The Price of Civilization_ Reawakening American Virtue and Prosperity - Jeffrey D. Sachs [55]
The Corporate Sector Continues to Win Big
The main thing to remember about the corporatocracy is that it looks after its own. There is absolutely no economic crisis in corporate America. Consider the pulse of the corporate sector as opposed to the pulse of the employees working in it:
Corporate profits in 2010 were at an all-time high.25
CEO salaries in 2010 rebounded strongly from the financial crisis.26
Wall Street compensation in 2010 was at an all-time high.
Several Wall Street firms paid civil penalties for financial abuses, but no senior banker faced any criminal charges.
There were no adverse regulatory measures that would lead to a loss of profits in finance, health care, military supplies, and energy.
The creation of America’s rich class (those in the top 1 percent, with incomes above $400,000 per year) and super-rich class (those in the top 0.01 percent, with incomes above $8 million per year) has been the thirty-year achievement of the corporatocracy. We can now see the tools of the trade. It began with globalization, which pushed up capital income while pushing down wages. These changes were magnified by the tax cuts at the top, which left more take-home pay and the ability to accumulate greater wealth through higher net-of-tax returns to saving. CEOs then helped themselves to their own slice of the corporate sector ownership through outlandish awards of stock options by friendly and often handpicked compensation committees, while the Securities and Exchange Commission looked the other way. It’s not all that hard to do when both political parties are standing in line to do your bidding.
CHAPTER 8.
The Distracted Society
Most attempts to explain the current economic crisis put the spotlight on reckless financial deregulation, and a few link the disastrous regulatory choices to the corrupted politics of Washington. Very few put a spotlight on the citizenry as well. It is easy, and right, to blame our politicians and greedy CEOs. The public knows the score and detests it. Yet at the end of the day, Americans have elected their leaders. Americans have allowed themselves to be manipulated by corporate propaganda. And Americans have behaved in a very shortsighted way with their own budget management, falling dangerously into debt and eventually into bankruptcy. Tens of millions of Americans are repeatedly overconsuming today and regretting it tomorrow: whether by overeating, overborrowing, overgambling, excessive TV viewing, or indulging in yet other addictions.
Just as Washington has abandoned any long-term economic steering, households have abandoned clear thinking regarding their personal budgets. They tend to be inconsistent about the federal budget as well, poorly informed and often contradictory in position. Voters regularly support middle-class tax cuts and government spending increases while simultaneously professing deep concern over the budget deficit. They also sometimes give the rich a free pass, such as by supporting cuts in the inheritance tax on the wealthy. Voters are easily enticed by promises of higher short-term income, seemingly without concern for the long-term consequences.
To understand such behavior and attitudes, we need to plow more deeply into our psyches to get a grip on our behavior both as consumers and as citizens. To retake political power from the lobbies, to establish meaningful solutions for America, we will need to take the long view. Yet taking that long view is exceedingly difficult, especially when much of the economy is working overtime to encourage us to succumb to temptation. The purpose of this chapter is to understand our psychological fragilities as thinkers, planners, and decision makers. By getting our heads cleared of deceptions, we can help to rebuild the economy as well.
The Psychology of Affluence
When a society is poor, consumer behavior is relatively straightforward. Consumers