The new “new normal” is old social Darwinism
R.J. Matson/Post-Dispatch
Back in January, we suggested that President Barack Obama should call for a “New Normal” in America, one in which shared civic responsibility comes ahead of personal aggrandizement. Lately, we’ve found our phrase has been kidnapped.
- “[M]any U.S. jobs lost during the recession may be gone forever and a weak employment market could linger for years,” The Associated Press reported last week after interviewing leading economists. “That could add up to a ‘new normal’ of higher joblessness and lower standards of living for many Americans.”
- “It’s a new normal that U.S. growth is going to be anemic or average for years,” economist Allen Sinai of Decision Economics told the AP.
- “The overall trend is ‘travel light’ by companies, because the new normal is constant change,’” Edward Lawless III of University of Southern California Marshall School of Business told The Wall Street Journal.
- In June, ABC News did a series called “The New Normal,” focusing on ways Americans are coping with financial hardship.
- Also in June, Barron’s published “The New Normal,” an interview with David Kelly, chief market strategist for JPMorgan Funds. He predicted the stock market would recover by year’s end but that employment wouldn’t.
This was not the “New Normal” we had in mind. This new normal describes something completely aberrant: The placid acceptance that economic growth doesn’t have to create jobs to be successful.
It means less leverage for workers, who become increasingly desperate to find a job — any job — regardless of benefits. Two-thirds of big companies that cut health care benefits during the recession told The Journal that they don’t plan to restore them. Fewer than half plan to restore cuts in retirement benefits.
But the Dow Jones industrial average is back above 10,000 and big banks are setting aside bonus money — $30 billion at Bank of America, $29.5 billion at JPMorgan Chase, $22 billion at Goldman Sachs and Citigroup and $16.4 billion at Morgan Stanley.
Shareholders are beginning to recover some value. Big shots are making money, lots of it, despite the Obama administration’s decision to trim executive pay at firms assisted by the Troubled Asset Relief Program. The capitalist rationale used to be that rich people deserve big money because they create opportunity for others. What happened?
Traditionally, recessions began to end as money started trickling into the construction and durable goods industries. They’re still in the tank, and only last week did the Obama administration get around to offering TARP benefits to community lenders and small businesses. And some community bankers are leery because that aid might force them to cut their own salaries.
Thanks for the shared sacrifice, boys.
Why are American workers told that “normal” means they must lower their expectations when bankers, executives and their bought-and-paid-for politicians from both parties aren’t adjusting theirs? They created this mess and now they’re now telling everyone else to suck it up, because — eek! — higher taxes might discourage investment.
Something is terribly wrong if the new normal means accepting 10,000 Americans a day losing their homes or one out in 10 Americans being out of work or the possibility that as many as half of the 7.2 million Americans who’ve lost their jobs in the recession never will find steady work again, much less health insurance.
This new normal has an older name: social Darwinism. Are there no poorhouses? Are there no emergency rooms?
I think there is a new normal. Unemployment is but one facet of it.
We have continually become fat[ter], dumb[er] and - for a little while - happy. Debt has swamped us out at every level, from our own accounts, through the states and up to the feds. Neglect in this and watching our own backside (farming out our own responsibility to “regulators”) has been our undoing.
Statism (however each and every one of us eventually identifies it) is the new normal. It is the new normal! And it us what enables the mess, attempts to correct it and contiually / increasingly takes over more of our lives.
We will have something of inverted “poorhouses” before you know it. Those that lose their homes to foreclosure will find the politically connected living in the best of them - some pigs are more equal than others.
The new normal is a result of incredibly shoddy work by the SEC, which was developed to protect stockholders of PUBLICLY traded companies from criminal activity by corporate executives and boards of directors.
In the 50s and early 60s, this worked because the country had some moral compass. In today’s “everything is a shade of gray” world, that’s gone, so let’s put some teeth into the SEC.
Executives of publicly traded companies (privately held companies would be exempt, since they’re not trying to bilk the average investor) should be required by law to:
1) Earn no more than 20x average non-executive/board compensation. It is unconscionable than a CEO can come into a business, dissolve it, and collect $70 million dollars for his/her efforts just by making two or three quarterly balance sheets “beat expectations.” That is not maximizing longterm shareholder value, nor is it in the technological interests of the country. It’s a great vehicle for speculation, which is the last thing this country needs.
2) Have no stock options. In fact, stock options should be illegal for publicly traded companies - they are a wonderful means of concealing compensation from the balance sheet. If the officers of the company think they are going to increase shareholder value, then they can invest in their own efforts under the same terms as the average Joe.
3) Have no golden parachutes. Contribute to the corporate well being by increasing true, LONG-TERM shareholder value, or pound the pavement like everybody else who doesn’t perform.
This will not cause our “best and brightest” to leave the country. If they really think they can earn more than a generous 20x average non-executive salary of a publicly traded company, they will start their own, private business, which will create even more jobs.
It is not capitalism that has failed us - it is the acceptance of greed in its execution that has run amok, and needs to be stopped. Socialism is a proven failure - let’s not go there, let’s fix the system that has worked in the past.
Al Gore may have invented the internet and you may have coined the term “new normal”, in January, however, you might want to mention that to Roger McNamee, who wrote the book, “The New Normal: Great Opportunities in a time of Great Risk,” in 2004. In the book, the venture capitalist said the new normal is the age of the individual and the safety nets of the past will disappear. With the advent of the new socialism, we can see the new normal can change very quickly.
As the former CEO of a public company, (who usually had one of the lowest salaries in the Post’s list which was <10% of the average worker), I take exception about his suggestion that stock options should be abolished. He says stock options are “a wonderful way of concealing compensation from balance sheets.” Nothing can be farther from the truth. GAAP accounting requires not only the disclosure of all stock option grants, but the expensing of the same, the disclosure of potential value to the top six executives at various future prices, as well as full disclosure of the impact of any resultant dilution. Without stock option compensation, which at my company was available to everyone from the receptionist to the CEO, it would be impossible for new public companies to attract talent. The onerous rules Tom proposes will only serve to drive talent from the public markets to the private. Guess what Tom, unless you are a very high net worth individual, the private equity markets generally are not available to you. I would suggest everyone spend a week as a CEO to fully understand the risk. You are personally responsible for anything that happens in the company. it is your fault whether you knew about it, did it or didn’t. Doesn’t matter, its your fault. I used to tell people that I had a lot in common with the manager of the Cardinals. We were both dependent on the actions of others. They printed both our scores in the paper every day, We both got paid a lot of money. And sooner or later, they were going to fire both our butts.
This is not as new as one might think. Remember middle managers being let go and being replaced by a computer in the 70’s and 80’s. Or the introduction of foreign cars in the 60’s and 70’s. As long as the government listens to wall street main street will suffer. During the last to Presidencies Clinton and Bush nearly 20 trillion has flowed out of country in investments while nearly another 20 trillion has be invested by foreign interests in the U.S. These interest do not want the good life for Americans the foreign investors want to take as much from us as possible. Those supporting imperialism by investing outside the U.S. have not desire to employ here they want to make money importing to here or exporting from here. So who cares about the people of the United States appartently no one it is time as usual to look out for number one anyone telling you anything else if full of bull. Wall Street is not a patriotic organization to begin with they sell to anyone regardless of country.
@jjK:
“Without stock option compensation, which at my company was available to everyone from the receptionist to the CEO, it would be impossible for new public companies to attract talent. The onerous rules Tom proposes will only serve to drive talent from the public markets to the private.”
Exactly - That will create more jobs, and incentivize newer technology.
“I would suggest everyone spend a week as a CEO to fully understand the risk. You are personally responsible for anything that happens in the company. it is your fault whether you knew about it, did it or didn’t. Doesn’t matter, its your fault.”
And that’s why a 20x non-executive salary is offered. Exhorbitant rewards for risk are inappropriate - you only reward that risk that results in success. Period. It’s like mountain climbing - you reach the summit if you don’t die. That’s rough, but that’s the way it is. Everybody has it tough, and there’s absolutely no reason 70 million in executive compensation is appropriate, no matter what the level of risk is. I run my own business, and am responsible for what happens, whether or not I can foresee the consequences, but I won’t get a dime if I fail. That’s the way it should be.
Talk about blindness. Why is it so accepting to GIVE CEO’s compensation that they don’t desire? Talk about highway robbery and handouts. This is the kind of robbery and handouts that is very acceptable by a certain ilk of people. These same people also think the value that insurance companies bring to the table is worth all the profits that they receive for nothing of real value. How crazy!
Another rambling screed on the evils of capitalism. How about the PD hire a bunch of $40/hour laborers with full benefits? Oh, I forgot, your paper and your industry are going broke! Maybe you are not the savvy business types you claim to be. In fact, you’re a bunch of left-wing, economic bozos that recommend socialist policies that were discredited a generation ago. But, never mind, like vampires, your ignorance never dies.
“They created this mess and now they’re now telling everyone else to suck it up, because — eek! — higher taxes might discourage investment.”
So, your solution is higher taxes? OMG, you are insane. It’s really no mystery why job creation will lag during this modest recovery. The gov/met has sucked up all the excess capital through massive deficit spending. You can’t create jobs without capital.
Obama owns this economy now. If it continues to stall, which it will because socialism never works, the next election will be telling.
Let’s please continue to hear about the onerous hardships suffered by the poor hapless banks and corporations; good stuff, that.
Hey Editorial Board….this new normal is called “Change you can believe in” This is the Obama promised world………he keeps running this economy into the ground, destroying job growth with higher taxes and the promise of even higher, his government take-overs make Post Office” like run car companies, insurance, banking, punishment of incentive with pay caps……….this is the change you promoted……..take a look at socialized Europe….there you have the “new normal”……..CHANGE, now here…..but not hope, regardless of the promise.
Remember when they cried “protectionism” and said “FOREIGN competition is good for the consumer?” Now the new line is “Save money, live better, COMMUNIST China Mart? How’s that workin’ out for ya’ll. HAHHAHAHAHAHAHA GET IT YET????????????????????