Saturday, November 15, 2008

Fat Cats Belly Up to the Bailout Bar Again

Now it’s American Insurance Group, worlds largest insurance company, back at the Bailout Bar to knock down a few more for the road. Altogether, $150 billion will be ‘invested’ in another craven, irresponsible, corporate welfare cheat.

Just for a little perspective, $23 billion would end hunger in the world. We’re always too poor to lay out the bucks to rescue dispensable little people from hunger, the ultimate deprivation, but always have the wherewithal to help mendacious corporations in their hour of need.

I don’t know about anybody else out there but if I were going to shell out $150 billion dollars of my hard earned dough, I’d want to have a say in how that money was used. As of now there are, in effect, no hard-wired restrictions on how the bailout money is being spent. Some recipient banks are using their freebies to purchase other banks, others are buying treasury bills when the bailout money was supposed to go for loaning. A full 10% of the money will wind up going for the same immense bonuses to top execs as before they lined up for the government dole.

Now General Motors is taking its turn showing up at congress with its begging bowl. If any corporation were allowed to fail it should be GM. Car manufacturing in America should continue but GM should be left to an ignominious death. Not saying Ford and Chrysler are that much better, but GM especially deserves the axe for the burial of its electric car, the EV1. I won’t repeat the whole sordid story; suffice to say that GM went through great lengths to get the few electric cars it did produce – by California government mandate – off the road, including refusing money from leaseholders who, at the end of the leases, begged GM to let them buy them.

Along with the other car companies, the labor unions and members of congress from auto producing states, they lobbied hard to prevent increased mileage standards. As a result, vehicles kept getting bigger and more destructive of the earth in the process. They ignored more efficient hybrid technologies for as long as they could, while concentrating on designing new gas-guzzling behemoths. They blew off trying to build better quality, longer lasting cars so they could concentrate on bigger profits and ever more insane compensation levels for top management.

Why is it a Japanese car will still be going strong at 200,000 miles while an American car is ready for the scrap heap at 150,000? Is it because American CEO’s are paid so much more than their Japanese counterparts? Japanese CEO’s earn about 11 times the average pay of their workers while American CEO’s earn upwards of 400 times.

Without a change in corporate culture and governance, the bailout babies will revert to the same stupid, greedy focus on immediate profits that caused them to falter in the first place. At the present time, corporations are forbidden to take the needs of society into account. They are literally prohibited from being good corporate citizens if that action impacts on shareholder value.

Take the case of Ben and Jerry’s. The two entrepreneurs wanted to earn a profit and manufacture a quality product as most firms would, but they also felt strongly about creating a healthy workplace for their employees and a cooperative atmosphere with their suppliers: one happy family. As a private company this was no problem, Ben and Jerry could run it as they saw fit.

But then grow or die reared its ugly head. You know, the idea, which totally defies logic, that a company that isn’t growing must be dying. What is so hard to comprehend about a company earning the same healthy profit year after year? But B and J got caught up in the growth mantra and decided becoming a public company would allow them to expand their products and good ideas to a wider sphere.

Big mistake. Once you have stockholders their well-being is the only consideration you are allowed: it’s not written into law, you’ll just get sued if you don’t put them first. Once B and J was public a multinational pounced with an offer to buy the company that could not be refused on any altruistic grounds else the certainty of that aforementioned suit.

The lamest of all presidential ducks has now taken to defending capitalism itself, pleading with the world not to try to regulate too much. Somehow the regurgitant coming out of his mouth is sounding a little hollow. If unbridled capitalism is so great, why not follow its own precepts and let poorly run companies die?

The big three automakers should be allowed to go bankrupt.

The hard assets could then be purchased by the government for creating new companies with the common good written into their charters. Once back on their feet, shares could be sold to the public but the government should keep a controlling interest. Capitalist purists will tell you that the government can’t effectively run a giant corporation, but what could possibly be worse than what current management has done?

It is sickening and disheartening seeing trillions of dollars spent feeding the wealthy and superwealthy while there is so much dire need in the world; it is truly painful to watch. Worse yet is knowing that money will not meet its objectives. The world economy is going down regardless; all that those trillions will do is let the fat cats breathe a little easier in the knowledge that their exorbitant compensation packages are intact.

Ultimately, it makes no sense whatever to provide that largesse to the very same people following the same economic beliefs that caused the problem in the first place.

1 comment:

Jeff said...

I'm with you.

Neil Young has his own plan, which is on HuffPo and on my blog as well.