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What If Atlas Really Shrugged?…

27 Oct

“Atlas Shrugged” is Ayn Rand’s 1957 novel in which rich people, upset because they aren’t rich enough, go on strike and society collapses as a result. It’s an absurd premise: The rich and powerful tend to have too much to lose to walk away from it all. It’s the same mentality you see when a game show contestant refuses to settle for his winnings so far and instead risks everything for a shot at the new car.

The reality is that the wealthy are easily replaced. Actually, I should clarify: The truly wealthy — those who live off the income derived from property or investments —  are definitely disposable. Anyone can have a staff of financial advisers briefing you on your portfolio over breakfast. It’s the type of job you can do from home. However, the merely rich — those who still have to go into the office on a daily basis if for no other reason than to escape their spouses — are also not the treasured commodity everyone seems to think.

For example, if your boss went on strike, you’d probably take his job for half of what he makes, and you’d still see a significant raise. That’s because most corporations compensate its employees according to an inverted pyramid — with those at the top making significantly more than those at the bottom. The supervisor of the mail room probably makes a couple dollars more per hour than his staff — at least before they downsized the mail room. Meanwhile, the CEO of the company makes 343 times more than the average worker. This disparity was not always the case: In 1980 — yes, the year before Ronald Reagan took office — CEO pay was equal to 42 times the average worker’s pay. This is probably why the 1970s was known as the Great CEO Famine.

The tricky thing about an inverted pyramid is that it’s only a matter of time before it topples. The jobs held by those in the top 1 percent — heck, even the top 20 percent — are desirable not just because they pay well but because of the associated perks, power, and prestige. Unless you’re a schoolteacher, it’s more likely to find careers that are described as “callings” in the top 20 percent. In Rand’s fictional world, the top architects walk and there’s not a line down the street to replace them. This is silly. It’s a faulty syllogism of believing there’s just the best and the worst. If businesses don’t pay a highwayman’s bounty for the best, then the businesses will suffer. It’s the same line that A.I.G. offered upset taxpayers when it gave out bonuses in 2009 after receiving a government bailout.

“We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” (Edward M. Liddy) wrote Mr. Geithner on Saturday.

This is nonsense of course: It’s not like A.I.G. actually tried to retain its staff without paying bonuses. The sentiment also seemed to imply that A.I.G.’s “best and brightest talent” still lived in the U.S. economy of the 1990s, when you could consider leaving your job for another one just because it had better coffee in the break room. And it takes a healthy amount of gall for Liddy to refer to anyone at A.I.G. as the “best and the brightest talent.” These are the same guys that ran the company so well it needed a taxpayer-funded bailout. To borrow from Woody Allen, maybe A.I.G. should consider hiring “some stupid people.” They’re cheaper and the results couldn’t have been much worse.

Yet at the same time, countless companies suspended compensation increases for average employees — apparently not fearing an inability to “attract and retain” them. Viacom even added insult to injury and rewarded its CEO Phillipe Dauman for “increasing cost effectiveness” by almost tripling his salary ($34 million to $84 million). Keep in mind that “increasing cost effectiveness” usually means firing people or not granting raises.

Earlier this year, on the road to Occupy Wall Street, Wisconsin Governor Scott Walker removed collective bargaining rights from public employees. Everyone should see this as the inverted pyramid beginning its inexorable tumble. As Rand would say about a different tax bracket, how much abuse and exploitation are people expected to take?

Let’s reverse the question Rand posed in “Atlas Shrugged.” What if the people at the bottom of the pyramid said enough all ready? Their government has little interest in whether they live or die and has become even more brazen in its clear preference for protecting the interests of the wealthy and powerful. What’s the point? Even those who can find jobs will probably never erase the debt they accumulated when they were unemployed. Banks will come up with new fees to siphon off what’s left (the new “it’s currency” fee — we charge more for currency). Who’s going to rush to perform their tasks? Is Dauman going to take out trash or wait tables or even answer his own phones? Until replicant technology is perfected, those at the top of the pyramid need those at the bottom far more than the reverse. True “rational self-interest” would be keeping those at the bottom content enough so that the wheels of society continue to turn. What we’ve instead experienced in the past 30 years is the slow, steady strangulation of the country’s golden goose — the working class.

 

 

 
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Posted by on October 27, 2011 in Capitalism

 

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