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“Corporate Wage Hike Subsidities”: CEOs Call For Wage Increases For Workers! What’s The Catch?

Peter Georgescu has a message he wants America’s corporate and political elites to hear: “I’m scared,” he said in a recent New York Times opinion piece.

He adds that Paul Tudor Jones is scared, too, as is Ken Langone. And they are trying to get the Powers That Be to pay attention to their urgent concerns. But wait — these three are Powers That Be. Georgescu is former head of Young & Rubicam, one of the world’s largest PR and advertising firms; Jones is a quadruple-billionaire and hedge fund operator; and Langone is a founder of Home Depot.

What is scaring the pants off these powerful peers of the corporate plutocracy? Inequality. Yes, amazingly, these actual occupiers of Wall Street say they share Occupy Wall Street’s critical analysis of America’s widening chasm between the rich and the rest of us. “We are creating a caste system from which it’s almost impossible to escape,” Georgescu wrote, not only trapping the poor, but also “those on the higher end of the middle class.” He issued a clarion call for his corporate peers to reverse the dangerous and ever-widening gulf of income inequality in our country by increasing the paychecks of America’s workaday majority. “We business leaders know what to do. But do we have the will to do it? Are we willing to control the excessive greed so prevalent in our culture today and divert resources to better education and the creation of more opportunity?”

Right on, Peter! However, their concern is not driven by moral outrage at the injustice of it all, but by self-interest: “We are concerned where income inequality will lead,” he said. Specifically, he warned that one of two horrors awaits the elites if they stick to the present path: social unrest (conjuring up images of the guillotine) or (horror of horrors) “oppressive taxes” on the super rich.

Motivation aside, Georgescu does comprehend the remedy that our society must have: “Invest in the actual value creators — the employees,” he writes. “Start compensating fairly (with) a wage that enables employees to share amply in productivity increases and creative innovations.” They have talked with other corporate chieftains and found “almost unanimous agreement” on the need to compensate employees better.

Great! So they’ll just do it, right? Uh… no. But he says he knows just the thing that’ll jar the CEOs into action: “Government can provide tax incentives to business to pay more to employees.” That’s his big idea. Yes, corporate wage-hike subsidies. He actually wants us taxpayers to give money to bloated, uber-rich corporations so they can pay a dab more to their employees!

As Lily Tomlin said, “No matter how cynical you become, it’s never enough to keep up.”

First of all, Georgescu proposes this tax giveaway to the corporate elite could “exist for three to five years and then be evaluated for effectiveness.” Much like the Bush tax cuts that helped drive the economic divide, once the corporate chieftains get a taste for a government handout, they will send their lawyers and lobbyists to Washington to schmooze congresscritters into making the tax subsidy permanent.

Secondly, paying to get “good behavior” would reward bad behavior, completely absolving those very CEOs and wealthy shareholders of their guilt in creating today’s gross inequality. After all, they are the ones who have pushed relentlessly for 30 years to disempower labor unions, downsize and privatize the workforce, send jobs offshore, defund education and social programs, and otherwise dismantle the framework that once sustained America’s healthy middle class. These guys put the “sin” in cynical.

If we want to fix income inequality, Larry Hanley, president of the Amalgamated Transit Union, has a solution. In response to Gerogescu’s offer of charity to corporations, Hanley wrote: “Strengthen labor laws, and we can have democracy and equality again.”

 

By: Jim Hightower, Featured Post, The National Memo, August 26, 2015

August 27, 2015 Posted by | CEO'S, Corporate Welfare, Wages, Working Class | , , , , , , , | 1 Comment

“The Princely CEO’s Of Corporate Larceny”: Scurrilous Corporate Thieves Are Stealing Workers’ Comp

They say there’s honor among thieves, but I say: That depends on the thieves.

Your common street thief, yes — but not those princely CEOs of corporate larceny. America’s working families have learned the elites in the top suites are rewarded for being pickpockets, swindlers, thugs, and scoundrels, routinely committing mass economic violence against the majority of America’s working people to further enrich and empower themselves.

But now comes a cabal of about two-dozen corporate chieftains pushing a vicious new campaign of physical violence against workers. The infamous anti-labor bully, Walmart, is among the leaders, but so are such prestigious chains as Macy’s and Nordstrom, along with Lowe’s, Kohl’s, and Safeway. Their goal is to gut our nation’s workers’ compensation program, freeing corporate giants to injure or even kill employees in the workplace without having to cover all (or, in many cases, any) of the lost wages, medical care, or burial expenses of those harmed.

Started more than 100 years ago, workers’ comp insurance is one of our society’s most fundamental contracts between injured employees who give up the right to sue their companies for negligence when injured on the job and employers who pay for insurance to cover a basic level of medical benefits and wages for those harmed. Administered by state governments, benefits vary, and they usually fall far short of meeting the full needs of the injured people. But the program has at least provided an important measure of help and a bit of fairness to assuage the suffering of millions.

But even that’s too much for the avaricious thieves atop these multi-billion-dollar corporations. Why pay for insuring employees when it’s much cheaper just to buy state legislators who are willing to privatize workers’ comp? This lets corporations write their own rules of compensation to slash benefits, cut safety costs — and earn thieving CEOs bigger bonuses.

But who, you might ask, would help these corporate crooks in their callous and calculating scheme to rob workers of their hard-earned benefits? Why, that would be the work of ARAWC — the Association for Responsible Alternatives to Workers’ Compensation.

When you come across a corporate lobbying group claiming to be pushing “Responsible Alternatives to Such-and-Such,” you can rightly assume that it’s really pushing something totally irresponsible, as well as malicious, shameless, self-serving and even disgusting. Mother Jones magazine reports that ARAWC is a front group funded by these hugely profitable retail chains and corporate behemoths that want to weasel out of compensating employees who suffer injuries at work. By law, corporations in nearly every state must carry workers’ comp insurance, but the ARAWC lobbying combine is pressuring legislators to allow the giants to opt out of the state benefit plans and instead substitute their own, highly restrictive set of benefits.

What a deal! But it’s a raw deal for injured workers. In Texas, which already has this write-it-yourself loophole, more than half of the corporate plans — get this — pay nothing to the families of workers who’re killed in job accidents! Similarly, under an ARAWC-written opt-out provision that a Tennessee senator sponsored this year, employers wouldn’t have to cover artificial limbs, home care or even funeral expenses of on-the-job accident victims.

Also, the Tennessee bill lets a company simply walk away from maimed workers after just three years or after paying only $300,000 in expenses. Corporations always claim to “value” their employees — and this tells us exactly how little that value is.

By the way, the CEO of ARAWC also happens to be the head of “risk management” at the mingiest of workplaces: Walmart. And that’s what this opt-out scam amounts to — corporate profiteers hoping they can manage to escape paying for risking the lives of America’s workforce. Yes, this shifty move is a scurrilous crime, but it’s a crime that pays richly for those at the top. And the money can fill the hole in their souls where their honor used to be.

 

By: Jim Hightower, The National Memo, April 15, 2015

April 16, 2015 Posted by | CEO'S, Corporations, Workers | , , , , , , | Leave a comment

“Americans Are A Bunch Of Slackers”: Carly Fiorina, As Ridiculous As Every Other Businessperson Politician

Yesterday, former HP CEO Carly Fiorina told Chris Wallace on Fox News Sunday that the chances that she’ll run for president are “higher than 90 percent.” And what will Fiorina be offering? Why, hard-nosed business sense, of course! Her political experience may begin and end with one failed run for Senate, but that doesn’t mean she isn’t ready for the job. Let’s see her answer to the inevitable question of why she’s qualified to be president:

Because I have a deep understanding of how the economy actually works, having started as a secretary and become the chief executive of the largest technology company in the world, because I understand how the world works and know many of the world leaders on the stage today, because I understand technology, a transformational tool, because I understand bureaucracies—how they work and how you need to change them and our government is a huge bureaucracy, and because I understand executive decision-making, which is making tough calls in tough times with high stakes for which you’re prepared to be held accountable.

So she knows that decision-making is about making tough calls! And does the substance of those calls matter? Nah. If someone who had success in a field unrelated to business—let’s say a great trial lawyer—said to a corporate board, “Hire me to be your CEO, even though I’ve never worked in business, because I know how to make tough decisions, and that’s what business is about, right?” they’d be laughed out of the room. That’s not even to address Fiorina’s stormy tenure at HP, which wouldn’t put her on anyone’s list of highly successful chief executives.

But there are a couple of other things about this interview I want to point out:

Well, I think we have two fundamental structural problems in our economy. One is that we have tangled people up in a web of dependence from which they can’t escape. We’re leaving lots of talent on the field. Secondly, we’re crushing small businesses now. Elizabeth Warren is right, crony capitalism is alive and well. Big business and big government go hand in hand. But for the first time in U.S. history now, we are destroying more businesses than we are creating.

So the biggest problem with the economy is the “web of dependence” we’ve trapped people in. Americans are a bunch of slackers cashing their government benefits, and if we could just cut those benefits and get them off their lazy duffs, then the economy would be supercharged. OK.

And what is this about “For the first time in U.S. history now, we are destroying more businesses than we are creating”? I have no idea what she’s talking about, but the economy constantly creates and then destroys businesses. You may have heard that idea that 90 percent of businesses fail in their first year; turns out that isn’t actually true, but the majority of businesses don’t last more than five years. Create, destroy, create, destroy—that’s how capitalism works.

And I love her attempt at Republican populism: “Crony capitalism is alive and well. Big business and big government go hand in hand.” And if you think that’s a problem, the person to solve it is the one whose sole quasi-qualification is having been CEO of a huge corporation.

But the best part of the interview is this, where Fiorina drills down to the problem that’s really holding our economy back:

So, if we want mainstream and the middle class going and growing again, we’ve got to get small and family-owned businesses going and growing again. Washington, D.C., has become a vast unaccountable bureaucracy. It’s been growing for 40 years. We have no idea how our money is spent.

I think there are two things that would help tremendously. One, zero base budgeting, so we know where the money is spent. We’re talking about the whole budget and not just the rate of increase.

And two, pay for performance in our civil service. We have—how many inspector general reports do we need to read that say, you know, you can watch porn all day and get paid exactly the same way as somebody who is trying to do their job?

There you have it. If we could only get federal employees to stop watching porn, we could really get this economy going.

I’ve got some shocking news for Ms. Fiorina. You know those tens of thousands of people who worked for you at HP? Plenty of them were watching porn, too. It isn’t just something that federal employees do.

 

By: Paul Waldman, Senior Writer, The American Prospect, March 30, 2015

March 31, 2015 Posted by | Carly Fiorina, CEO'S, GOP Presidential Candidates | , , , , , | 2 Comments

“Chief Tax-Dodging Officers”: It’s Gotten Pretty Easy For Large Corporations To Avoid The Taxman

Republican and Democratic leaders don’t often see eye to eye on taxes.

But surprisingly, corporate tax reform looks like one area where there might actually be some potential for bipartisan action in Washington. This should be good news, since our corporate tax system is clearly hopelessly broken.

Here’s a stark indicator of just how broken: Last year, 29 of the 100 highest-paid CEOs made more in personal compensation than their companies paid in federal income taxes. That’s according to a new report by the Institute for Policy Studies and the Center for Effective Government.

Source: Fleecing Uncle Sam,  an Institute for Policy Studies and Center for Effective Government report

Source: Fleecing Uncle Sam, an Institute for Policy Studies and Center for Effective Government report

Yes, it’s gotten that easy for large corporations to avoid the taxman.

This is true even for the country’s wealthiest companies. Citigroup, Halliburton, Boeing, Ford, Chesapeake Energy, Chevron, Verizon, and General Motors all made more than $1 billion in U.S. profits last year, but still paid their CEOs more than they paid Uncle Sam. In fact, most of them got massive tax refunds.

How is this possible?

While big businesses moan about the U.S. corporate tax rate of 35 percent, most of them pay nowhere near that. Between 2008 and 2012, the average large corporation paid an effective rate of less than 20 percent.

Hiding profits in tax havens is one of the most common ways large corporations avoid paying their fair share to the IRS. And indeed, the 31 firms who paid their CEOs more than Uncle Sam operate 237 subsidiaries in low- or no-tax zones like the Cayman Islands and Bermuda.

But that’s just one tax-dodging trick. Corporations have lobbied successfully for a plethora of other tax loopholes and subsidies.

Boeing, for example, has figured out how to double dip in the Treasury’s pool.

The aerospace giant hauled in more than $20 billion in federal contracts in 2013. According to Citizens for Tax Justice, taxpayers also picked up the tab for $300 million of Boeing’s research expenses last year through a tax break that Congress is now considering making permanent.

When tax time came, Boeing got $82 million back from the IRS, despite reporting nearly $6 billion in U.S. pre-tax profits. Meanwhile, Boeing chief executive Jim McNerney made $23.3 million.

Corporate tax dodging is bad for ordinary Americans — and our nation’s long-term economic health.

For example, if Boeing had paid the statutory corporate tax rate of 35 percent on its $6 billion in profits, it would’ve added an extra $2 billion to the funds available for public services. That sum would’ve covered the cost of hiring 2,775 teachers for a year.

Shirking taxes may boost the bottom line in the short term, but in the long run it erodes the economic infrastructure businesses need to be competitive.

Unfortunately, the current political rhetoric has little to do with cracking down on corporate tax avoidance.

Republicans are hooked on corporate tax giveaways. And President Barack Obama has suggested that he’s ready to reward corporations for stashing money overseas by giving them deeply discounted tax rates on their profits if they’ll just agree to bring them home.

Both of these positions are based on the unfounded claim that smaller corporate tax burdens translate into more good jobs.

In a Hart Research poll of voters on election night, only 22 percent favored taxing corporations less. In the same poll, less than 30 percent wanted Congress to make tax cuts a higher priority than investments in education, health care, and job creation.

The American people have their priorities straight. They deserve leaders who do too.

 

By: Sarah Anderson and Scott Klinger are the co-authors of “Fleecing Uncle Sam”; The National Memo, November 19, 2014

November 24, 2014 Posted by | CEO'S, Corporations, Tax Loopholes | , , , , , , , | Leave a comment

“Neglecting Human Costs”: Harvard Business School’s Role In Widening Inequality

No institution is more responsible for educating the CEOs of American corporations than Harvard Business School – inculcating in them a set of ideas and principles that have resulted in a pay gap between CEOs and ordinary workers that’s gone from 20-to-1 fifty years ago to almost 300-to-1 today.

survey, released on September 6, of 1,947 Harvard Business School alumni showed them far more hopeful about the future competitiveness of American firms than about the future of American workers.

As the authors of the survey conclude, such a divergence is unsustainable. Without a large and growing middle class, Americans won’t have the purchasing power to keep U.S. corporations profitable, and global demand won’t fill the gap. Moreover, the widening gap eventually will lead to political and social instability. As the authors put it, “any leader with a long view understands that business has a profound stake in the prosperity of the average American.”

Unfortunately, the authors neglected to include a discussion about how Harvard Business School should change what it teaches future CEOs with regard to this “profound stake.” HBS has made some changes over the years in response to earlier crises, but has not gone nearly far enough with courses that critically examine the goals of the modern corporation and the role that top executives play in achieving them.

A half-century ago, CEOs typically managed companies for the benefit of all their stakeholders – not just shareholders, but also their employees, communities, and the nation as a whole.

“The job of management,” proclaimed Frank Abrams, chairman of Standard Oil of New Jersey, in a 1951 address, “is to maintain an equitable and working balance among the claims of the various directly affected interest groups … stockholders, employees, customers, and the public at large. Business managers are gaining professional status partly because they see in their work the basic responsibilities [to the public] that other professional men have long recognized as theirs.”

This view was a common view among chief executives of the time. Fortune magazine urged CEOs to become “industrial statesmen.” And to a large extent, that’s what they became.

For thirty years after World War II, as American corporations prospered, so did the American middle class. Wages rose and benefits increased. American companies and American citizens achieved a virtuous cycle of higher profits accompanied by more and better jobs.

But starting in the late 1970s, a new vision of the corporation and the role of CEOs emerged – prodded by corporate “raiders,” hostile takeovers, junk bonds, and leveraged buyouts. Shareholders began to predominate over other stakeholders. And CEOs began to view their primary role as driving up share prices. To do this, they had to cut costs – especially payrolls, which constituted their largest expense.

Corporate statesmen were replaced by something more like corporate butchers, with their nearly exclusive focus being to “cut out the fat” and “cut to the bone.”

In consequence, the compensation packages of CEOs and other top executives soared, as did share prices. But ordinary workers lost jobs and wages, and many communities were abandoned. Almost all the gains from growth went to the top.

The results were touted as being “efficient,” because resources were theoretically shifted to “higher and better uses,” to use the dry language of economics.

But the human costs of this transformation have been substantial, and the efficiency benefits have not been widely shared. Most workers today are no better off than they were thirty years ago, adjusted for inflation. Most are less economically secure.

So it would seem worthwhile for the faculty and students of Harvard Business School, as well as those at every other major business school in America, to assess this transformation, and ask whether maximizing shareholder value – a convenient goal now that so many CEOs are paid with stock options – continues to be the proper goal for the modern corporation.

Can an enterprise be truly successful in a society becoming ever more divided between a few highly successful people at the top and a far larger number who are not thriving?

For years, some of the nation’s most talented young people have flocked to Harvard Business School and other elite graduate schools of business in order to take up positions at the top rungs of American corporations, or on Wall Street, or management consulting.

Their educations represent a substantial social investment; and their intellectual and creative capacities, a precious national and global resource.

But given that so few in our society – or even in other advanced nations – have shared in the benefits of what our largest corporations and Wall Street entities have achieved, it must be asked whether the social return on such an investment has been worth it, and whether these graduates are making the most of their capacities in terms of their potential for improving human well-being.

These questions also merit careful examination at Harvard and other elite universities. If the answer is not a resounding yes, perhaps we should ask whether these investments and talents should be directed toward “higher and better” uses.

 

By: Robert Reich, The Robert Reich Blog, September 13, 2014; This essay originally appeared in the Harvard Business Review’s blog.

September 14, 2014 Posted by | CEO'S, Corporations, Economic Inequality | , , , , , | Leave a comment

   

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