Are we able to fix
living with risk?
Yes, we can!
Ellen Goodman,
Commentary, Home News Tribune Online, January 16, 2007
It's safe to say that Bob Nardelli
was never confused with Bob the Builder, the cartoon character who teaches
teamwork to the kids: "Can we fix it? Yes we can!"
Home Depot has a similar slogan — "You can do it. We can help" — but the
former CEO was more of a do-it-for-himself kind of guy.
By the time Bob the Un-Builder hung up his orange apron, the Home Depot stock
had gone down 6 percent in six years. Nevertheless, he left with $210
million in his pocket, thereby becoming another in the burgeoning line of CEOs
Gone Wild.
The money Bob got, just for leaving, was over and above his annual compensation,
a number that hit $38.1 million in 2005, roughly $100,000 a day.
This is not going to be a rant about CEO salaries, although a rant is in order.
We all know about the growing inequality of income. In 1965, the average
CEO was paid 24 times the average worker. In 2005, the average CEO was
paid 262 times the average worker.
It's taken 12 years and an act of Congress just to get the minimum wage moving
up to $7.25 an hour over the next two years. At Home Depot, where the
average wage is $10 an hour, the boss made more every day than most workers
combined earned in a year.
But Bob the Un-Builder is also a symbol of something that has gotten a lot less
attention: The growing inequality of risk.
"At one time, when corporate titans went down, they went down hard," says Jacob
Hacker, a Yale political scientist. "Who could be more insulated from risk
than today's CEO? There's never been a group of people richer or more
protected from the vagaries of the economy."
Life at the tippy top is sheltered complete with a "golden parachute," no matter
what happens under the CEO's watch. That's a level of security that's
virtually extinct in the real working world.
Indeed, as Hacker writes in "The Great Risk Shift," one of the hallmarks of
today's economy is that risks once widely shared by government and employers
have shifted onto the American family. We carry more and more of the risks
of retirement, illness, unemployment, and even education.
About 25 years ago, 83 percent of medium and large firms offered traditional
pensions for life. Now less than a third do. Instead they offer
401(k)s with no guarantee. In this case, Nardelli got an annual,
guaranteed pension of $4.5 million for waving goodbye, whereas Home Depot
workers are offered a so-called FutureBuilder 401(k) with no guaranteed annual
pension.
As for health insurance, one out of three non-elderly Americans spends part of
every two years without any coverage. Incomes rise and fall with more
volatility than in the past at all levels of education. If economists
wonder why people feel insecure, it's because they are.
How did this happen? Hacker blames the conservatives' "personal
responsibility crusade": "Political leaders told us that we need to take
"ownership' of our economic future, and personal responsibility for our lives."
This tapped into the primal American belief in independence, individualism and
bootstraps. It also tapped out the other modulating American belief, that
we should insure each other from the hazards of illness, old age and
unemployment. With apologies to Home Depot, we're told "You can do it,"
without being told "We can help."
If you need proof of how many of us buy into the personal responsibility cult,
consider this: The loudest protest over CEO salaries has come from
shareholders, not from employees who experience the insecurity. If you
need proof that things are beginning to change, consider something else:
The November election was about economic, as well as national, insecurity.
The strategy for the Democrats' first 100 hours tackles some of the inequality
of risk, from the minimum wage to health care to the cost of education loans.
States such as Massachusetts and California are pushing for universal health
care. But we have yet to develop a narrative, a story for the 21st century
with all its globalism and change, that counters the simplistic, powerful notion
of individual responsibility.
What we are seeing, however, is the reaction to these CEO stories. In
America, workers aren't being rewarded for productivity, and CEOs aren't being
punished for poor performance. What's wrong with this picture? At
some point, the personal shame of bankruptcy, job loss, illness — the hallmarks
of living in a risky society — has to be trumped by the public shame of picking
up a pink slip worth $210 million.
So let's begin with a little renovation on Bob Nardelli's ego, a do-it-yourself
project if there ever was one. "Can we fix it? Yes we can!"
Write to Ellen Goodman, The Boston Globe, Boston, MA 02107, or
e-mail ellengoodman@globe.com.
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