The new gilded age

News that the CEO of Qantas Geoff Dixon was paid $11m for 5 months work is a shocking reminder that for Australia's corporate executives and business elites nothing has changed. Last week we saw a string of announcements about the massive increases in salaries and benefits pocketed by Australian corporate executives, led by the 20% increase in salary to the CEO of BHP Billiton.

All this whilst ordinary working Australians face growing financial stress, mortgage stress, rising costs of living and problems finding affordable housing.

Despite excessive executive salaries being one of the major causes of the global financial meltdown corporate leaders here in Australia see no reason why they should have to suffer for the awful mess that they themselves have created. In fact Australian corporate executives are now using the current crises as an opportunity for even greater personal rewards.

And don't expect the Rudd Government to act on appalling excessive executive remuneration. Despite all their talk about how outrageous executive salaries are the Rudd Government won't act. It has washed its hands of the issue. The government acknowledges public outrage but will do nothing.

Rather than address the fundamental problems- the overall size of executive salaries and the unconscionable gap between the salaries and bonuses paid corporate executives and ordinary salaried workers- the Rudd Government is focused solely on how to give shareholders greater say over executive payouts. Hardly a significant reform.

In the Guardian Mark Weisbrot, the Co Director of the Centre for Economic Policy Research
(whose other Director is renowned US economist Dean Baker who was one of the few USA commentators to predict the global crises) has written an important piece arguing that the US has nothing to show in reforms that would prevent a recurrence of the recent financial excess and corporate collapses. Wesibrot argues that the recession of the last 2 years should have ushered in a wave of progressive reform of corporations and business but hasn't.

Weisbrot's diagnoses is depressingly familiar here in Australia as well. He concludes that in the US:

• corporate executives continue to pay themselves massively extravagant bonuses despite destroying billions of dollars of value
• the same risky corporate and financial practices continue unchecked
  
• the financial sector that created the crises is more concentrated and powerful than ever and financial firms are still gambling with taxpayer guarantees and subsidies to protect their own profits and excessive remuneration
• corporations and industry bodies continue to actively oppose any form of progressive reform and use their political influence and might to block even minor reform
• politicians and governments are unwilling to pursue any substantial reform
  
• corporate leaders and business groups are using their political influence and financial clout to shift policy and debate even further towards policies that protect and serve corporate profits and private interetsts
• the growth in inequality continues unabated. In the USA during the period 2002-2007 tw0 thirds of the income gains in those years went to the top 1% of the income distribution. This bought the income share of the top 1% to the highest level since 1928.

In the USA the Institute for Policy Studies has just released their annual expose of Executive Excess. It makes for shocking reading. Lead author Sara Anderson concludes that "America's executive pay bubble remains un-popped"..... "And these outrageous rewards give executives an incentive to behave outrageously, putting the rest of us at risk."

Sounds familiar!