Joel Mathis

NYT reports that American CEOs are taking minimal -- or even non-existent -- paycuts during the pandemic, letting employees suffer layoffs while refusing to do any real sacrifice. A survey of some 3,000 public companies shows that the cuts — which, so far, have come in the form of salary reductions — were tiny compared with their total pay last year. Total pay includes things like bonuses and stock awards that typically make up the bulk of what corporate bosses take home. Companies in this group include the Walt Disney Company, Delta Air Lines, United Airlines and Marriott International. All of those businesses have laid off or furloughed employees or pressed workers to take pay cuts. Seems obvious at this point that American capitalism is disordered. Right now the shareholders are making a killing -- as Ryan Cooper points out today, the only way to get Republicans to move on an economic relief bill right now is to root for the stock market to collapse -- and so, apparently, are th

A lot of the debate over Mitt Romney's time at Bain Capital has been focused on how many jobs he did or didn't create, did or didn't destroy. That's understandable, given that we're in a time of sustained high unemployment, but I'm not sure that tallying lost jobs really gets to the heart of what might be objectionable about Romney's business practices. The problem is debt. In the case of the shuttered Kansas City steel mill at the center of the debate, the chain of events is pretty clear: • Bain Capital bought the steel mill in October 1993, putting up just $8 million of its own money to gain majority control—even though the total purchase price was $75 million.  • The next year, Bain had the company issue $125 million in bonds—debt used to pay Bain itself a dividend of $36 million in 1994. Understand again: Bain made a quick profit on its investment, but it wasn't by helping the steel mill earn greater profits—but by having the mill take on a

Ben and I discuss Mitt Romney's venture capitalist past in our Scripps Howard column this week. My take: This is the problem with the Republican version of capitalism, as practiced by Mitt Romney and so many of his Wall Street friends over the last few decades: Profit isn't just regarded as the highest virtue; often, it is seen as the only virtue. It wasn't always this way. During the 1950s, a time when labor unions were ascendant, the American social contract expected that big corporations would make big bucks, yes, but that those employers would also provide their workers a comfortable living, and would even hang onto those workers during rough times. Now, quarterly profits are the only thing that matter and if a few jobs have to be sliced to make the accounting work out, then that's what has to be done. The result? Our businesses are richer. But our society feels poorer. And Mitt Romney helped lead the way. Profit isn't unimportant. What today's m

Because government helps banks , but it doesn't help you: The largest banks are larger than they were when Obama took office and are nearing the level of profits they were making before the depths of the financial crisis in 2008, according to government data. Stabilizing the financial system was considered necessary to prevent an even deeper economic recession. But some critics say the Bush administration, which first moved to bail out Wall Street, and the Obama administration, which ultimately stabilized it, took a far less aggressive approach to helping the American people.  “There’s a very popular conception out there that the bailout was done with a tremendous amount of firepower and focus on saving the largest Wall Street institutions but with very little regard for Main Street,” said Neil Barofsky, the former federal watchdog for the Troubled Assets Relief Program, or TARP , the $700 billion fund used to bail out banks. “That’s actually a very accurate description of what

At NRO today, Thomas Sowell gets cranky about a California newspaper's investigation into "payday loan" companies and their practices. He particularly objects to a line suggesting that customers of such institutions are charged what amounts to an annual interest rate of more than 400 percent: The 460 percent figure comes from imagining that the borrower is not just going to borrow the money for a couple of weeks, but is going to keep on borrowing every couple of weeks all year long. Using this kind of reasoning — or lack of reasoning — you could quote the price of salmon as $15,000 a ton or say a hotel room rents for $36,000 a year, when no consumer buys a ton of salmon and few people stay in a hotel room all year. It is clever propaganda, but do people buy newspapers to be propagandized? Sowell, having raised such questions, might've attempted to answer them. That might've detracted from his screed, though, because the evidence is that quite a few customers

I've poked fun at conservative defense writer Max Boot lately because of Boot's recent assertions that cutting defense spending would end up cutting American jobs in a soft economy. I noted that Boot sounded like liberal columnist Paul Krugman, and suggested that "mainstream conservative Republicans—whatever their fiscal rhetoric—have long favored the soft socialism of big defense spending." Krugman sounds the same theme this morning , not mentioning Boot specifically, but otherwise making the same point. He calls this crowd "weaponized Keynesians," a term borrowed from Barney Frank. First things first: Military spending does create jobs when the economy is depressed. Indeed, much of the evidence that Keynesian economics works comes from tracking the effects of past military buildups. Some liberals dislike this conclusion, but economics isn’t a morality play: spending on things you don’t like is still spending, and more spending would create more jobs.

A conservative friend posted this to Facebook a couple of days ago, and it's been gnawing at me a bit: The suggestion here being that the Occupy Wall Street crowd is selfish and ridiculous to be protesting. This is both right and wrong. We should all be grateful in a cosmic sense for what we do have, of course. But "being a starving baby with ribs showing" shouldn't be the only grounds for complaint. (If it is, the Tea Party might want to pipe down as well.) If you believe that your betters are tilting the playing field not through luck, not through accident, not merely through hard work, but through the greasing of palms and the escaping of the same rules that apply to you—then I think it's fine and appropriate to speak up. This is a similar logic to those who suggest (say) American women shouldn't complain about disparities in the United States because, hey, Afghanistan! Burkhas! It's a logic that allows the people at the top to deflect the co

So says I in this week's Scripps Howard column with Ben Boychuk : The flat tax is Republican-led class warfare. It makes the rich richer and the poor poorer, for no better purpose than making the rich richer and the poor poorer. We have progressive taxation -- in which people with higher incomes pay a higher tax rate than those at the lower end of the scale -- for a reason: People on the low end are less able to pay. Flat taxes invert that logic, giving the rich a huge tax break and often burdening the poor. The Tax Policy Center says a low-income family making $31,000 a year would lose its $5,147 tax return under Perry's plan, for example. (Herman Cain's plan is worse. Nearly everybody making under $50,000 would see a huge tax increase.) Perry's plan was unveiled the same day as a new Congressional Budget Office report showing economic inequality is widening in this country. From 1979 to 2007, people in the richest 1 percent grew their after-tax income by 27

I wondered where National Review editor Rich Lowry was going with this . He spends the bulk of his column conceding that, yes, the American Dream is "raggedy around the edges," that if you're born poor in America, you're all too likely to stay poor, that "picking the right parents" seems to make more of a difference here than it does in (say) Finland for your future economic prospects. So, God bless Lowry for providing some conservative reality-based pushback to Paul Ryan's fantasy of an economically mobile society. But Lowry arrives at the end of his column—just two paragraphs to go!—and concludes that despite all this, one shouldn't blame America's economic structure—really, the poor have only themselves to blame: This stagnation is less a statement about the structure of America’s economy than about its culture. As Ronald Haskins, also of the Brookings Institution, wrote in an essay for National Affairs, “economic mobility is constrained

Kevin Drum sums up a new report : "I'm not sure how many ways it's possible to debunk a single meme, but in this case it's a helluva lot. It turns out that (a) Obama has issued fewer regulations than Bush, (b) adjusted for inflation, they cost less than the average over the past 30 years, (c) this doesn't take into account the benefits of any of his regs anyway, and (d) only about 0.3% of mass layoffs during the Great Recession were related to new regulatory issues." Read the whole thing.

Stu Bykofsky, always the contrarian, uses his perch in the Philadelphia Daily News today to let the "Top 1 Percent" respond to the Occupy Wall Street protests. I found this excerpt to be particularly confounding: How do the members of the "1 percent" feel? I asked three - Renee Amoore, Tom Knox and George Bochetto - each a local, unapologetic, self-made millionaire. They believe they already pay their "fair share" in federal taxes. "I don't only pay the 35 percent," says Center City lawyer Bochetto, who was raised in an orphanage. "I also pay Social Security tax, state and city income tax, property tax. More than half of my income goes to the government. That's my fair share." Due respect to Bochetto and his rise to riches from the orphanage. Good for him! But does he really pay more than half his income to the government? If so, he needs to hire a new accountant—immediately. Why do I say that? Because the effective tax r

At NRO, Andrew Stiles tries to prove the "regulatory uncertainty" canard is actually true: A new Gallup survey asked small-business owners an open-ended question about what they viewed to be “the most important problem” facing the small-business community. It’s not “lack of demand,” as Democrats like to argue. In fact, 22 percent of respondents listed “complying with government regulations” as their top concern. Here's the graphic that Stiles uses as supporting evidence: Notice anything about items 2 and 3 on that list? "Consumer confidence" and "lack of consumer" demand" are parsed out as two different items, but the effect is the same: Consumers who aren't confident are consumers who aren't buying stuff—thus, they're not demanding the products that businesses provide. Add those two up, and 27 percent of small-business owners see some variation of the demand side as being the biggest problem with the economy. Which is, ahem , m

Jonah Goldberg this morning delights in his own prescience in writing this 2008 column about how the children of capitalism are spoiled and ungrateful: In large measure our wealth isn’t the product of capitalism, it is capitalism. And yet we hate it. Leaving religion out of it, no idea has given more to humanity. The average working-class person today is richer, in real terms, than the average prince or potentate of 300 years ago. His food is better, his life longer, his health better, his menu of entertainments vastly more diverse, his toilette infinitely more civilized. And yet we constantly hear how cruel capitalism is while this collectivism or that is more loving because, unlike capitalism, collectivism is about the group, not the individual. These complaints grow loudest at times like this: when the loom of capitalism momentarily stutters in spinning its gold. Suddenly, the people ask: What have you done for me lately? Politicians croon about how we need to give in to Ca

Michael Ellsberg argues in the New York Times that we should emphasize entrepreneurship over education: I TYPED these words on a computer designed by Apple, co-founded by the college dropout Steve Jobs. The program I used to write it was created by Microsoft, started by the college dropouts Bill Gates and Paul Allen. And as soon as it is published, I will share it with my friends via Twitter, co-founded by the college dropouts Jack Dorsey and Evan Williams and Biz Stone, and Facebook — invented, among others, by the college dropouts Mark Zuckerberg and Dustin Moskovitz, and nurtured by the degreeless Sean Parker. American academia is good at producing writers, literary critics and historians. It is also good at producing professionals with degrees. But we don’t have a shortage of lawyers and professors. America has a shortage of job creators. And the people who create jobs aren’t traditional professionals, but start-up entrepreneurs. College isn't for everybody, sure, but thi

Maybe. But the New York Times doesn't offer any evidence to back up this assertion : To improve their profitability, banks have three main options: increase revenues, cut expenses and reduce the shareholder base. But the first method is not working at a time when earnings have been crimped by regulatory uncertainty and economic woes. The reason I ask the question is that "regulatory uncertainty" is one of those Luntzian phrases—like "death tax," say—that Republicans toss around cavalierly. And it's true that Dodd-Frank regulations are altering the investment banking landscape. But is that the reason Goldman Sachs lost $428 million during the quarter? Consider the very next paragraph in the Times' article: Goldman reported a loss of $428 million during the third quarter, compared with a $1.74 billion profit a year ago. The firm was punished by its holdings in stocks and bonds, losing $1.05 billion on its holdings in Industrial and Commercial Bank of

This is in the comments on my Starbucks post, but I think Andrew S. offers some good and interesting commentary that I want to highlight : It really doesn't reduce new and small businesses to charity cases. It treats CDFIs--and the services they provide in the form of technical assistance and low-cost credit--as charity cases which almost all of them have always been. That's the innovation. I think this effort does a good service by recognizing that not all sources of credit are the same and that getting a loan as a small business is not merely a matter of declaring your interest in getting one. If you have a sexy internet company with high growth potential, money can be easy to come by. If you want to start a lawncare business, not so much. The "technical assistance" part of the picture is important as well. There are lots of people with great ideas for starting their own businesses who don't really know how to use debt effectively. Coupling loans with that kind

Joe Nocera highlights Starbucks' new effort in the NYT : Here’s the idea they came up with: Americans themselves would start lending to small businesses, with Starbucks serving as the middleman. Starbucks would find financial institutions willing to loan to small businesses. Starbucks customers would be able to donate money to the effort when they bought their coffee. Those who gave $5 or more would get a red-white-and-blue wristband, which Schultz labeled “Indivisible.” “We are hoping it will bring back pride in the American dream,” he says. The tag line will read: “Americans Helping Americans.” It didn’t take long for Starbucks to find the perfect financial partner: Community Development Financial Institutions, or CDFIs. These are lenders, mostly under the radar, that specialize in underserved communities. Most, but not all, CDFIs are nonprofit, and their loan default rates are extremely low. “We specialize in expending credit, getting paid back, and paying back our investors,

At NRO, Charles C.W. Cooke finds an Occupy Wall Street protester to mock and educate. It needs to be quoted at length. He was a fairly well dressed and sometimes well spoken middle-aged man, and he wanted to talk to me about Walt Disney. This request alone was enough to pique my interest. But then, he surprised me. “Walt Disney,” he said, “was a whore…Look at how much money he made out of Snow White….Why can’t I use it in my mashups?” Walt Disney made a lot of money from Snow White, something my friend considers unfair. But then Walt and his brother Roy also took a lot of risk. Originally estimating that the movie would cost $250,000 to make, the final bill ended up at around $1.5 million. During the three grueling years of production, Walt was almost universally laughed at for his ambition, including by his wife and brother. In the industry the project was known as “Disney’s Folly,” in part because the studio quite literally had to invent most of the processes necessary for the pro

Wednesday night, my Twitter feed—after the Phillies game ended—was primarily concerned with two things: Occupy Wall Street, and the death of Steve Jobs. It's terribly dangerous to mash up two wildly disparate news stories and find a Common Meaning in them, but I was struck nonetheless. And so I Tweeted my thoughts : That while capitalism has real, sometimes huge flaws, it is also capable—uniquely so, in my opinion—of offering us goods and services that help us survive, thrive, and extend our abilities. I think it's also largely true, as Rod Dreher said —and he, incidentally, is no fan of Big Corporatism—"socialism just doesn’t produce a Steve Jobs." But I think National Review's Kevin D. Williamson takes the Jobs-as-awesome-capitalist meme too far: Profits are not deductions from the sum of the public good, but the real measure of the social value a firm creates. Those who talk about the horror of putting profits over people make no sense at all. The phrase i

That 1,000-point drop on Wall Street today? Guess how it happened? In one of the most dizzying half-hours in stock market history, the Dow plunged nearly 1,000 points before paring those losses in what possibly could have been a trader error. According to multiple sources, a trader entered a “b” for billion instead of an “m” for million in a trade possibly involving Procter & Gamble [PG 60.75 -1.41 (-2.27%) ], a component in the Dow. That set off a chain-reaction panic on trading floors. As Daniel Foster at National Review noted : P&G's 37 percent nosedive was only responsible for 172 points of the 992.60 the Dow lost in the slump. The rest was market reaction — and part of that was computerized and automated. You know, capitalism and free trade generally make a lot of sense. But our current method of allocating capital -- Wall Street being the big mover in that process -- keeps finding new ways to make itself look dangerously insane. Terminator was about how compute