Corporate Crocodile Tears: A Guest Post

In response to my post yesterday about CBC bias in its reporting on Ontario's minimum wage increase, the Mound wrote a detailed commentary that I am featuring today as a guest post. Following his piece I reproduce a letter from a Star reader pillorying corporate hypocrisy.

"Government should function on the expectation that corporations will act in their own economic self-interest." That point is inarguable. The corporate self-interest, however, has to be subordinated somewhat to the public interest. The political caste is elected to represent the public who voted them into power and those voters who preferred someone else. They are not elected to put corporate interests ahead of the public interest but to balance the conflicting needs of labour and capital recognizing, as Lincoln said, that "labour is by far the superior."

That principle, stated by Lincoln, is especially relevant today in this era of early-onset automation that is going to become a more dominant factor in our industrial economy. Galbraith addresses this in "The Predator State."

Ours is a consumer economy and there's really nothing else we can substitute for that. The corporate sector collapses without access to markets sufficiently large to purchase and consume their wares. Henry Ford knew that it was essential that his workers earned enough to be able to afford to buy his cars.

Commerce today engages in nihilistic pursuit of unsustainable profits at the expense of even its own mid- and long-term interests. Executive compensation is based on what the company takes in today, not how it may be positioned to fare in the next decade or the one after that.

A month before the Republican tax cuts were passed, corporations were gearing up for the anticipated windfall. They weren't hiring new employees or adding additional machinery, they were organizing share buy backs. They were using the newfound money to buy back outstanding shares sending share prices soaring, hence increasing executive compensation. And the US government is funding this nihilism with an additional 1.5 trillion in borrowings. Call it "the art of the deal."

In the era of globalism our neoliberal political caste thought they could finally wash their hands of responsibility for the balancing of public and private interests, delegating this fundamental responsibility to "the invisible hand of the marketplace." Only that hand no longer works as they fantasize.

We think fondly of the era of Pearson and Pierre Trudeau, the vision they brought to our country. That began to wane under Mulroney and Chretien but it was crushed under Harper and, sadly, now Trudeau the lesser. Now when we desperately need leaders of vision again, leaders who can navigate us through these enormous challenges of the day, that quality is no longer on offer.

And from Robert Bahlieda of Newmarket:

Starting salary for top CEOs? $2,489 an hour, Wells, Jan. 2

Kudos to Jennifer Wells for exposing the other side of the coin. The sadness of the headline is that we have all accepted and internalized the bizarre logic of capitalism and can see no way out. We read the article and then move on.

The logic of a free market is to convince everyone that extreme wealth is good and necessary, so extreme relative poverty must be its alternative. But even here, there is deception. This is reflected in the salaries of CEOs and of the minimum wage for workers. The $14 minimum wage is held out as either a pariah or a godsend.

The business community warns of job losses while it pays its CEOs handsome salaries and perks. But if paying a living wage is that critical, businesses that are stretched so thin should close their doors. The whole point of business is not to create wealth for the business but also a good quality of life for workers. If businesses cannot pay good living wages, health care, pensions and other basic aspects of daily living, they should not be in business. It’s a false capitalist logic to say we can only operate on minimum wages while profits are booming and the senior suite is golden.

CEO salaries are the same. They have increased every year for the past 40 years while workers’ wages have remained stagnant. Everyone knows this lie. The Credit Suisse Global Wealth Report (2016) noted that the top 1 per cent owned more than half of the worlds’ assets and the bottom half owned virtually nothing.

The real irony is that taxpayers are paying for the minimum wage and CEO increases. The federal government is cutting small-business taxes by 0.5 per cent immediately and another 1 per cent cut is coming. They have also modified the corporate tax penalty on small business to make it non-existent. Provincial governments have chipped in cash to ease the transition as well.

But still the wailing and gnashing of teeth goes on in the business community. So stop the whining and change the system.