A Politician Finally Stands Up And Fights For The Majority of Americans

For all of the failings of our politicians in Washington, D.C. over the years, I just finished watching a video of Senator Elizabeth Warren grilling Wells Fargo CEO John Stumpf, and for one brief shining moment, I have to stand and applaud a member of Congress for actually doing the job for which she was elected. Like a bird watcher catching a glimpse of an extremely rare New Caledonian Owlet, I witnessed a Senator calling one of the most powerful bankers in America to accountability for not stopping employees from opening bogus credit card and bank accounts costing unaware customers millions of dollars. It was a beautiful and uplifting sight to see Stumpf try and explain why 5,300 low-level employees were fired over the scam, while top executives, including Stumpf, continued to receive salaries and bonuses worth tens of millions of dollars.

At the basis of the Wells Fargo fiasco is the concept of “cross-selling.” Not something new, cross-selling is a long-practiced technique of getting customers who bought one thing from you interested in buying something else. A recent experience of mine serves as an example. I walk daily and needed a new pair of walking shoes. I went to a nearby upscale running store (my mistake) to get a good quality product. I did find a pair of shoes that worked for me, but while I was there, two employees worked on me constantly, trying to cross-sell me expensive socks, an additional pair of shoes, a VIP membership and on and on. In the banking world, cross-selling involves selling customers additional accounts beyond a checking and savings account. Wells Fargo was giving its employees bonuses for cross-selling accounts, which as it turns out, got completely out of hand.

Why the emphasis on cross-selling? Selling more accounts to customers helped the bank profit each year, and this pleased the bank’s board and shareholders, who then rewarded CEO Stumpf and others at the top of the food chain with salary increases and huge bonuses. So customers became a means to an end. No one involved in the scheme cared whether the customer needed another account or credit card, it was all a matter of numbers. Sell more, get more. And this is, of course, the major flaw of capitalism itself.

Capitalism has no moral imperative. It is an economic system driven by one thing and one thing only, profits. If you run a business, you either make a profit or you go under. As a business owner, you must do whatever you need to do to keep your company profitable, weather that means massive layoffs, moving your business overseas or selling customers things they don’t need. There is no room in the capitalist system for mercy, kindness or generosity when the bottom line is in danger. Sure, you’ve probably read an article here and there of the employer who did this nice thing for his employees, but these people are the exception by far, and not the rule. Capitalism is a system that rewards greed, especially at the top, and as government restrictions and regulations have been curtailed over the last thirty years by money-hungry politicians, the fattest of the fat cats like Strumpf couldn’t be happier.

We need Elizabeth Warren and many more like her if we are to ever hope for a more equitable economic system in this country. Income inequality is the worst it has been since the Robber Baron era at the turn of the 19^th century. Today’s economic bandits like Strumpf will only stop gouging the little guys when they are held accountable for their actions, and have to pay for their crimes. Thank you Elizabeth Warren, for doing your job.

Income inequality worldwide: Bad and getting worse

There is a sobering new report from Oxfam about income inequality worldwide. Some lowlights:

• The richest 1 percent of the world's population currently controls 48 percent of the world's total wealth.
• If trends continue, Oxfam predicts that the most affluent will possess more wealth than the remaining 99 percent by 2016.
• The 80 wealthiest people in the world possess $1.9 trillion, which is almost the same amount shared by some 3.5 billion people at the bottom half of the world's income scale.
• Thirty-five of the lucky 80 were Americans with a combined wealth of $941 billion. Germany and Russia shared second place, with seven uber-rich individuals apiece.

Although late to the game, Obama is at least attempting to do something about this egregious problem and will announce a plan to extend tax credits to the middle class by hiking taxes on wealthier Americans and big banks during his upcoming state of the union address. It’s a step in the right direction, but we’ll have to wait and see what the dim bulbs in Congress have to say about this.

As bad as things are for the 99 percent here in America, there is one statistic that is perhaps the most shocking and damning of all.

More than 1 billion people worldwide live on less than $1.25 a day.

Americans don’t have a clue about income inequality

There’s an interesting and disturbing article in today’s Salon on income inequality in America. A recent study found that the United States has by far the largest gap in income inequality in the developed world. The current gap in this country between what CEOs make as compared to the average pay of workers in their factories is a whopping 354 to 1. To provide some perspective, in 1965, the gap between CEO pay and workers was 20 to 1. On the list of developed countries, the second country below America is Switzerland, with a gap of 145 to 1. The pay gap in the United Kingdom is 84 to 1.

The article points out how clueless Americans are when it comes to income inequality in this country. The survey asked people what they thought the actual wage gap was, and the answers averaged out to 36 to 1, and this was across ages, demographics and political affiliation. When asked what they thought the gap should be, respondents said about 7 to 1. How is it we have such a poor understanding of the wage gap and income inequality in this country?

The author points out a number of reasons for our rose-colored view of income inequality, including the lingering belief among Baby Boomers that we’re still living in the Post-WWII boom, the reluctance of Republicans and Democrats to address the issue and the Ayn Rand/Tea Party propaganda that those at the bottom of the economic ladder are lazy and not working hard enough.

The one culprit the article leaves out is the corporate mainstream press. Is it in the economic interests of the small cabal of media giants to make an issue out of income inequality? Absolutely not. Scaring consumers with stories about how much more their bosses make than they do could lead to all kinds of unfortunate circumstances, like people saving more and using credit cards less; letters to representatives demanding more income equality; citizens actually marching in the streets demanding things. The horror! FOX News is only the most vocal corporate shill, but it is by no means alone.

Breaking down existing beliefs about income inequality will be difficult, but necessary. If nothing is done, our ruinous trend will continue to push the 99 percent down and lift the .01 percent up and further enhance the political power they already enjoy.