Well, the US General Election is barreling toward us like a hurricane. It will be over soon, one way or another, and I won’t be missing those political ads at all. They’ve reduced one poor little girl to tears: in her viral video, she said she hates both candidates for president. Here in Ohio, we’ve been spared from the worst of Hurricane Sandy’s wrath, but my thoughts go out those who have suffered the most. A friend used to always say that “we hang by a silver thread,” meaning that something life-changing can happen at any moment, and that was surely on display on our east coast this week.
Last week, before the storms grabbed all of the headlines, my local paper’s business section had several stories (which I mentioned in an earlier post) that seemed to bode well for our economy. The unemployment rate continued to fall in our area. A headline proclaimed that the United States could become the world’s top oil producer, explaining that there is currently a boom in oil and other liquid hydrocarbon production in our country. In our local economy, a new retail store and a new hotel that caters to long-term business travelers are planned for the county. It was such a flood of good economic news, that I was startled by the headline of an article at the bottom of the page.
“Stocks sink as DuPont, Xerox, 3M scare investors” the headline of The Associated Press release announced. It seems that despite three years of growing profit for these and other “Blue Chip” companies, revenues (money received from operations, such as sales) are down. Part of the problem lies elsewhere in the world: these are truly global companies after all, and demand has fallen off worldwide. In addition, investors are worried that corporate cost-cutting has reached its limit. I don’t think that’s really the case. There is one area with enormous cost saving potential that is never discussed: executive compensation.
In 2011, the CEO of Xerox was paid $12,902,607 (all figures include salary/bonus, benefits and stock options) representing an amount 379 times what was paid to the average worker. The Chief Executive of DuPont received $15,926,631, or 468 times what the average employee earned, and 3M’s CEO was compensated $25,391,738 which was 746 times the pay for one of the company’s average employees. Those CEOs are way behind the leader. The CEO of Apple, Timothy Cook, was paid $377,996,537, or 11,100 times the average employee compensation. To be fair to Cook, most of his compensation was in the form of stock options, which could decrease in value by the time he exercises them, but still, that’s a whole lot of executive compensation.
Of course you know by now that I love history, especially the insight that it can offer to our current situation. So let’s look back a few years. In 1980, the average CEO compensation for all of the companies included in the Standard & Poor 500 was 42 times the average worker’s pay. In 2011, the average CEO in the S&P 500 received 380 times more than the average worker. I don’t know about you, but I find that number staggering. It boggles my mind, and it raises a few questions, including the main one: why so much more now than just over thirty years ago?
It also answers the question that I thought of when I first saw the headline, which was why would a company come out at the end of October and warn its investors that problems are on the way for the companies’ profitability? Well, I think the simple answer is that these executives would like everyone to think that our current President isn’t up to the task of doing what is best for American businesses. Furthermore, we would be much better off if we would elect a Republican who has more than demonstrated his own support for big business, as well as support for the concept of rule by the wealthy. Personally, I don’t think it really matters, since history has shown (there’s that old “historical perspective” thing again) that the stock market has actually performed better under Democrat presidents than it has under Republicans. Both parties are in the pockets of the corporations, and there is little evidence that any significant changes are forthcoming. However, those people at the top, the top 1% of income earners, want to make sure that they stay where they are: at the top. Also, in order for that to happen, that everyone else stays at the bottom.
The new flood of unrestrained PAC-money sponsored political ads really has me freaked out. Does anyone really believe this nonsense? Is anyone really this uninformed? Of course they are. We’ve been taught from an early age to respect authority, and what’s more informative than the deep, reassuring voice of authority from TV news, which is mimicked in the political ads? Serious television journalists such as Edward R. Murrow and Walter Cronkite set a standard for unbiased reporting in the middle of the 20th century, and many of us assume that this integrity continues in all newsrooms today. It really doesn't. Our media is owned by large corporate entities that mostly dispense the news that they want us to hear. The political ads twist facts so badly in an effort to frighten us into giving them our vote that it should be a criminal act. It won’t be unless we speak up as an overwhelming group, and that won’t happen.
The latest political ad that has made me nauseous is from an Eastern European guy who talks about growing up under Socialism. He speaks in the background about the failure of the Socialist system while pictures from post-World War II Europe flash across the screen. He concludes with the statement that he plans to vote Republican this election, because Socialism doesn’t work. The implication is that Democrats favor Socialism. They don’t. Never did. Not once.
I reiterate the following fact: our economy has fared better in recent history under Democratic administrations than it has under Republican administrations. That is information supported by evidence. The commercial cited above is the worst kind of fear-mongering propaganda. The people who fill your head with such nonsense do not deserve your vote. I was once a pro-business Republican. I’m not sure if I’m now a Democrat, but I still love my country, and want what is best for her people, as well as what is best for all of the world’s people. I’m fairly certain that capitalism is the best way for people to succeed in this world, but I have seen the problems associated with unrestrained capitalism. Human greed needs to be kept in check. We need rules and regulations to help the little guy, because the success of our nation rests on the success of our rapidly vanishing middle class. History has demonstrated this time and again. Capitalism works, but unrestrained capitalism only works for the ones with the most money and most power.
So what should you do? Cast your vote for the people who are going to benefit you the most. If you are a member of the middle class, or even poor, you would be wise to vote for the Democrats. If you’re a multi-millionaire, that means you probably think you should vote for the Republicans. Guess what? History has shown us that your stock portfolio will probably improve more under a Democrat’s administration (check out the following graph). As far as Socialism goes, history has already demonstrated that the last two Democrats to hold the office of President of the United States of America would be considered two of the worst Socialists ever. More like Capitalists, really good Capitalists.
“Self-interest makes some people blind, and others sharp-sighted.”
-Francois de La Rochefoucauld
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