FacebookTwitterRedditEmail

Beware Wall Street During a Pandemic

We have entered uncertain times. The novel coronavirus has upended life around the globe, and none of us knows exactly how long the outbreak or its ramifications will last. But daily reminders of how much we can’t control shouldn’t stop us from seizing upon those things we can.

We may not know if the United States has yet been successful in flattening the curve, but we do know that social distancing is our best strategy for limiting the spread of the disease. We don’t know when those with the privilege to telework will return to the office, but we know that it’s essential to look out for the economic and physical well-being of those who can’t work remotely and those who can’t work at all. We can’t know how deeply we’ll sink into the coming recession, but we can commit to avoiding the mistakes we made during the last one.

During the Great Recession, we bailed out Wall Street. This time, the bailout should be for the rest of us. The overwhelming majority of people want an economy that works for everyone, not just the super-rich. We want to be able to cover our basic needs, from housing to food to education, without being forced to take on unsustainable debt. We want a safety net to protect us when hard times strike and the security of knowing that getting sick will neither bankrupt us nor force us to put others at risk because we don’t have paid sick days.

All of this is achievable. We’ve already seen local legislators and Congress begin putting temporary supports in place to mediate the harm of the coronavirus and the recession.

Here’s just a small sampling of what else needs to happen if we are to counter business—and bailouts—as usual.

Last Time: The Bailout Centered on Greed

In 2009, the U.S. government allowed banks to write down roughly a trillion dollars in losses. This is after the finance industry engaged in such increasingly risky behavior that, over the prior 30 years, its debt had grown from $3 trillion to $36 trillion. Federal prosecutors did not even criminally charge any major bank CEOs, declining to make personal the consequences of their greed. By 2010, top Wall Street executives and traders were back to normal, collectively receiving $25 billion in bonuses, but the jobless rate on Main Street was still near 10%. Losses in home value and retirement savings hit nearly $10 trillion during the Great Recession, devastating thousands of families.

This Time: The Bailout Must Center on Need

The nature of the coronavirus requires that we protect public health at all costs. That means making sure that everyone can access healthcare and stay home sick without losing their wages. We must support people who lose their jobs or are furloughed without pay due to the pandemic. We also need to support small- and medium-sized businesses in their efforts to care for their employees and their livelihood.

For the short-term, that means:

+ Paid sick and family leave;

+ Interest-free loan forbearance for all who need it;

+ A moratorium on evictions and foreclosures;

+ A moratorium on negative credit reporting;

+ Halting all debt collection;

+ Flexible repayment options post-forbearance;

+ Stopping wage garnishment and the freezing of bank accounts;

+ Increasing predatory lending protections; and

+ Spurring the economy by canceling student debt.

Last Time: We Didn’t Put in Measures to Close the Growing Wealth Divide

It’s important to note that the economy could have been facing a looming recession even if the coronavirus had never emerged. While Wall Street continues to hand out bonuses that dwarf the average worker’s salary, the rest of us have continued to struggle. The gig economy has exploded and wages for lower- and middle-income workers have stagnated, while costs have increased for everything from housing to goods and services to childcare.

Families across the country are taking on increasing debt, while the super-rich either hoard or gamble with their increasingly large share of the collective pie. The wealth divide is even more acute for some. The recession worsened the century-long economic divide between Black and white households: By 2031, Black wealth is expected to be nearly $100,000 lower than it would have been without the Great Recession.

This Time: We Can Narrow the Wealth Divide by Taxing Extreme CEO Pay Gaps

It is indefensible for companies to pay the frontline workers who produce their goods and services the tiniest fractions of what their CEOs earn. The gap between CEO pay and the typical worker has continued to skyrocket, with the vast majority of S&P 500 firms paying their CEOs more than 100 times what they pay typical workers, and 1 in 10 of those workers was paid below the poverty level for a family of four. We should tax CEO pay ratios that are over 100 times higher than typical workers to help pay for pressing social needs that will benefit the many and not just the corporate elite. If a tax penalty like the one proposed here had been in place in 2018, the federal government could have brought in up to $17.2 billion in revenue annually.

Last Time: We Didn’t Regulate Stock Buybacks

Stock buybacks are schemes in which a company buys its own stock. That might sound innocent enough, but buying up shares reduces the total number of stock shares, making the remaining shares become more valuable. Company executives, who get paid in stock, then become even wealthier thanks to this artificial inflation of the stock price. But the company has in no way become more efficient, innovative, or profitable.

This Time: End Stock Buybacks

Even billionaire Mark Cuban agrees that companies that receive a bailout during this crisis should not be allowed to buy stocks back in the future because they’d be “using taxpayer money to buy back stock.” To put a finer point on the consequences of this behavior: The largest U.S. airlines spent 96% of their available cash earnings buying their own shares. American Airlines even had negative free cash flow from 2010-2019 and still spent $12.5 billion enriching its executives by buying its own stocks. Now airlines are among the first in line for a bailout.

Any federal support airlines receive should mandate that they provide necessary worker coronavirus health protections, ensure all workers receive full pay and benefits during the crisis, require a pay-ratio limit, and must, as our friends at the Institute for Policy Studies suggest, be tied to “other proposed pro-worker conditions, such as setting a $15 per hour wage minimum, requiring worker representation on boards, and banning anti-union activity.”

This list is far from comprehensive, and much more will need to be done. The banks that were “too big to fail” are uniformly larger now, and the modest constraints imposed by the Dodd-Frank Act have either been weakened or have yet to be finalized even a decade later. Additionally, recovery from the coming recession will be impossible if we fail to help states and municipalities finance their response to the health crisis. Requiring banks to hold on to their capital instead of gambling with it will also be essential to sustaining the economy.

In the coming weeks and months, we’ll be expanding on the proposals above and developing additional ones. We’ll also be working with our allies, and hopefully, you, to ensure that we emerge from the other side of this recession into the world we envision. We can have fair wages and quality healthcare and a safety net that isn’t filled with gaping holes. All we have to do is fight for it.

Originally posted at TakeOnWallStreet.com

More articles by:

Erika Taylor is the Popular Education Manager for Take on Wall Street. Follow them @TakeOnWallSt

Weekend Edition
August 14, 2020
Friday - Sunday
Matthew Hoh
Lights! Camera! Kill! Hollywood, the Pentagon and Imperial Ambitions.
Joseph Grosso
Bloody Chicken: Inside the American Poultry Industry During the Time of COVID
Jeffrey St. Clair
Roaming Charges: It Had to be You
H. Bruce Franklin
August 12-22, 1945: Washington Starts the Korean and Vietnam Wars
Pete Dolack
Business as Usual Equals Many Extra Deaths from Global Warming
Paul Street
Whispers in the Asylum (Seven Days in August)
Richard Falk – Daniel Falcone
Predatory Capitalism and the Nuclear Threat in the Age of Trump
Paul Fitzgerald - Elizabeth Gould
‘Magical Thinking’ has Always Guided the US Role in Afghanistan
Ramzy Baroud
The Politics of War: What is Israel’s Endgame in Lebanon and Syria?
Ron Jacobs
It’s a Sick Country
Eve Ottenberg
Trump’s Plan: Gut Social Security, Bankrupt the States
Richard C. Gross
Trump’s Fake News
Jonathan Cook
How the Guardian Betrayed Not Only Corbyn But the Last Vestiges of British Democracy
Joseph Natoli
What Trump and the Republican Party Teach Us
Robert Fisk
Can Lebanon be Saved?
Brian Cloughley
Will Biden be Less Belligerent Than Trump?
Kenn Orphan
We Do Not Live in the World of Before
Kollibri terre Sonnenblume
Compromise & the Status Quo
Andrew Bacevich
Biden Wins, Then What?
Thomas Klikauer – Nadine Campbell
The Criminology of Global Warming
Michael Welton
Toppled Monuments and the Struggle For Symbolic Space
Prabir Purkayastha
Why 5G is the First Stage of a Tech War Between the U.S. and China
Daniel Beaumont
The Reign of Error
Adrian Treves – John Laundré
Science Does Not Support the Claims About Grizzly Hunting, Lethal Removal
David Rosen
A Moment of Social Crisis: Recalling the 1970s
Maximilian Werner
Who’s Afraid of the Big Bad Wolf: Textual Manipulations in Anti-wolf Rhetoric
Pritha Chandra
Online Education and the Struggle over Disposable Time
Robert Koehler
Learning from the Hibakushas
Seth Sandronsky
Teaching in a Pandemic: an Interview With Mercedes K. Schneider
Dean Baker
Financing Drug Development: What the Pandemic Has Taught Us
Greta Anderson
Blaming Mexican Wolves for Livestock Kills
Evaggelos Vallianatos
The Meaning of the Battle of Salamis
Mel Gurtov
The World Bank’s Poverty Illusion
Paul Gilk
The Great Question
Rev. Susan K. Williams Smith
Trump Doesn’t Want Law and Order
Martin Cherniack
Neo-conservatism: The Seductive Lure of Lying About History
Nicky Reid
Pick a Cold War, Any Cold War!
George Wuerthner
Zombie Legislation: the Latest Misguided Wildfire Bill
Lee Camp
The Execution of Elephants and Americans
Christopher Brauchli
I Read the News Today, Oh Boy…
Tony McKenna
The Truth About Prince Philip
Louis Proyect
MarxMail 2.0
Sidney Miralao
Get Military Recruiters Out of Our High Schools
Jon Hochschartner
Okra of Time
David Yearsley
Bringing Landscapes to Life: the Music of Johann Christian Bach
FacebookTwitterRedditEmail