The Great Reagan Tax Scam was the divide between middleclass prosperity and middleclass impoverishment. According to the Institute for Policy Studies, productivity increased at a relatively consistent 3 percent since 1948 with increases in wages tracking productivity gains. Then in the early ’80s it all stopped. Although worker productivity increased 132.8 percent since then, worker compensation flat-lined at just 16.7 percent.
Mother Jones reports if median household income had kept pace with the economy it now would be nearly $92,000 not $50,000. Instead Reagan policies allowed excessive executive compensation packages, higher retention of corporate profits and a whole host of dodgy tax gimmicks to further enrich Daddy Warbucks.
Instead, tax and regulatory cuts for the top 20 percent and flattening of wage growth for the bottom 80 percent have resulted in the most inequality since the 1920s with the 400 richest families now owning about 80 percent of the wealth of the nation, more than the bottom four-fifths.
In 1981 Fortune 200 CEOs stated that a corporation’s goal should be to “enhance the enterprise, provide jobs and build the economy.” But by 1997, reflecting the shifting consensus by the moneyed class, the Business Roundtable said the “principal objective of a business enterprise is to generate economic returns to its owners.”
For example, Jeffrey Sonnenfeld, senior associate dean for leadership studies at the Yale School of Management, points to a 2005 survey that found 80 percent of CFOs at 400 of the largest U.S. companies admitted they would sacrifice research-and-development spending to meet a quarterly earnings target.
And now the Trump administration is pressuring the SEC to require even less oversight of corporations by eliminating quarterly reporting, making it semi-annual, resulting in even less transparency.
The government reported in early August that average working Americans, even given their paltry Trump tax breaks and nearly full employment, are making less money than they did at this point last year, after accounting for rising prices.
Now Massachusetts Sen. Elizabeth Warren has introduced legislation called the Accountable Capitalism Act, aimed at fundamentally recalibrating the mission of the biggest corporations, pushing them away from maximizing immediate returns for shareholders and executives and toward investing in longer-term value and sharing gains with workers.
The bill would require companies with more than $1 billion in annual revenue to weigh the interests of all stakeholders — including workers and local communities, in addition to shareholders — in its decision-making. Forty percent of board seats would be reserved for employees. It also would discourage managers from seeking to pump the share price to line their own pockets. (In an accompanied bill, she calls for an end to big money in politics and the closing of the revolving door between political officeholders and lobbying and vice versa).
Robert Hockett, a professor at Cornell Law School says the basic concept is simple. “If you’re going to get corporations’ limited liability privilege, you should show you’re giving something back to the community.
This is how it used to work and must again if we want to save capitalism.