March 27, 2006
Secretary Snow's Star System
As noted last week, Secretary of the Treasury John Snow is out on the circuit hawking his boss's wares. Just ask him and he'll pull open one side of his tailored overcoat and show just how great the economy is doing as a direct result of tax cuts, unprecedented spending and deficits, and federal subsidies-and-rule-making for oil and energy companies, pharmaceutical companies, defense contractors, financial service companies, communications and media companies -- pretty much any private sector company..... and, of course, nonprofit organizations that promote Christianity of the 'complete faith, no works' kind. You know, the kind with a litmus test of being reborn in biblical literalism while staying as far as possible from Christ's message of acts of forgiveness, tolerance and charity.
One of the latest steps taken by the Rebulican right wing employing Snow is to throw gasoline onto the already raging fire known as the pension fund crisis. Several decades ago, millions of workers in the U.S. depended on pensions that were funded by the companies for whom they worked. It was part of the 'deal'. In the bubble years, many companies' pensions soared because of the stock market -- and, a number of questionable practices sprung up like putting all of the pension assets in the company's own stock (violation of Rule #1 -- diversification -- that every single one of those pension managers would advise their parents and children to follow). With the growth-on-paper of pension assets, companies also got lazy about actually funding future pension liabilities with cash and other hard assets.
Then, the bubble burst. And, the Bush Administration came into office. By the middle of Bush's first term, nearly all private sector pensions were underfunded. That means, they did not have the assets to meet liabilities. The federal agency responsible for monitoring and serving as insurer -- the Pension Benefit Guaranty Corporation -- was also underfunded, especially after it got hit by the airline bankruptcies.
A competent group of federal officials from the executive, legislative and agency parts of the government would have looked at the balance sheets and taken steps to restore -- well -- balance. But the Bush Administration -- and their handmaidens and sponsors that rule the Republican Party -- have instead chosen the novel approach of inviting companies to decrease -- not increase -- how and if they fund pensions.
This is very good news for shareholders. At least in the short term. Of course, like all policies of shareholder value fundamentalism -- the ideology that makes "what does this do for next quarter's earnings?" the single test for every question, large and small -- this latest piece of incompetence will, soon enough, destroy shareholder value along with, of course, the security of tens of millions of workers who thought they could depend on funded pensions to see them through the years ahead.
It is a travesty of incompetence. Put ideals to one side. My father was a Republican. I learned from him the ideals -- the values -- of fiscal responsibility and of the responsibilities in a free market economy that must be exercised by owners. Those are values. Those are ideals. And, those are evidently now viewed by these Republican rulers -- well, to paraphrase what the Attorney General once said about the Geneva Conventions -- they are evidently 'quaint'.
It's not that Snow will be without a pitch. The ideology, we know and hear daily, is all about individualism and individual risk taking in free and open markets. Bracing stuff. Every single one of us is out there on our own to make or break it -- that's freedom. Stop the "Nanny State". Stop the "Nanny corporation." It's all about an ideological view of "me" and "I". The value of living in completely free and competitive markets and having the opportunity to make it on your own. That's what America is. Of course, we should permit corporations to stop funding pensions. If millions of individualists out there cut a deal with their employers that, in part, were based on pension expectations, then, well, then let's correct for those individuals' misunderstanding of what individualism and true freedom are all about. Let's set them free from the freedom-killing possibility that they might have income disconnected from any current labor. True freedom is the right to go out there, compete, and make money based on the labor you put in each day. Pensions? Sure, make that an investment choice for yourself. But, grow up and get free. Don't expect any free lunch from others who are working hard just to make it on their own. Really, a company should not even be allowed to promise future income streams for past work. It ought to be against the law if we want to have a competely free marketplance!
Unless, of course, the company is dealing with senior executives. Then the idea of providing future money -- in rather large amounts -- for past as opposed to current effort is an effective form of executive compensation in John Snow's star system.
The blend of arrogance and incompetence in folks like the affable John Snow leads, of course, to stories like this -- only one of zillions of similar stories that are part of our economy's -- of our society's -- overall narrative by and in which folks who do not do their jobs get million dollar send offs while folks who have and/or continue to do their jobs get stripped of financial security -- all in the name of 'shareholder value fundamentalism'.
In the slick Snow sales pitch, the stars in the star system take no individual risk on actually being paid for real performance yet get plenty of individual reward while the 'non-stars' risking their financial security every single day on performance receive little actual reward for their effort. No wonder 80% of the workforce still makes basically the same pay they did when Bush took office. And, job insecurity being what it has been, it's also no surprise that the average family income is less now than in January 2001. Meanwhile, with dramatic increases in consumer debt (both credit card and home equity related), American families face precarious financial futures. To all of which, we can now add increasingly value-less pension promises under the individual-risk-loving-for-all-individuals-except-CEOs policies, practices and, again, sheer incompetence of the Bush Administration.