The days of the robber barons are back, indeed
Don Bauder
October 27, 2002
Do you need proof that we have returned to the days of the robber barons? In the middle of last month, President Bush considered sharply trimming a spending increase for the sorely understaffed Securities and Exchange Commission?
Thank goodness, a rise of protest from the masses forced him to back down. But still, he hasn't suggested what is really necessary: a tripling or quadrupling of the SEC budget.
You can bet scaling-back pressure will return: The SEC has been deliberately kept anemic and underfed by the Wall Street/corporate nexus and its super-wealthy leaders who not only control a huge percentage of the nation's wealth and income, but also control its politicians through campaign largesse.
If that reminds you of the Gilded Age, the age of the robber barons, it should: Back then, a small handful of the super-wealthy ran everything.
Bush's timing this time was pathetically inept. It is simply astounding that in the tsunami of corporate scandals these days, any president would dare try to emasculate the one agency that can try, however ineffectively, to contain the runaway greed.
But Bush did it. In midyear, Congress agreed to raise the SEC's budget 77 percent. That would bring the budget to an inadequate $776 million.
Then in mid-October, Bush decided the SEC budget should be carved back to $568 million. That would have been pathetically inadequate in the current scam-riddled environment.
Although they deal with securities issues – the most complex area of the law – SEC lawyers are underpaid compared with lawyers from other agencies. Also, there are far too few lawyers and accountants at the agency.
After all, their job is to penetrate fraud that is deliberately obfuscated by private-sector lawyers who are paid $500 an hour to make impenetrable haze out of very obvious fraud.
It's the SEC's job to cut through that artificially concocted haze and unearth the fraud. That's also the job of securities analysts, but they are paid to look the other way. We journalists are supposed to do it, too, but too many of us are too lazy or ill-equipped or ill-disposed to slice through the legal Latin.
The SEC funding issue has degenerated into a mudslinging contest between Republicans, who initiated the call for a lower budget, and Democrats.
But we have to see this in a much broader context.
For that, I recommend an article in the Sunday New York Times Magazine of Oct. 20, titled, "For Richer: How the permissive capitalism of the boom destroyed American equality." It was written by Princeton economist Paul Krugman, a Times columnist.
In it, Krugman hits some themes that have been expressed in this column – for example, the disgrace that income distribution has regressed to the have/have not days of the plutocrats of a century ago.
Quoting Fortune magazine, Krugman points out that 30 years ago, the chief executive officers of the top 100 companies made 39 times the pay of the average workers. By 1999, the top-100 CEOs made a staggering 1,000 times what the average working stiffs made.
How have CEOs come to rake in such obscene sums? "It's not the invisible hand of the market that leads to those monumental executive incomes; it's the invisible handshake in the boardroom," Krugman says.
It's high-level cronyism. And remember just four years ago, the United States was berating Asian nations for their cronyism.
Krugman refers to one study showing that in 1998, the 13,000 richest families in the United States had almost as much income as the 20 million poorest households.
This intolerable and economically deleterious income inequality evolved because the culture was changing, Krugman says. In earlier decades, there were social norms – as well as enforced laws – that held down runaway greed.
But in the 1980s and 1990s, we developed a new ethos: "anything goes." Philosophers rationalized it; business school professors taught it.
Now, we are beginning to see the fruits of "anything goes": offshore shenanigans (hundreds of billion dollars of it); swap deals; pro forma accounting; out-of-control stock options; rigged initial public offerings, ad nauseam.
Now comes the punch line, which relates to the move that Bush tried with the SEC. Says Krugman, "As the rich get richer, they can buy a lot besides goods and services. Money buys political influence."
Increasingly, this small percentage of super-wealthy support the politicians of both parties – and get what they want.
But what they deserve – and what their lackey politicians deserve – is public wrath.
--------------------------------------------------------------------------------
Don Bauder: (619) 293-1523; don.bauder@uniontrib.com |
