Bank of America:
$135 billion in profits over 10 years. $34.8 million for CEO Ken Lewis the past two.
The American Dream, right?
Not for their workers.
The median wage for a Bank of America teller is near the poverty line.
Not for taxpayers.
The fact that many Bank of America employees can’t afford their company’s health benefits costs taxpayers an estimated $50 million a year in public health programs.
And not for consumers.
Last year, Bank of America collected $10.3 billion in bank fees, almost 30 percent higher than either of its two largest competitors.
CEO pay has gone from 27 times higher average pay to 344 times higher.
Wages for workers dropped 13 percent.
To be fair, writes Jeff Maldrick at NewDeal 2.0, some Republicans must have thought there was a just social contract, but it was largely based on an ingenuous faith—at least among the most sincere of them—in the fantasies of Milton Friedman.
Make individuals free to buy, sell and work, especially by relieving them of tax obligations and expensive regulations, and most will prosper, even the poor.
But what happened is that incomes and wealth became increasingly unequal; family incomes rose only limb marginally higher even as spouses worked; class divisions based on college entrance became stark; healthcare costs soared, and many more had no health insurance; the quality of the nation’s infrastructure deteriorated; dependence on dirty fossil fuels rose — and on and on.
Democrats bought into this idea to a surprisingly large extent.
There were many causes of the Clinton boom of the late 1990s, but perhaps most important were cheap money, speculative stock and housing prices, and a lot of borrowing. As noted, debt covered up the failures of the social contract and the economic model. Borrowing—and hence, the cover-up– was brought to us by a high U.S. dollar, which was the pride of deregulation champions Robert Rubin, then the Treasury Secretary, Lawrence Summers and Alan Greenspan.
As most know today, and some of us knew back then, access to borrowing was the salve that soothed harsh reality.
Now overly indebted Americans are paying a large price, losing homes and livelihoods. The debt was the source of enormous of wealth for a small privileged sliver of Americans located on Wall Street, where profits rose to nearly two fifths of all American profits.
Let’s face it.
America will not be fine again until we have a new social contract, one that recognizes that high wages are a source of growth and that government must have a robust role in creating prosperity again.
That role includes vigilant oversight of financial markets and active investment in infrastructure, energy, education, and healthcare reform. Without these, America’s future prosperity in a global economy is seriously endangered.