For several years, those of us with a heart and a sense of fair play had been worried that Richard Grasso, the head of the New York Stock Exchange, wasn’t going to get a fair shake on his compensation. Mr. Grasso has been the front man for inertia, stand-pat-ism and doing nothing much as small investors have been pillaged and robbed of their savings. You’ve heard of stand-up guys? Well, Mr. Grasso has been a sit-down guy, and some of us felt he should be appropriately rewarded.
Mr. Grasso and the others who are supposed to watch over the securities business did nothing—certainly nothing effective—to stop robbery by the manipulation and misrepresentation of securities, by pumping and dumping the price of stocks until much of working America’s golden-retirement years have turned into leaden days trying to make ends meet.
Naturally, when people look back on all that has happened in these last few years, there was a certain concern that Dick Grasso might go unrewarded or insufficiently compensated for the services he has performed for the securities industry—an industry which, thanks to his efforts, has been kept clean of every kind of scoundrel, confidence man, book-cooker, liar, cheater or thief for a decade or more. Can you think of a higher-minded group of men and women, ethically speaking, than the brokers, traders, analysts and auditors that Mr. Grasso hangs out with and regulates?
Anyhow, Mr. Grasso’s getting more than gratitude or a citation on a scroll: They’re paying him somewhere in the neighborhood of $140 million, which is a pretty nice place to be. Yes, that’s right, and as John Jacob Astor once said: "A man who has a million dollars is as well off as if he be rich." So Dick Grasso has been made rich, which is good for Dick Grasso—but how did he earn his money?
Did he start a business? No. Did he invent something? No. Did he take over a business which was in a shaky condition and turn it around? No. Did he discover a remarkable business opportunity that even as sharp an eye as Warren Buffett had not spotted? No. Did he save the life of a drowning billionaire who wanted to show his gratitude? No. What did this man do that other men (and possibly a woman or two) thought so valuable that they dropped all those millions on him?
It is a mystery. "This is a phenomenal un-risked return for the head of a quasi-public organization," said Charles M. Elson, chairman of the corporate-governance program at the University of Delaware, to The New York Times. "It’s really a staggering sum because it’s cash that was never at risk. It’s mind-boggling, more of an entrepreneur’s fortune, and may well be more than the earnings of some of the companies that trade on the exchange." Translating Mr. Elson’s business-speak into our kind of English, he said that he’s staggered because Mr. Grasso got all this dough—more than the annual profits of some publicly traded companies—without putting up a dime of his own. Usually when you get that kind of pay-off, you have risked something. What exactly did Dickie Boy do for his money? You can lay odds that it wasn’t for running a youth-outreach program. What did he do? Was it dirty? Was it something they’re ashamed of?
H. Carl McCall, the former comptroller for New York State, now vice chairman of HealthPoint Partners and chairman of the Stock Exchange’s compensation committee, is quoted in the same Times piece saying, "I think the board is very pleased with the leadership he has provided …. We want to make sure that we retain his leadership at the N.Y.S.E." Mr. McCall, an ex-politician, is accustomed to saying "blah-blah his leadership, more blah-blah." Such types figure they can use their stock of meaningless words and phrases—"leadership," "vision," etc.—and nobody will say boo. They are right: Nobody does say boo—though if they’re one of the millions who have been stung, they may say boo-hoo. Apparently somebody thought Mr. McCall’s blather needed amplification, so they got another one of the slickies to explain that it was Mr. Grasso’s leadership during 9/11 and the blackout which gets him into the tall, tall green. So was he running around with a firefighter’s hat on during 9/11? Did he catch a terrorist? Did he get the lights back on? Did he save a life? He got $140 million oysters for leading who in the dark? Another snow job from the big-bankroll department.
Congratulations of a sort are in order for Dickie: His compensation places him among the 400 richest taxpayers in the United States. The combined income of these 400 constitutes one percent of the income of the entire American people. This and more such detail is to be found in a recent New York Times article by David Cay Johnston. These 400, through oversight or stupidity, do pay taxes. Others as rich or richer don’t—a subject discussed in a forthcoming book by Mr. Johnston nicely titled Perfectly Legal.
What’s perfectly legal may also be, as in Mr. Grasso’s case, perfectly disgusting, but there is more involved here than taste. There is the fact of the excessive wealth of a few thousand individuals when compared to that of the rest of the citizenry. On the rare occasions when this topic is raised, no discussion follows, because the defenders of entrenched wealth let loose their gangs of op-ed-ers, TV experts, think-tank parasites, academic moochers and other members of an occupational group the Communists used to call the running dogs of capitalism.
The running dogs fill the air with vocalizations such as "class warfare," "crypto-Marxism," "death tax," "double tax," "collectivism," "anti–free market," "socialism" and "gay marriage," this last being used if they think it might help to discredit anyone daring to question the monumental disparity between the rich and the rest. The tactic is to make the issue disreputable even to the point of hinting that a speaker or writer using the word "rich" is disloyal. The approved word for rich is "wealthy," which doesn’t sound so rich.
If the disparity is ever to be seriously debated again, the people challenging the nation’s drift into plutocracy have to find ways of sounding respectable. As it stands now, their opinions—on the rare occasions they can find a pulpit—are dismissed as self-evidently subversive. They need to find examples of respectable people who are above being convicted of closet collectivism and who hold the same opinions. So it is that the argument ad hominem has its uses, and thus Warren Buffett—the billionaire proponent of confiscatory inheritance taxes—is a big help. But one billionaire does not win a debate where so much power is at stake.
Mr. Buffett has a certain liberal odor about him which takes away from his effectiveness. What’s needed is a Republican of unimpeachable credentials, a Republican such as Rutherford B. Hayes (1822-1893). Please note that Hayes lived and died B.C. (that is, before communism), so he couldn’t have been tainted. He was also a farmer, a major general and a hero in the Civil War, the governor of Ohio and the 19th President of the United States of America.
He lived at the beginning of an era of towering fortunes that put huge power into the hands of the very rich, and it troubled him, as entries in his diary tell us. Read what he wrote on Sunday, Dec. 4, 1887: "In church it occurred to me that it is time for the public to hear that the giant evil and danger in this country, the danger which transcends all others, is the vast wealth owned or controlled by a few persons. In Congress, in state legislatures, in city councils, in the courts, in the political conventions, in the press, in the pulpit, in the circles of the educated and the talented its influence is growing greater and greater."
You can only imagine what Hayes would have written had he been alive now. On March 19 of the same year, he wrote that "no man does with accumulated wealth so much good as the same amount would do in many hands." The previous year, on Jan. 24, there is an entry reading: "The question for the country now is how to secure a more equal distribution of property among the people. There can be no republican institutions with vast masses of property permanently in a few hands, and large masses of voters without property."
Since Hayes’ time, the nation has so far evolved into a plutocracy that the first question that is asked of all putative candidates for all elective offices is how much money can they raise. The ideas, the character and the ability of a candidate matters not unless he’s backed by a coterie of the rich. It’s that simple. We all know it, and I doubt that it will change.
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