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Society is suffering from the greed of the few

Written 2008/02/04, modified 2016/08/22
Contact: email daveclarkecb@yahoo.com

Also see Ethics, Contribution and Societal dysfunction and cancer.

Contents

Changing attitude to income
Who are the worst thieves?
Climate change deniers
Australia's coal miners
Links
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Every Australia Day we hear a lot about the importance to Australia of volunteers – those who work with no expectation of payment and the aim of making their society just that little bit better. They look after the elderly, the sick and injured, the disadvantaged; they fight our fires, get trapped people out of car wrecks, help to bring storm damage under control, improve our environment, raise money for charities, and make many other valuable contributions.

 

Value for money?

We are told that huge salaries must be paid to attract the very highly talented people we need. As I write this section in October 2008 the world's economic systems are in chaos because many banks and other financial institutions have collapsed following irresponsible and stupid lending of billions of dollars to people quite incapable of repaying their debts. The worst excesses were in the USA, but institutions in other countries around the world are in deep trouble because the people who controlled them invested money (their share-holder's money) in the businesses that went down.

The executives who were, we were told, so very highly talented – and certainly were very highly paid – have made a dog's breakfast of running the big institutions. The average self-funded retiree looked after his investments with more care, foresight and intelligence than shown by the highly paid corporate bosses.

We are all fallible. No-one is worth even ten times as much as anyone else.

Gulf of Mexico oil spill

The record-breaking oil leak from the deep-ocean oil well of 2010 and BP's incompetent response to it shows again that the top corporate bosses are just as fallible as the rest of us.

Ethics

If our big corporations were run ethically there would be more justification for the big salaries, but they are not run ethically, quite the opposite. It is largely the big corporations that are leading the opposition to the much needed response to climate change. The big corporations are run with two aims in mind:
  1. The benefit of the corporate bosses;
  2. The short-term financial benefit of the share-holders.

Changing attitude to income

According to an annual UCLA [University of California, Los Angeles] survey of college freshmen [first year students], "being very well off financially" was "very important or essential" to 44 percent of students in 1965, but that number has steadily increased, reaching 75 percent of students in 2000. It's curious to note that while prosperity has significantly increased during the past fifty years, self-reported levels of happiness have stayed the same. The data are dramatic. For example, while inflation-adjusted personal income has almost tripled since 1956, the percentage of Americans reporting that they are "very happy" has remained steady at 30 percent during the past 45 years.

Extract from 'Do The Right Thing',
by Thomas G. Plante

Exactly opposite the spirit of the volunteer is that of the bosses of our big companies. They demand obscene amounts of money for their time; they divert money into their own pockets from people who are less well off than themselves; in place of the volunteer's altruism, the corporate bosses have selfishness. They use their positions of power to amass levels of wealth that are far beyond what they will ever need. Where the volunteers give, the corporate bosses take; where the former are admirable, the latter are contemptible.

 

Where does all that money go?

Huge incomes lead to huge rates of consumption. Material that is consumed requires resources to produce, probably requires energy (or fuel) to run, and creates pollution, or at least land-fill, when it is disposed of.

So the CEOs have a far bigger environmental foot-print than the people they take money from.

Who pays the multi-million dollar salaries of the CEOs? Many of the volunteers would be small investors, many would be employees of the big companies, many would be self-funded retirees, many others would be putting a portion of their hard-earned income into superannuation funds. The CEOs are taking a cut from all these groups; effectively robbing the poor to help themselves. Some volunteers would fall into several of the above categories and would be loosing in more ways than one. Many volunteers, small investors, employees of the big corporations, and those who pay into superannuation schemes are far from wealthy; they can ill-afford being 'milked' by the bosses.

The CEOs take a significant skim off the top of the profits of the big corporations. If they took less there would be more for the employees and the investors. The superannuation funds invest a large part of the money that they have the responsibility to look after in the big companies. All those who place money in a superannuation fund, or who have retired and are living from their superannuation, are paying a portion of the bloated incomes of the big bosses. In effect, the battlers are paying the wealthy.

The average package for the 100 highest paid CEOs in Australia in the 2001-2002 financial year was $2.6 million a year. Consider this: if a particular CEO was to decide that he (there are very few shes) could get by on $600 000 a year and put the rest back into the company funds, that $2 million a year would be enough for a thousand investors to each get a thousand dollars more each year and a thousand employees to get a pay rise of a thousand dollars per year. Enough to make quite a difference to many volunteers, I imagine. And that's only one company.

In late 2010 the price of gold is at an all-time record. People have been taking money out of shares and putting it into gold because they have become disenchanted with investing in companies. How much of this disenchantment is due to a perception that those who are running the companies are not doing so for the benefit of the shareholders, but for their own short-term selfish aims? It is more than a perception, the total value of the companies on the share markets has stagnated or declined at the same time as the corporate bosses take out larger and larger cuts.
 
Houses of the rich
Luxury houses in 'Mandurah Canals', Western Australia.
I looked for solar panels (PV and water heating) on the roofs of many of these houses, didn't see any. Solar is fairly common on more ordinary houses; why not on the houses of the wealthy? Does it indicate a systematic lack of concern for environment?

There is ample research indicating that beyond sufficient income to provide a comfortable living, more money does not lead to more happiness. The same research confirms that, on the other hand, too little money certainly causes misery.

The huge incomes of the corporate bosses and board members don't come out of the blue; we pay them. Most ordinary Australians are paying toward the maintenance of their life-styles and the size of their bank accounts.

Australia and the USA have, in the past few decades, had a history of an increasing gap between rich and poor. If the gap becomes sufficiently big, revolution will result.

Ethically the grasping CEOs are no better than embezzlers or bank robbers. While they may obey the laws, they take away from many who have much less than themselves, and they do not need what they take. They take it because they can!

The share of the nation's wealth in the hands of the richest 10% increased greatly during the Howard years, just as the share of the nation's wealth in the hands of the poorest 10% decreased. The incomes of the wealthy increased steeply, those at the bottom of the heap were lucky if they kept their heads above water. The gap between rich and poor in Australia must be wider now than for a very long time. Will the Rudd government turn this around? I'd say that the early signs are not promising.

We should be more vocal in our condemnation of greed – for the good of our society.

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This section written 2010/03/04

Who are the worst thieves?

If a robber steals five thousand dollars from a bank we tend to think badly of him; and rightly so, because if our society is to function well people can't be allowed to help themselves to other people's property.

But surely the corporate bosses are much worse than my hypothetical bank robber. The average CEO, mentioned above, who is paid two million dollars a year more than he needs to live happily, can be thought of as stealing a thousand dollars a year from each of a thousand small investors and stealing another thousand dollars a year from each of a thousand workers. Yet there is a tendency for the plebs to admire such a man, rather than condemning him! Why?

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This section written 2010/04/27

Climate change deniers

Climate change is, by a large margin, the greatest threat to the world today. The bosses of the multinational corporations that make their profits from those industries that are the largest producers of greenhouse gasses don't want anything done that might reduce their incomes. They have, therefore, very effectively mounted a campaign of misinformation to make the more ignorant of the people doubt the reality of climate change and its link to Man's activities.

They do not do the climate change denying themselves, they use their public relations people to fabricate environmentally responsible images for their companies, and then they employ others to do the dirty work of lobbying politicians and funding complient 'experts'.

Future generations will suffer from the failure of our generation to fix the climate change problem; a large part of the blame for that failure will rest with the corporate bosses.

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Australia's coal miners

Deaths to be expected from proposed coal mines in the Galilee Basin, Queensland;
Just two mines will cause around 18 thousand deaths each year and two of the wealthiest Australians are heavily involved.

Wikipedia gives world coal extraction as 7 865 million tonnes (MT) per year and total Australian extraction as 431MT.

As discussed elsewhere, from a World Health Organisation (WHO) report, it is reasonable to accept that there are two million deaths caused by coal burning world-wide each year. If we accept that the deaths due to burning the coal exported from Australian mines cause deaths at the same rate we can do some calculations.

Several mines are proposed in the Galilee Basin in Queensland. Two of the largest:

  • Gina Rinehart's, Hancock Coal/GVK, Alpha Coal mine is expected to 'produce' 30MT/year, causing more than seven thousand deaths each year;
  • Clive Palmer's China First mine, at 40MT/yr will be responsible for over ten thousand deaths each year.
(The above production figures are from Wikipedia.)

A Net site called Facts and Details provides a shocking summary of the air pollution situation in China; India is similarly polluted.

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Links

The Bucks Stop Here: Private Sector Executive Remuneration in Australia; a report written for the Labor Council of NSW by John Shields, Michael O'Donnell and John O'Brien.
Available on the Net as a pdf document

In addition to listing the remuneration packages the CEOs of some 100 to 150 of Australia's largest companies the report found that:

  • Executive Remuneration levels in Australia grew over the decade 1992-2002 from 22 times average weekly earnings to 74 times average weekly earnings.
  • At the same time, executive option packages, with 'long-term incentives' (share bonuses, share purchase plans and share option entitlements) for Australian CEOs increased from 6.3 per cent of total remuneration in 1987 to 35.2 per cent of total remuneration in 1998.
  • The often-stated link between high executive pay and company performance does not exist. Indeed, the evidence is that as an executive's pay increases, the performance of the company deteriorates. Against three criteria: return on equity, share price change and change in earnings per share, statistical analysis shows that high excessive pay levels actually coincide with a lower bottom line.



The Conversation: Australia's rich give little, by Bronwen Dalton and Elizabeth Cham, 2016/08/18.


Queensland (Australia) Courier Mail: Australian multi-millionaires the meanest in the world for charity, written by Daryl Passmore, 2016/01/10. "... the average total amount donated to charitable causes by Australian UHNWIs [ultra-high net worth individuals] over their lifetimes is just $9.5 million – compared to the global average of $41 million."


Doing an Internet search on something like "How much do wealthy people donate in Australia" gives some interesting results.





Index

Australia's coal miners
Changing attitude to income
Climate change deniers
Contents
Corporate greed
Ethics
Links
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Value for money
Who are the worst thieves?
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