May 01, 2007
A Family of Thieves

When people are asked for a one-word description of George W. Bush, they increasingly choose words like incompetent, idiot, and liar rather than good, Christian, or honest (why those last three are considered synonyms is not clear to a fringe resident like me).

But isn’t it just totally dead clear that the right word is thief?

Since President Bush took office, the combination of rising productivity and stagnant wages — workers are producing more, but they aren’t getting paid more — has led to a veritable profit gusher, with corporate profits more than doubling since 2000. Last year, profits as a share of national income were at the highest level ever recorded.

Krugman points out that this profit gusher has not increased investment. Far from it; in fact, if you leave out housing, investment remains well below its late 1990's level, and has declined the past two quarters despite that great economy the White House keeps trumpeting.

And of course wages are stagnant despite consistently rising productivity. So if the money’s not going to the workers, and it’s not being invested, where’s it at?

Krugman gives some credence to the idea that it’s being used to buy back stock, thus increasing the value of the remaining shares. If corporate officers and insiders hold most of those shares, they’re basically pocketing the cash they’re choosing to remove from the market. This doesn’t increase investment or wages or improve the physical plant or finance research and development. It enriches the already very rich. It concentrates wealth in fewer and fewer hands.

The first thing Chomsky taught me was that capitalism and democracy are opposites: to the extent we favor one we disfavor the other. And it’s clear which side the Cheney administration comes down on, to the obvious and flagrantly disregarded discomfort of most of the population.

In fact, a case can be made that the Bush family values loyalty above competence precisely because much of the wealth created when they’re in office arises from illegal acts, from wars to the looting of the S&Ls and the theft of Iraqi oil and cash by American companies. It’s not simply that George W. Bush is a thief; it’s that his family has heen a bunch of thieves for at least three generations.

The difference is that Shrub believes his thievery is the will of God.


Posted by Chuck Dupree at May 01, 2007 03:15 AM
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There's more to it than Krugman noted. Often those bought back shares, treasury shares as they are usually called, have voting rights. This giving the directors the right to vote these shares to continue to allow high CEO salaries. Thus negating the positive effects that Barney Franks intends in H.R. 1257 bill, the Shareholder Vote on Executive Compensation Act.

Posted by: Buck on May 1, 2007 4:40 AM

Sometimes I shouldn't post at 4:30 in the morning. Treasury shares generally do NOT have voting rights.
My error.

Although the same effect might be accomplished through a complicated buyback when several classes of shares are involved.

Posted by: Buck on May 1, 2007 1:33 PM
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