so much richer, one-third better off than the rich of other OECD countries, while our poverty rate sits at 12 per cent, and growing.
We’ve chased the Reagan/Thatcher/Mulroney promise of trickle-down economics for 20 years, only to see the money not so much trickling as cascading, and always up.
While opinions differ on whether the current economic situation is a recession or a depression, we’re not seeing a lot of millionaires jumping out of windows yet, or selling pencils on the street corners. That’s in part because, as soon as things started to look dicey for the rich, governments jumped in to save them, on the perfectly plausible grounds that, while they may not bring us all up with them when they rise, they’ll sure as hell take us down when they fall.
So governments have taken billions that could have been spent on retooling the economy to work for the people and the planet, and shoved it back into supporting the old order, like propping up a collapsing building with gold-plated 2x4s. It won’t do any good in the long run, but at least it’s not collapsing on our heads today.
Or is it? According to former Bank of Canada governor David Dodge, Stephen Harper and current governor Mark Cheney are being much too optimistic about the prospects for a turnaround in the economy. Putting it bluntly, if colourfully, Dodge told the Globe and Mail that not only will there be no recovery this year, current government policies amount to “piss(ing) money down a rat hole”.
In time this crisis may weaken, but things are never going back, says Dodge. Governments will have to restructure. This restructuring has to be done with global warming in mind, as Dodge points out. That means we’re going to need new leadership. Leadership that doesn’t see the upward redistribution of wealth as the primary function of government.
Al Pope won the 2002 Ma Murray Award for Best Columnist in BC/Yukon. His novel, Bad Latitudes, is available in bookstores.