Barbara's Blog

It’s Not Easy Being Ultra-Rich

On Labor Day we customarily give a nod to America’s underpaid and overworked blue and pink collar workers – janitors, flight attendants, forklift operators and the like. But this year let’s go a step further and salute the most reviled and despised of the people who make our economy happen, the mere mention of whom causes the average forklift operator to spit on the floor. You are thinking perhaps of telemarketers, human traffickers, and the fiends who answer the phone when you to try to make a claim on your health insurance. But I’m talking about our CEOs.

Just in time for the holiday, two liberal groups – United for a Fair Economy and the Institute for Policy Studies – have issued a gleefully malicious new attack on our CEO class. They point out that the CEOs of large companies earn an average of $10.8 million a year, which is 362 times as much as the average American worker, and retire with $10.1 million in their special exclusive CEO pension funds. They further point out that the compensation of US CEOs wildly exceeds that of their European counterparts, who, we are invited to believe, work equally hard.

And, in what they must think is their cleverest point of all, the UFE/IPS folks state that: “The 20 highest-paid individuals at publicly traded corporations last year took home, on average, $36.4 million. That’s … 204 times more than the 20 highest-paid generals in the U.S. military.” You know what we’re supposed to think here: Wow, but generals have all that responsibility! They’re responsible for national security, or at least for conducting the wars that increase the threats to our national security and thus help justify ever greater increases in our national security apparatus!

But someone has to speak up for our beleaguered CEO class, and let me begin with that spurious comparison to the top military brass. Could we put patriotic emotion aside for a moment and look at this in a hard-headed, bottom-line, sort of way?

Suppose you are the general responsible for all the service people currently in Iraq, about 130,000 in round numbers, and suppose you manage to lose every single one of them in some ghastly miscalculation. With the death benefit for the family of a dead soldier running at $100,000, your mistake will cost a total of $13 billion. Sounds like a lot, I know, until you consider that a hedge fund manager or financial company CEO can lose that much in a single afternoon, without anyone even noticing. Q.E.D., there is simply no comparison between a general and a CEO.

That’s a side issue though. The real point, which the CEOs and their usual defenders are strangely reticent about making, is that it’s damn expensive to be rich, and extravagantly expensive to be super-rich. Before you start playing your air violins, consider the costs of maintaining up to five different homes, some of them up to 45,000 square feet in size, most with swimming pools, tennis courts, guest houses, and wine cellars requiring constant supervision.

The poor whine about having no home at all, or maybe a two-bedroom apartment for a family of six. They should just think for one moment of the tribulations involved in running four or more mansions, each with its own full-time staff. There’s the problem of getting between them, for example. A friend of mine, of very modest means himself, consults for a billionaire couple who commute between London and Los Angeles by private jet, with their dogs following in a second private jet.

But much of what we know about the extreme costs of wealth comes from Wall Street Journal columnist Robert Frank’s recent book Richistan. The ultra-rich, who are drawn largely from the CEO class, require staffs of about 40-50 people, including not only cooks, maids and nannies, but “lifestyle managers” (to set up the entertainment schedule) and – in a throw-back to the original gilded age -- butlers. It’s the butler’s job, among other things, to deal with any issues that may arise from the proliferation of homes. For example, if the boss is in Palm Beach, Frank reports, “and wants to send his jet to New York to pick up a Chateau LaTour from his South Hampton cellar, the butler makes it happen, no questions asked.”

Nor are the ultra-rich in a position to cut back on their expenses – by, say, running down to the supermarket for a $12 bottle of chardonnay. If they were to do so, their friends would despise them. As Frank explains, the Richistani word “affluent,” meaning someone with less than $10 million in assets, translates into English roughly as “scum.”

A mean-spirited critic of the ultra-rich CEO class might grumble that the rich should simply find a new circle of friends. But who exactly might these new friends be? If you were in the $100- million-in-assets set, you could hardly consort with the class of people for whom a pittance like $10,000 might be a transformative sum, possibly allowing granny to get her insulin and the children to have warm winter clothes. People of that class could not be trusted not to pocket the silverware or rip out the gold fixtures in your powder room. They might even make a lunge for your throat.

(Barbara Ehrenreich admits to being on the board of the Institute for Policy Studies.)

Smashing Capitalism

Somewhere in the Hamptons a high-roller is cursing his cleaning lady and shaking his fists at the lawn guys. The American poor, who are usually tactful enough to remain invisible to the multi-millionaire class, suddenly leaped onto the scene and started smashing the global financial system. Incredibly enough, this may be the first case in history in which the downtrodden manage to bring down an unfair economic system without going to the trouble of a revolution.

First they stopped paying their mortgages, a move in which they were joined by many financially stretched middle class folks, though the poor definitely led the way. All right, these were trick mortgages, many of them designed to be unaffordable within two years of signing the contract. There were “NINJA” loans, for example, awarded to people with “no income, no job or assets.” Conservative columnist Niall Fergusen laments the low levels of “economic literacy” that allowed people to be exploited by sub-prime loans. Why didn’t these low-income folks get lawyers to go over the fine print? And don’t they have personal financial advisors anyway?

Then, in a diabolically clever move, the poor – a category which now roughly coincides with the working class – stopped shopping. Both Wal-Mart and Home Depot announced disappointing second quarter performances, plunging the market into another Arctic-style meltdown.  H. Lee Scott, CEO of the low-wage Wal-Mart empire, admitted with admirable sensitivity, that “it’s no secret that many customers are running out of money at the end of the month.”

I wish I could report that the current attack on capitalism represents a deliberate strategy on the part of the poor, that there have been secret meetings in break rooms and parking lots around the country, where cell leaders issued instructions like, “You, Vinny – don’t make any mortgage payment this month. And Caroline, forget that back-to-school shopping, OK?” But all the evidence suggests that the current crisis is something the high-rollers brought down on themselves.

When, for example, the largest private employer in America, which is Wal-Mart, starts experiencing a shortage of customers, it needs to take a long, hard look in the mirror. About a century ago, Henry Ford realized that his company would only prosper if his own workers earned enough to buy Fords. Wal-Mart, on the other hand, never seemed to figure out that its cruelly low wages would eventually curtail its own growth, even at the company’s famously discounted prices.

The sad truth is that people earning Wal-Mart-level wages tend to favor the fashions available at the Salvation Army. Nor do they have much use for Wal-Mart’s other departments, such as Electronics, Lawn and Garden, and Pharmacy.

It gets worse though. While with one hand the high-rollers, H. Lee Scott among them, squeezed the American worker’s wages, the other hand was reaching out with the tempting offer of credit. In fact, easy credit became the American substitute for decent wages. Once you worked for your money, but now you were supposed to pay for it. Once you could count on earning enough to save for a home. Now you’ll never earn that much, but, as the lenders were saying – heh, heh—do we have a mortgage for you!

Pay day loans, rent-to-buy furniture and exorbitant credit card interest rates for the poor were just the beginning. In its May 21^st cover story on “The Poverty Business,” Business Week documented the stampede, in the just the last few years, to lend money to the people who could least afford to pay the interest: Buy your dream home! Refinance your house! Take on a car loan even if your credit rating sucks! Financiamos a Todos! Somehow, no one bothered to figure out where the poor were going to get the money to pay for all the money they were being offered.

Personally, I prefer my revolutions to be a little more pro-active. There should be marches and rallies, banners and sit-ins, possibly a nice color theme like red or orange. Certainly, there should be a vision of what you intend to replace the bad old system with—European-style social democracy, Latin American-style socialism, or how about just American capitalism with some regulation thrown in?

Global capitalism will survive the current credit crisis; already, the government has rushed in to soothe the feverish markets. But in the long term, a system that depends on extracting every last cent from the poor cannot hope for a healthy prognosis. Who would have thought that foreclosures in Stockton and Cleveland would roil the markets of London and Shanghai? The poor have risen up and spoken; only it sounds less like a shout of protest than a low, strangled, cry of pain.

The War on Infrastructure

This morning, flanked by a dozen people who lost cars or family members in last week’s I-35W bridge collapse, President Bush declared a “War on Infrastructure.” Describing the July steam pipe explosion in Manhattan and the bridge collapse in Minneapolis as “cowardly attacks on our way of life,” he explained that until now, “the War on Infrastructure has been largely centered on Iraq, where it has been over 70 percent successful. Today, very few operating bridges, water mains or power grids remain for Iraqis to worry about.”

Anticipating the usual caviling, he added that the new war is in no way a distraction from the ongoing War on Terror. “The World Trade Center towers would not have fallen under the force of airplane collisions alone,” he said, “The role of faulty construction, which is code phrase for infrastructure, can no longer be denied.”

Ken Pollack, the Brooking Institute’s die-hard supporter of the war in Iraq, warned that the War on Infrastructure could be as difficult to win as the War on Terror. “We’d gotten used to fighting human enemies,” he said, “and now we’re up against abstract nouns.”

“We expected that there would be a dastardly attack on the homeland sometime this summer,” added Donald Rumsfeld, who will end his brief retirement to take charge of the War on Infrastructure. He attributed the nation’s lack of preparation to the Clinton administration, with its “hear-no-evil, see-no-evil policy toward highway overpasses.”

Congressional Democrats rushed to display their support for the president in his new initiative. Hillary Clinton promised to vote for the bombing of infrastructure on condition that the president checks in with Congress first, assuming he can find them and that the phone and DSL lines are working.

Echoing her sentiments on Pakistan, she said she does not rule out the use of nuclear warheads on particularly entrenched elements of infrastructure, even if civilians are using them at the time. “Anyone who wants to be president has to be prepared to kill people,” she added – “with her bare hands if necessary.”

Perhaps the strongest anti-infrastructure rumblings have come from Dick Cheney, who sent a message from his undisclosed location shortly after the Minneapolis bridge collapse, stating that: “We will prevail even if it means water-boarding every last one of America’s remaining bridges.”

A spokeswoman from the Transportation Safety Administration announced that people seeking to cross bridges will be required to remove their shoes, jackets and all metal items. The effect of this measure on infrastructure is not known, but, she said, “It will definitely facilitate swimming.”

Opportunities in Abstinence Training

If things are not working out as planned, you might want to consider a career in the expanding field of abstinence education. The need is staggering: four out of five random people I surveyed on the street thought abstinence training is something you do with your mid-section in the gym. Plus, unlike any of the rest of the coaching industry – career coaching, life coaching, sales training, etc. – this form of training is generously subsidized by the federal government, and has been since President Clinton signed the welfare reform bill of 1996, which provided abstinence training for impoverished women (though not, alas, for him.)

It’s not rocket science, either. In fact, there’ve been men in my life who were naturals at abstinence training without the slightest formal preparation: One renounced dental hygiene; another developed a passion for Frank Sinatra – leading me in each case to embrace abstinence without any regret. In yet another case, marriage alone was enough to induce that sanctified state.

Most people, though, require a bit of training to get into the abstinence training business, so I went to the website of WAIT Training to look at the sample curriculum for an abstinence course. The suggested syllabus contained a lot about love, marriage and STD’s—none of it terribly technical – until I got to the part about how to explain the difference between the sexes, where the following demonstration was suggested:

Bring to class frozen waffles and a bowl of spaghetti noodles without sauce. Using these as visual aides, explain how research has found that men’s brains are more like the waffle, in that their design allows them to more easily compartmentalize information. Women’s minds, on the other hand are more interrelated due to increased brain connectors.

Maybe my spaghetti brain wasn’t up to this challenge, but it did seem to imply that sex would involve a mixing of waffles and pasta, possibly with maple syrup for lubrication. Disgusting, yes, but no doubt a surefire recipe for abstinence.

My next step was to call Joneen Mackenzie, executive director of WAIT (which is an acronym for Why Am I Tempted?) to further pin down the requirements for becoming an abstinence trainer. Her program admits only college-educated people, but they can be of any age or sex. “Do they have to be abstinent themselves?” I asked. Not at all, she assured me, proudly confessing to being “like an animal” with her husband. How about gays? Well, yes, they could teach abstinence to gay teenagers. So – no barriers at all, and you can become a Certified Abstinence Trainer after only two days of training.

There is, however, one shadow hanging over the abstinence training industry. A study commissioned by Congress revealed in April that abstinence training doesn’t work: Students exposed to such training turn out to be no less likely to have sex than those who are not, leading some to question the over $100 million the Federal government spends on it annually. Mackenzie dismissed the study out of hand, saying it had been undertaken before serious abstinence training really got off the ground.

But there’s a deeper problem with abstinence training as currently conducted: It’s being wasted on kids. What better way to make sex a big deal than to tell a kid they can’t have any for years, and then only after spending $25,000 on champagne and bridesmaid dresses? Furthermore, kids have become more sophisticated thanks to programs like DARE (Drug Abuse Resistance Education), the website of which currently proclaims that “Cannabis can double chances of psychotic illness” and “Just one cigarette can lead to addiction.” If you’ve known honor students who smoke marijuana, why should you believe that teen sex leads inevitably to heartbreak and oozing genital sores?

Here’s my advice for the abstinence training industry and any novice abstinence trainers: First, leave the teenagers alone and focus on the vast neglected demographic of middle-aged and elderly people, including the married. Many of them have thought they just weren’t getting any, so imagine how happy they will be to see their lifestyle affirmed as a noble, pro-active, choice! Think of the market for silver chastity rings (see ) in nursing homes and other long term care facilities!

Secondly, and I realize that this may be more controversial: The abstinent training profession should be restricted to abstinent people. Would you undergo computer training with someone who hasn’t touched a computer since 1987? Would you hire a flabby, out-of-shape, personal fitness trainer? No, nor do I think you should study abstinence with someone who behaves “like an animal” in bed.

Abstinence may be easier to achieve than you realize. Contrary to the assumptions of the framers of welfare reform, poverty – or at least sudden downward mobility – can lead to the rapid exit of significant others. You should welcome their departure and, if you are heterosexual, take it as an opportunity to withdraw into your own gender-appropriate Tupperware compartment – spaghetti or waffle.