Letter 2 America for February 4, 2014

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Dear America,
Ayn Rand and the World She Made

Ayn Rand and the World She Made (Photo credit: Wikipedia)


The solutions to one of our nation's afflictions--economic, and hence social, stratification--are not the kind of remedies that smack of social engineering iterated in President Obama's State of the Union address.  Rather, what we need is a candid assessment of American capitalism and a fundamental willingness to change some things at their most quintessential levels.  The reason that our system seems stacked against those who are not already at the top of our economic ladder is that it is.  And changing tax laws will impede the tendency in that direction to some extent, but until we acknowledge the difference between natural and artificial wealth in every sphere, we can do nothing to change the institutionalization of inequality that is the American economic system.  We have cast in stone the rules that make the sedimentation of our society ineluctable.  We actually protect what has become an economic caste system and thus change in the disparity between rich and poor is almost certain not to occur.  That is why preschool education and reinforcement of values that have fallen by the wayside will not serve to get us on the path toward the real egalitarianism that we have always claimed was the American Way, but that in reality hasn't been since the industrial revolution.  The virtual aristocracy of the wealthy in this country didn't start yesterday, or ten years ago.  It evolved over the course of a century and a half, sponsored of late by those who subscribe to supply-side economics and the Calvinistic social Darwinism of would-be pundits like Ayn Rand and her modern acolyte, Paul Ryan.  It represents the decay of our ideals, not their manifestation, and in order to alter that trend, we must dig deep into the economic institutions that have precipitated it, starting with corporations.

Some years ago, back when I believed the notion that one could make money legitimately by investing in the stock market, we owned some stock in a tire company.  It began to move in the wrong direction and the shareholders were up in arms about the policies implemented by management and the CEO in particular.  There was a grass-roots movement to replace him and the board of directors at the annual shareholders' meeting, where millions of shares were voted against the compensation package that the CEO was slated to receive.  But millions of shares--a majority of those cast--were not enough because they did not represent a majority of all the shares that were outstanding, a substantial plurality of which didn't vote at all.  Thus, the consensus of the majority of those who were interested in the running of the company was thwarted by a corporate by-law...one that is on the books of a great many corporations.  That style by-law virtually guaranties both the impunity of over-paid executives and their exorbitant compensation, and not incidentally the astronomical pay outs they receive when they get fired for being failures.  It is the American equivalent of inherited titles of nobility, and addressing that one thing in particular would be of enormous moment.  Limiting tax incentives that maximize profits while diminishing the national weal will help to reduce the corporate tendency toward exploitation of impoverished people at the expense of American workers, but it is not enough.  Raising the minimum wage will help in several ways: it will put more buying power in the hands of people who will exercise that power and thus stimulate the economy and create the need for more workers, hence more jobs, but that is not enough either.  Even The President's executive order to pay all employees of federal contractors $10.10 per hour at a minimum will help by putting more power in the hands of workers at the expense of the capitalist upper class that decides how much is enough to pay people without eroding their own profits.  They will have to compete with federal contractors for workers at a time when we can anticipate more federal spending on infrastructure, among other things, and that will drive wages up after five years of downward pressure on wages because of the scarcity of jobs at the lower levels of business and industry.  But eliminating the insular power of the board room to sequester corporate revenue for the benefit of the select few executives would go much farther in that it would prevent the accretion of wealth in the hands of people who make their livings deciding things rather than doing them.  It should result in a more equitable wage scale for executives who used to make 40 times the average wage and now make 400 times that amount, and as a byproduct of that reconciliation of compensation with value, wages at the lower levels of business--the levels at which the work is done--can be more reflective of the division of labor within the company, and thus within our society.

So, I would take the step of outlawing corporate by-laws that insulate executives from the will of the majority of interested shareholders who actually vote their shares--rather than allowing those who don't bother to vote but just cash in the dividends to have a say in determining executive compensation by doing nothing--as a first step, but that is all it would be: a first step.  I'll tell you about step two on Friday.

Your friend,

Mike

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This page contains a single entry by Michael Wolf published on February 3, 2014 9:16 AM.

Letter 2 America for January 31, 2014 was the previous entry in this blog.

Letter 2 America for February 7, 2014 is the next entry in this blog.

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About this Entry

This page contains a single entry by Michael Wolf published on February 3, 2014 9:16 AM.

Letter 2 America for January 31, 2014 was the previous entry in this blog.

Letter 2 America for February 7, 2014 is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.

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