Defining Economic Justice: An Essay
Previously, I wrote an essay called "Why is income inequality so high in the United States?" in response to a question by ChristinS. I have found that I expressed myself badly, there, in talking about what I mean by the term "economic justice." I find that to be important enough to merit this separate essay devoted to this concept.
Here's how I define economic justice:
Within the modern capitalist framework (America since 1945, the end of WW II), it is the ability of all economic actors to get what they have coming to them, no more and no less. When someone is not getting all that they have coming to him, someone else is getting more than he has coming to him---this is injustice, something is happening that should not be happening.
How do we know what economic actors, say, manual workers, have coming to them?
The sweet spot of American capitalism was roughly the period from 1945 to 1975. This was the end of World War Two. American stood alone as the only advanced industrial power that was undamaged by the man-made global catastrophe. America had no competitors. Europe and Japan had to rebuild by buying American stuff. What's more, they had to borrow American money to buy the American stuff. American manual, blue collar workers shared in the prosperity along with employers. With relatively strong unions at their backs, workers got rising wages as reward with higher rates of production, which helped salaries keep pace with inflation (1).
Under these circumstances, we discovered that it is the right thing to do---under the framework of modern capitalism---for employers to pay workers higher wages for higher rates of production, to keep pace with inflation. "Discovered" is precisely the word here, but I'll come back to that.
The first complication: There are two things that undergirded that "good times were had by all" situation---which included higher wages for workers as a reward for higher production, keeping pace with inflation: one wrong thing; and one impossible thing.
There were two things that made rising wages for workers possible between 1945-1975:
The Wrong Thing: There were a set of circumstances which created a "scarcity of labor," meaning that there were too few hands pursuing too much work to be done. As I mentioned last time, there had been restrictive immigration legislation in place since the 1920s. Also, women tended to be, more or less, barred from the work place. But because there were too few hands pursuing too much work to be done, employers had to pay those hands well.
But of course, from a standpoint of human rights and simple decency, it was wrong to have racist immigration legislation on the books; and it was wrong to bar women from the paid workforce.
When those things were reversed---along with automation---an "abundance of labor" was created. This meant that too many hands were pursuing too little work to be done, a situation which employers could and did take advantage of to put downward pressure on wages.
The Impossible Thing: It is not hard to be the number one industrial producer and creditor, when all of your competitors have been smashed during a world war. The point is that Japan and Western Europe were not going to stay down forever.
Question: Is it indeed the case that because America's extraordinary prosperity during 1945-1975---which workers shared in---had been based on the one wrong thing and the one impossible thing, the idea of paying workers rising wages for rising productivity (which has continued to rise for thirty years), is suddenly not right anymore? Are we looking at "fruit of the poisoned tree"?
Answer: No. Paying workers rising wages for higher rates of productivity, to keep pace with inflation, was right then (1945-1975), was right before that, was right after that, remains right today, and will always be right. The circumstances of America's Golden Age of Capitalism allowed us, on a broad level, to discover that it is right to do this.
Just because the pillars upholding the situation of 1945-1975, was one wrong and one impossible thing, collapsed, does not mean that paying workers rising wages has become wrong. The fundamental right-ness of paying workers higher wages for higher rates of productivity, as a way to cope with rising inflation, has never changed.
As I said, the sweet spot of 1945-1975, allowed America to discover or realize this fundamental truth, within the framework of modern capitalism.
The way it seems to work in this life is like this: From time to time, fortuitous circumstances converge which allows human beings to treat other human beings better. People say, "Hey, I like this; this is great. Let's keep doing this." It is the will to keep doing "this," whatever that may be, which seems to make human life better over a long period of time. This is what I mean when I say we "discover" truth. Economic justice, as I see it, requires that the condition of rising worker wages for rising worker productivity, to deal with rising inflation, persist in spite of women and people of color from other countries having entered the workforce.
Here's the thing.
The real wage (wage workers get in relation to prices for stuff we have to pay) has stopped rising somewhere around the late-1970s, so that the real wage today is about where it was in 1978. Now, that money did not just sit in the ether. Someone else got that money. It went to CEOs and top executive management; and it has been going to them for thirty-odd years. Mind you, this has been going on even as worker productivity has continued to rise (2).
1. What did CEOs and other executives do to deserve that extra money, taken from workers?
2. What did workers do to un-deserve their rightful wage increases in the face of rising rates of productivity?
The second complication
If I am saying that CEOs and other executives have padded their salaries over a period of 30-35 years at the expense of the rightful wage raises of workers,---which I am---then where would "economic justice" calibrate the salaries of top corporate executives relative to workers? Should such executive ever get raises?
A. One way to approach that is to recognize that American corporate CEOs reward themselves like no other chief executive officers anywhere else in the capitalist world (3). Given the interconnectivity and interdependence of the capitalist world, it might be, therefore, fair to align the compensation of American CEOs with world norms.
B. Another way to approach that is to recognize how well known it is that American CEOs compensation tends not to be related to performance (4).
C. Another way to approach that is to insist that executive pay---in addition to being brought into alignment with world norms (of Western Europe, the advanced capitalist nations)---be directly related to performance.
D. The trouble with trying to align executive pay to performance, is that it is hard to know what executive and CEO performance would mean. If you define, say, CEO performance as: The executive's strategic decision, which empowers the corporation to make better goods and services and/or market and sell them more effectively than the organization's competitors---well, there may be a problem.
You see, it turns out that the whole competition thing might be a problem. Former U.S. Secretary of Labor for the Clinton administration, Robert B. Reich, wrote a book: Supercapitalism: The Transformation of Business, Democracy, and Everyday Life (2007). In it he talked about the competition thing:
Talking about postwar American capitalism he wrote:
"The largest corporations could not risk competition. Their output had to be planned far in advance with a high degree of confidence it could be sold at a predetermined price. Collusion and planning were essential" (5).
He then quoted the legendary economist John Kenneth Galbraith:
"The '[t]echnology [of mass production], with its companion commitment of time and capital, means that the needs of the consumer must be anticipated---by months or years.' "The large corporation, therefore," 'must exercise control over what is sold. It must exercise control over what is supplied. It must replace the market with planning... Much of what the firm regards as planning consists in minimizing or getting rid of market influences'" (6).
And, according to Mr. Reich, one major way corporations do this is by asking government to set up market share-guaranteeing regulations. They tend to ask for these regulations when times are hard for them; and then ask for their relaxation or removal when demand is high (7).
Again, from Supercapitalism we read: "The NRA took industrial planning to a new level of explicitness. Every major industry was to establish codes of fair dealing, including prices and wages. The same business leaders who condemned socialism and communism were delighted. The Great Depression had left them with far more capacity than customers, resulting in a downward plunge in prices. The NRA offered a way to limit industry-wide capacity and stop the price cutting. The United States Chamber of Commerce enthused that the NRA was a 'Magna Carta of industry and labor.' Henry I. Harriman, its president, baldly stated that the free market 'must be replaced by a philosophy of planned national economy,' and that the NRA would allow industries to rid themselves of the 'industrial buccaneer' and the 'unscrupulous price-cutter'" (8).
NRA=National Recovery Administration
But perhaps you want to give CEOs and executives credit, anyway, for cultivating such close relations with the government. Indeed, there is a business magazine that specifically gives special recognition to "private" companies for excellence in government relations (9).
If you want to give CEOs and executives credit for growing the organization's bottom line in the way they cultivate such relationships, fine.
But one problem is that CEOs also grow the bottom line by simply firing people. It seems that "downsizing" gives the right message to the stock market, which rewards them. This fact has been confirmed by several independent academic studies (10).
Another problem is that you cannot otherwise look at a corporation's bottom line and say, with great assurance, that the CEO and other executives have made great strategic decisions which enabled them to make better goods and services and/or market and sell them more effectively than its competitors.
That is because its hard to know how much of that profit has come from government subsidies. Indeed, there may be some industries that are more than one hundred percent dependent on government subsidies for their profits---with professional sports (football, basketball, baseball, and hockey) having almost never been profitable in the strict market sense (11).
Another factor that obscures the "performance" of corporate CEOs and other executives seems to be tax evasion, the extent of which is quite phenomenal, which is to say that the massive scale of it is hardly describable with words (12).
Then there's the massive use of stock options. A stock option is the right to buy corporate stock below market price. In addition to being the preferred method of compensation of American corporate executives, this device is apparently used to mask company losses and inflate earnings (13).
Yet another factor which tends to obscure the extent to which CEO and executive "performance" can be determined---in terms of the "value" they "add" by making sound strategic decisions which actually allows their organizations to make better goods and services and/or market and sell them better than their competitors---is their use of patent law to create asymmetrical monopoly advantage. They "outcompete" their rivals because their rivals---or anybody else---are not allowed to compete, essentially (14).
Addendum (added 01/27/2015):
I feel compelled to mention this: another thing that the executive class does, which tends to effectively obscure the line of demarcation between whatever brilliance they may possess and their sheer, opportunistic ruthlessness is to NOT pay pension obligations.
Between 1978 and 1998, corporate spending on pensions for regular workers declined by 22 percent. By 2003 corporate pensions were found to have $400 billion less than they were supposed to (15).
Economic journalist David Cay Johnston noted: "During the stock market bubble very little cash went into pension plans as rising stock prices made these plans appear to be sound. Not spending money on pension obligations also made companies appear more profitable than they really were, propelling stock prices even higher and enriching those who cashed out" (16).
Remember, we're talking about how hard it is to make a clear determination about the nature of executive performance.
I'm afraid I also feel compelled to mention that the period of the 1980s, 1990s, and 2000s saw stock market averages---[which are supposed to be a measure of how well executives are doing their jobs, with the strategic "vision thing"]---were propelled by high levels of mergers, reorganizations, and leveraged buyouts (17).
Political-economist Kevin Phillips says that this era saw "...corporate raiders posture as outsiders tackling a bloated 'corpocracy' as promoters of the ability of the small to challenge the big, and as standard-bearers of a 'democratization of capital' that would unlock shareholder value" (18). Stock market indices rose, as did fees and profits as a result of these machinations (19).
Please forgive me, but I also feel compelled to mention the well known fact that when a major corporation introduces a new product, it is often, if not most times, the result of said major corporation having bought up a small start up company---which has conveniently taken all the risk of research and development---and integrating it into its organization (20).
That, in and of itself, is not such a big deal for our purposes. Maybe its smart business, maybe not. Who knows? However, it does tend to further obscure the degree to which corporations "perform," and therefore to what extent such performance is due to the contribution of the talents of the executives. However, the question, for us, is: Where did corporations get the money to do this? Where has it come from over the past forty years now, when the real wage of ordinary workers has remained basically flat since the late-1970s/early-1980s.
The thing is, if one wanted to make the argument that companies stop paying workers rising wages to keep up with inflation, because, somehow, they "couldn't afford it," then nobody should have gotten that money. Do you follow me?
That money should have remained in the ether. But that is not what happened. Somebody got that money. Remember, we're talking about why it is that workers un-deserved their rightful production-tied, inflation-coping wage increases; and why it is that the executives, who got that money, deserved it. So, even it is "good business" for major corporations to buyout small start ups, what special talent was involved if you simply "Robbed Peter to pay Paul," as it were?
Now then, the extent to which corporations (board of directors, CEOs, executives specifically) see it as important to their "performance" to cultivate "excellence in government relations," we can observe:
1975 - Washington lobbyists collected less then $100 million in fees; by 2006 they made $2.5 billion (21).
2006 - More than 35,000 lobbyists were registered in Washington (22).
Thousands more lobbyists work the 50 state capitals and larger city and county governments around the United States of America. Even this quantity vastly understates the number of people who are paid to influence the government since many practitioners of the art are not, strictly speaking, required to register as lobbyists, per se (23).
Where did corporation boards get the money to hire and pay all those lobbyists?
I will add just one more thing for today. In the 1990s a technical study was carried out by Winfried Ruigrock and Rob van Tulder, concerning the relationship between the state and private industry.
Their conclusion was: 'Virtually all of the world's largest core firms have experienced a decisive influence from government policies and/or trade barriers on their strategy and competitive position' and 'at least twenty companies in the 1993 Fortune 100 would not have survived at all as independent companies, if they had not been saved by their respective governments,' through state takeover or bailouts (24).
The same study pointed out that government intervention has 'been the rule rather than the exception over the past two centuries...' and 'has played a key role in the development and diffusion of many products and process innovations --- particularly in aerospace, electronics, modern agriculture, materials technologies, energy, and transportation technology,' as well as telecommunications and information technologies generally, and in earlier periods, textiles, steel, and energy.' Other technical studies reached the same conclusion (25).
Again, all of this tends to obscure where exactly government hand-holding, subsidies, tax breaks, funding of R&D, outright performance of the grunt work on research and development, granting of monopoly privileges, the construction of vital infrastructure, and other things, ends and executive brilliance, burning-the-candle-on-both-ends, visionary strategic thinking, and all that, begins.
Once again, here's the question: Suppose the acquisition, from the government, of "products and process innovations", requires that "private industry" pay the government fees for this. If I have that right, then where did corporations get the money to do this, over the past forty years, in light of the fact that they have, for the same period, NOT paid workers their rightful production-tied, inflation-coping wage increases? Do you follow me?
Addendum (added 01/28/2015):
You know, when you think about it, if politics in the United States---over the past forty years---has been about any one thing, from the perspective of the mainstream left, right, and center, it has been devoted to one thing: how to recapture the magic of the 1945-1975 period, the Golden Age of American Capitalism. How did we lose the magic? Where has our love gone?
I said before that American prosperity during this period had rested on two pillars: the aftermath of World War II, leaving the United States the "last man standing," as it were; and immigration restrictions (as well as sexism) which created a "scarcity of labor."
Actually, there are two more pillars which I can think of, which gave the "perfect storm," if you will, which unlocked an unprecedented American prosperity during this period.
Internment of the Japanese
A factor that tends to be neglected is the fact that during World War Two, the US government put multitudes of Japanese-Americans into concentration camps and "jacked their stuff."
After the Pearl Harbor attack, within two hours, the police rounded up everybody who even looked Japanese, in the L.A. district known as Little Tokyo. The next day the U.S. Treasury froze Japanese bank accounts and seized all Japanese banks and businesses. Two days after Pearl Harbor, Japanese language schools were closed (26).
Two weeks after the outbreak of war, on February 19, 1942, President Franklin Roosevelt signed Executive Order 9066, which gave the Secretary of War the power to exclude any persons from designated areas in order to secure national defense. The order mandated the detaining of all persons deemed to be a possible danger, especially the west coast Japanese-Americans (Nisei), all 120,000 (27).
Here's the part that is most relevant for our purposes. They were all placed in temporary facilities and given less than two weeks to make arrangements for the sale of their property, before being sent the camps in the southwest desert, where they spent the next three and a half years (28).
This naturally put enormous pressure on Japanese-Americans to sell their stuff at "fire sale" prices, to say the least. For example, one of the "great deals" you could get in this "buyer's market," is this: How about an almost new pickup truck for $125 (the tires alone were worth $125)? Or, a Japanese-American strawberry farm for $2,000, which the buyer turned around and resold for more than $10,000. Or, you could buy an ice cream parlor for just $1,000---a deal of the century since the establishment had $10,000 in inventory and $8,000 in equipment (29).
On March 11, 1942 FDR signed Executive Order 9095, establishing the Office of Alien Property, under the umbrella of the Department of Justice. This office spent the next few years seizing, inventorying, and finding buyers for millions of dollars worth of property, taken not only from the Japanese, as it turns out, but also from German nationals living in the United States. Many of the seized properties were sold by no-contest, sealed bids overseen by a key appointee of President Harry Truman (30).
The Office of Alien Property (OAP) ended up confiscating 415 business with a total valuation of $290 million in tangible assets alone; and over six thousand German patents (worth exponentially more than the businesses), which would be given to U.S. businesses (31).
This is an important piece because this period---1945 to 1975---is seen as a time of great social mobility. If you're my age, you grew up hearing "Only in America" stories, while largely true, must be put into their proper context.
You may have heard something like this: "His grandfather came to this country from Poland in 1942, with only fifty dollars in his pocket..."
1. $50 was a lot more money in 1942 than it is today.
2. If this grandfather from Poland was a white-skinned man, he would have experienced an immediate jump in social status, being accepted as a member of the synthetic "white" identity created in the United States.
3. He would have been coming over at a rather propitious time. As we have seen, the interment of the Japanese set things up so that one could very quickly and cheaply acquire the trappings of a good life: you could rent a room for ten dollars, maybe get a bank loan and get yourself an almost new truck for the fire sale price of $125; maybe that bank loan is enough to pick yourself up an ice cream parlor business for prices that make "fire sales" look expensive.
4. There was a good likelihood that you would be in a position to repay the loan rather quickly. The end of the war came in 1945. At that you could have probably expected to feel a sudden, massive onrush of business. There was a whole lot of pent up spending power to be unleashed by American families because they had spent four years rationing.
The United States doesn't do so good with the social mobility thing these days, compared to other advanced industrialized countries like ourselves (32). That just goes to show that doing social mobility is hard when you can no longer walk over the backs of a disenfranchised segment of the population.
Also, we may have overestimated the dynamism of American business, based on this Golden Age period. As we have seen, American business got a tremendous shot in the arm, to say the least, when the US government transferred six thousand patents to them, which had originally belonged to German nationals living in this country at the time.
This may go a long way to explaining why it is that US business---now that other entities are not readily available for cannibalization---are always so very dependent upon government subsidies to function (33). A 1994 study by the Progressive Policy Institute of the Democratic Leadership Conference, for instance, identified what it considered to be unjust subsidies and tax benefits extended to corporations in the United States amounted to $111 billion over five years (34).
One More Thing, Lieutenant Columbo...
We tend to look back at that period as one of dynamic small business growth and development. Democratic politicians and policymakers would like to get back to that. Indeed, in the 1990s, the Democratic Party claimed credit for having achieved some of that. However... (drum roll, please)...
It turns out that the very term "small business" is misleading; and small business "growth" was, in fact, driven by something called the "strategic downsizing" of the big corporations.
According to Bennett Harrison, author of Lean and Mean: The Changing Landscape of Corporate Power in the Age of Flexibility: 'It is the strategic downsizing of the big firms that is responsible for driving down the average size of business organizations in the current era, not some spectacular growth of the small firms sector, per se' (35).
David C. Korten: "The contracting-out process does create new opportunities for smaller firms, but the power remains right where it has been all along --- with the corporate giants. Lacking independent access to the market, the smaller firms that orbit the core corporations function more as dependent appendages than as independent businesses" (36).
Again, David C. Korten: "Weaker competitors are crushed, colonized, or absorbed. Accommodation is sought with stronger competitors through strategic alliances, mergers, acquisitions, and interlocking boards of directors" (37).
Anyway, what "strategic downsizing" seems to come down to is this: A large corporation gets itself into anti-trust difficulty with the government; and to try to evade consequences of that, splits off a division, setting it up as a separate, "small business," which, coincidentally mostly does business with its corporate parent.
The case of MCA-Universal, in the 1960s, is a perfect example of this. Basically, the US federal government busted the company for violation of the Sherman Anti-Trust Act. MCA-Universal sold it talent agency "business" to former MCA employees, who formed Artists Agency Group, who, for some crazy reason, continued to do business primarily with MCA-Universal (38).
The final pillar upon which the Golden Age of American Capitalism---1) aftermath of World War Two; 2) immigration restrictions/sexist restrictions giving rise to artificial "scarcity of labor"; 3) consequences of internment of Japanese-Americans---is "Operation Paperclip."
It is fairly well known, by now, that at the tail end of World War Two, the United States government welcomed into America, sixteen hundred Nazi and Nazi-collaborator scientists, engineers, and intelligence personnel, instead of allowing them to stand trial at Nuremberg. Some were brought over to help out with gathering intelligence on the Soviet Union. Others helped out with the US space program (39).
Of course, I do not know how much of an impact this may have had on the US economy. However, to the extent that outcomes from the US space program may have had any beneficial impacts on the American economy at all, we must include it, here, as one of the pillars of the Golden Age of American Capitalism---especially given the long history of "private-public partnership" that exists whereby innovations begun in the public sector are often "spun off," if you will, for the benefit of private enterprise and private profit (40).
Basically that's it, I guess. There's more I could say---as there always is. But I think I'll leave it there. As I said, I define economic justice very simply. It is simply a state of affairs in the modern capitalist framework, in which all economic actors get what they have coming to them, no more and no less. If someone is not getting what they have coming to them, somebody else is getting more than they have coming to them; and this is a situation of injustice.
As I said before, we know what workers have coming to them, in the United States, because we were able to discover this during 1945-1975. Though that situation had been undergirded by the one wrong thing and the one impossible thing, this does not make paying workers rising wages as a reward for higher rates of productivity wrong all of the sudden. Its right-ness is confirmed.
As I said, too, it is much more problematic determining what CEOs and executives have coming to them because it is so hard to isolate their "performance" from the results of government favoritism and tax evasion. But, as I said, a good start might be to align their compensation with the norms for the rest of the capitalist world, Western Europe, Canada, Australia, and so forth. After all, what the rest of the world does might give us some indication of the "going rate" for what such people should make.
One thing is certain though, you should not be able to take money from one group of people---workers by not raising wages with inflation for thirty-odd years---and give it to another group of people, CEOs and top executives without being able to answer a question: What did the latter do to deserve it? and What did the former do to un-deserve it?
Conclusion Addendum (added 01/28/2015)
The real challenge is to think about what American economic prosperity should look like, freed from the distortions of racism (41), sexism, class-ism, homophobia (42), xenophobia, war, and militarism (43). Call that "socialism," "communism," or "planning," if you like, but I call it the ideal of economic justice.
Thank You for reading!
References and Notes
1. Reich, Robert B. Supercapitalism: The Transformation of Business, Democracy, and Everyday Life. Alfred A. Knopf, 2007. 15-49; there is wide agreement about the rough period of 1945-1975 as the "Golden Age," of American capitalism. While not emphasizing war, economist Richard D. Wolff does talk about conditions of "scarcity of labor." see: Economic Crisis and Globalization--Richard D. Wolff Lecture 4. [YouTube video]. (2012, June 10), from a lecture he gave at The New School in New York City in the Spring of 2009.
2. Economic Crisis and Globalization--Richard D. Wolff Lecture 4. [YouTube video]. (2012, June 10).
4. Krugman, Paul. The Conscience of a Liberal. W.W. Norton, 2007. 148
5. Reich, Robert B. Supercapitalism: The Transformation of Business, Democracy, and Everyday Life. Alfred A. Knopf, 2007. 30
7. ibid, 29
8. ibid, 25
9. Johnston, David Cay. Perfectly Legal: The Covert Campaign To Rig Our Tax System To The Benefit Of The Super Rich---And Cheat Everybody Else. Portfolio, 2003.
10. Phillips, Kevin. Wealth and Democracy: A Political History of the American Rich. Broadway Books, 2002. 112, 150-151; Johnston, David Cay. Free Lunch: How The Wealthiest Americans Enrich Themselves At Government Expense (And Stick You With The Bill). Portfolio, 2007. 15
11. Johnston, David Cay. Free Lunch: How The Wealthiest Americans Enrich Themselves At Government Expense (And Stick You With The Bill). Portfolio, 2007. 62-64: Take professional sports in the United States, for just one small example. Economic journalist David Cay Johnston (p.62): "From [from the available data], one crucial fact can be readily distilled: while some teams are profitable, overall the sports-team industry does not earn any profit from the market. Industry profits all come from taxpayers."
(p.63): Between 1995-2006 local, state, and federal government spent more than $10 billion subsidizing 50 new major league stadiums and innumerable minor league facilities. There has been an uptick in the trend. Government spending on this kind of thing is something like $2 billion a year, according to Neil de Mause (author of book and website "Field of Schemes"), who testified to Congress on this.
(p.63): According to Forbes magazine, the Big Four sports (pro baseball, football, hockey, and basketball) had revenues in 2006 of $16.7 billion. They counted roughly one-tenth of that, $1.7 billion, as operating income.
(p.63): "Putting together the estimates by Forbes and de Mause shows that the entire operating profit of the commercial sports industry comes from taxpayers. The subsidies, in fact, cover a third of a billion dollars in operating losses before this boost from the taxpayers pushes the industry into the black."
(p.64): None of this would have surprised the 18th century philosopher Adam Smith, who observed: 'The bounty [subsidy] to the white-herring fishery is a tonnage bounty; and is proportioned to the burden [size] of the ship, not to her diligence or success in the fishery; and it has, I am afraid, been too common for vessels to fit out for the sole purpose of catching, not the fish, but the bounty.'
12. Johnston, David Cay. Perfectly Legal: The Covert Campaign To Rig Our Tax System To The Benefit Of The Super Rich---And Cheat Everybody Else. Portfolio, 2003.
13. Stiglitz, Joseph E. The Roaring Nineties: A New History of the World's Most Prosperous Decade. W.W. Norton, 2007. 115-116, 120-121
(p.116): By 2001 stock options accounted for about 80 percent of the compensation for American corporate managers;
(p.116): If Microsoft, for example, had been required to acknowledge the value of the options it gave out that year, the effect would have been to reduce the company's 2001 profits (officially at $7.3 billion) by one-third.
(p.116): The same maneuver allowed Starbucks and Cisco, among other companies, to boost profits by 20 percent or more.
(p.116): Intel's profits would have been but to a fifth, from $1.3 billion to $254 million. Yahoo's losses would have increased tenfold, from $93 million to $983 million.
(p.116): Enron, WorldCom, and Adelphia's transgressions were simply the most flagrant and well-publicized.
14. Baker, D. (2006). Bill Gates --- Welfare Mom How Government Patent and Copyright Monopolies Enrich the Rich and Distort the Economy. Retrieved January 26, 2015; and see: When Patents Attack. (2011, June 22). Retrieved January 26, 2015.
15. Johnston, D.C. Perfectly Legal. 284
17. Phillips, Kevin. Bad Money: Reckless Finance, Failed Politics, and The Global Crisis of American Capitalism. Viking, 2008. 76; and just to emphasize, it was definitely the leveraged buyout craze that fueled the American bull market, which got started in the mid-1980s---see Chancellor, Edward. Devil Take the Hindmost: A History of Financial Speculation. Farrar, Straus, & Giroux, 1999. 262
19. ibid, 77
20. I do not consider this to be a controversial point. You see this, yourself, everyday, on the news when they do the business. We are always hearing about how Google bought so and so, and Yahoo bought x, y, z. And this is said so casually by the business presenter that we don't always stop to think about what it means as it relates to corporate "performance" and, for that matter, the survivability of small business in the United States; one hears the statistic, for example, that ninety percent fail in the first year, and all that.
But if you want confirmation, know that Professor Richard D. Wolff does make this point in his lecture "Economic Crisis and Globalization 4."
21. Johnston, D.C. Free Lunch. 110
23. ibid, 105
24. Chomsky, Noam. Profit Over People: Neoliberalism and Global Order. Seven Stories Press, 1999. 38
26. Russo, Gus. SuperMob: How Sidney Korshak And His Criminal Associates Became America's Hidden Power Brokers. Bloomsbury Press, 2006. 101
27. ibid, 102
29. ibid, 105
30. ibid, 106
31. ibid, 110
32. Krugman, Paul. The Conscience of a Liberal. W.W. Norton, 2007. 249; intergenerational mobility was found to be the highest in the Scandinavian countries. But mobility is lower, in the United States, than in France, than in Canada, and perhaps even than in Britain.
33. Again, see the entire volume of: Johnston, David Cay. Free Lunch: How The Wealthiest Americans Enrich Themselves At Government Expense (And Stick You With The Bill). Portfolio, 2007.
34. Korten, David C. When Corporations Rule the World. Berret-Koehler Publishers and Kumarian Press, 1995. 130
35. ibid, 216-217
36. ibid, 218
37. ibid, 222
38. Russo, Gus. SuperMob. 231-234, 236, 268-270
39. Jacobsen, Annie. Operation Paperclip: The Secret Intelligence Program That Brought Nazi Scientists To America. Little Brown And Company, 2014.
40. For some tantalizing details about the long history of this process---"public-private" spinoff---which goes back to at least the late-nineteenth century, see: Phillips, Kevin. Wealth and Democracy: A Political History of the American Rich. Broadway Books, 2002. 243-248.
41. It is well known in the scholarship, that blacks were largely left out of benefiting from New Deal and postwar G.I. Bill programs, for example, due to political pressure from southern Democrats and their constituencies. See: Painter Nell Irvin. The History of White People. W.W. Norton & Company, 2010. 371-372.
42. It is well known that gay people are not getting their full economic rights in the United States, mostly within the context of inheritance in marriage. See: Miller, K. & Burns, C. (2012, November 30). 5 Ways the Defense of Marriage Act Harms Same-Sex Couples and Their Children. Retrieved January 28, 2015.
43. It is also not a controversial point that the United States is the world's biggest retailer of military weapons and equipment. This comes up all the time when the news covers President Obama's visit to India and its new prime minister. And by the way, it also always comes up that India is the world's biggest buyer of military weapons and equipment. At least these facts come up on the broadcasts I watch: BBC World Service and Al Jazeera America.
This is to say nothing of the military bases the U.S. operates around the world. The information I have is from at least eleven years ago. But, assuming that things have not changed all that much in eleven years, let's just note that the Pentagon had acknowledged 725 American military bases around the world. But the true number greatly exceeds that; some bases exist under leaseholds, informal agreements, and various other kinds of disguises. There have been additions since 2001.
Between 1999-2001 bases went up in Kosovo, Kyrgyzstan, and Uzbekistan. The U.S. armed forces have a ski and vacation center at Garmisch in the Bavarian Alps; a resort in downtown Tokyo; 234 military golf course worldwide; 71 Learjets, 13 Gulfstream IIIs and 17 Cessna Citation luxury jets used to fly admirals and generals around. At a cost of $50 million each, each Gulfstream can fit 12 passengers, two pilots, a flight engineer, a communications operator, and a flight attendant. All of this can be seen as a symptom of the way the Pentagon is displacing the State Department as the primary agency for US foreign policy.
Chalmers Johnson: "We now station innumerably more uniformed military officers than civilian diplomats, aid workers, or environmental specialists in foreign countries --- a point not lost on the lands to which they are assigned. Our garrisons send a daily message that the United States prefers to deal with other nations through the use or threat of force rather than negotiations, commerce, or cultural interactions and through military-to-military not civilian-to-civilian, relations."
The basic point Chalmers Johnson [Sorrows of Empire (2004)] makes with regard to military bases, is that so many of them are not useful for actually fighting a war. However, with what we have just read together, that infrastructure does point to something: These bases and this worldwide infrastructure does allow many of our military people to have a "rock star lifestyle," perhaps beyond anything they could have dreamed of stateside.
Chalmers Johnson: "The great enclaves of bases, such as those in Okinawa or Germany, have not been involved in combat since World War II and are not really intended to contribute to war fighting capabilities. They are headquarters for our proconsuls, visible manifestations of our imperial reach. During the Second Iraq war, for example, the United States did not use its Persian Gulf and Central Asian bases except to launch bombers against Iraqi cities --- an activity more akin to a training exercise, given America's air superiority, than to anything that might be called combat. Virtually all of the actual fighting forces came from the 'homeland' --- the Third Infantry Division from Fort Stewart, Georgia; the Fourth Infantry Division from Fort Hood, Texas; the First Marine Division from Camp Pendleton, California; and the 101st Airborne Division from Fort Campbell, Kentucky. The bases in Qatar, Saudi Arabia, Bahrain, the United Arab Emirates, Oman, and elsewhere served primarily as high-ranking officers' watering spots and comfortable sites for their remote control command posts. The American network of bases is a sign not of military preparedness but of militarism, the inescapable companion of imperialism."
Finally, Chalmers Johnson noted that ever since the Korean War (1950-1953): "Defense spending at staggering levels became a normal feature of 'civilian' life and all members of Congress, regardless of their political orientation, tried to attract defense contractors to their districts."
Source: Johnson, Chalmers. Sorrows of Empire: Militarism, Secrecy, and the End of the Republic. Metropolitan Books (Henry Holt and Company, L.L.C.), 2004. 4-5, 24, 56-57
We might legitimately ask the question: Can we afford peace?
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