America’s most ruthless serial job-killer has struck again. Last Monday, in broad daylight, the business software giant known as Oracle announced a $7.4-billion takeover of Sun Microsystems that will shortly, industry observers estimate, cost somewhere between 5,500 and 10,000 Sun staffers their jobs.

Oracle CEO Larry Ellison, the number three on the latest Forbes list of America’s 400 richest, has been merging and purging like this for years — without a peep of protest from Congress. But this year figured to be a little different. Ever since January, after all, Republican lawmakers have been loudly crusading against the “job-killer” menace they now see stalking America.

So how did these lawmakers react last week to the latest Oracle job-killing maneuver? We have that story — and much more — in this week’s Too Much.

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For three decades, ever since Margaret Thatcher’s election in 1979 and Ronald Reagan’s in 1980, Britain and the United States have been marching in lockstep — toward greater inequality. Now the UK has broken ranks. Britain’s Labor Party government last week announced plans to hike the tax rate on incomes over £150,000 a year — about $221,000 — to 50 percent, a 10-point hike over the current UK rate and over 10 points higher than the 39.6 percent top rate the Obama White House is proposing. The current U.S. top rate: 35 percent. The new British rate will mean, on average, a $390,000 tax hike for Britain’s top 100 CEOs. British voters are backing the new 50 percent top tax rate for high earners, says a just-released Times of London poll, by a “big majority.”

Corporations all over, the Barron’s business magazine lamented last week, “are dumping their corporate jets.” Why is Barron’s lamenting? Corporate jets, says the magazine, can be “really cost-effective.” If fact, the business pub adds, if you calculate how much top execs get paid by the hour and the hours corporate jets save execs, then compare the cost of owning a business jet to the price of airline tickets, corporate jets turn out to be a bargain. Of course, the magazine goes on to acknowledge, “the cost-benefit evaluation will swing more in favor of business jets as the net compensation of the executives on board rises.” In other words, private jets “save” companies money but only if the companies pay their execs lavishly. Makes sense to Barron’s. The magazine’s parting advice: Don't go “mothball the company jet just yet.” Assures Barron’s: “Despite all the rhetoric from Washington, reason can still prevail.”  

Lavishing private jets — and millions — on CEOs makes no sense at all to Kazuo Inamori, the 77-year-old founder of Kyocera, one of Japan’s top manufacturers. The company now annually pulls in $13 billion in revenue, but Inamori credits that success to “the hard work and collaboration of the workers and other levels of management,” not the company’s top execs. Last week, in a rare U.S. interview, Inamori urged “business leaders to keep their own compensation reasonable” and blasted the “arrogance” of overpaid CEOs. Added the business legend: “For the top echelon to receive such high compensation, as if they alone were responsible for the profits, is unreasonable.”

The billionaires come big and brash in Texas. But the deep-pockets of metro Dallas-Fort Worth — the world’s biggest billionaire watering hole after New York, London, and Moscow — are looking a bit less like masters of the universe these days. Since last September, Ross Perot and son have personally lost $1.2 billion. One Perot hedge fund went kaput after burning through all but $265 million of a $2.5 billion investor stake. T. Boone Pickens has dropped a billion, too. At one T. Boone hedge fund, two-thirds of the investors have bailed out. And CEO Karen Katz of Neiman Marcus no longer seems to merit the “magical thinker” label Time magazine hung on her in 2007. The luxury retailer recently posted a $509.2 million quarterly loss. Katz is remaining optimistic. The nation, she told a reporter earlier this month, still has “very wealthy people out there.”

Hope in the wealthy people market does seem to spring eternal. In Manhattan, a pair of publishing dynamos have launched a glossy new luxury magazine filled, the Wall Street Journal notes, with “ads for watches, jets, diamonds, and mansions” and “sprinkled with the occasional feature story about watches, jets, diamonds, and mansions.” The publishers say the subscriber list they’ve compiled — 50,000 households worth at least $10 million — will float them past the current economic unpleasantness. They also say that their new mag — entitled Prestige New York — is “not about flaunting your wealth.” Maybe, the Journal observed last week, “they should consider a different title.”

Quote of the Week

“Financial professionals love to claim that their pay packages reflect their superb brainpower and competitiveness. Maybe. But a more important factor may be their location at the exact spot where cash changes hands — a money-making principle understood equally by bond traders, the owners of boutiques at Caesars Palace, and hot dog vendors with carts at the corner of Broad and Wall.”
Michael Hiltzik, Executive whining about salary caps is getting tiresome, Los Angeles Times, April 23, 2009

New Wisdom
on Wealth

David Francis, Tax the heirs of the rich (at least of few of them), Christian Science Monitor, April 22, 2009. The “millionaire's club” that is the U.S. Senate will determine America's estate tax future.

Stephen Bezruchka, Promoting public understanding of population health. The germ theory of disease took a century to sink in, notes this leading U.S. epidemiologist in a chapter from the new book, Social Inequality and Public Health. How long before our society truly understands, he wonders, the link between health and inequality?

Louise Story, After an Off Year, Wall Street Pay Is Bouncing Back, New York Times, April 26, 2009

Still at Large in America: A Serial Job-Killer

A new crime has burst out onto America’s political blotter. Move over drug pushing and car stealing, meet the new menace. Job killing. But fear not. We now have in Congress a dedicated army of self-selected saviors who have loudly vowed to keep us protected.

And just how are these lawmakers going to keep our jobs secure? They’re going to put the kibosh on labor law reform.

Americans who believe all workers have the right to bargain collectively with their employers have been battling for labor law reform for some time now. The plentiful loopholes in our current labor law, they note, let companies make life intolerably miserable for workers who want to start a union. But reform had no chance so long as George W. Bush sat in the White House.

With Barack Obama’s election, real reform has once again become politically viable. And America’s anti-union business leaders know it. They’ve been spending furiously on anti-reform ads and lobbying. And now the U.S. Chamber of Commerce is threatening a “firestorm bordering on Armageddon” if Democrats in Congress try to get reform onto President Obama’s desk.

Business groups are claiming that passage of the Employee Free Choice Act — the prime pending labor law reform bill — would “harm the economy and cost millions of jobs.” In Congress, reform foes are echoing that pitch at every opportunity. Labor law reform, as South Dakota Senator John Thune enjoys asserting, would be “a job killer for our economy.”

This drumbeat won’t be letting up anytime soon. Corporate interests have even named their anti-reform front group the “Alliance To Save Main Street Jobs.”

But we need to give the masterminds of this campaign against labor law reform some credit. They actually do have a legitimate point to make. Job killers really are stalking America today. Here's the catch: The real-life “job killers” in our midst aren’t pushing the Employee Free Choice Act. They’re opposing it.

Over the last quarter-century, these real-life job killers — the power suits who run Wall Street and Corporate America — have essentially turned job killing into standard business operating procedure. In effect, they’ve been on a job-killing spree. Their motive: keep CEO pockets stuffed. Their M.O.: merge and purge.

Here’s how the deadly corporate job-killing game has worked: Instead of devoting their time to nurturing enterprises that make good products and offer quality services, impatient CEOs spend their every waking hour cutting deals to buy out other companies. After each deal, they gobble up the customers of these other companies — and then fire huge numbers of their workers.

The euphemism for this job killing: downsizing. Top executives at the 50 U.S. companies that did the most “downsizing” in 2001, researchers from the Institute for Policy Studies and United for a Fair Economy reported in 2003, averaged 44 percent pay increases the next year.

Compensation for those job killers, that study documented, increased over seven times faster than compensation for CEOs overall.

This job-killing profiteering is still going strong. Mark Hurd, the CEO of Hewlett-Packard since 2005, last year cleared $44.4 million in gains from previously awarded stock options and other “incentives” — plus another $21.4 million in new compensation. Over his first 46 months as H-P CEO, Hurd wheeled and dealed his way to 31 mergers. He has so far killed nearly 40,000 jobs.

Larry Ellison, the CEO of business software giant Oracle, has merged and purged his way to a fortune that Forbes last month estimated at $22.5 billion. Ellison pulled off his most brazen bit of job killing back in 2005 when he shelled out $10.6 billion to buy out PeopleSoft, an 11,000-employee rival, then proceeded to put the ax to 5,000 jobs.

Ellison’s latest takeover — last week’s acquisition of Silicon Valley’s Sun Microsystems — will almost certainly, analysts believe, end up eliminating more jobs than the PeopleSoft grab. But no members of Congress who’ve been blasting the Employee Free Choice Act have so far made any protest whatsoever against Oracle’s latest job-killing maneuver.

Ellison’s personal fortune, meanwhile, is holding up quite nicely, despite the global financial meltdown. This May 8, notes CNBC, Ellison will pocket a $57.5 million quarterly Oracle stock dividend check. In all, over the next 12 months, he’ll reap $230 million in dividends alone.

Job-killers like Larry Ellison don’t have to worry about sharing any of the enormous wealth their empires are so prolifically generating. They don’t, after all, bargain collectively with their employees — and they don’t want to have to start. If Congress kills the Employee Free Choice Act, they won’t have to.

Tiny Tax, Surprisingly Big Return

Elizabeth McNichol, Andrew Nicholas, and Jon Shure, Raising State Income Taxes on High-Income Taxpayers. Center on Budget and Policy Priorities, Washington, D.C. April 20, 2009.

The first round of state legislative sessions since the U.S. economy started shifting into meltdown mode last spring is now wrapping up. Most states have reacted predictably. They’ve cut back on funding for the public services that low- and middle-income people, in these hard times, so desperately need.

Not every state has so far gone this budget-slashing route. But virtually every state that hasn’t yet taken the cutback plunge is actively considering it.

For all these states, researchers at the Center for Budget and Policy Priorities have a straightforward message: stop! States today, these researchers argue in this well-documented new white paper, have a remarkably easy-to-administer alternative that can help state officials avoid devastating cuts without putting any real pain on anyone.

That alternative: tax the rich. Even just a little.

In fact, the new Center paper explains, placing just an additional 1 percent tax on income over $500,000 — in the 41 states that currently have a state income tax — would raise $8 billion for needed state services.

The Center paper thoughtfully offers up a state-by-state breakdown of how much revenue a tiny 1 percent increase would raise — and how few taxpayers would see higher tax bills.

In Maryland, for instance, adding a 1 percent tax on income over $500,000 would raise $207.4 million — fully enough to offset the $206.5 million in cuts to Medicaid, public colleges, and local governments in the latest state budget. This 1 percent tax on income over $500,000 would impact a mere 0.6 percent of Maryland’s taxpayers.

How can such a tiny tax increase raise such significant sums? Simple. The rich are sitting on a ton of assets. America's wealth, Center researchers note, “has become concentrated among the nation’s richest households to an extent not seen since the late 1920s.”

Across-the-board 1 percent state tax hikes on income over $500,000, the Center adds, have no real downside. Such tax hikes would be fair, quick to put in place, and much more economic recovery-friendly than budget cutbacks that reduce the spending money in average family pockets and depress, in the process, overall economic demand.

The obvious question: Why aren’t more states actively considering tax hikes, even if just tiny ones, on their wealthiest?

Chalk that reluctance off to concentrated wealth. In a top-heavy society, immense concentrations of private wealth invariably translate into immense concentrations of political power. In deeply unequal societies, rich people have the clout to determine which issues get political traction and which don’t.

The Greeks gave us a word for a political system where the wealthy exercise this sort of clout: plutocracy.

The rich, to be sure, don’t always get their way in a plutocratic society. Serious and sustained citizen pressure can indeed dent deep-pocket armor. In New York, earlier this month, we saw the what this pressure can do when the state's governor, after categorically ruling out a tax hike on his state’s wealthiest, did an about-face and agreed to a modest hike on New York’s top tax rate.

But New York’s wealthiest — and the wealthiest in every other state — are still paying their total state and federal taxes at less than half the rate their predecessors paid back in the 1950s and 1960s. The citizen pressure we need to see has clearly only just begun.

Stat of the Week

In 2008, 48 CEOs in the United States pocketed at least $25 million, Forbes reported last week. The Forbes tally includes the personal stock option profits executives cleared last year but does not count the value of the newly granted incentives the execs took in over the course of the year.

Too Much is published by the Council on International and Public Affairs, a nonprofit research and education group founded in 1954. Office: Suite 3C, 777 United Nations Plaza, New York, NY 10017. E-mail: editor@toomuchonline.org.