People are angry and confused. And they have their reasons. As layoffs pile up by the tens of thousands and the unemployment rate spikes up, they see their neighbors and family members caught in the crunch.
They watch reports of executives at distressed companies receiving eight-figure severance packages. And they are astounded to learn that one executive spent more than $1.2 million to renovate his office, including $1,000 for a fancy trash can.
At a recent readers’ roundtable at the Hartford Business Journal, several business leaders expressed deep frustration and rage about an economy that is punishing people who didn’t cause the problems and often rewarding those who did cause them.
Their anger tends to be free-floating rather than specific. But it’s generally directed at a political system that lacks accountability or transparency and at the culture of “greed” that once enriched Wall Street but is now bringing it to its knees.
While venting against the excesses of former Merrill Lynch boss John Thain comes naturally, local leaders are more polite when outrageous compensation goes to a local such as Ramani Ayer, CEO of The Hartford.
According to a recent report in The Wall Street Journal, Ayer will receive pension benefits of about $37 million, thanks in part to interest rate assumptions that are more favorable than those used by the IRS. Other companies, including United Technologies Corp. locally, played similar games.
But consider Ayer’s case further. The Hartford is seeking up to $3.4 billion in federal bailout money. Its share price has plunged some 80 percent in the past year. It has laid off hundreds of employees. That means Ayer’s rich payout is on the backs of taxpayers, shareholders and axed employees. Harsh but true.
Is The Hartford’s case out of the ordinary? Maybe not. But that’s because U.S. executive pay patterns are totally out of line. The old justification for big paychecks — the executives are worth every penny to their companies and their shareholders — no longer holds today.
Giant paychecks have become an entitlement to anyone who claws to the top. It’s no longer pay for performance. It’s pay for status.
Frustration over compensation abuse merges with anxiety over how bailout money is being spent and how the media is reporting the nation’s collapsing economy. Many readers fault the media.
After a recent HBJ Today e-news bulletin announced that Connecticut’s unemployment rate shot up to 7.1 percent, one irate — and highly sophisticated — reader sent the following e-mail: “I’m thinking of unsubscribing to HBJ Today … It’s all BAD news.”
Unfortunately, a lot of it is. And to the extent the media slips into exploiting anxiety, it is part of the perceived problem.
Another sure cause of general unease is President Barack Obama’s stimulus package, which was approved last week. Taxpayers know that it commits more than $800 billion in borrowed money, which they will eventaully have to cover. The spending binge won’t necessarily work, but it’s our elected leader’s best shot.
And now, in a dire economic crisis that has no simple solutions, hyper-partisanship has reared its useless head again. In a direct challenge to Obama’s inauguration call for us to return to the best of our national history, radio talk show host and Republican thought-leader Rush Limbaugh chimed in with, “I hope he fails.”
Days later, U.S. House Republicans unanimously withheld support for the Obama plan. And so, torn between opposing thought leaders, our anxieties continue to grow.
