February 1, 2009
Super Bowl Sunday fun: Try saying these words out loud, in the incredulous voice of former NFL coach Jim Mora in that Coors beer commercial:
"Bonuses? Don't talk about - bonuses? You kidding me? Bonuses?" Yes, coach, I'm afraid it's true: Something like $18.4 billion in bonuses for Wall Street executives in 2008, the year Wall Street came tumbling down.
We had 2.6 million jobs disappear from the American economy last year, another 60,000 just last Monday and more expected, with the number of people getting unemployment checks now at an all-time record. Meanwhile, the New York State comptroller reports that in one of the most ruinous years in the history of money, total Wall Street bonuses hit their sixth-highest level on record. So, all in all, despite the economic bonfire, it was pretty much business as usual for some of the already well-compensated people who make money from money.
And this at a time when taxpayers - and their descendants - are being asked to finance the bailout of financial institutions.
Even the president of the United States was outraged. Even the president saw the year-end holiday bonuses as "shameful" and "the height of irresponsibility." I say "even the president" because it's not like we've had a long line of chief executives who decried excessive profits and executive compensation. You have to stand back and regard that tableau for a minute: The man in the Oval Office saying Wall Street ought to be ashamed of itself.
The president said that? Are you kidding me? The president? Yes, and his vice president said those who took bonuses ought to be thrown in a brig.
Such rhetoric hasn't been in the presidential repertoire since Franklin Roosevelt. In fact, we've had the opposite - presidents who wanted to further reward the well-compensated with tax cuts. Ronald Reagan sold us trickle-down economics, on the premise that those with capital must have even more to make the economy grow. But it didn't work out that way.
Things have actually trickled up over the nearly 30 years since Mr. Reagan's election. The disparity between the wealthiest 5 percent of citizens and the poorest 5 percent has never been wider, and Americans in the middle haven't done much better than those just below them. Instead of holiday bonuses, average workers across the country have seen stagnant wages and increased health care costs, along with incessant cost-cutting and workforce reductions to show bigger profit margins, most of it driven by Wall Street.
The nonpartisan Center on Budget and Policy Priorities in Washington looked at incomes adjusted for inflation over the last decade. It found that since 1998, incomes declined by 2.5 percent among the bottom fifth of American families while increasing by 9.1 percent among the top fifth. And, on average, incomes grew by just over 1 percent for the middle fifth of American families.
In New York, Wall Street compensation certainly contributed to this condition: Since the 1980s, average incomes there grew by $108,000 among the top 5 percent but by less than $1,000 among the bottom 20. (Like New York, Maryland has been one of the top 10 states for income disparity since the CBPP started measuring it in the 1980s.)
So, yes, the rich have gotten richer, and with Washington's assistance. And clearly Wall Street - read that, the super-rich - wants the ride to continue. Insulated from real pain, convinced of their value even as the pillars crumble about them and oblivious to public opinion, bankers and securities executives continued to take bonuses while the federal government provided taxpayer-backed billions to bail them out.
It's outrageous, but understandable. It's as Alan Greenspan told Congress last fall: the way the world is supposed to work. But, of course, Mr. Greenspan was shocked to discover a great flaw - you can't trust those in the free market to do the right thing - and here we are in meltdown.
Maybe things will change. Perhaps the new president can influence the markets and change the culture of corporate America. Maybe he can shame Wall Street into shedding such obnoxious behavior in the future. Maybe this was the last gasp of Reagan era get-mine greed.
Last gasp? You kidding me?
Dan Rodricks' column appears Sundays on this page and Tuesdays in the news pages. He is host of the midday talk show on WYPR-FM.
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