Six on History: "Our" Economy
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1) Unions help reduce disparities and strengthen our democracy, Economic Policy Institute
"Unions improve wages and benefits for all workers, not just union members. They help reduce income inequality by making sure all Americans, and not just the wealthy elite, share in the benefits of their labor.
Unions also reduce racial disparities in wages and raise women’s wages, helping to counteract disparate labor market outcomes by race and gender that result from occupational segregation, discrimination, and other labor market inequities related to structural racism and sexism.
Finally, unions help win progressive policies at the federal, state, and local levels that benefit all workers. And conversely, where unions are weak, wealthy corporations and their allies are more successful at pushing through policies and legislation that hurt working people. A strong labor movement protects workers, reduces disparities, and strengthens our democracy.
Unions lower inequalityBy bringing workers’ collective power to the bargaining table, unions are able to win better wages and benefits for working people—reducing income inequality as a result. As seen in Figure A, there was less income inequality in the decades following World War II than there is today. Not coincidentally, union membership was at its highest rate in 1945, just as the war was ending. But as union strength steadily declined—particularly after 1979—income inequality got worse, and it is now at its worst point since the Great Depression.
"How does a country deal with climate disasters when it’s drowning in debt? Not very well, it turns out. Especially not when a pandemic clobbers its economy.
Take Belize, Fiji and Mozambique. Vastly different countries, they are among dozens of nations at the crossroads of two mounting global crises that are drawing the attention of international financial institutions: climate change and debt.
They owe staggering amounts of money to various foreign lenders. They face staggering climate risks, too. And now, with the coronavirus pandemic pummeling their economies, there is a growing recognition that their debt obligations stand in the way of meeting the immediate needs of their people — not to mention the investments required to protect them from climate disasters.
The bank and the I.M.F., whose top officials are meeting this week, are planning talks in the next few months with debtor countries, creditors, advocates and ratings agencies to figure out how to make new money available for what they call a green economic recovery. The goal is to come up with concrete proposals before the international climate talks in November and ultimately, to get buy-in from the world’s wealthiest countries, including China, which is the largest single creditor country in the world.
Kristalina Georgieva, the managing director of the I.M.F., said in an emailed statement that green recovery programs had the potential to spur ambitious climate action in developing countries, “especially at a time they face fiscal constraints because of the impact of the pandemic on their economies.”
One of the countries at the crossroads of the climate and debt crises is Belize, a middle-income country on the Caribbean coast of Central America. Its foreign debt had been steadily rising for the last few years. It was also feeling some of the most acute effects of climate change: sea level rise, bleached corals, coastal erosion. The pandemic dried up tourism, a mainstay of its economy. Then, after two hurricanes, Eta and Iota, hit neighboring Guatemala, floods swept away farms and roads downstream in Belize.
Today, the debt that Belize owes its foreign creditors is equal to 85 percent of its entire national economy. The private credit ratings agency Standard & Poor’s has downgraded its creditworthiness, making it tougher to get loans on the private market. The International Monetary Fund calls its debt levels “unsustainable.”
(CNN) "Minnesota Rep. Ilhan Omar on Sunday said Major League Baseball's decision to pull its all-star game from Atlanta in response to Georgia's new restrictive voting law adds to a history of boycotts that have pushed for justice.
- Big businesses side with Democrats in clash over voting rights
- Fact check: What the new Georgia elections law actually does
- MLB moving All-Star Game from Georgia after state passes new restrictive voting laws
- Virginia governor approves bill to prevent voter suppression, discrimination
- Michigan voting rights battle looms as GOP plans to side-step Whitmer veto
"Fourteen months ago, Larry Fink, the CEO of BlackRock, the world's largest money manager, wrote a letter warning that climate change was on the verge of "fundamentally reshaping" the financial sector. The crux of his message was that the finance sector would have an effect on preventing climate change, if only it changed who and what it invested in.
This should please everyone concerned about climate change. Yet there is a danger that the financial sector now gets credit for acting on climate, when, in fact, it hasn't even begun to do what is necessary.
Yes, nearly all of the country's biggest banks have now committed to achieve "net-zero" climate emissions by 2050. But, at the same time, those same banks are continuing to loan trillions to the companies most responsible for causing climate change. As a major new report shows, since the Paris Agreement was signed in late 2015, JPMorgan Chase alone has loaned more than $317 billion to fossil fuel corporations. Even by the standards of oil companies, that is a lot of money; indeed, it's more than the market capitalization of Chevron and BP combined.
Reducing humanity's greenhouse gas emissions is a race against time, and no bank should be taken seriously if its 2050 climate promises are not accompanied by actions that immediately exclude financing for the coal mines and tar sands pipelines that we know are incompatible with reigning in catastrophic climate change. Even the few fossil fuel-exclusion policies that banks have passed amount to little more than empty gestures. In February 2020, JPMorgan Chase passed a policy to curtail its funding of Arctic drilling projects. Chase's policy prevents the provision of loans that are specifically designated to go toward a particular Arctic drilling project. That's all well and good. But it does nothing to prevent the provision of general purpose loans to companies that are engaged in the business of Arctic drilling.
Industry’s largest financier pledges to end loans to Arctic oil drillers and coalminers
Even voices from within Wall Street have begun decrying the industry's empty posturing. "Wall Street is greenwashing the economic system and, in the process, creating a deadly distraction," wrote Tariq Fancy, the former head of Sustainable Investing at BlackRock, earlier this month.
“This is about the preservation of our people,” said Bryan Polite, the tribe’s chairman. “The story of the Shinnecocks is one of struggle and perseverance, and that’s what’s happening right now.”
The new casino plan comes as the country grapples with social and financial inequity issues with regard to many disenfranchised and oppressed groups, including Indigenous peoples. On the Shinnecock reservation, one person in five lives below the poverty line in a sparse mix of modest houses and ramshackle trailers. From a scruffy shoreline, the Shinnecocks can gaze across the bay at workers landscaping the lawns of huge Southampton summer mansions. It is a stark inequity that tribal leaders hope can be improved by the financial lifeline of a tribally run casino.
Because the reservation is sovereign land, free from government regulations, the planned Shinnecock Hamptons Casino cannot be blocked by local zoning laws and restrictions. That has not stopped a group of roughly 200 homeowners from forming the Hamptons Neighborhood Group and setting up a website with the motto: “Keep the Hamptons the Hamptons!”
The group called the casino out of character with its residential surroundings and said it would lead to increased traffic, as well as possible noise problems, disturbances and crime. They have begun discussing with tribal leaders the possibility of finding another location that might also benefit the tribe.
“A lot of us are bleeding-heart liberals and sympathetic to the oppressed, and we understand their attempt for economic development,” said a homeowner in the group, James Wacht. “But it’s not the right location.”
"Perhaps no industry was as badly battered by the pandemic in 2020 as the cruise industry, with business in the U.S. — its most lucrative market — banned for nine and a half of the year’s 12 months. To cope, the three largest companies stopped paying employees on their ships, cut marketing expenses and worked furiously to raise as much debt and equity financing as possible.
“CEOs don’t lose,” said William Lazonick, professor of economics emeritus at the University of Massachusetts. “Unfortunately, what we’re seeing during the pandemic is business as usual. It will be these employees who are the last ones to see what they once had restored.”
Uniquely, Del Rio’s pay doubled to $36.4 million — two-and-a-half times the national median CEO compensation for the year, according to the Wall Street Journal — and around three times the pay of his counterparts at his larger competitors. According to filings with the Securities and Exchange Commission, Norwegian lost $4 billion. The company, valued at $11.2 billion, has a total of 28 ships operating under the brands Norwegian Cruise Line, Regent Seven Seas and Oceania Cruises and has 34,000 employees.
“We believe these changes were in the best interests of the company and secured Mr. Del Rio’s continued invaluable expertise and critical industry relationships to drive our recovery from COVID-19,” the spokesperson said via email. “In responding to the pandemic, our management team took quick decisive action to reduce costs, conserve cash, raise capital and extend debt maturities and amortization, and remain focused on executing our road map to a healthy, safe relaunch.”
Thanks to low interest rates and profit-hungry investors, the cruise companies were able to borrow large sums of money on relatively favorable terms, shoring up enough funds to last through a cruise-less 2021.
Norwegian Cruise Line Holdings finished the year with cash and cash equivalents of $3.3 billion. Investors who bet on the company’s high-yielding debt issued last year — and that of its competitors — are likely to see a handsome payoff. The index showing the spread between junk bonds and U.S. government debt has now fallen to below pre-crisis levels, signaling that the risk of investing in the cruise companies has dissipated now that new cruises are in sight.
Carnival Corp., the world’s largest cruise company, lost $10.2 billion and paid CEO Donald $13.3 million, according to SEC filings. The company, valued at $33.1 billion, has a total of 88 ships operating under the brands Carnival Cruise Line, Princess Cruises, Holland America Line, P&O Cruises (Australia), P&O Cruises (UK), Seabourn, Costa Cruises, AIDA Cruises and Cunard and has 69,000 employees. Carnival Corp. finished the year with $9.5 billion in cash and cash equivalents.
The disparity is another blow to the cruise ship workforce, which hails mostly from developing countries.
Keeping an executive on board who can weather a time as turbulent for the cruise industry as the COVID-19 pandemic can be a challenge for companies, said Luis Navas, founder and senior partner of Global Governance Advisors, who advises companies on executive pay.
All three CEOs were applauded for making temporary cuts to their salaries. Del Rio’s 2020 salary at Norwegian was reduced 15% from 2019. Donald’s salary at Carnival dropped 43% and Fain’s salary at Royal Caribbean dropped 49%. [wait for it ...]
“Reductions in base pay are token and cynical gestures that try to varnish the reputation of the CEO but are not real,” said Kirk Hanson, senior lecturer emeritus in business ethics at Stanford University Graduate School of Business. “In other cases there are real efforts made by executives to hold down their compensation in order to provide funds for others and not to appear they are taking advantage of the suffering of others.”
All three companies shrank their staffs considerably. Before the pandemic, the companies collectively employed about 24,000 people who worked on land in the U.S. and abroad and 201,000 people on ships. In 2020, the number of shore workers employed by the three companies around the world dropped 12% to 21,200 and ship employees dropped 17% to 167,000 according to the companies’ financial filings.
Though the companies are headquartered in South Florida, where their executives live, they are incorporated in Panama (Carnival Corp.), Liberia (Royal Caribbean Group), and Bermuda (Norwegian Cruise Line Holdings), and flag their ships in foreign countries. This absolves them of U.S. labor restrictions including the 40-hour work week and minimum wage. The minimum wage for seafarers, set by the United Nations’ International Labor Organization, in 2020 was $625 per month.
Even before the pandemic, the three cruise companies reported their CEOs made hundreds of times as much as their median workers, according to their financial filings. In 2019, Carnival reported a CEO-to-median worker pay ratio of 723 to one, Royal Caribbean 830 to one, and Norwegian 1,052 to one. The ratios, all calculated slightly differently, are at least three times higher than the average CEO-to-worker granted compensation ratio at big companies in 2019, which has exploded since the 1980s, according to the Economic Policy Institute.
Only Carnival Corp. closed the gap slightly. The company reported Donald made 490 times the median employee in 2020.
Company boards have long argued that ballooning executive payouts are necessary to keep CEOs on staff. But there are limits.
In March, Starbucks shareholders rejected the company’s executive compensation proposal, which included a CEO-to-worker ratio of 1,211 to one and a $1.86 million bonus for the CEO. The rare say-on-pay vote rebuke is non-binding but can hurt a company’s reputation, said Navas.
Navas said he was surprised by Norwegian’s approach, including the $2.8 million bonus for Del Rio, and would not recommend it to his clients. Norwegian’s annual meeting is on May 20.
