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Issue #1733      June 1, 2016

Culture & Life

A rigged system

It’s an axiom among bosses that any negative features likely to adversely affect profits – an increase in costs, or a drop in sales, whatever – must be foisted on to the backs of the employees, so that the boss’s income is not reduced. It doesn’t matter that the problem will have been the result of the dog-eat-dog nature of capitalism itself: the workers make handy scapegoats and unless they have a strong union are powerless to stop employers robbing them blind.

It’s the workers’ labour that creates corporate wealth, but if an enterprise suffers the embarrassment of going belly up money owed to employees – unpaid wages, pension contributions, etc – will be at the bottom of the list to be paid. Priority will always be given to money owed to other companies – and to the bosses themselves.

According to ProPublica, when Mark Whittle the former CEO of US outfit South Financial Group, retired in October of 2008, he received “a $4 million cash severance payment” and a “$9 million pension benefit” as well as an extra $5 million (for being such a nice guy, presumably). A few weeks later South Financial had to be bailed out by US taxpayers to the tune of $347 million. Whittle was not asked to reimburse the company that had just lavished all this largesse on him so generously with even one cent. It was all his to keep; the taxpayers would look after the company.

Mark Whittle’s retirement package, however, was peanuts compared to that of Jeffrey Immelt, CEO of General Electric. The Wall Street Journal reported that “Mr Immelt’s pension is valued at about $4.8 million a year for life.” Note that: for life! That’s a mighty generous pension, especially when we consider that GE was also bailed out by US taxpayers during the financial crisis. Capitalists have always regarded the public purse as something into which they can dip their fingers with impunity whenever the “free enterprise” system fails to come up to scratch.

Although they are always keen to use the state’s resources to finance infrastructure projects and the like – indeed, anything which they expect to advance their own profit-making opportunities – capitalists are remarkably loath to contribute any of their profits as tax so their governments can undertake public works that might benefit the people generally.

Jake Johnson, writing in Common Dreams, noted that “in October of 2008, [when Mark Whittle retired, the US] economy was in the early stages of what the IMF called ‘the worst recession since World War II’.” The effect of that recession on workers was reported by The Washington Post as “the stock market’s prolonged tumble has wiped out about $2 trillion in Americans’ retirement savings in the past 15 months, a blow that could force workers to stay on the job longer than planned.”

Unimpressed, Johnson paraphrased the Post with the blunt statement: “Thanks, in other words, to Wall Street’s reckless and criminal behaviour, workers who were promised a secure retirement were cheated out of the benefits they worked hard – for decades – to attain.” Which is just what we have been talking about.

Even if bosses don’t actually steal their employees’ pension money, what workers receive as a pension bears little comparison to the vast sums the boss class are happy to give themselves. Johnson again: “Broadly, the disparity in retirement savings between CEOs and the average American family is striking: As a 2015 report by the Centre for Effective Government and the Institute for Policy Studies detailed, ‘just 100 CEOs have as much in their company retirement assets as the entire retirement savings of 41 percent of American families (50 million families total)’.”

Johnson goes on to point out that “the CEOs and top executives of companies that have an extensive record of involvement in questionable (to say the least) activity and that have to be bailed out by the taxpayers are at no risk of losing a dime of their lavish pension plans (and, on some occasions, they are rewarded for their efforts with massive bonuses); but, average workers, who had nothing to do with the crisis, are forced to absorb the costs.” Another American coming to grips with the reality of capitalism.

US journalist Matt Taibbi noted how Wall Street has for years been “grabbing money meant for public workers.” More than that, however, Taibbi also noted how politicians, to keep their business partners safe from accountability, have adopted such methods as “using scare tactics and lavishly funded PR campaigns to cast teachers, fire-fighters and cops – not bankers – as the budget-devouring bogeymen responsible for the mounting fiscal problems of America’s states and cities.

“It’s a scam of almost unmatchable balls and cruelty,” wrote Taibbi, “accomplished with the aid of some singularly spineless politicians.”

To which Johnson added the observation that “much of the same can be said about the American economy, broadly. In short, the middle class and the poor must endure lectures on the virtues of personal responsibility, self-sufficiency, and free enterprise from the same people who have been feeding greedily at the public trough, crashing the economy, and walking away with their pension plans and severance packages in hand for decades.

“If this isn’t the definition of a rigged system – a system that gives the rich a free ride while forcing the public to clean up the mess and suffer the consequences – I’m not sure what is.”

I think Guardian readers will have no doubt about whether it’s a rigged system either!

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