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Archive for May, 2008|Monthly archive page

How the Rich Get Richer

In civics, economics, ideology, sociology on May 23, 2008 at 11:30 pm

anna_nicole_weight300Just a short note — a few observations — because I notice my philosophical meanderings attract a lot fewer readers than postings that might mention Anna Nicole Smith’s boob size (it’s three handfuls, each, by the way — if you’re tuning in to this posting on that basis).

My observations will be based on my New Zealand experience but I have no doubt the same principles apply in the USA and most other countries — just on a much grander scale of larceny. The government’s budget here, just announced — and by a so-called “Labour” government — has just handed out its first TAX CUT, which seem to be all the rage. The average salary will be boosted by $16 a week — just enough for a 1kg block of cheese — for which this government has put the country into hock for $10.6 billion over the next three years (this country only has a population around about Arkansas’s). This is a criminal burden on this country’s services, which will have to be cut back everywhere in every sphere, when they are barely coping now. I know Bush’s tax cuts were deliberately aimed at the rich, but even using the conventional PERCENTAGE cut (or pay raise) the rich benefit far more, obviously. For example, the prime minister here is on $320,000 a year. If she gets a 5 percent increase she’s boosted by a cool $16,000. If someone on $20,000 gets a 5 percent increase they get a not so cool $1,000 a year. This is nothing more than keeping the rich in the manner to which they’ve become accustomed — dressed up as “fairness”. What is wrong with giving everyone the same dollar increase, so the rich don’t hog the gravy for themselves every time?

And this tax cut is being given in the face of galloping inflation — gasoline here is around $9 a gallon, cheese in a dairying country $15 a kilo (about $7 a pound) and milk almost $2 a quart. The health system and hospitals are government run and barely getting by — already slipped to at least 2nd World quality — and obviously any money taken from these in the form of tax cuts affects the poor hugely, unlike the rich who can afford private health care.

dollarloveCorporate salaries here are not what they are in the US — the top CEO (at Telecom) gets about $3 million a year in salary and bonuses. The thing is they get their bonuses, and huge severance bonus even if they’ve done a shitty job — like the CEO who departed last year with about a $2 million golden handshake.

But you listen to any economic commentators and they’re all saying “This is an extremely important position” — It has to be, by definition: they’re paid so much. Well this extremely important position was occupied by precisely NOBODY for eight months until the new CEO was “headhunted” — Is this amputation why they do such a rotten job running things? Any reasonable person would conclude that a company that runs ordinarily well for eight months without someone could do without that position being filled forever. But not the corporate world. They need an obscenely-highly paid figurehead position to aspire to — where they can name their own price, rubber-stamped by the board of directors, who are also invariably wealthy people maintaining their own fiefdoms.

In this country all these CEO and board positions are interchangeable — no experience necessary in the field, so that a person can be shoulder-tapped to sit on umpteen boards and a CEO go from heading a Telecom business to an airline business: It’s all the same to them.

This has been G. A. De Forest.

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