Who Stole the American Dream? (62 page)
Read Who Stole the American Dream? Online
Authors: Hedrick Smith
1
“If you’re gonna splurge”
Al Dunlap, interviews, July and August 1997, transcript, PBS,
Surviving the Bottom Line
,
http://www.hedricksmith.com
.
1
“There’s class warfare”
Ben Stein, “In Class Warfare, Guess Which Class Is Winning?”
The New York Times
, November 26, 2006.
2
“If I were to describe”
Stephen Roach, interview, July 1997, “Running with the Bulls,” transcript, PBS,
Surviving the Bottom Line
, January 18, 1998,
http://www.hedricksmith.com
.
3
Traditional CEOs such as Bob Galvin
Hedrick Smith,
Rethinking America
(New York: Random House, 1995), 319–25.
4
Price made all that profit
Michael Price, interviews, May–June 1997, transcript, PBS,
Surviving the Bottom Line
,
http://www.hedricksmith.com
.
5
Reagan, who broke the air controllers
Greenhouse,
Big Squeeze
, 82.
6
Ghoshal cited Milton Friedman
Sumantra Ghoshal, “Bad Management
Theories Are Destroying Good Management Practices,”
Academy of Management Learning & Education
vol. 4, no. 1 (2005): 75–91.
7
“Undermine the very foundations”
Milton Friedman,
Capitalism and Freedom
(Chicago: University of Chicago Press, 1962 and 2002), 133.
8
“Worst excesses”
Ghoshal, “Bad Management Theories.”
9
Turn a huge profit
Price, interview,
Surviving the Bottom Line
.
10
“The word that comes to mind”
Jerry Ballas, interview, June 1997, transcript, PBS,
Surviving the Bottom Line
,
http://www.hedricksmith.com
.
11
Made $166,000 a day
“Running with the Bulls,” transcript, PBS,
Surviving the Bottom Line
,
http://www.hedricksmith.com
.
12
“It’s like we thought we made money”
Art Oxley, interview, July 3, 1977, transcript, PBS,
Surviving the Bottom Line
,
http://www.hedricksmith.com
.
13
“A hurt feeling”
Marsha Dunlap, interview, July 2, 1977, transcript, PBS,
Surviving the Bottom Line
,
http://www.hedricksmith.com
.
14
“Why the layoffs”
Jack Wahl, interview, August 1997, transcript, PBS,
Surviving the Bottom Line
,
http://www.hedricksmith.com
.
15
“We actually care”
Greg Wahl, interview, August 1997, transcript, PBS,
Surviving the Bottom Line
,
http://www.hedricksmith.com
.
16
Sunbeam had been exaggerating
Jonathan R. Laing, “High Noon at Sunbeam,”
Barron’s
, June 16, 1997.
17
Barron’s
saw the downside
Jonathan R. Laing, “Dangerous Games,”
Barron’s
, June 8, 1998.
18
Sunbeam’s stock started tumbling
Jonathan R. Laing, “… And Take the Chainsaw with You!”
Barron’s
, June 22, 1998.
19
Sunbeam filed for bankruptcy
“Despite Recovery Efforts, Sunbeam Files for Chapter 11,”
The New York Times
, February 7, 2001.
20
Dunlap … paid $15.5 million
“Ex-Sunbeam Executives to Pay $15 Million to Settle a Lawsuit,”
The New York Times
, January 15, 2002; “Former Sunbeam Chief Agrees to Ban and a Fine of $500,000,”
The New York Times
, September 5, 2002.
21
Retire to a much larger estate
Tax assessor records, Ocala, FL,
http://216.255.243/135/DEFAULT.aspx?Key=2062061&YR=2011
.
22
“Firing people and slashing”
Henry Schacht, interview, July 1997, transcript, PBS,
Surviving the Bottom Line
,
http://www.hedricksmith.com
.
23
“The chain-saw mentality”
Stephen Roach, interview, July 1997, transcript, PBS,
Surviving the Bottom Line
,
http://www.hedricksmith.com
.
24
Mitt Romney’s corporate strategies
Nicholas Confessore, Christopher Drew, and Julie Creswell, “Buyout Profits Keep Flowing to Romney,”
The New York Times
, December 18, 2011.
25
Newsweek
listed the big guns
Allan Sloan, “The Hit Men,”
Newsweek
, February 26, 1996,
http://www.newsweek.com
.
26
“The gold standard”
Geoffrey Colvin, “The Ultimate Manager,”
Fortune
, November 22, 1999; Tim Smart, “Jack Welch’s Encore,”
Business Week
, October 28, 1996,
http://www.businessweek.com
.
27
Hallmark was downsizing
Greenhouse,
Big Squeeze
, 85–86.
28
Firing GE managers
Clyde Prestowitz,
The Betrayal of American Prosperity: Free Market Delusions, America’s Decline, and How We Must Compete in the Post-Dollar Era
(New York: Free Press, 2010), 193.
29
Abrasive management style
Steven Flax, “The Toughest Bosses in America,”
Fortune
, August 6, 1984.
30
These tactics made
Welch Paul Krugman, “For Richer,”
The New York Times
, October 20, 2002.
31
“Loyalty to a company, it’s nonsense”
Janet Guyon, “Combative Chief, GE Chairman Welch, Though Much Prized, Starts to Draw Critics,”
The Wall Street Journal
, August 4, 1988.
32
367 times the pay
Krugman,
Conscience of a Liberal
, 142–45.
33
Former CEO Lee Scott
Reich,
Supercapitalism
, 108.
34
“Invisible handshake in the boardroom”
Krugman, “For Richer.”
35
Board directors as their
“friends” James D. Westphal, “Collaboration in the Boardroom: Behavioral and Performance Consequences of CEO-Board Social Ties,”
Academy of Management Journal
42, no. 1 (1999): 7–24; update interview, October 13, 2011.
36
“The Lake Wobegon syndrome”
Paul Volcker, testimony to Joint Economic Committee, May 14, 2008,
http://www.gpo.gov/fdsys/pkg/CHRG-110shrg44539/pdf/CHRG-110shrg44539.pdf
.
37
“That would imply”
Jay Lorsch and Rakesh Khurana, “The Pay Problem,”
Harvard Magazine
, May–June 2010.
38
CEO pay spirals ever upward
Edward S. Woolard, Jr., quoted in Charles Elson, moderator, “What’s Wrong with Executive Compensation?”
Harvard Business Review
81, no. 1 (2003): 69–77.
39
Ranked the United States thirty-first
Organisation for Economic Co-operation and Development, “An Overview of Growing Income Inequalities in OECD Countries: Main Findings,” in “Divided We Stand: Why Inequality Keeps Rising,”
An Overview of Growing Income Inequalities in OECD Countries: Main Findings
, accessed December 6, 2011,
http://www.oecd.org/dataoecd/40/12/49170449.pdf
.
40
With rare exceptions, such as
Jessica Silver Greenberg and Nelson D. Schwartz, “Citigroup’s Chief Rebuffed on Pay by Shareholders,”
The New York Times
, April 18, 2012.
41
The number of illegally fired workers
Edsall,
New Politics of Inequality
, 151–54.
42
Increasingly sided with business
Jeffrey Rosen, “Supreme Court, Inc.,”
The New York Times Magazine
, March 16, 2008; Adam Liptak, “Justices Offer Receptive Ear to Business Interests,”
The New York Times
, December 19, 2010.
43
“Terrors” of the corporate boardroom
“The Scariest S.O.B. on Wall Street,”
Fortune
4, no. 11 (December 9, 1996).
44
Close-up photo of Price
Ibid.
45
“The power of the financial markets”
Roach, interview, transcript,
Surviving the Bottom Line
.
1
“The ‘land of opportunity’ ”
Sawhill, “Overview,” in Isaacs, Sawhill, and Haskins,
Getting Ahead
, 4, 7.
2
“America has entered”
Lance Morrow, “The Temping of America,”
Time
, June 24, 2001.
3
“The biggest failure”
“Retiring Rep. Obey Not Going Out with a Whimper,”
The Washington Post
, November 30, 2010.
4
“I got $1.75 an hour”
Pam Scholl, interview, November 7, 2010.
5
“The early seventies”
Roy Wunsch, interviews, October 27 and November 7, 2010.
6
Mike got good technical training
Mike Hughes, interview, June 23, 2010.
7
“What made it difficult”
Ibid., June 28, 2010.
8
“I barely stay afloat”
Pam Scholl, interview, June 23, 2010.
9
Fewer jobs
U.S. Bureau of Labor Statistics, “The Employment Situation, December 2001,” January 7, 2002,
http://www.bls.gov
; U.S. Bureau of Labor Statistics, “The Employment Situation, September 2011,” October 7, 2011,
http://www.bls.gov
. BLS figures show 132.2 million nonfarm jobs in 2001 vs. 131.3 million in September 2011.
10
Winding up lower
Census Bureau, “Income, Poverty, and Health Insurance Coverage in the United States: 2010”; “Income Slides to 1996 Levels,”
The Wall Street Journal
, September 4, 2011.
11
Roughly 45 percent of blacks
Isaacs, “Economic Mobility of Black and White Families,” in Isaacs, Sawhill, and Haskins,
Getting Ahead
, 71–80.
12
The numbers of New Poor
Census Bureau, “Income, Poverty, and Health Insurance Coverage in the United States: 2010.”
13
“Median family is in worse shape”
“Soaring Poverty Casts Spotlight on ‘Lost Decade,’ ”
The New York Times
, September 14, 2011.
14
“This is new…. It is worse”
E. S. Browning, “Oldest Baby Boomers Face Jobs Bust,”
The Wall Street Journal
, December 19, 2011.
15
Children born to parents
Isaacs, “Economic Mobility of Families Across Generations,” in Isaacs, Sawhill, and Haskins,
Getting Ahead
, 19.
16
Have now surpassed us
Isaacs, “International Comparisons of Economic Mobility,” in Isaacs, Sawhill, and Haskins,
Getting Ahead
, 37–44.
17
America is now classified as
“a
low-mobility
country” Sawhill, “Trends in Intergenerational Mobility,” in Isaacs, Sawhill, and Haskins,
Getting Ahead
, 9, italics added; Thomas DeLeire and Leonard M. Lopoo, “Family Structure and the Economic Mobility of Children,” Pew Charitable Trusts, April 2010,
http://www.economicmobility.org
; Jason DeParle, “Harder for Americans to Rise from Economy’s Lower Rungs,”
The New York Times
, January 5, 2012.
18
Starting at the bottom
Isaacs, “Economic Mobility of Families Across Generations,” in Isaacs, Sawhill, and Haskins,
Getting Ahead
, 19.
19
“We have moved”
Sean F. Reardon, “The Widening Academic Achievement Gap Between the Rich and the Poor: New Evidence and Possible Explanations,” in
Whither Opportunity? Rising Inequality, Schools, and Children’s
Life Chances
(New York: Russell Sage Foundation, 2011); “Poor Dropping Further Behind Rich in School,”
The New York Times
, February 10, 2012.
20
At the college level
Martha J. Bailey and Susan M. Dynarski, “Gains and Gaps: Changing Inequality in U.S. College Entry and Completion,” Working Paper 17633, National Bureau of Economic Research, December 2011,
http://www.nber.org
.
21
An important driver
Study by Sabino Kornrich, Center for Advanced Studies, Juan March Institute, Madrid, and Frank F. Furstenberg, University of Pennsylvania, cited in “Poor Dropping Further Behind Rich in School,”
The New York Times
, February 10, 2012.
22
The quadrupling of average college tuition
Will Hutton, “Log Cabin to White House? Not Any More,”
The Observer
, April 28, 2002,
http://www.observer.co.uk/comment/story/0,6903,706484,00.html
.
23
Far less chance of rising
Bhashkar Mazumder, “Fortunate Sons: New Estimates of Intergenerational Mobility in the United States Using Social Security Earnings Data,” for Federal Reserve Bank of Chicago, July 6, 2004, published in
The Review of Economics and Statistics
87, no. 2 (2005): 235–55.
24
Being born in the elite
Janny Scott and David Leonhardt, “Class in America: Shadowy Lines That Still Divide,”
The New York Times
, May 15, 2005.
25
From 1948 to 1973
Lawrence Mishel, Joshua Bivens, and Heidi Shierholz,
The State of Working America, 2012/2013
(Ithaca, NY: Cornell University Press, 2012), figure 4U, “Hourly Compensation for Production/Non-Supervisory Workers and Total Economy Productivity, 1948–2011”; Mishel, emails, March 29 and April 9, 2012.
26
From 1973 to 2011
Ibid. The contrast is sharper when comparing productivity growth and hourly wages only in the private sector. Over this period, private sector productivity grew by 92.6 percent while the average hourly wage rose by only 4.2 percent. This difference is dampened when figures cover the overall economy, because that data includes government workers, whose productivity is assumed not to grow while their salaries rise.
27
Hourly wages of the average
Census Bureau, “Income, Poverty, and Health Insurance Coverage in the United States: 2010,” September 2011.
28
The living standards
Phillips,
Wealth and Democracy
, 112, 163.
29
Corporate profits have trended upward
Aviva Aron-Dine and Isaac Shapiro, “Share of National Income Going to Wages and Salaries at Record Low in 2006,” Center on Budget and Policy Priorities, March 29, 2007,
http://www.cbpp.org
.
30
Gaping inequalities in wealth and income
Study by Emmanuel Saez, University of California at Berkeley, cited in “It’s the Inequality, Stupid,”
Mother Jones
, March–April 2011,
http://www.motherjones.com
.
31
The super-rich (the top 1 percent)
During recession, the share of the top 1 percent fell, but with recovery that share has been moving back up toward previous highs. Emmanuel Saez, “Striking It Richer: The Evolution of Top Incomes in the United States,”
Pathways Magazine
, Stanford Center for the Study of Poverty and Inequality (Winter 2008), and updated version of same
paper to include estimates for 2009 and 2010, March 7, 2012,
http://elsa.berkeley.edu/~saez/saez-UStopincomes-2010.pdf
. Also see Thomas Piketty and Emmanuel Saez, “Income Inequality in the United States, 1913–1998, updated,” table A-3, “Top Fractiles Income Shares (Including Capital Gains) in the United States,”
http://elsa.berkeley.edu/~saez/TabFig2010
.
32
Forced to swallow cutbacks
Catherine Rampell, “In Job Market Shift, Some Workers Are Left Behind,”
The New York Times
, May 12, 2010; Louis Uchitelle, “Unions Yield on Wage Scales to Preserve Jobs,”
The New York Times
, November 19, 2010; “Still On the Job, but at Half the Pay,”
The New York Times
, October 13, 2009.
33
Roughly 30 percent of the labor force
“Employment Arrangements: Improved Outreach Could Help Ensure Proper Worker Classification,” General Accounting Office report, July 2006,
http://www.gao.gov
.
34
Working part-time
U.S. Bureau of Labor Statistics, “The Employment Situation, September 2011,” table A-1, October 7, 2011,
http://www.bls.gov
.
35
Microsoft agreed to pay $97 million
Steven Greenhouse, “Technology: Temp Workers at Microsoft Win Lawsuit,”
The New York Times
, December 13, 2000; Mike Blain, “Supreme Court Refuses to Hear Appeal of Microsoft ‘Permatemp’ Settlement,”
WashTech News
, November 13, 2002,
http://archive.washtech.org
.
36
To get around the ruling
Ibid.
37
Several million male dropouts
U.S. Bureau of Labor Statistics, “Employment Situation, September 2011.”
38
Only reason average family incomes
Haskins and Sawhill,
Creating an Opportunity Society
, 10.
39
“They are also working more hours”
Larry Mishel, interview, June 30, 2010.
40
The toll on young mothers
Phillips,
Wealth and Democracy
, 113; U.S. Bureau of Labor Statistics, “Employment Characteristics of Families Summary,” March 24, 2011,
http://www.bls.gov
.
41
“World’s highest ratio of two-income households”
Phillips,
Wealth and Democracy
, 113, 164.
42
An even tighter financial bind
Elizabeth Warren and Amelia Warren Tyagi,
The Two-Income Trap: Why Middle-Class Parents Are Going Broke
(New York: Basic Books 2003), 20–24.
43
“A crisis in middle-class family economics”
Ibid., 34.
44
The typical college graduate
Hacker and Pierson,
Winner-Take-All Politics
, 35–38.
45
Entry-level college graduate salaries
Heidi Shierholz, “New College Grads Losing Ground on Wages,”
Economic Snapshot
, Economic Policy Institute, August 31, 2011,
http://www.epi.org
. Men’s salaries fell from $22.75 per hour in 2000 to $21.77; women’s fell from $19.38 to $18.43.
46
Falling further and further behind the executive elite
Larry Mishel, interview, June 30, 2010; Catherine Rampell, “Many with New College Degree Find the Job Market Humbling,”
The New York Times
, May 18, 2011;
Joann S. Lublin, “A Closer Look at Three Big Paydays,”
The Wall Street Journal
, November 15, 2010.
47
“A critical problem of legitimacy”
Lawrence H. Summers, “The Future of Market Capitalism,” Harvard Business School Forum, October 14, 2008,
http://www.hbs.edu
.
48
Average Americans would be far better off today
Hacker and Pierson,
Winner-Take-All Politics
, 25.
49
Would have earned $743 billion more
Jacob S. Hacker and Paul Pierson, cited in Kevin Drum, “Why Screwing Unions Screws the Entire Middle Class,” with statistical table, “Your Loss, Their Gain,”
Mother Jones
, March–April 2011.
50
Rising numbers of business managements
Jacob S. Hacker,
The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream
(New York, Oxford University Press, 2008), 69.
51
One-third had failed to find
U.S. Bureau of Labor Statistics, “Worker Displacement, 2001–03,” July 30, 2004,
http://www.bls.gov/news.release/archives/disp_07302004.pdf
. See also U.S. Bureau of Labor Statistics, “Worker Displacement, 2007–09,” August 26, 2010.
52
Fifty-nine thousand factories and production facilities
U.S. Bureau of Labor Statistics, “Quarterly Census of Employment & Wages Database,” accessed January 20, 2012,
http://www.bls.gov
.
53
17.1 million to 11.8 million
U.S. Bureau of Labor Statistics, “Employment, Hours, and Earnings from the Current Employment Statistics survey (National),” data extracted on January 23, 2012,
http://www.bls.gov
.
54
After the 1990 downturn
Peter S. Goodman, “Despite Signs of Recovery, Chronic Joblessness Rises,”
The New York Times
, February 21, 2010.
55
“The weakest hiring cycle”
Stephen Roach, “More Jobs, Worse Work,”
The New York Times
, July 22, 2004.
56
Sitting on idle capital
“No Rush to Hire Even as Profits Soar,”
The Wall Street Journal
, February 6, 2011.
57
Roughly twenty-nine million
Americans U.S. Bureau of Labor Statistics, “The Employment Situation, December 2010,” January 7, 2011,
http://www.bls.gov
. Unemployed, 14.5 million; part-time wanting full-time work, 8.9 million; 2.6 million marginally attached (day laborers); discouraged dropouts from labor market, 3.6 million.
58
Hoarding $1.9 trillion in cash
Alan Greenspan, citing Federal Reserve data, in “Activism,”
International Finance
14, no. 1 (Spring 2011),
www.cfr.org/content/publications/attachments/infi_1277_Rev6.pdf
.