W. Arthur Lewis and the Tradeoffs of Economics and Economists - From Vox EU: W. Arthur Lewis and the tradeoffs of economics and economists, by Ravi Kanbur, VoxEU: There is nothing new under the sun. The passionate polit...
16 hours ago
“No offense to Middle America, but if someone went to Columbia or Wharton, [even if] their company is a fumbling, mismanaged bank, why should they all of a sudden be paid the same as the guy down the block who delivers restaurant supplies for Sysco out of a huge, shiny truck?” e-mails an irate Citigroup executive to a colleague.
“I’m not giving to charity this year!” one hedge-fund analyst shouts into the phone, when I ask about Obama’s planned tax increases. “When people ask me for money, I tell them, ‘If you want me to give you money, send a letter to my senator asking for my taxes to be lowered.’ I feel so much less generous right now. If I have to adopt twenty poor families, I want a thank-you note and an update on their lives. At least Sally Struthers gives you an update.”
It is difficult to sympathize with these people, their comments laced with snobbery and petulance. But you can understand their shock: Their world has been turned on its head. After years of enjoying favorable tax rates, they are facing an administration that wants to redistribute their wealth. Their industry is being reordered—no one knows what Wall Street will look like in a few years. They are anxious, and their anxiety is making them mad.”
“A few weeks ago, I had drinks with a friend who used to work at Lehman Brothers. She had come to Wall Street in the mid-eighties, when the junk-bond boom spawned a new class of globe-trotting financiers. Over two decades, she had done stints at all the major banks—Chase, Goldman, Lehman—and had a thriving career directing giant streams of capital around the world and extracting a substantial percentage for herself. To her mind, extreme compensation is a fair trade for the compromises of such a career. “People just don’t get it,” she says. “I’m attached to my BlackBerry. I was at my doctor the other day, and my doctor said to me, ‘You know, I like that when I leave the office, I leave.’ I get calls at two in the morning, when the market moves. That costs money. If they keep compensation capped, I don’t know how the deals get done. They’re taking Wall Street and throwing it in the East River.”
“The battle has ground on for 20 years. In 1989 and again in 1994, a clear majority of nurses at a Louisville, Ky., hospital signed cards saying they wanted a union. But each time a majority of the nurses later voted down the idea when it was put to a secret ballot.
“Given the deceitful tactics unions employ when trying to get nurses to sign these cards, this is dangerous legislation that should not be enacted,” Stephen A. Williams, president of the hospital’s parent, the nonprofit corporation Norton Healthcare, wrote to the nurses in March.
In the Louisville fight, the National Labor Relations Board ruled that the nurses had changed their minds about the union in 1994 mainly because management conducted an often illegal campaign against unionization.”
“The N.L.R.B.’s rulings described weeks of psychological warfare. Management put television sets in the nurses’ stations. “They would show these horrible old movies showing miners’ strikes and violence involving unions,” said Betty Schmitt, a nurse who has since retired.
She said management put up signs reading: “Be careful with whom you associate. You can be found guilty by association.” Many nurses were scared to be seen talking to union supporters, she said.
“It didn’t feel like America,” Ms. Schmitt said. “It felt like Nazi Germany.”
In 1994, the nurses voted 366 to 220 against unionizing — a sharp reversal considering that a majority of 348 nurses had originally signed pro-union cards. Management said the nurses in the majority did not want to pay union dues or have an outside party speak for them.”
“In the absence of fraud or self-dealing, it’s hard for shareholders to make a legal argument that boards have failed at their job. State law in Delaware, where most big public entities are incorporated, simply requires companies to have boards that direct or manage their affairs, and it affords broad legal protection to board members so long as they act in good faith and in a manner “believed to be in or not opposed to the best interests of the corporation.”
That was the basis for the recent ruling of a Delaware judge who threw out most of the claims in a shareholder lawsuit seeking to hold Citigroup directors and officers liable for big losses tied to subprime mortgages. But the judge did allow the plaintiffs to pursue one of their claims, which alleged corporate waste stemming from a multimillion-dollar parting pay package that Citigroup’s board awarded Charles O. Prince III, the former C.E.O., in 2007.”