Most of his former colleagues probably can't fathom why Wall Street bankers make
tens of millions of dollars in salaries and bonuses each year. How would he
justify these fat pay days? "It's simple," he lectures, sounding very much like
the Texas A&M economics professor that he was in the 1970s: "In economics,
we define labor exploitation as paying people less than their marginal value
product. I recently told Ed Whitacre [former CEO of AT&T, who retired with a
$158 million pay package] he was probably the most exploited worker in American
history because he took Southwestern Bell, which was the smallest of the former
Bell companies, and he turned it into the dominant phone company on earth. His
severance package should have been billions."
Barack Obama may have a hard time connecting with white working class Americans, but it is hard for me to believe that they are a going to vote for McCain whose economic policies are going to be driven by a guy who thinks that CEO's are the most exploited workers in the America.
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a guy who thinks that CEO's are the most exploited workers in the America
ReplyDeleteThat says all anyone needs to know about McCain's connection with reality.
I take McCain at his word when he says he doesn't understand economics. If he is elected, I have no doubt that he will trust people like Gramm to make sure that the wealth gap in the United States keeps growing.
ReplyDeleteThis thing reads like a joke, and from what I saw of Phil Gramm in the 2004 primary I'd be very surprised if it isn't. This is the kind of dry humor he's known for. The way his statement is constructed suggests to me that he knows full well that this is a strange way to define the term 'exploited'. That's not his point. His point is that it's not immoral to pay market value for someone whose going rate is very high. That's simply how economics works.
ReplyDeleteI don't know if I agree with him on that, but I sure don't want to accuse him of really thinking that this is exploitation when it very much reads like a joke. I certainly don't want to accuse McCain of wanting to make the wealth gap grow, which is exactly what you did. I'm a big fan of not impugning someone's motives when it may well be that they really think their economic views are for the best. To say that McCain is trusting people like Gramm to achieve a certain effect is just to say that McCain wants that effect and is using people like Gramm to achieve it.
McCain has fired Gramm, by the way, for making one joke too many. Unfortunately, he picked a joke that happens to be oh too true of too many Americans who have no sense of perspective of how well off they are in comparison with most of the world today, never mind most people throughout history.
I certainly don't want to accuse McCain of wanting to make the wealth gap grow, which is exactly what you did. I'm a big fan of not impugning someone's motives when it may well be that they really think their economic views are for the best.
ReplyDeleteI don’t think he necessarily wants it, but I believe that he is indifferent to it. Like Gramm, I think he believes that any economic result is acceptable if it is produced by what he understands to be free market capitalism. If the market sends factories overseas, that is just tough luck for the manufacturing worker who is forced to take a job at Wal-Mart. He should not feel exploited just because the market attached a lower value to his labor. I think that the corollary to Gramm’s “joke” is who he considers not to be exploited and therein lies the problem.
Unfortunately, he picked a joke that happens to be oh too true of too many Americans who have no sense of perspective of how well off they are in comparison with most of the world today, never mind most people throughout history.
Maybe so, but many Americans have a sense of perspective of how well off they were in comparison with ten or twenty years ago and in comparison to how they expected to be. They also have a sense of how much better off corporate CEO’s are in comparison with earlier periods. I think that is why they would not find Gramm’s “joke” very funny.
Why is it a problem if the consequences of American economic actions leads to a sacrifice over here by providing higher-paying jobs with better benefits in a third-world country? You're speaking as if this is a bad consequence. I know there are other moral issues than consequences, but you're treating a better work position for people who are not remotely well off in exchange for a slightly lower position for people who are doing ok as bad. Even if these jobs are sub-par to us, they're a vast improvement compared to what's available there. Outsourcing is, at worst, an immoral method of making very hard-pressed people a little less hard-pressed while making relatively comfortable people in comparison a little less comfortable.
ReplyDeleteI don't think most Americans do have a sense of how well off they are in comparison with a few years ago, never mind ten or twenty. Relatively speaking, gas prices are much better right now than they were in the late 80s when I started to drive, once you factor in the change in the worth of the dollar and things like that. Yet most people think the gas prices now are much higher, simply because the number we attach to it is four times as much. Gas per disposable income is much better now than it was when I started to drive in the late 80s.
Jeremy,
ReplyDeleteThe problem is that the sacrifices are not being distributed equally. The concentration of wealth in fewer and fewer hands is a serious problem for a participatory democracy. American economic policy, environmental policy, and foreign policy are increasingly being dictated by a small segment of the popularion for its own benefit. Doesn’t it give you pause that we have record oil prices and record oil company profits after two terms of an administration dominated by oil executives?
I think you are wrong about your economic statistics. I bought my first new car in 1986 for about $14,000 and I could fill the tank for just under $1/gallon. I think a comparable car today would be around $30,000 while gas costs four times as much. The United States Dollar is at about half the level it was in 1986 as measured against foreign currencies. It would take me some time to verify the statistics, but I don’t think that median incomes have kept pace with inflation since that time.
When my wife and I graduated from college around 1980, we had less than $5,000 in debt between us. My son and daughter will have more than ten times that amount when they finish college over the next two years and we have been able to help them more than many parents can. I realize that I have things pretty good, but I see things being tougher for my children than they were for me and that is depressing even though I know people have things worse in many places.
It would take me some time to find the statistics, but I am confident that the ratio of the average CEO’s salary relative to the average worker’s salary has increased dramatically (if not obscenely) over the last twenty years. I am not convinced that it is a result of the free market.
Well, we obviously have different economic theories. That's not something I want to debate right now. My point was about whether McCain wants a result that you charged him with wanting, not whether his view would actually result in it. That's a separate issue. I thought your claim was over-the-top because it treated him as wanting the result when he just holds a different view about what will result.
ReplyDeleteI think it's a huge mistake to attribute high oil prices to deliberate policy moves by the Bush Administration. The most dominant theory right now about what's causing it is simply the same thing that caused the housing bubble and the earlier dot-com bubble. That's not something the Bush Administration caused.
On my figures, the numbers you give fit exactly. If half the increase in gas prices is due to inflation and half of it is due to other factors like supply-and-demand and speculation, then the numbers I saw are confirmed.
CEO salaries are ridiculous. I agree. So are basketball players' salaries. I don't see how that should be government-regulated, though, and I don't see how you can point to one as the rich getting richer, when the other is most often the poor getting very rich. The issue isn't the top salaries. Those are blips in the grand scheme of things. A world where everyone is a little better off and a few are much, much better off is much better than a world where everyone is constant (assuming economic well-being is the only thing we should care about, which isn't remotely true).
Jeremy,
ReplyDeleteI am wondering why you repeated your claim that I charged McCain with wanting some economic result. My post addressed Gramm’s statement and made no specific claim about what McCain wanted or did not want. Moreover, I told you that I doubted that McCain actively desired that result. I don’t mind that you inferred that from my post, although I do not think it was accurate. However, now that I have clarified my position on whether McCain wants economic inequality, I cannot see the justification for repeating the claim.
Corporations are creatures of law. Without them, people would be forced to run their businesses as sole proprietorships or partnerships. Our elected representatives have every right to change the laws regarding corporate governance in order to produce the maximum benefit for society.
I don’t know what figures you are referring to because you did not cite any. You did say that “[r]elatively speaking, gas prices are much better right now than they were in the late 80s.” My evidence showed that gas prices had increased by twice the rate of vehicle prices. My evidence was admittedly anecdotal; nevertheless, it was, at the least, inconsistent with your assertion.
I think that most of the rise in oil prices can be attributed to deliberate policy moves by the Bush administration. It chose to cut taxes in a time of war. This has led to a ballooning deficit which has weakened the dollar which has caused much of the spike in oil prices. The tensions created by Bush’s Middle East policies have exacerbated the problem.
Jeremy,
ReplyDeleteThe difference between the CEO and the basketball star is that the basketball star's salary is the product of an arm's length negotiation between the owner and the player's agent while the CEO's compensation is determined in a negotiation with a compensation committee whose interests may be much more closely aligned with the CEO than with the shareholders they should be representing.
The sentence I found problematic was:
ReplyDelete"If he is elected, I have no doubt that he will trust people like Gramm to make sure that the wealth gap in the United States keeps growing."
That attributes to McCain the motivation of keeping the wealth gap growing and using Gramm to do so. I know you didn't intend it that way, but that's what the sentence in fact says. It says that McCain would use someone like Gramm for that purpose. It's not your official position that I found problematic. It was the way you stated it that sounds as if you're attributing a motive to McCain that you don't really believe he has.
As I said, we're operating from very different economic theories, and we have very different views about what the government has a role in doing.
One of the sets of data I'm referring to is here. I can't fine the other one, but your data tells you exactly what it would tell you, that inflation accounts for half of the price increase in gas up to the high point before it started dropping.
As for deliberate policy moves, that's exactly the thing I was complaining about before. The Bush Administration may have done things that happened to result in higher gas prices. I'm not going to have that debate here now. What they did not do (or at least what you have not the least bit of evidence to claim they did) is to enact those policies in order to have gas prices rise. When you talk about deliberate policies, you have to be careful to indicate whether the policies are deliberate but not the effects or whether the policies were intended to have the effects, because it comes across as the latter unless you clarify it, and that's pretty unfair.
Oh, and your comment about oil executives in the White House does not constitute evidence that they deliberately wanted to raise oil prices. Dick Cheney has no economic interest in any oil company anymore, since his stock is independent of the success of any oil companies. He's been investigated fully on such matters and been totally cleared. It's a bit much to charge a man who gives 75% of his income to charity (including a number of green charities) of trying to affect oil policy to line his pockets, but that tells you more of his critics than it does of him. I don't agree with everything he thinks or does, but I'm not going to accuse him of being interested in wealth accumulation for himself or his friends. He's simply not that kind of person. He's an ideologue, not a scrooge, and he happens to hold conservative positions. He may be Machiavellian about how he achieves the national security results he wants, but I think the evidence is strongly against his being in it for personal gain.
ReplyDeleteThe sentence I found problematic was:
ReplyDelete"If he is elected, I have no doubt that he will trust people like Gramm to make sure that the wealth gap in the United States keeps growing."
I apologize Jeremy. I certainly did say that in my response to The Chaplain's comment and your interpretation of that comment is perfectly reasonable. When you made your comment, I only looked back at my original post.
One other thing I would point out: people are generally held responsible for the foreseeable consequences of deliberate acts. If a mugger hits an old lady in the head with a brick, it does not matter whether he did so in order to kill her or in order to get her to let go of her purse. If she dies, he’s a murderer.
ReplyDeleteIf McCain favors economic policies whose foreseeable consequences are greater concentration of wealth (and this may be a big “if”), then I think it is reasonable to say that increasing the wealth gap is part of his economic policy. Claiming that this is his purpose may be hyperbolic, but I don’t think that it is particularly slanderous. By the same token, if the Bush administration made economic and foreign policy decisions whose foreseeable consequences were to drive up the price of oil (and once again I realize that this is a big “if”), they cannot absolve themselves from responsibility for those consequences simply by claiming another motive for their decisions. When the consequence is foreseeable, I don’t think the distinction between intending the action and intending the consequence is as big as you believe.
As to what type of person Cheney is, let’s just agree to disagree for the time being.