Tuesday, October 11, 2011

Class Warfare? Who's the Aggressor?

Almost since the beginning of the Occupy Wall Street "movement," detractors like Mayor Bloomberg and other 1 percenters, have tried to characterize the protestors as engaging in or encouraging "class warfare." In a sense, it's true. The 99 percenters are out on the streets protesting what Wall Street represents—the rich getting richer, the poor getting poorer, and the middle class stagnating or shrinking. We often hear that the "rich," the corporations, the banks are the providers of jobs. Without them or by attacking them (according to Bloomberg), the protestors want to destroy the very underpinnings of the job creators.

Importantly, it has also been said that by not allowing corporations to pay their CEOs a "competitive" salary, those same CEOs—that irreplaceable talent poole of Harvard Business School knowhow—will go to work elsewhere, and America will lose its competitive edge. So, it is necessary to allow capitalism to do its work, to reward "hard" work and ingenuity without restriction; to allow banks to compete in the world banking system; to allow corporations to compete globally. It is said that we must have multinational corporations in the U.S. to take business and enterprise to the rest of the world.

Let's see...CEOs in the US whose compensation is restricted will go...where, exactly?

Well, according to Steve Eder (Reuters, Sept. 23, 2009), Chairman Jiang Jianqing, of the world's largest bank in China,  Industrial and Commercial Bank, made just $234,700 in 2008. Compare this to Jamie Dimon, CEO of the world's fourth-largest bank, JPMorgan Chase & Co, who made $19,600,000. Chairman Jianqing's compensation is less than 2 percent of Dimon's compensation.

So, let's say that the IRS code allowed for an individual income tax on Dimon's 19.2 million at a 50 percent rate...let's just say that, not that I'm proposing it; or let's say we just passed a law to squash such obscene compensation packages and paid Dimon and other CEOs just...oh...I don't know...10 percent of their former salaries.

I can hear the wailing and gnashing of teeth now. We'll lose Dimon and CEOs of American banks and American corporations to our competitors! I wouldn't bet on it. Where are they going to go? Dimon would still be making almost four times what his Chinese counterpart would make—not that I'm seriously suggesting that, either. This extreme example illustrates a point: there is no cogent argument detractors of Occupy Wall Street can make about class warfare and wanting to destroy jobs on Wall Street (symbolizing at least the too-big-to-fail banks and the two-big-for-their-britches American CEOs)

No, the class warfare is made by the banks, like Bank of America and Chase on their credit card holders, or now debit card holders (who made this switch to avoid the astronomically high, usury interest rates. BofA wants to charge a $5/month fee for debit cards, increase the swipe fees to merchants for debit cards. They want to force credit card use on the 99 percenters, rather than using debit cards. Chase wants to charge $20/month on checking accounts that don't keep a balance of at least $15,000 in the checking account. And with Congress' credit card reforms of 2009, which gave banks 90 days to set up their new weaponry, with interest rates starting at 17 percent interest, instead of the 9 percent interest before the reforms by Congress, most of the too-big-to-fail banks were able to begin grabbing even more of the 99 percenters' money and are now making even greater profits off the backs of ordinary Americans.

There simply are not enough shame-inducing adjectives to describe the real aggressors in this current issue of occupying Wall Street. It's unbridled greed, combined with lack of any real regulation on banks and banking "products" that pose the real warfare.

What I don't understand is how anyone who makes less that $50,000/year could ever fight on the side of the banks and the corporations in this "war." Talk about Ponzi schemes!

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