Opinion » Ted Rall

Share the Wealth

High salaries impossible to justify

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Income inequality isn't an abstraction. It's real. It takes money out of your pocket.

Income is a zero-sum game. If you work for a company that employs 1,000 workers, the decision to pay $10 million a year to the CEO reduces each of the other employees' paychecks by an average of $10,000 a year.

Until recently, Americans tended to accept the argument that seven- and eight-digit salaries were justified by the value top executives added to the bottom line. Visionaries like Bill Gates and Steve Jobs earned billions in profits for shareholders. They were entrepreneurs. They took risks that changed the world. They deserved to rake in the rewards.

People began reassessing this view after the collapse of global capitalism. The crisis was triggered by the crash of exotic mortgage derivatives invented by multimillionaire bankers and hedge fund traders, who then exploited the mess they made to shake down the federal government for trillions of tax dollars, which they used to give themselves raises and redecorate their executive suites.

Banks and other transnational corporations are "too big to fail." So too are the executives of companies that do fail. The New York Times, bleeding tens of millions in losses per quarter, recently let go its underperforming CEO--yet eased her out the door with $4.5 million in "consulting" fees. Despite suffering a net loss of $7 billion in a year, Hewlett-Packard paid Leo Apotheker a severance package worth $13.2 million, including moving fees to Europe and up to $300,000 to cover a loss on the sale of his house in California.

Which is part of the reason four out of 10 Americans tell Pew Research pollsters they'd like to see the United States adopt a socialist or communist economic system--a number that has remained unchanged from 2009.

Mitt Romney's tax returns expose the sharp contrast between the capitalist ideal and corporatist reality. Romney got $45 million during 2010 and 2011.

"The Romneys hold as much as a quarter of a billion dollars in assets, much of it derived from Mr. Romney's time as founder and partner in Bain Capital, a private equity firm," reported the Times.

The thing is, the world would have been a better place had Bain Capital never existed. Bain never created anything. There are no Bain products, no innovations. It was a cash-extraction machine that targeted profitable companies. Twenty-two percent of Romney's targets were driven into bankruptcy. Thousands of workers lost their jobs.

The public offering of Facebook stands to make founder Mark Zuckerberg as much as $28 billion--more than the gross domestic products of Panama, Jordan and 100 other countries. Zuckerberg is already worth about $17 billion.

He founded Facebook eight years ago. Does he deserve to earn $15 million a day? $6,000 a minute? I use Facebook every day. But only because I'm expected to. It adds nothing to my life.

Zuckerberg's $45 billion could cut a check for $3,500 to every officially unemployed person in the United States. But we live under a system under which nearly 13 million people suffer--so that one man is permitted to aggregate unimaginable wealth.

But not for long. It just isn't possible.

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