There are many millionaires and billionaires that are starting to get it. Sadly there are not enough of them. Millionaire Nick Hanauer made it clear that it is the middle-class who create jobs and that if they are allowed their share for the spoils the pitchfork will come out. Undeserving financial guru Henry Blodget finally came to the same conclusion, the people that do the work and consume are the real job and wealth creators. The instruments of capitalism reward only a few with the spoils.
A few years back the organization Patriotic Millionaires begged Congress to tax the rich to mitigate many of the disparities created by the flaws in the economic system. But the fallacy that keeping taxes low on the rich somehow makes for a better economy that rewards all continues to be the modus operandi of the Republican Congress. Even as the experiment of trickle-down economics have proven otherwise. It is important to note that under much higher progressively tax rates there the economy was much more robust for more of its people.
Los Angeles Times Pat Morrison wrote the piece “George Zimmer, a millionaire with a plan to help the middle class,” from an interview with George Zimmer, a Patriotic Millionaires board member. George Zimmer was candid.
George Zimmer correctly points out that the election of Ronald Reagan was the tipping point. One can look at any economic chart to qualify and quantify the slide of the middle-class. Under the Reagan economy, previously characterized by George H.W. Bush as voodoo economics, or supply-side economics, an anti-tax, anti-regulation selfish form of economics became vogue. It became acceptable.
Zimmer’s statement on unfettered capitalism is probative.
That changed around 1980, and we have a reliance on the market economy as though it were being given to us on the mountaintop, like Moses. In fact, only in the last 50 years has maximizing shareholder value been part of the conversation on capitalism. The original idea was that companies would identify social reasons for their existence, other than their own profits. Adam Smith, who wrote “The Wealth of Nations,” wrote a book called “The Theory of Moral Sentiments,” about the moral underpinnings that this new capitalistic system would require in order to work for everybody.
[But] beginning in 1980, we started to get things like hedge funds. We are rewarding shareholders and not worrying about stakeholders. [We should] initiate dialogue about moving from a strictly shareholder model to a stakeholder model so customers, employees, communities and suppliers have a seat at the table as well as the chairman.
About his own salary as CEO of the Men’s Warehouse he said the following
My successor’s compensation package in the current year is approximately equal to my entire compensation over 40 years: about $9.6 million. I paid myself plus or minus a half-million for about 20 years. After the company went public in 1992, I became a millionaire; I set up a foundation whose primary purpose was providing college scholarships to children of Men’s Wearhouse employees. I took my salary over a similar time and donated to the scholarships.
About how he paid his employee he said the following.
We were certainly [near] the top. We did pay some employees minimum wage, but we had a very generous group medical policy and one of the early employee stock ownership plans, back in the 1980s. We were voted one of the best companies to work for [at least 12 times in Fortune magazine’s annual list].
Now I’m not paying anybody in downtown Oakland less than $15 an hour. It’s as much a personal choice — because I think it’s the right thing — as it is a political agenda.
We need more of the wealthy to step out. They are really doing us no favors. They are ensuring the survival of a system that absent change will crash under its own weight.