The question raised by this case here is one of where some capitalists are more equal than others. The folks who invested in Nabors Industries most decidedly wanted to raise their shareholder value, but when a CEO gets paid more as the company’s fortunes tumble, then over a hundred million to leave the company, something is not right.

It’s a bit of a vicious cycle, and it’s sort of hardwired into us. You put an electrode into the pleasure centers of a person’s brain, and just give them the ability to press it until they don’t want to anymore, and you’ll have an addict on your hands.

And soon, a dead addict. Fortunately, nature tends to route our pleasures and rewards through doing things like eating, surviving, having kids, and other helpful things. Ah, but human beings can abstract things away from the hoops nature would otherwise have us jump through, and so folks get into trouble.

And the trouble here? Well, the folks on the board of directors for many corporations are CEOs and executives themselves, so they’re not opposed, really, to granting pay raises to fellow CEOs and executives, often in the name of being competitive. Which just means that they use the fact that they’ve given some guy over here more pay as an excuse to give somebody over there even more pay!

Ah, but that pay has to come from somewhere, doesn’t it?

The conventional wisdom is that the captains of industry are all super-smart people who know better than the rest of us how to run things, and thus deserve every dollar that people are willing to give them to buy their services. Nice theory. Trouble is, the reality is that many corporations have gone down in flames, while the executives bail out with golden parachutes. And why not? If a person can make tons of money whether they succeed or not, whether the business prospers or not, whether they are honest with their clients or not, they’ll do whatever is easiest for them.

And why shouldn’t they? Like many of God’s creatures, if you reward their behavior, they’ll continue to do what makes them wealthy.

The funny thing about this approach to things is that many people sell this expedience as being the grittily realistic way of doing things, yet their other selling point, simultaneous to that, is that we should expect these folks, having been given more money, keeping more of that money, not having to be so accountable or so constrained, etc. to turn around and give people jobs, that is take on a cost, with no certainty of reward.

This after years of headlines dominated by outsourcing, offshoring, layoffs, and consultants brought in just so they can figure out who to fire. Why? Because if you cut labor costs, you can meet price/earnings ratio estimates, and your stock will go up.

Sense something a little funky there? Now while some rich folks are going to do something with their newly accumulated cash, you have to realize something: cash was already accumulating for them to begin with. By definition, being rich means you take in more than you have to spend to satisfy your needs. So why raise labor costs, especially in a bad economy, where nobody can expect a profit?

I’m not trying to talk businesses out of hiring here, this is what they’re already saying to talk themselves out of hiring more people, despite the fact that they have more cash on hand than ever! Why is all that cash not being spent on creating jobs? Because at basis, businessmen are ill-advised to create jobs if they don’t get a return on investment. That is, if they care about doing things in the first place, rather than just soaking up more wealth and pressing the lever attached to the pleasure centers of their brains.

Supply side theory on bringing this nation out of it current economic state is built on a huge misunderstanding of what motivates productive economic behavior. It says that if you provide people with a never-ending escalation of reward, regardless of what they do, you’ll get the best leaders. Well, hate to break it to you, you’ve only gotten the best-paid. It says that if you relieve them of obligations, then they’ll naturally gravitate towards doing the right thing, even if the things that aren’t right often can be done at a greater profit. It says that if you let them keep more of what they’ve already accumulated, and then let the market alone decide what gets done, that in gratitude, these people will create jobs. Never mind that the market discourages growth in employment when there aren’t enough people making enough money to generate the activity that would keep those people busy, their employers rolling in the profits. Never mind that the response of many of these supposedly altruistic souls, over the past few decades, has been to reward themselves by cutting labor and other costs in the business to the bone, even in the best of times.

In a normal business cycle, whatever imbalance that reduced profit and business would ease up, and folks would get back to business, positively correcting the negative correction that caused the whole recession to begin with. Only this time, the economic crisis caused a major problem in finance, such that the negative correction, in all its excess, remained stuck, not springing back with full elasticity. Long term, it’s a problem for us.

I would prefer to let the system correct itself. I would also prefer that the system gets corrected, back to working at full potential, regardless of whether it does so by the means of my first preference. My sentiments about letting things happen “naturally” is that all too many times, it means letting a highly artificial, price-distorted situation endure, on the theory that letting this happen again and again is the way to find moderation. Never mind that this depends on the idea that markets seek or find one ideal, natural equilibrium.

What if markets don’t? What if the market can get stuck for a long time in a state where it’s not performing up to snuff, and rather than this being our only real choice, it’s just some screwed up alternative we chose out of foolishness? How many times in the last few years have we had the opportunity to do better, and had it thrown away just so some could keep government the way it is, and enforce their idea of what’s “natural?”

If we reward folks the way we do on Wall Street, and in corporate America, for what they’re doing at the moment, we can easily get stuck in these positions where bad market conditions persist for years, both the ones that cause problems now, and those that cause problems in the future after fueling false growth. It’s my belief that the policies that were enacted to encourage speculative froth in the housing markets and excessive easy credit in the Bush years were encouraged precisely to mask the weaknesses of an economy where manufacturing had been largely outsourced, and consumers were expected to spend more on stagnant wages. That’s how Wall Street finance came to take up so much of the economy, and that’s how their collapse became so much more devastating.

We encouraged an economy reliant on the vain promises of future gain, in its own way an insidious addiction for the average American. Because failures in credit mean that people pay more for products, the problem isn’t just outstanding debt taking up income, but also future finance charges sucking it up on the other end. Finance, instead of acting in a symbiotic way with commerce to promote businesses that employ and act productively, has parasitically sucked the economy dry from both the supply side and the demand side. Wall Street has shaped an economy that seems intent on fitting the square peg of current cost into the round hole of reduced demand.

The average person now graduates to less hope of a job than their parents had. They have less hope of making themselves upwardly mobile. The luck and pluck fairy tales become a cruel joke for many, who thanks to market forces out of their control, see themselves slide deeper into poverty, rather than rise higher into prosperity. Our infrastructure ages, a legacy of generations that while not greater, certainly were more responsible, and longer term in their thinking. But even their creations can’t last forever.

Hope exists, but not in the passive acceptance of what is. Hope is what OWS is looking for, really. I know folks make fun of it, but when we’re talking hope here, we’re talking a defiance of what some consider an inevitable defeat for the interests of the average person. We’re talking people wanting to follow the example of their forebears and put finance and commerce back in the place of being part of what governs life in America, not the sum total.

I remember a time when it was taken for granted that we must think not merely in terms of financial benefit, but in terms of the consequences of our actions, where moral and health concerns had some precedence over dollars and cents bean-counting. We need to return to those kinds of values, where there were other dimensions, other facts taken into account than just the ones that would lead us to do something in the interests of some financier or CEO.

We need a system that’s more wholly human, because only when we take needs and social obligations that have long been the root of law and order in our civilization and satisfy them as well in the mix can we get a system that isn’t corroding our humanity and civility in the name of the benefit of the lucky few.


market uncertanty political agenda re election ron paul