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July 19, 2002
M. Shahid Alam
Through
Racist Eyes:
Is Eurocentrism Unique?
July 18, 2002
Mokhiber / Weissman
Business
As Usual
Jerre Skog
I Spy: Now
Let's be Fair,
the USA Ain't East Germany
Ralph Nader
The CEO
Crimewave:
Corporate Socialism
Mahbubul Karim (Sohel)
The Rising Tensions
Between Spain and Morocco
Alexander Cockburn
Drivel
and Squawk:
Can the Times' Jeff Gerth
Save the White House?
July 17, 2002
Philip Farruggio
The
New Role Model:
Remember Jesus, George?
Zara Gelsey
Who's
Reading Over
Your Shoulder?
Behzad Yaghmaian
9/11 and
Fotress Europe:
the Drama of the New
Moslem Diaspora
Mike Ferner
War, Incorporated
Gary Leupp
Bush, Burqas
and the Oppression of Afghan Women
July 16, 2002
Pierre Tristam
Faith-based
Capitalism in
the Ruins of the Market
Kurt Nimmo
How My
35mm Camera Almost Became a Tool of Treason
Robert Fisk
The Kashmir
Distraction
Salam al-Marayati
When
is Terrorism
Not Defined as Terrorism?
Kathleen Christison
The
Image Problem:
Anti-Palestinian Bias
from Wilson to Bush
July 15, 2002
Gavin Keeney
In One
of Safire's Ears,
Out the Other
CounterPunch Wire
Nader in
Cuba
Ralph Nader
The Secret
World of Banking
Dave Marsh
Vincible:
Michael Jackson, Racism and the Music Cartel
Rahul Mahajan
Justice
for Bhopal
Jeffrey St. Clair
Seduced
by a Legend
The Return of Jimmy T99 Nelson
July 14, 2002
Bill Christison
The
DOA (Poem)
David Vest
I'll Never
Get Out of This Band Alive
July 13, 2002
M. Junaid Alam
A Process
of Dehumanization
Gavin Keeney
Go Tell
Karl Rove!
Matt Vidal
Corporate
"Ethics" Red Herrings
Ed Whitfield
Lessons
from Independence Day
July 12, 2002
Sean Donahue
The Other
Harken Energy Scandal: Oil, Death Squads
and Colombia
Walt Brasch
Sin Tax
Scam
"Psst. Cigarettes. A Buck Each."
Steve Perry
A Tale
of Two Twits
Wall Street Burns, Bush Fiddles, But Where's Wellstone?
July 11, 2002
Lloyd Marbet
Arrested
by the Chamber
of Commerce
David Krieger
Law vs.
Force
David Vest
Fountain
of Foo:
Strike Three Called
Irit Katriel
A Deep
Ideological Crisis
Richard Glen Boire
Dangerous
Lessons:
Public School Drug Testing
Resources:
100s of Links
About 9/11
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Robust Heroin Market and Helped to Finance the Rise of the Taliban
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Whiteout:
CIA, Drugs & the
Press
by Alexander
Cockburn
and Jeffrey St. Clair
The Memphis Blues Again:
Six Decades of Memphis Music Photographs
Photos by Ernest Withers
Text by Daniel Wolff
The New Intifada:
Resisting Israel's Apartheid
Edited by Roane Carey
A Pocket Guide to
Environmental Bad Guys
by James Ridgeway
and Jeffrey St. Clair
The
Phoenix Program
by Douglas Valentine
Al Gore:
A User's Manual
by Cockburn
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|
July
19, 2002
American
Journal
The
Hog Wallow
Pop-Gun
Populism Isn't Enough
by Alexander Cockburn
When did the great executive stock option hog
wallow really start? You can go back to the deregulatory push
under Carter in the late Seventies, then move into the Reagan
Eighties when corporate purchases of shares really took off.
This was the era of the leveraged buy-out and merger-mania, assisted
by tax laws that favored capital gains over stockholder dividends,
and allowed corporations to write off interest payments entirely.
Between 1983 and l990 72.5 per cent of
all US net equity purchases were bought by non-financial corporations.
At the end of this spree the debt laden corporations withdrew
to their tents for three years of necessary restraint and repose,
until in 1994 they roared into action once more, plunging themselves
into debt to finance their share purchases. This was the start
of the options game.
Between 1994 and 1998 non-financial companies
sank themselves in debt by either repurchasing their own shares
or acquiring shares as a result of mergers. The annual value
of the repurchases quadrupled, testimony to the most hectic,
sustained orgy of self-aggrandizement by an executive class in
the history of capitalism.
For these and ensuing reflections and
specific numbers figures I'm mostly indebted to Robert Brenner's
prescient The
Boom and The Bubble, published this spring with impeccable
timing by Verso; also Robin Blackburn's long awaited book (also
from Verso) on the past and future of pensions, Banking
on Death.
Why did these chief executive officers,
and chief financial officers, and boards of directors chose to
burden their companies with debt? Since stock prices were going
up, companies needing money could have raised funds by issuing
shares, rather than borrowing money to buy shares back.
Top corporate officers stood to make
vast killings on their options, and by the unstinting efforts
of legislators such as Senator Joe Lieberman they were spared
the inconvenience of having to report to stockholders the cost
of these same options. Enlightened legislators had also been
thoughtful enough to rewrite the tax laws in such a manner that
corporations are allowed to deduct these same costs from company
income.
As Brenner remarks, US law "thus
encourages corporations to exaggerate their earnings in public
for the benefit of their stockholders, while deflating them in
private for the benefit of the Internal Revenue Service."
It's fun these days to read all the jubilant
punditeers who favor Democrats now lashing Bush and Cheney for
the way they made their fortunes while repining the glories of
the Clinton boom when the dollar was mighty and the middle classes
gazed into their 401(k) nest eggs with the devotion of Jonson's
Volpone eyeing his trove. "Good morning to the day; and,
next, my gold: Open the shrine, that I may see my saint."
Bush and Cheney deserve the punishment.
But when it comes to political parties the seaminess is seamless.
The Clinton boom was lofted in large part by the helium of bubble
accountancy. Brenner cites a Bear, Stearns study reviewing all
S&P 500 companies that calculated their net income in that
year would have been 6 per cent lower had stock options been
counted as an expense. Earnings at Yahoo, Broadcom, JDS Uniphase
and the others would either have been wiped out or gone deeply
negative.
By the end of 1999 average annual pay
of CEOs at 362 of America's largest corporations had swollen
to $12.4 million, more than six times what it was in 1990. The
top option pay-out was to Charles Wang, boss of Computer Associates
International, who got $650 million in restricted shares, towering
far above Ken Lay's scrawny salary of $5.4 million and shares
worth $49 million. As the Nineties blew themselves out, the corporate
culture applauded on a weekly basis by such bullfrogs of the
bubble as Thomas Friedman saw average CEO pay at America's 362
largest companies rise to a level 475 times larger than that
of the average manufacturing worker.
The executive suites of America's largest
companies became a vast hog wallow. CEOs and finance officers
would borrow millions from some cooperative bank, using the money
to drive up company stock prices, thereby inflating the value
of their options. Brenner offers us the memorable figure of $1.22
trillion as the total of borrowing by non-financial corporations
between 1994 and 1999, inclusive. Of that sum, corporations used
just 15.3 per cent for capital expenditures. They used 57 per
cent of it, $697.4 billion, to buy back stock and thus enrich
themselves. Surely the wildest smash and grab in the history
of corporate thievery.
When the bubble burst, the parachutes
opened, golden in a darkening sky. Blackburn cites the packages
of two departing Lucent executives, Richard McGinn and Deborah
Hopkins, a CFO. Whereas the laying off of 10,500 employees was
dealt with in less than a page of Lucent's quarterly report in
August of 2001, it took a 15-page attachment to outline the treasures
allotted to McGinn (just under $13 million after running Lucent
for barely three years) and to Hopkins (at Lucent for less than
a year, departing with almost $5 million. Michael Bonsignore,
ousted as boss of Honeywell, got a $9 million settlement, plus
a commitment that he continue to be treated as a chief executive,
with "executive transportation" and "financial
and tax-planning services" for the rest of his life.
Makes your blood boil, doesn't it? Isn't
it time we had a "New Covenant for economic change that
empowers people". Aye to that! "Never again should
Washington reward those who speculate in paper, instead of those
who put people first." Hurrah! Whistle the tune and memorize
the words (Bill Clinton's in 1992). Prime yourself for a bout
of rhetorical populism, necessary to soothe popular indignation.
There are villains in this story, an
entire piranha-elite. And there are victims, the people whose
pension funds were pumped dry to flood the hog wallow with loot.
One great battleground of the next decades across much of the
world will revolve around pensions and issues of asset-based
welfare for the swelling ranks of older folk. Here in the US
privatization of Social Security has been only staved off because
Bill Clinton couldn't keep his hand from his zipper and again
because George Bush's credentials as a voucher for the ethics
of private enterprise have taken a fierce beating.
But the wolves will be back, and pop-gun populism (a brawnier
SEC, etc etc) won't hold them off. The Democrats will no more
defend the people from the predations of capital than they can
protect the Bill of Rights. (In the most recent snoop bill pushed
through the House, only three voted against a measure which allows
life sentences for "malicious computer hacking": Dennis
Kucinich, and two Republicans, Jeff Miller of Florida and the
great Texas libertarian, Ron Paul.)
It was the Democrats in the US senate
in early July who rallied in defense of the accounting "principles"
that permit the present deceptive treatment of stock options.
Not just Joe Lieberman, the whore of Connecticut, but Tom Daschle
of the Northern plains.
Pop-gun populism is not enough. Socialize
accumulation! Details soon.
Today's Features
M. Shahid Alam
Through
Racist Eyes:
Is Eurocentrism Unique?
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