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Commentary | JOHN BALZAR

Executives Get Rich, Workers Get Peanuts

July 29, 2001|JOHN BALZAR

"Experience declares that man is the only animal which devours his own kind, for I can think of no milder term to apply to ... the general prey of the rich on the poor."

My, how things have changed. Today you'd be flayed for repeating what Thomas Jefferson said 200 years ago. Class warfare, remember, threatens everything we hold dear in America.

Just look back at the presidential election, or at the recent tax-cut debate. Anyone who dared question the privileges and distribution of wealth was marginalized as a troublemaker and anti-American to boot.

These admonitions have been remarkably effective in clearing the path for those few who never tire of preying on the many. Maybe you came across the Wall Street Journal's recent expose on executive pensions. Corporations across the land have frozen or whittled down worker pensions, all the while fattening up executive retirements. The differences are, to use the proper term, shocking.

Lifetime workers at many blue-ribbon companies end up drawing 12% or 15% of their salaries in retirement. Executives, even short-termers, are looting these same companies for 50% to 100% of their already overblown paychecks. Salary employees must work for years to earn a pension. Executives vest right away.

A drugstore chain carried $65 million in retirement obligations for 18,000 employees. For a few dozen executives, the newspaper reported, the company owed another $32 million. An electronics giant was found to have reduced pension liability for 120,000 workers while increasing its pension promises for 71 executives. The "latest twist" described by the newspaper enables executives to transform surplus retirement benefits into trusts that can be passed to heirs tax-free. Cuts in pensions have boosted the bottom line for corporations, allowing executives to justify their salary bonuses. Meanwhile, their own pensions often remain undisclosed liabilities for shareholders.

The Journal contrasted the fate of two men who lost their jobs in a utility company merger. Both had worked there 12 years. A 62-year-old former welder lacked the requisite 15 years to receive a pension. But a 59-year-old executive received credit for 35 years service in his severance package and began drawing $69,070 a month.

How this gluttony occurs is easy to explain. Executives set the terms of compensation for everyone, including themselves. They sit on each other's boards of directors. They solemnly tell each other they need all this money or they couldn't possibly be motivated to get out of bed and come to the office. They listen and nod in agreement. Then they hire factotums to step forward with straight faces and tell the rest of us that this is so.

A more difficult question: How come there is not a backlash?

America's baby boomers are now looking retirement in the face. You might think that a system skewered to exalt 71 of them and diminish 120,000 others would create discontent. Or at the very least, crowd-pleasing politicians would try to make hay of it.

Well so far, no one, except Ralph Nader on the political fringe, has dared even the feeblest counterattack.

Why? Of a dozen or so reasons I've discussed with people, a few seem to make the most sense. One atop another, they amount to hoisting the white flag of surrender:

Campaign financing. The old-fashioned populists who have risen up in the past to restrain corporate privilege cannot get a foothold in politics. Even campaigns for minor offices require huge contributions from the moneyed class. So we are left without a farm club for populists.

The demise of public interest. Beginning with Ronald Reagan, a generation of Americans has been indoctrinated to believe that society's collective good, as expressed by government, strangles free enterprise. Our social restraint mechanism has been stigmatized. Gee, if gub'ment could only be as efficient as business. Yes, if only.

Cynicism. Steal a slice of pizza, go to jail. But if a Wall Street brokerage cheats thousands of people out of their savings and gets caught, well, shareholders of the brokerage may suffer a fine so long as nobody has to admit guilt. Americans feel powerless against institutional injustice, because so few people in positions of authority say it is wrong.

Fear. When a cutthroat culture turns on itself and poverty becomes a cause for individual blame, not collective sympathy, the Employee Class accepts many indignities for fear of losing even more ground. We cower under the thumb of the sheriff of Nottingham because Robin Hood is on the run.

The lottery. Don't laugh. Tens of millions of Americans tell themselves that they are just a few lucky numbers away at any given moment from joining the aristocracy. It's hard to rouse these working people on to war footing when they think they have a chance each week to escape to the enemy camp.

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