Meet the 1%

So why do you feel the need to denigrate what Obama did? Reflex?

 

You're also ignoring the fact that reduced utility bills help out senior citizens, many of whom need to count every penny.

Not to mention, lower utility bills also help out ... businesses. You know, the same businesses that offer those entry level jobs.

 

Dooley, a subject we agree about!

The problem with this story, I think, is that people are more upset with the metaphorical 1% not the literal 1%. Specifically, the elites that enrich themselves by exploiting gaps in our economic, legal, and political structures. They often merely extract rents rather than add value to society.

This includes top-level executives earning outrageous salaries with little oversight because of principal-agent and collective action problems. Traders that take home huges bonuses because of "skill" that is really luck or disguised risk. Executives at industrial firms racking up profits by producing pollution they do not have to pay for (classic externality).

 

Buuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuulllllshit.

And if they do, the vast vast majority of that "work" consists of sitting on their asses, dialing phones or sending e-mails, telling many many other people to do REAL work, so they can sit on their asses some more.

And remember, the NYT is a corporatist rag.

 

Also, Krugman points out the 0.1%, as opposed to the 1%, really isn't all that diverse:

http://krugman.blogs.nytimes.com/2012/01/15/but-the-top-0-1-percent-isnt-diverse/

 

What's so bad about the fact that "business executives" make up the vast majority of the top 0.1 percent? That includes entrepreneurs who create products or service techniques and then become the CEO (Steve Jobs, John from Papa John's, etc.).

Who should be part of the top 0.1 percent but isn't?

 

Me, for starters.

 

It's not so much who should be part of the 0.1 percent but isn't. It's who is part of the 0.1 percent, who doesn't deserve it.

Namely, executives who do little more than cut jobs or send them overseas and collect huge bonuses for doing so.

 

OK, so Steve Jobs builds the company from scratch and works his way up to a higher salary. Fair enough. But why does his replacement deserve to start at that higher salary, having not done that groundwork?

(Metaphorical example: I'm pretty sure the new Apple CEO has been there for a while. But the point stands.)

 

But Jobs had only a $1 salary.

His earnings came from stock, which is fine and dandy considering he founded the company.

His successor, while receiving a $900,000 salary (not all that high for CEO of the world's richest company), also gets most of his earnings through stock, half of which won't vest until 2016 and the rest until 2021 (to encourage long-term rather than short-term results).

 

Suppose you have a shareholder-owned company with a workforce that is too big (on a long-term basis). Why it is too big is irrelevant. Maybe top management was too optimistic in its plans. Maybe demand for this company’s product fundamentally changed. Maybe the workforce itself got more productive than anyone could have imagined. For whatever reason, there’s no way of justifying a workforce that’s that big. But top management won’t make a change. Who’s getting stiffed here? Well, the shareholders, for whom top management works, are seeing their money being thrown away. And the overall economy’s getting held back, because that excess labor could ultimately be put to better, more desired uses.

Now suppose some outsider comes in. Maybe he/she buys the company, maybe he/she wins a proxy battle, whatever. First thing the new management team does is reduce headcount. Should that be rewarded? Of course it should. We now have a company that was underperforming due to excessive labor costs and we’ve realigned it with the realities of its situation.

Does it suck if you are one of those employees who gets canned? Of course it does. But clean-ups like this are just as important for the overall health of the economy as those heroic founding CEOs and their innovations.