The demise underway in America today sees many games in play and many players at fault. What’s plain is that the scramble for money is fierce – 2009 brought record profits – and the fallout is very severe, especially for millions of young people who are entering adulthood per the terms of The Great Marginalization. Chris Farrell, economics reporter for NPR’s Marketplace, told audiences on February 12 that “variable pay” – a term for stagnant base pay — is now well established in the U.S. “Keeping a tight lid on wages is not going to change,” said Farrell. “Get used to it.”
The sheer magnitude of the demise Farrell and others describe is staggering and nothing planned or proposed by this government at this time will have any meaningful effect except to increase it. We are rapidly approaching a sobering statistic: 100 million Americans – one- third the population — living at twice poverty or less, which translates into $43,000 a year gross for a family of four, or less, which translates into less than $3,000 per month take home for a family of four, or less. These numbers courtesy a recent report out from Brookings Institution.
For the purveyors of “variable pay” there are “retention bonuses”– an acknowledgment that financial manipulators don’t come cheap and are prepared to pedal their services. It’s no fun for the top minds of Wall Street to come forward and grovel before the few skeptics in Congress for retention bonuses for their best and brightest operatives. Even Lloyd Blankfein of Goldman Sachs has a sponsor, Warren Buffett– the billionaire investor whose holdings include insurance giants, Chinese factories, WalMart and, of course, Goldman Sachs. The Omaha Oracle, who, like Blankfein, is a self-described liberal Democrat, came forward recently to publicly applaud Blankfein’s performance: “I don’t think anybody could have done a better job at Goldman Sachs than Lloyd Blankfein. I give him enormous credit for how he’s run Goldman. You’ve got to expect vilification of banks.”
The elites aren’t giving an inch, which is what makes them elites. What will America look like in a couple of decades, or less, when half the population takes home $3,000 a month per family of four, or less?
Against this backdrop score a victory for the tenants of the largest apartment complexes in Manhattan: Stuyvesant Town and Cooper Village, an 80-acre tract built up in the 1940s with tax breaks and other incentives provided in exchange for keeping rents low. World War II vets were the first tenants, as these adjacent projects became an oasis for middle-class New Yorkers.
The keen and thoroughly unoriginal idea behind the $6.3 billion dollar deal was to replace rent-regulated tenants as quickly as possible with market-rate renters. Mega-landlords Tishman Speyer Properties and BlackRock Realty were the lead players in this jack-up-the-rent opportunity. Tenants did not take kindly to the deal, going to court and eventually prevailing: the new landlord had improperly deregulated 4,400 apartments and had illegally raised rents.
Since the purchase, the value of the twin complexes plummeted – to below $2 billion. And Tishman and partners did what all careful and concerned investors do: they walked away. A new buyer will have to unravel the mess and put Stuyvesant Town and Peter Cooper Village back together with reduced maintenance staff, rebate rents to over-charged tenants, and put the project on a sound fiscal footing.
What of the court battles and harassment of tenants? Chalk it up to a business deal gone sour. But unlike the victims of the sub-prime rip-off, lambasted for failure to pay their obligations, Tishman is credited with exercising prudent judgment, sober expertise the company can apply to the $33.5 billion in real estate it manages elsewhere. There’s got to be a retention bonus in it.
CARL GINSBURG is a journalist in New York City. He can be reached at firstname.lastname@example.org.