I may live to see an uprising over the widening gap between rich and poor in North America
After all, that's the cause of the regime change this year in North Africa and the Middle East.
Westerners have no less an acute sense of fairness than Tunisians and Egyptians. A few of us don't get the $9.7 million (Canadian) severance payoff for top managers at Rupert Murdoch's late, scandal ridden News of the World. And in particular the $3.9 million golden parachute for Rebekah Brooks, who oversaw that paper's regime of spying and police bribery, and was arrested this week over those alleged improprieties.
Meanwhile, the 200 or so front line NOTW employees laid off with the paper's closure will be fortunate to collect on their pensions. Their fate is akin to the 1,200 employees of call-centre operator IQT Solutions in Oshawa and Quebec abruptly laid off this week.
Declaring their firm bankrupt, the IQT owners hightailed it to parts unknown without giving the affected workers proper notice, their last paycheques, or accumulated vacation and severance pay.
That's how it goes for the little people. But you have to wonder how much longer the cancer of excessive CEO pay will remain socially sustainable.
At some point, some of us will awaken to the fact that many of our social ills - including the American economy's stubborn refusal to recover - can be traced back to a 30-year stagnation in middle-class incomes.
The economy, stock market and executive pay have all increased by several multiples in that time. But between 1976 and 2009, median income for Canadians rose just 5.5 per cent - median pay for Standard & Poor's 500 CEOs jumpecl 35 per cent last year alone, to $8.4 million (U.S.).
The economy, inflation, the stock market and dividend payouts to pension funds and other institutional investors did not increase that much.
Nor, between 2009 and 2010, did CEOs become 35 per cent smarter or harder-working.
Pay for the average U.S. worker actually fell last year, after inflation. Not accounting for inflation, it rose a meagre 0.5 per cent. Americans are bracing for a forecast additional six million home foreclosures, having suffered the loss of about two million homes already since the Great Recession began in 2007.
The household debt of Canadians now surpasses that of the US., where consumer indebtedness remains at levels too high to allow for the usual consumer-led recovery that follows recessions.
No, we didn't entirely lose our sense of prudence. As tuition, housing, gasoline, food and other costs rose over the past three decades while middle-class incomes stagnated, Canada and the US. first became nations of two income earners. And when that didn't suffice, we began borrowing for essentials.
"We are feeling the deferred pain of 25 years of excess, as people try to rebuild their depleted savings;' is New York Times economics editor David Leonhardt's explanation for the current consumer strike.
But that's not the whole story.
Many of us did not engage in "excess;' yet are struggling to make ends meet. The real story is: Where did all the money go that has been generated by a North American economy that has greatly expanded since 1980?
And the answer is to be found in decades of outsourcing, offshoring, declining union membership and bargaining power, and productivity gains that have enabled employers to generate ever more revenue with steadily fewer employees.
What grates in this transformation is the sense of entitlement among the sole, conspicuous CEO beneficiaries of our New-and- Not -Improved-Econom~
In the erosion of the "social contract" between capital and labour dating from the end of World War II, we are not suffering equally. Indeed, we now reward failure in high places.
The shares of General Electric Co. have plunged in value by 60.8 per cent during the tenure of CEO Jeffrey Immelt, who was rewarded for this performance with $37.2 million in free stock in 2010. Shares in pfizer Inc., the world's largest drugmaker, have dropped in value by 481 per cent over the past decade. Yet CEO Jeffrey Kinder retired in December clutching a $34.4-million severance package.
Rex Tillerson was paid $88 million in 2010, a year in which shares ofhis company, ExxonMobil Corp., generated a 5.8 per cent negative return.
Shares of banking giant J.P. MorganChase & Co. inched up in value by 3.5 per cent last year, good enough for a 1,474 per cent hike in CEO Jamie Dimon's pay, to $20.8 million.
For the approximately17 million North Americans who are unemployed, the economy has not recovered. But use of corporate jets has picked up by 6.2 per cent. And 24,666 oflast year's flights were to West Palm Beach, Nantucket and the Hamptons, not known as hives of business activity.
We need to have an adult conversation about income distribution before we're forced into an unruly one. For now, the occupant of the corner office isn't ready. Asked about Goldman Sachs Group Inc.'s role in helping put the match to the Great Recession, CEO Lloyd Blankfein snapped that he is "doing God's work!'
Jamie Dimon regards his bank's eviction notices as an act of altruism. "Giving debt relief to people that really need it, that's what foreclosure is."
And Stephen Schwarzman, chairman and co-founder of private equity giant Blackstone Group, who has a net worth of $8 billion, balked over a rumoured Obama administration increase in taxes on private equity firms from a loophole-engineered 15 per cent to the traditional 35 per cent.
''It's like when Hitler invaded Poland;' Schwarzman said of the barbarian at his gate.
Decrying "short - termism" as central to the US. economic malaise, Sheila Bair, outgoing head of the Federal Deposit Insurance Corp. (FDIC), noted the failure to accept responsibility among directors and management of failed banks, who had neglected their fiduciary duties.
"The rationales the executives come up with to try to escape accountability for their actions never cease to amaze me;' Bair wrote in a recent Washington Post op-ed. "They blame, the failure of their institutions on market forces, on 'deadbeat borrowers,' on regulators, on space aliens.They will reach for any excuse to avoid responsibility."
A dialogue of the deaf would be one thing, but we're not even talking about our greatest social ill, the maldistribution of income in North America
Well short of a revolution, this dangerous imbalance could easily be corrected simply by restoring the system of progressive taxation to where it was in the booming 1950s and 1960s.
That's when leadership meant responsibility, not a hurried grasp for the brass ring, with the little guy paying for the consequences.
That, history teaches us, is a lousy business plan.
July 23, 2011