Monday, December 10, 2012

Callous Capitalists

The richest Americans reap huge benefits. The rich have already more than recovered from the impact of the recession which began in late 2007. From 2000 to 2007, incomes for the bottom 90 percent of earners rose only about 4 percent, once adjusted for inflation. For the top 0.1 percent, incomes climbed about 94 percent. The recession interrupted the trend, with the sharp decline in stock prices hitting the pocketbooks of the rich. But the income share of 1 percent has since rebounded. Data that the two economists released in March showed that the top 1 percent of earners got nearly every dollar of the income gains eked out in the first full year of the recovery. In 2010, the top 10 percent of earners took about half of overall income. The richest one percent of Americans snared 93 percent of the total income gains in 2010.

Over the past 20 years, more than 80 percent of the capital gains income realized in the United States has gone to 5 percent of the people; about half of all the capital gains have gone to the wealthiest 0.1 percent. Between 2001 and 2007- a period during which poverty was rising and average household income had fallen - the 400 richest taxpayers saw their incomes double to an average of $345 million even as their effective tax rate was virtually halved. The 400 richest taxpayers in 2008 counted 60 percent of their income in the form of capital gains and 8 percent from salary and wages. The rest of the country reported 5 percent in capital gains and 72 percent in salary.

Over the three decades ending in 2007, the top 1 percent's share of the nation's total after-tax household income more than doubled, from 7.5 percent to 17.1 percent. During that time, the share of the middle 60% of Americans dropped from 51.1 percent to 43.5 percent; the bottom four-fifths declined from 58 percent to 48 percent. As for the poor, they fell further and further behind, with the lowest quintile's income share sliding to just 4.9%. Expressed in dollar terms between 1979 and 2007, average after-tax incomes for the top 1 percent rose by 281 percent after adjusting for inflation -- an increase in income of $973,100 per household -- compared to increases of 25 percent ($11,200 per household) for the middle fifth of households and 16 percent ($2,400 per household) for the bottom fifth.

A 2005 British study compared the psychological profiles of 39 senior business executives at leading British companies with those of mental patients in the UK's Broadmoor Special Hospital. The business leaders scored higher in the three traits normally used to identify the emotional dysfunction of psychopaths: histrionic personality disorder, narcissistic personality disorder, and compulsive personality disorder. The psychologist Kevin Dutton in The Wisdom of Psychopaths, notes society, and especially Wall Street, admires and rewards many of the qualities of psychopaths - fearlessness, emotional sterility, supreme confidence, ruthlessness, lack of remorse, refusal to take responsibility, narcissism and delusions of grandeur. Who could argue that those characteristics virtually define Wall Street.

 CEOs of mighty corporations who have been the benefiiaries of war contracts, subsidies and bailouts, as well as specialized tax breaks and loopholes that virtually eliminate the companies' tax bills - companies like Goldman Sachs, Honeywell, AT &T and Boeing want us to turn away the poor, disabled and the vulnerable, calling government support for them "low priority spending." CEOs of the major fossil fuel energy companies have enough scientific expertise to know that their business model of extracting all the carbon they can get their hands on threatens the very survival of all of mankind, yet they persist in doing exactly that. Who cares about the collapse of civilization when there are quarterly profits to be made?

Walmart, the largest purchaser of merchandise in Bangladesh, were specifically asked to pay slightly higher costs for garments, so that the factories could make some much-needed upgrades and safety improvements. Representatives from Walmart (and Gap) responded to the request by saying, "It is not financially feasible for the brands to make such investments." In 2011, the retail giant audited the Tazreen factory where just recently over a hundred workers died in a blaze, gave it a high-risk rating. A second audit several months later found similar high-risk safety hazards but still the fatory produced garments for Walmart. They weren't willing to spend a penny of that massive profit to protect their wage-slaves in Bangladesh.
Between 1973 and 2009 as many as 2,000 people were killed here in the United States when their General Motors trucks crashed and their gas tanks exploded on impact. The National Traffic Safety Administration concluded the problem had to do with gas tanks that were newly-installed on GM trucks beginning in 1973 to increase fuel capacity. Those gas tanks, were now located on the outside of the truck, were more likely to be damaged in an accident and could explode. But, GM didn't initiate a recall. Instead, GM ran a cost-benefit analysis to determine what would be more profitable to the company: a recall, fixing the new gas tanks, or just paying out settlements to burn victims and their families. At a cost of just $8.59 per vehicle, GM could have moved the dangerous gas tanks to a safer location but concluded that paying out settlements to the 500 or so people who died every year when their gas tank exploded would cost GM just $2.40 per vehicle. So, in 1973, GM abandoned plans to make the gas tanks safer. 
In 2005, a BP refinery in Texas City exploded, killing 15 workers who were in nearby trailers. BP had run a cost-benefit analysis in 2002 to determine what material they should use to most cheaply build the trailers surrounding the oil refinery. Rather than using expensive blast-resistant material that would have likely saved the lives of those killed, BP opted for the more profitable and less-safe alternative, because, should an accident occur, BP would actually saving money paying out settlements to the dead rather than building blast-resistant trailers.

How can all these Captains of Industry not be psychopaths?

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