The “American dream” is that this is a land of opportunity. America is supposed to be the magical place where anyone can work their way up from poverty to the presidency, or at least that’s what we’ve believed.
Recent studies found that our country is now far from that.
Americans enjoy less economic mobility than their peers in Canada and much of Western Europe. The mobility gap has been widely discussed in academic circles, but a sour season of mass unemployment and street protests has moved the discussion toward center stage.
In a country that prides itself as a “classless society”- we are stratified financially more than ever, and our ruling class now has a stranglehold on Congress (47% are currently millionaires- and it would probably be higher, except we have a big freshman class right now). The gap between the haves and the have nots is growing faster than compound interest and fees on your overdrawn checking account.
Republican candidate for president Mitt Romney still believes the answer is “American business” and that “free enterprise” will take care of the problems:
At an outdoor rally yesterday at Wofford College in Spartanburg, Romney offered a robust defense of American business, warning that “free enterprise is under attack from the right and left.’’…
“This president has got it entirely wrong when he attacks the private sector,’’ Romney said. “Don’t attack the private sector. Don’t attack risk takers. Don’t attack those that are trying to create a brighter future for themselves and their family.’’
“Don’t attack profit,’’ Romney said. “Profit, by the way, is what allows businesses to hire people and grow. Free enterprise is under attack from the right and left.’’
Fundamentally, Romney is correct, profit is what allows businesses to hire people- the question is what people are we hiring and how the profits are made and shared.
Hiring people in “third world” or “developing nations” is one way to maximize profit- and American corporations have been doing a great job of that. Since the beginning of the economic meltdown, shifting jobs overseas has been easy, despite high unemployment in this country. Many of our biggest corporations have also been hoarding cash. Apple, for instance, is sitting on something around $50 billion. Oddly, the windfalls of success aren’t being shared with the owners of the company- the shareholders through dividends- the only way they can “profit” from ownership is to sell their stock. Yet, the executive team running the company keeps rewarding itself with stock options, multimillion-dollar bonuses (in the tens and hundreds of millions). This isn’t how the system is supposed to work.
Nor was the system working when AIG failed (soon after after the bond-rating agencies gave them an A rating)- and the American public bailed out the banks. The executives at AIG who took the country to the brink of financial destruction all were being paid princely sums and suffered no jail time and most are still making huge money.
A local instance of one of these “job creators” gone bad was MCSi, a high growth sham company that received local taxpayer assistance from the Montgomery County Port Authority in building a new HQ. The company was a house of cards, much like our Wall Street Casino, and when it fell- thousands were out of jobs or forced to write off debts. The CEO, after a protracted court case, was sentenced to a grand total of 7 days in jail. Had he had a few thousand dollars worth of meth in his mansion, he’d be in prison for life.
There is nothing wrong with the American dream, there is a problem with what kind of reward is expected at the top. We laugh when Jihadists dream of being rewarded with 70 virgins after blowing themselves up in the name of Allah, yet we seem to think it’s perfectly OK for companies to pay their executives more in a week than most of their workforce in a year- with zero personal risk involved on their part. Even when the head of Countrywide, Angelo Mozilo, was fired, he took home a huge multimillion-dollar jackpot.
All we have to do is add risk back in to the American business model and also limit the ability to profit wildly without some measurable standard of performance and Mitt can shut up.
Here are three parts of the solution:
- The federal government, the largest buyer of goods and services, will no longer purchase from companies that don’t implement a cap on executive pay based on the average U.S. worker’s payroll. In other words, if you are Miami Valley Hospital (Premier Health Partners) or Boeing, and your average U.S.-based payroll is $50K a year, your chief executive can’t make more than 35 times that- or $1,750,000 a year (a caveat might be added that if you operate as a “non-profit” corporation, the ratio drops to 20x- sorry MVH). Note- all hospitals depend on Medicare/Medicaid for their existence, and Boeing wouldn’t be around if not for our Air Force and government contracts.
- Shareholders of record, must be paid dividends annually if the company makes a profit. Stocks must be held for a period of at least a year to be eligible and any profit realized from short-term trades is taxed at a 35% tax rate. Dividends would be taxed at 15% to spur investment in private enterprise by the private sector.
- Secondary markets- the buying and selling of financial paper and commodity exchanges- would be restricted to either long-term holding of paper, or a requirement to actually take possession of the commodity. It’s time to stop pretending that trading paper is really the same as creating jobs and paying people. Our financial system acts as if “fantasy football” is the real game and the NFL is just a tiny part of the system- when if fact, it’s the other way around- the real people who play the game determine the outcome.
With these three changes, the American dream may come back. We would reward innovators and business founders with the opportunity to make huge money by owning their own companies- while, posers who waltz in after the fact, would have to earn their stock the old-fashioned way.
Romney is so far disconnected from the everyday financial situation of most Americans that he is a perfect example of how our country has lost touch with what a fair income distribution looks like:
He (Romney) also characterized as “not very much” the $374,327 he reported earning in speaking fees last year, though that sum would, by itself, very nearly catapult most American families into the top 1 percent of the country’s earners.
We don’t hear real solutions to the economic stratification of this country without someone yelling “socialism” – but, the reality is that it is socialism when the taxpayers of this country bail out the wizards of Wall Street with our tax dollars or continue to do business with companies that pay their executives princely sums while pretending to be saving our country money.
On March 6, 2012, you can pick from 6 Democratic candidates to run for Congress against Mike Turner in OH-10. I ask you: Are there any that can write a post with solutions to the crisis- and cite their previous writings since 2005? Can you research their positions- or even question them easily? If you want a new kind of representative, please consider donating to my campaign. I refuse all corporate, PAC and Special Interest money- if it’s not coming from an individual taxpayer, I’m not taking it.
I’m doing what I can to end the myth of the million-dollar congressional campaign as well. Your money will be used in the most efficient way possible. You can help by sharing this message with as many friends as you have. Thank you.