United States: Wall Street greed hits new lows

Sunday, April 17, 2011
Photo from Indymedia.org.

Wall Street has continued erecting monuments to its own greed. The British Guardian reported on April 12 that Goldman Sachs’ paid its top five directors almost US$70 million in 2010.

The latest United States Department of Labor’s Bureau of Labor Statistics report, released on 27 July 2010, said civilian workers’ median hourly wage was $16.55. Private industry workers received $15.70 and state and local government workers received $22.04.

The top Goldman Sachs directors, on the other hand, earned an average $38,356 each day for 2010.

The Guardian said Sister Nora Nash of the Sisters of Saint Francis in Philadelphia has described this latest payout as “sinful”.

Nash told the Guardian that “there is a culture of greed and this culture tells me there is a philosophical and ethical divide between these corporations and the ordinary person on the street.

“The middle class is disappearing … There is an awful lot of goodness in the American culture that is being swamped by greed, by selfishness.”

The Guardian that Nash will join an interfaith group to confront Goldman Sachs directors at the investment bank’s annual general meeting in May. Nash said: “My feeling is we are dealing with a corporate world that is almost at the brink of collapse. It can’t go on this way.”

The Goldman Sachs payments have been awarded barely three years after the greatest global financial crisis since the Great Depression.

The April 9 New York Times said: “The disparity is especially stark as companies are swimming in cash. In the fourth quarter, profits at American businesses were up an astounding 29.2 percent, the fastest growth in more than 60 years …

“So far, this recovery has not trickled down … C.E.O’s in finance, technology, energy and beyond are pulling down multimillion-dollar paychecks … The median pay for top executives at 200 major companies was $9.6 million last year.”

The United States government is mired in more than $14 trillion of debt and reeling from huge spending cuts contained in the latest federal budget.

The government also faces the near-term prospect of defaulting on its loan repayments unless Congress agrees to raise the debt ceiling by mid-May.

White House spokesperson Jay Carney predicted on April 12 that the US government defaulting on its loans would “throw the global economy into chaos”. He warned that “playing chicken” with the economy is “risky business”.

US workers face great uncertainty. Unemployment is close to double figures and public sector jobs and services are under siege from federal and state administrations.

Wealth continues to be transferred to the upper echelons of US society, facilitated by government polices at all levels.

University of Wisconsin student body president Michael Wilson said in an April 12 letter to Socialistworker.org: “In the last 30 years since Ronald Reagan — a global sweep of privatization, austerity and deregulation — the wealth of the world has been consolidated into fewer and fewer hands at the cost of human development and human security.”

On April 6, the Huffington Post said that despite the rate of corporate recovery from the financial crisis, “big business is gearing up to try to win yet another budget battle: overhauling the corporate tax code”.

In his State of the Union speech, President Barack Obama said he hoped to remove corporate tax loopholes.

But he said this action would be accompanied by a cut in the overall tax-rate, creating a joint policy intended to be “revenue neutral”.

The Post said this meant the policy “will neither increase of decrease overall corporate tax receipts”.

The article said: “Buoyed by the prospect of a business-friendly tax overhaul … the Business Roundtable and other high-powered corporate lobbyists are using tax reform negotiations to push for more offshore tax breaks and official federal forgiveness for tax avoidance schemes.”

In January, Obama appointed General Electric (GE) CEO Jeffery Immelt as the chair of the Council on Jobs and Competitiveness.

Obama said Immelt “understands what it takes for America to compete in the global economy”.

Proof of this understanding was revealed by the March 24 New York Times, which said GE paid zero tax on its US operations. These operations turned a $5.1 billion profit.

The NYT said that instead of paying tax on its profit, GE “claimed a tax benefit of $3.2 billion”.

“[GE’s] extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore …

“GE’s giant tax department, led by bow-tied former Treasury official John Samuels, is often referred to as the world’s best tax law firm.

“Indeed, the company’s slogan ‘Imagination at Work’ fits this department well.”

The NYT said that “a review of company filings and Congressional records shows that one of the most striking advantages of General Electric is its ability to lobby for, win and take advantage of tax breaks”.





Citizens for Tax Justice.org (CTJ) said on April 12 that, like GE, US corporate giant Honeywell International avoided paying tax on its $1.2 billion profit for 2010.

Instead, like GE, Honeywell International “recorded a tax benefit of US$471 million, meaning Honeywell expects to receive that amount from the IRS”, CTJ said.

Honeywell International’s CEO Dave Cote has served as a member of the National Commission on Fiscal Responsibility and Reform.

Forbes.com said Cote was also “Senior Vice President of General Electric Company and President and Chief Executive Officer of GE Appliances from June 1996 to November 1999”.

British Prime Minister David Cameron, in a continuation of Britain’s paternalistic dealings with the subcontinent, singled out Pakistan’s rich for accusations they were not paying taxes on April 5.

Guardian.co.uk reporter Patrick Wintour quoted Cameron as saying the Pakistani fiscal position was serious because “too few people pay tax. Too many of your richest people are getting away without paying much tax at all – and that’s not fair.”

Given the US government’s facilitation of legal banditry for its corporate elite, perhaps Cameron’s admonishment could have been more fairly directed toward its more powerful ally.

In fact, Cameron could start at home. His government is implementing savage spending cuts worth £81 billion over four years, blaming the economic crisis.

But activist group UK Uncut said rather than making ordinary people pay for a crisis they did not cause, Cameron could start by cracking down on the tax-dodging by corporations and the rich that cost the British government an estimated £95 billion a year.

From GLW issue 877

Comments

Correction....

"The top Goldman Sachs directors, on the other hand, earned an average $38,356 each day for 2010."

This is incorrect, they did not "earn" $38,356 each day, if they did then that wouldn't be a problem. The problem is the fact that they are getting income that they DON'T earn. How can you even write an article that decries the incomes of the super-rich if you play right into the propaganda of the super-rich by calling their incomes "earned".

The first step to fighting income inequality is using the proper language to describe incomes. The most straightforward accurate, and unbiased way to write what you just said is the following:

"The top Goldman Sachs directors, on the other hand, *received* an average $38,356 each day for 2010."

Now if you want to really take sides on the issue you would say:

"The top Goldman Sachs directors, on the other hand, skimmed an average of $38,356 from the compensation workers each day during 2010."

Alright..

"This is incorrect, they did not "earn" $38,356 each day, if they did then that wouldn't be a problem. The problem is the fact that they are getting income that they DON'T earn. How can you even write an article that decries the incomes of the super-rich if you play right into the propaganda of the super-rich by calling their incomes "earned".

Who are you to say they didn't earn it? Perhaps you have these guys timesheets for the year and can prove that they didn't earn it. If so then cough up. Otherwise you are just playing class warfare, which is fine, but don't pass it off as fact.

Are You Kidding?

When an individual is earning as much or more in a day than an ordinary worker earns in a year there's no need to see any timesheet. This type of disparity is absolutely disgusting and there is no timesheet that could adequately account for it. America is a society where the top 1% of income earners control as much as half the country's wealth. It is indicative of a society that is sick and out of control, where wealth concentrations are so acute and the market is increasingly monopolised by only a handful of corporate interests, where the voice of the people counts for absolutely nothing. You show me the timesheet that justifies these robber baron's "earnings" and i'll show you the torch that will burn it.

Phil: A very fair point, though

Thanks for your thoughts on the use of the word "earned". I have to say I entirely agree with you. I guess as a journalist though, my role is to gather, disseminate and present information as accurately as possible to our readership. I try to avoid loading the language with too much "spin". That way the readership can draw their own conclusions about the story. if I want to present a certain point of view regarding the story then I like to present in plain sentences where appropriate (usually at the end of an article). I really appreciate your feedback and, personally, I agree with your point.

GREED IS GOOD

We bankers aint liars
Wall Street was lending
For you fat consumer buyers

http://www.youtube.com/watch?v=EoMpcz0S3hc

Consumer Behavior is to blame for the financial crisis. Lets all start to take responsibility for our actions
and not blame institutions and government. They aren't here to fix everything and they shouldn't be. They're to mediate
and stabilize, not to fix.

There's a Profit Jammed in my Arse!

Going on your spelling I assume you're an American? Not to worry, this will be straight forward. If the government's role is to mediate and stabilize (sic) they didn't do a very good job when the financial crisis was brewing, did they? Where was the financial regulation? Why did the government legislate for and then promote lending by banks to individuals lacking adequate financial resources? Why was the financial sector allowed to package collateralised debt and then trade and place bets on these packages? Why were triple A ratings given to these blatantly unsound financial arrangements? Why were ordinary people left destitute after their home foreclosures and offered no government assistance while the banks and financial institutions were rescued to the tune of hundreds of billions of dollars?

Consumer behaviour? Sure, individuals should act responsibly and take responsibility for their actions, but many people were deliberately lured into financial agreements by "experts" and then left with the devastating consequences. Bankers and other financial lenders are in the business of profit. They are also in the business of greed, this is inherent to their very existence.

Without adequate government designed legislation to reign in their greed and protect people from their desperate pursuit of money the banks and financial institutions become a social menace. They become predatory. It is said that money is the root of all evil.

It is a simple phrase and a simple idea, but its meaning is profound. No one should be made to suffer as a result of the naked greed of others. Sadly, our world is full of examples of this happening.

Billions of people suffer needlessly every day for the sake of other people's profit, It is a system that must be overcome. Oh for the day when the first shall be last and the last shall be first.