Recently Tyco International, the company that has become - along with Enron - the poster child for wretched corporate excess, announced that things there weren't as bad as they'd been painted.
They were worse.
An internal investigation by the company revealed that Tyco executives, without board approval, had helped themselves to hundreds of millions of dollars in unearned bonuses, unauthorized perks and bogus expenses over the course of the years. Right at the top of the list of malefactors, of course, was Tyco's former chief executive, Dennis Kozlowski. Here are just some of the things Mr. Kozlowski bought for himself with company money:
A house and land in Boca Raton worth $29.7 million.A co-op apartment in New York City for $7 million.
A second apartment in New York for $16.8 million.
Renovations for the second apartment, $3 million.
Furnishings for that second apartment, $11 million. Among those furnishings: a "dog umbrella stand" for $15,000 and a "gilt metal wastebasket" for $2,000, as well as $2,900 worth of "coat hangers."
So it goes. An umbrella stand here, a coat hanger there, and pretty soon you're talking about real money.
It's tempting to say that conspicuous consumption at that level is pathological, but it's not. Lavish executive compensation has become the norm in corporate America, at least at its highest levels. As Paul Krugman, the New York Times' brilliant economics columnist, documented in a series of recent articles, we have spawned a corporate culture that supports itself in a sultanic manner unseen here since the Robber Baron era of the 1890s.
Krugman produced figures to show that in the past 30 years, the average real annual compensation of the top 100 CEOs in America has gone from an inflation-adjusted $1.3 million a year (39 times the pay of an average worker) to $37.5 million (more than 1,000 times the pay of the average guy). That average guy's salary, in case you're wondering, has gone from $32,500 to $35,800 in that same time span.
Do the words "progressive taxation" ring a bell? I can hear the conservatives screaming now: "Class warfare! Class warfare!" Some war. They have missiles; we have spitballs. One of the organizing principles of this nation is equality of opportunity. When the wealth of the nation falls into the hands of a small group, we mock that principle. Today, the top .01 percent of taxpayers, representing the 13,000 richest families, receive as much income as the 20 million poorest. And the poorer families are bigger.
That, my friends, is the real class warfare, and we have lost the war. The rich guys won.
They use their money - what's left over when they've bought their yachts, houses, and umbrella stands - to gain political power, and with it, tax breaks, subsidies and government contracts. Then they reward pliant public servants with big-paying jobs when they leave office.
(Consider the case of Senator Phil Gramm who, while his wife served on the board of Enron, successfully pushed through legislation that exempted that firm from laws governing trading practices, thus allowing its executives to fleece the nation. He's leaving the Senate now to take a job with the company that bought Enron's trading business.)
While all of this has been going on, the Bush administration has been doing everything in its power (which is considerable) to thwart any attempt at improving government regulation of business. It has backed off on its promise to institute corporate auditing reforms, it has cut its promised budget increase for the resource-starved Security and Exchange Commission and blocked the appointment of strong reformers to key regulatory boards.
Now comes word, via the Washington Post, that business lobbyists are exhibiting a "guarded optimism bordering on giddiness" over the prospect that Republicans will take control of both houses of Congress this fall. They say they intend to pursue an agenda of accelerated tax cuts (mainly for the rich), limits on medical malpractice damages and a serious reduction in corporate taxes.
But we mustn't blame the president for anything. It would be unpatriotic. Besides, it might wake the voters.
Donald Kaul recently retired as Washington columnist for the Des Moines (Iowa) Register.