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6, 2000 April, 2000

Highlights—September 18, 2010

  • Wall Street Journal: Moffat Sentenced to Six Months in Galleon Case. By Chad Bray. Excerpts: A former senior vice president at International Business Machines Corp. was sentenced to six months in prison Monday after he pleaded guilty in an insider-trading case that has ensnared several hedge-fund executives, including Galleon Group founder Raj Rajaratnam. Robert Moffat Jr., who joined IBM out of college in 1978, admitted in March to providing tips to Danielle Chiesi, a former consultant for New Castle Funds LLC, involving insider information about Advanced Micro Devices Inc. and Lenovo Group Ltd. between August 2008 and October 2008. Mr. Moffat was serving on Lenovo's board of directors at the time.

    At the time of his plea, Mr. Moffat said Ms. Chiesi was a friend, but his lawyers later said in court papers that the relationship became "an intimate one." "I made terrible mistakes in judgment, which will haunt me for the rest of my life," Mr. Moffat said in court on Monday. "I am alone responsible for my conduct."

    Selected reader comments concerning this article follow:

    • 6 months and 50k, that is a joke. That court is a court of kangaroos.
    • Yeah, but these kangaroos have deep pockets and powerful friends. Different rules apply for these marsupials.
    • Only six months? He probably would have got more time if he was a young Black guy trying to steal a Snickers bar from Target.
    • The IBM Values, particularly the primary one of Trust and Personal Responsibility in All Relationships, have been a joke for years.... this is just another example of how ethics and proper business conduct are optional at best
  • Associated Press, courtesy of Forbes: Ex-IBM exec gets 6 months in prison. By Larry Neumeister. Excerpts: "White collar crime is just as destructive to our social fabric as the crimes of drugs and violence," the judge said as she sentenced Moffat at the top of a federal sentencing guidelines range that stretched from no jail time to six months in prison.

    The sentence came in a case that resulted in charges against 21 defendants last fall. Already, a dozen people have pleaded guilty. Charges against Moffat drew increased attention because he was a high-level executive at Armonk, N.Y.-based International Business Machines Corp., where he once was considered a candidate for chief executive officer during a three-decade career.

    Authorities say profits from illegal trades topped $50 million, though Moffat's tips resulted in no profits and he received no money, lawyers on both sides agreed. Instead, Moffat was motivated by a desire to impress fellow defendant Danielle Chiesi, with whom he had an affair, his lawyers acknowledged in court papers prior to the sentencing. They said she "played" him by using their intimate relationship to get confidential information. She has pleaded not guilty to charges in the case.

  • The Register (United Kingdom): Ex-IBM heir apparent gets six months in the slammer. No 'get-out-of jail-free' card, says US attorney. By Timothy Prickett Morgan. Excerpts: Moffat, who is 54, worked for IBM for 31 years and has run its PC, printer, and server divisions as well as knocked its supply chain into shape, offshoring large portions of it to Asia to save Big Blue big bucks. The alleged Galleon insider trading scam is still being billed as the largest such scam in US history, with 21 people being criminally charged and now a dozen pleading guilty.
  • When Fridays Were Fridays: Moffat’s True Crime. By Colette Martin. Excerpts: Moffat was respected within IBM because his position commanded it. In some circles he was revered for restoring flailing business units to profit, and in others he was feared. He had a reputation for cutting budgets and expense – including headcount – to the bone. Thousands of employees received those pink slips in the form of a 30-plus-page package with a cover letter signed by Moffat himself that begins, "As your business leader, I make decisions every day with the objective that IBM remains at the forefront of its competitors.” (Hmmm... not every day.)

    Is Moffat’s true crime that he had a personal relationship with Danielle Chiesi? He has a convenient explanation for this, saying it wasn’t about sex but about, “Clarity in the business environment”. So maybe Moffat’s true crime is that he passed along inside information to Chiesi? That is indeed what he will serve six months in jail for.

    No, in my opinion Moffat’s true crime was betrayal – betrayal of the tens of thousands of employees and ex-employees of IBM who worked for him, trusted him, and some who would even lay down on the railroad tracks for him – even when their jobs were being cut.

    Yes, I suppose Moffat now knows what it feels like to lose his job after thirty years of loyalty and hard work for the same company. The difference between his job loss and the losses thousands of others suffered is that Moffat created his own demise, while the employees that worked for him lost their jobs due to no fault of their own. Is six months in jail and $50,000 dollars punishment enough?

  • Bloomberg BusinessWeek: IBM’s Moffat Gets Wish to Leave Prison Before Son Graduates. By Patricia Hurtado. Excerpt: Robert Moffat, the former International Business Machines Corp. senior vice president who pleaded guilty to leaking tips in the Galleon Group LLC case, was granted his wish to begin serving his term earlier so he we will be out of prison by his son’s college graduation in May. Moffat, who was sentenced to six months in prison for his role in the insider-trading scheme, persuaded a federal judge in New York to let him begin his sentence eight months sooner than scheduled. He’s giving up his freedom before the Thanksgiving and Christmas season to be home before his son graduates.
  • Wall Street Journal: IBM's Chief Thumps H-P. By Spencer E. Ante. Excerpts: International Business Machines Corp.'s chief sharply criticized rival Hewlett-Packard Co., saying it fell behind the technology curve and bungled the removal of its former chief executive, Mark Hurd. In a rare public broadside, IBM Chief Executive Samuel J. Palmisano said he doesn't worry about companies such as H-P that have slashed their investments in core technologies and need to make expensive acquisitions to keep up. ...

    Mr. Palmisano, who turns 60 next year, the age at which some of his predecessors have retired, said he has no plans to step down next year. "I am not going anywhere," he said. He is also IBM's chairman. The executive said he worries about software giant Oracle and believes it will become the biggest threat to IBM over the long term. "Oracle invests," said Mr. Palmisano, who praised Oracle CEO Larry Ellison.

  • The Register (United Kingdom): Big Blue Sam disses HP, lauds Ellison. IBM's biggest rival? Oracle. By Timothy Prickett Morgan. Excerpts: Palmisano rattled on for an hour, giving his normal speech about how globalization is important to Big Blue and complaining a bit about the Obama Administration, which helped prop up IT sales and was Palmisano's best friend forever back in late 2008 and early 2009 when it was clear there would be some serious economic stimulus and that IT vendors - particularly IBM - would profit handsomely from that.

    Now, it is the summer of Obama's discontent, and some $30bn in IT projects in the US government have been stalled for review, making it all that much harder for Palmisano to make his numbers. ...

    IBM has some 6,000 to 7,000 mainframe shops absolutely glued to the floor with their vintage mainframe apps and databases and can more or less pick their pockets at will. It just ain't that way in the Unix server racket and is even less so in the x64 server space where HP dominates and Oracle is, like Sun, simply not a player.

    It's always easier to talk big when you have a monopoly, as IBM does with mainframes and Oracle does with enterprise-grade databases. And Palmisano is right. Oracle is a much bigger threat because companies will switch their entire hardware stack long before they even think of changing their applications and databases. Oracle is a better bet for profits long term than HP for this very reason. And that is an even better reason why IBM should have been smart enough to never let Oracle get ahold of the 35,000-strong Sun customer base. Who made that decision again? Oh, right...

  • Yahoo! IBM Pension and Retiree Issues message board: "Sam and HP and other competitors" by "Paul S". Full excerpt: I know in our division they are suddenly seeing competitors like Oracle dropping their storage boxes into our customer shops, preloaded with the Oracle Database (we sell "DB2"). What did Larry Ellison of Oracle do? He did what IBM did during the last "Great Recession" of the early 1980s. IBM didn't slow down its R&D. In the 80s unemployment was over 10%, and interest rates were staggeringly high. Many of us were actually hired in the early 80s by a proactive IBM management that looked beyond their short-term profits to long-term market leadership. They had the foresight to forego "record profits in a recession", and continued hiring and building expertise in their existing base of workers, many still around from the IBM/360 days at that time.

    The new IBM only values rising profits. Expertise in mainframe and other technical areas requires decades to acquire. Larry Ellison had something else in mind. He probably saw an IBM hellbent on throwing away its most valuable resources (people) in what could only be termed a sociopathic pursuit of the almighty dollar. He looked around at HP and he saw the same cost-cutting mania there. When IBM turned its back on Sun, Larry bought the company. He continued to work to perfect his products, he took the long view of the market as IBM had done 30 years ago.

    Where IBM saw the recession as an opportunity to lay off thousands, Ellison saw recession as a chance to develop the "killer" product, something to slip into the shops of IBM customers and quietly take over their I/T model. Now IBM is the one who is "late to the dance".

    We used to work with Oracle folks because their database drove our hardware sales. We can't afford to work with them anymore, neither can we afford to ignore them. While Sam and Randy count US IBM employees, attrition rates, and plan the next round of R/As, still babbling about smarter planets, their relentless cutting of US, Canada, UK and other country's highly skilled employees may in the not distant future cost the company its dominant position.

    As long as corporations are run by boards that work 3 weeks a year and by the unquenchable greed of people like Palmisano, Moffat, and McDonald, great companies like IBM once was will continue to be compromised and sacrificed.

  • Yahoo! IBM Employee Issues message board: "IBM Truths" by "big.bertha92". Full excerpt: PBCs rating are pretty much determined by mid-year and determined before an employee writes their year-end results. There are definitely forced skews and many employees in the United States will be given unfair performance ratings to feed the corporate HR beast and to form a new "bottom" layer of employees. Many of those in the bottom layer will be unfairly fired.

    Payroll and most administrative services and help desks (too numerous to mention) are staffed by non-US citizens. They don't pay US taxes and don't put anything back in the US economy. Add your truths.....

  • Yahoo! IBM Employee Issues message board: "Re: IBM Truths" by Scott Storms. Full excerpt: Raises in my former division had some interesting "rules" I put rule in quotes, because the rules are unwritten. The raise tool is automatically loaded with a pre-set amount of money based on the Job Codes/Bands/Current Salaries of the employees in your group. Before any manager began allocating that money to their employees they had to hold back a pre-determined percentage (usually 15% to 20%) of the total to be used at the upper management level. That money is then siphoned up the chain to pay bigger raises to management and to balance inequities between groups. Only once in my 10 years of management did I ever receive money back into my group to balance inequities and it was nowhere near 15%. So every raise you have received at IBM is about 15% to 20% lower than it should have been, unless you're a manager, because of this practice.
  • Local Techwire (RTP, NC): IBM to phase out ‘extra pay’ for late-shift workers. By Rick Smith. Excerpts: IBM is ending what it calls “extra pay” or “premiums” for U.S. employees who work late shifts and what the company calls “alternative schedules.” The change takes effect in January, and affected workers will receive a “bridge” in compensation for a year as the change is implemented. A source familiar with the situation said the extra pay amounts to less than $100 to $200 a week. Most of the workers involved belong to IBM’s various services units, not manufacturing. ...

    Alliance@IBM, the union seeking to represent IBM workers, attacked the move as one that would “drives the standard of living down for IBM employees.” “It just shows that without a union contract or a voice inside IBM, workers are at the mercy of any unilateral change IBM wants to make,” said Lee Conrad, the national coordinator for Alliance@IBM and a retired IBMer. “It is one more instance where corporate management drives the standard of living down for employees,” he said.

  • Yahoo! IBM Employee Issues message board: "SSR's get the shaft" by "dogbreath127k". Full excerpt: No more shift or weekend premiums for USA SSRs is coming so sales can low ball more offerings.
  • Yahoo! IBM Employee Issues message board: "Re: SSR's get the shaft" by Bob Nelson. Full excerpt: IMHO the cut of SSR premium pay is not about selling more. I work for a BP and we get time and a half out side of normal business hours. Cutting premium pay is all about the SSR costing less. The difference goes into the BIG guys pockets. Years ago they cut Sunday premium pay. Why, because they knew the CE's could do nothing.

    The only time IBM management blinked was when they did a partial roll back of the cash balance plan. The roll back happened because there was so much unrest that a union was a real possibility. Poughkeepsie was in revolt and there were airplanes overhead towing banners saying "LOU STOLE YOUR PENSION." (I had an IBM VP tell me that the roll back happened because IBM miscalculated the human impact. What a crock of crap!)

    I'm not a fan of unions but IBM will keep chipping away, little by little, until either nothing is left or they are challenged by a union. A sad situation. On a positive note, there is life after IBM and life is good.

  • The Register (United Kingdom): BT's onshoring call centres scheme continues. Bringing jobs back from India. By John Oates. Excerpt: BT's aim of bringing call centres back to the UK continues to make progress. A Reg reader was told by a business broadband support line that all support for that part of BT's business should be back in the UK by next May. The telco never promised to bring back all its support functions but said last July it aimed to onshore as many as 2,750 support jobs back to Blighty. BT has some 11,000 support staff already in the UK. The news was warmly received by shareholders at BT's annual general meeting.
  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM Pricer in London, England (United Kingdom): (Current Employee) “Salary Increase Program.” Pros: Great work life balance, great at flexible working arrangements, myriad of opportunities if you put your hand up for them. Cons: Salary Increase Program (SIP) is less than inflation. Top talent is identified, but not promoted. Top heavy organisation which leaves no room for advancement and stifles ambition. Advice to Senior Management: If the strategy is to change IBM from "Ferrari" to "Ford", then great. If we want to retain the legacy of premium IT Products and Services provider, then we need a top quality workforce. This can only be achieved through attrition reducing measures such as best in breed salaries.
    • IBM Global Solutions Leader in New York, NY: (Current Employee) “IBM current management style.” Pros: Good name on your resume. Great potential to learn and share knowledge. Work from home is not a very stressful environment. Cons: No clear growth strategy. Growth by acquisition adds revenue to IBM's bottom line but has a negative impact on employees morale and team work. Products are not integrated what so ever. Senior management are not skilled and are not at par with current IT industry requirements Mediocristan by large. Advice to Senior Management: Slim down the reporting hierarchy. Meet more with your field folks, and go visit / listen to your clients more often. Promote the performer and not the one with contacts. Increase salaries. Improve skills.
    • IBM Anonymous: (Current Employee) “Why work for IBM?” Pros: good paid good benefit, good locations, people are friendly there. Generally good culture. Benefits seem decent. Stock options (now restricted stock) for a large portion of the company. CEO is very dynamic and a thoughtful engineer and businessman. Very charismatic. Generally good at retaining people. Projects are technically challenging. Do more with less. Cons: It takes an enormous amount of work to change the way they do things and it is just not happening that quickly. They continue to portray a positive attitude and the continuous "work harder" mantra in company meetings but people are doing that. As others have said, I think they have lost touch with employees as well and constantly try to convince themselves that their course of action is right. Some of the aggressiveness with schedule shows they are a little out of touch with employees (who know when it is realistic and not). Advice to Senior Management: Very hard to re-evaluate themselves but they really need to see if the old guard is doing the job. Lots of people have been there a very long time and have moved up but they may need some fresh blood. Action needs to be taken to show that they will not stand for late projects and someone has to be shown to be responsible for that.
    • IBM Human Resources in New York, NY: (Current Employee) “The work is great, need to focus more on employees vs. shareholders.” Pros: There are a lot of positives about working in IBM. IBM is global and growing, investing in high margin businesses with huge potential to grow revenue profitably. Relentless focus on cost-cutting and off-shoring jobs, while delivering savings, is demotivating for employees and represents the single-minded focus the company has on shareholders and investors, not employees. That balance needs to change or the company won't meet its revenue and profit targets because employees will start walking or running out the door. Cons: Inability to reduce cost structures in EMEA due to European labor laws. Lack of real recognition and compensation for top performers. Relentless focus on cost cutting and too much focus on shareholders and investors, not employees. Advice to Senior Management: Listen to what employees are saying -- we can grow revenue and profit and achieve the 2015 roadmap, but you have to start investing in your top employees. Long-timers will stay and tolerate it, but the younger talent will check out, and then start voting with their feet.
    • IBM Human Resources Specialist: (Current Employee) “If you can handle frustration well and can lower your expectation of quality work just to survive...okay.” Pros: Flexible working and flexible job changes - homeworking, part-time, internal moves and working abroad - excellent. Looks good on resume. If you are lucky, fairly good salary (depends on when and where hired and how good at negotiation) but afterwards forget about increases...minuscule. Cons: Not much else... atmosphere has been declining radically for the past few years. Frequent reorganizations just for the sake of reorganization - then nobody knows who does what, why and where. Often nobody notices how wrong things are done because managers change so often that by the time they would learn their area, they leave. Short-sighted top management - as if the company wanted to get rid of its own basis - no investment in human and non-human resources, no appreciation of quality at all - only quantity and surface statistical numbers count. People are overworked, neither time/nor resource for anything but very tight deadlines, too many people changes, a lot of knowledge is lost. At the same time, many "clever" people can get by without doing meaningful work - a perfect place for self-sellers; if you change jobs annually, nobody notices that you don't know anything. Advice to Senior Management: Read the Glassdoor reviews and learn from them...smart cities and smarter planet begins with smart companies so start from inside and start appreciating your employees
    • IBM Managing Consultant in Washington, DC: (Past Employee - 2010) “Business Analytics and Optimization.” Pros: A great collection of experts and practices. Access to different SME. Ability to move laterally to other areas of choice. Cons: Compensation below market place and the current environment does not allow for management to provide adequate compensation to experts. Also the trend is to go for cheaper labor for increased margin leading to loss of quality of solutions. Advice to Senior Management: Hard line approach for managing employees within the current economic condition would lead to loss of key senior resources. Do not repeat what happened in 1980's.
    • IBM Consultant in Atlanta, GA: (Current Employee) “IBM review.” Pros: Good benefits, decent salary, smart employees - as a traveling consultant you also get to keep your travel points/rewards. Cons: Horrible bureaucracy, I know because I also worked in government & IBM has more bureaucracy than they do! Horrible performance review system - it's jury rigged from the beginning of the year. Built in overtime which as a "professional" you don't get paid for. (e.g. utilization targets over 100%). People get credit for doing nothing on projects - just need to be a manager somehow connected to it. You get the idea. Advice to Senior Management: Need to redo performance review system, invest in employees and don't just use them until they're too expensive & then fire them for new college grads or offshore resources. Build loyalty with your employees.
  • eWeek: Ohio Ban on Offshore Outsourcing Raises More Ire from Asia. By Don E. Sears. Excerpts: In an executive order put forth by Gov. Tim Strickland of Ohio in August, his state is no longer allowed to outsource work offshore, despite some federal stimulus monies being paid to a Texas company Parago in March for services on a federally funded appliance rebate program. "Ohio's policy has been—and must continue to be—that public funds should not be spent on services provided offshore," said Strickland in a statement. "Ohioans have been among the hardest hit by more than a decade of unfair trade agreements and the trickle-down economic policies that promoted offshoring jobs at the expense of Ohioans who work for a living. We must do everything within our power to prevent outsourcing jobs because it undermines our economic development objectives, slows our recovery and deprives Ohioans and other Americans of employment opportunities."

    India's National Association of Software and Service Companies (Nasscom), which represents all of the major outsourcing companies, including Wipro, Satyam, Infosys and Tata Consultancy, plans to fight this measure in trade talks with the United States at the end of September. This latest move by Ohio follows recently passed U.S. legislation that ups the cost of H-1B visa applications for companies that employ more than 50 percent of its workforce with H-1B visa holders. That move was called protectionist and discriminatory by Nasscom as it "unfairly" targets Asian outsourcers that are major global competitors with American-based outsourcing companies including IBM, Accenture and others.

  • New York Times editorial: Fairness for Older Workers. Excerpts: Fifteen months ago, the Supreme Court’s conservative majority mowed past statutory language, Congressional intent and decades of precedent to make it much harder for older workers to prove age discrimination. Under the 5-to-4 ruling, it is no longer sufficient for employees claiming illegal age bias to show that age was a motivating factor in their demotion or layoff. They must show that age was the decisive factor, an unfairly tough standard of proof and a major watering down of older workers’ civil rights.

    Fortunately, the court’s mangling of the Age Discrimination in Employment Act of 1967 need not stand. Legislation introduced last fall by Senator Tom Harkin of Iowa and Representative George Miller of California, both Democrats, would reverse the ruling, once again making the standard for proving age discrimination equivalent to the standard for proving discrimination on the basis of race, sex, religion and national origin.

    Once a worker showed age discrimination was a factor in his or her treatment, an employer could still win by showing it would have made the same employment decision, regardless of the worker’s age. So far, the measure has attracted no Republican co-sponsors. But standing in the way of fair treatment of older workers is bad policy and bad politics, especially at a moment of soaring unemployment and rising age discrimination claims. This is one of the few areas where progress should be possible even in the charged lead-up to the midterm elections.

  • TechRepublic: Is engineering now a young man's game? By Toni Bowers. Excerpts: Recruiters at Silicon Valley companies lament that in the U.S. there is a shortage of qualified engineers. But unemployment figures show a different picture. So what’s the deal? According to a piece by Vivek Wadhwa for TechCrunch, the truth of the situation is that tech companies prefer to hire young, inexperienced engineers rather than shell out the money for a seasoned veteran.

    The thinking is that you can get a new programmer for about a third of the salary of an experienced programmer. Even if takes a few weeks for the new programmer to get trained, the company still saves money. Though they wouldn’t publicly admit it, some companies prefer to get someone who is more eager with a “clean slate” that they can train as they want than hire someone with years of acquired knowledge.

  • Washington Post: An American innovation in light bulbs, but will manufacturing stay in the U.S.? By Peter Whoriskey. Excerpts: During the depths of the night, Fred Maxik is often struck by an idea for building a better light bulb. When that happens, he rolls over and scrawls a diagram or a few words on the wall beside his bed with an indelible black marker, a practice his wife tolerates because he offers to repaint their room every six months. "I don't want to lose the thought," says the graying, pony-tailed inventor.

    Now, in a coup for Maxik and the company here he founded, the object of those pre-dawn inspirations is going on sale at Home Depot, the nation's largest lighting retailer. The bulbs, assembled at a plant here with about 250 workers, are illuminated not with electrified wires but energy-efficient light-emitting diodes, or LEDs - a method many industry experts consider the future of lighting.

    Lighting Science Group is, as a result, just the sort of manufacturer that many, including the Obama administration, have said they would like to keep in the United States. But while the company's manufacturing roots lie here, they may not remain.

    The connection between American innovation and manufacturing, which for generations created U.S. jobs, has been unraveling under the pressures of globalization, and the light-bulb industry may be a prime example. Ordinary incandescents, the bulbs pioneered by Thomas Edison, are manufactured almost entirely outside the United States, with the country's last major General Electric factory set to close this month. The company will continue to make incandescents in Mexico and China. In the near term, compact fluorescents are expected to replace the traditional bulbs that are being phased out by new U.S. energy standards. But CFLs, as they are called, are almost entirely made in China, though it was an engineer in the United States who came up with the breakthrough design.

    Now, as Lighting Science rapidly expands its production of what is considered the next-generation technology, the company is being courted by China and Mexico. Aside from the enticement of lower-wage workers, those countries offer significant cash incentives for capital equipment and labor, amounting to as much as $4 million, company officials said. ...

    "They came out with one of the highest-performing lamps and at about half the price of anyone in the industry," said Bill Hamilton, vice president of merchandizing for Home Depot's electrical business. "It's taken the industry by storm." The contest among the manufacturers now is to continue to whittle down prices while also developing bulbs that can match the brightness of 60-watt, 75-watt and 100-watt bulbs. LED bulbs today represent less than 1 percent of sales, but as prices come down that figure is expected to rise. "We make significant improvements every six months," Maxik said.

    The swift pace of innovation is, in fact, one of the most compelling reasons to keep the factory here in this beach town, where workers are paid between $16 and $22 an hour. With the factory nearby, engineers can make alterations rapidly and learn as they do so. "The engineers need to react quickly and to make the changes as the product is being made," Maxik said. "But it's not just a matter of speed. If your factories are on another continent, you lose know-how."...

    Yet the steady decline of U.S. manufacturing employment has left many worried that essential skills are leaving the United States and that the nation's vaunted expertise for engineering innovation could be withering. "As we've decided to vacate various areas of technology - saying, 'It's cheaper to build it there, lets move it away' - we've created a vacuum" that weakens the nation's capacity for innovation, Maxik said. "There's so much interaction between the manufacturing process and the innovation and invention process," he said. And "as you start moving the manufacturing process further and further away, you lose that connection.

  • truthout: Exporting Jobs, Importing Workers. By Jim Hightower. Excerpt: Maybe you're one of the thousands of young lawyers in America working in some low-skill, part-time job because law firms have cut so many of the starting positions you were educated to take. If so, I have good news: Jobs for young lawyers are now mushrooming in companies that provide legal services to U.S. corporations. Unfortunately, you'll have to move to India to get one. And the pay will be -- how shall I put this? -- "disappointing."

    Lawyering has become the latest category of good jobs disappearing from our Land of the Free, as corporate chieftains continue to offshore the American workplace. The average student loan debt for a recent law school graduate is upward of $100,000, and now law school grads are finding that jobs are scarce -- especially since Wall Street banks, insurance corporations, mining giants and others are shipping more and more of their law business to Pangea3, CPA Global, UnitedLex and other rapidly expanding legal outsourcing outfits in India.

    In the past five years, the number of these upstart firms has more than tripled, with each one offering from a few dozen to hundreds of young Indian law-school graduates. These eager legal beagles are hunkered down in corporate cubicles, ready to write contracts, review legal documents and -- increasingly -- to handle the more sophisticated chores of case management and regulatory filings that corporations have been entrusting to more experienced American lawyers.

    Even though U.S. corporations have amassed record levels of profits and cash reserves, they are offshoring their legal work simply because it puts even more money in their pockets. They can pay Indian lawyers as little as a tenth of what they'd pay young American attorneys -- and the 90-percent wage difference goes to the corporation, rather than being spread through our economy as family incomes.

    It's another move by the corporate elite to separate their expanding fortunes from the well-being of America's middle class -- and from the well being of America itself.

New on the Alliance@IBM Site
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  • Do you work at a GDF? If you do, please contact me, Lee Conrad of Alliance@IBM, at ibmunionalliance@gmail.com
  • To Alliance@IBM supporters: The Alliance is the only organization that advocates and supports IBM employees and ex-employees. In fact, there are few like it in the Information Technology field. It is always difficult to keep an organization like this alive, but as a supporter you know how important it is that we exist. We are calling on you today to help keep us alive another year by joining as a member or associate member. See our online forms below. As our membership has dropped, it is imperative that we gain new members or this organization and web site will cease to exist. Help us keep our organizing and advocacy work alive!
  • General Visitor Comments: Due to a lack of membership growth the comment sections will be closed until we see sufficient growth in full membership, associate membership or donations. Many of you that visit our site have not yet joined, but seem to value its existence. The only comment section that will remain open will be Job Cuts Reports. If you have information that you want the Alliance to know about please send to ibmunionalliance@gmail.com. Information of importance will be put on the front page of this web site. To join go here: Join The Alliance! or here: Join The Alliance!
  • Job Cut Reports
    • Comment 9/13/10: I worked for IBM as a contractor for 2 and a half years. Worked for the ITD. Job was moved to Dubuque Iowa. I even had to go out there and train my "replacements". They don't know jack out there. They are hiring people directly out of college and sometimes with no college whatsoever. Finally found a way out and I have never looked back in regret. Took a pay cut but its totally worth it. Only reason I stayed on was because they kept dangling the full timer carrot in my face every few months. If you can, get the hell out of there asap, not worth it at all. -Former IBM Contractor-
    • Comment 9/14/10: The big announcement was no more AWS for 2011. Only overtime will be pay, in CO by law overtime is paid anything over 40 hours and/or 12 hours a day. No even shift premiums for second shift and weekends. What else is next? who knows... -Rocky Mountains-
    • Comment 9/14/10: IBM's employee's everywhere do not have a voice in decisions made by IBM that effect the employees. 100 years ago, that's what unions wanted. To give employees a voice. That's what The Alliance is trying to do, give IBM employee's a voice. While it's true that modern unions have somewhat moved away from that premise, it's very clear that IBM's employees desperately need a voice. It's sad that IBM employees cant hear that very simple message. -Union Yes-
    • Comment 9/14/10: In the continuing saga of" What will they take away next ?" The answer becomes obvious. Whatever is left to take away. Hate the way every time there is a change you lose something? Wouldn't it be nice to have shift premiums and AWS defined in a contract? You can bet Sammy' contract defines every penny he will get. . Why don't you have a contract also? I know. Its too much effort to sign up for the Alliance as even a free member. It may take a few keystrokes on your own time to join with others who are tired of being cheated. There will never be a union vote if YOU do not sign up in some fashion so the abuse will NEVER end for you. I know. Maybe you can pick a benefit you really like and start an office pool to guess when IBM will take it away or charge so much for it you will be better off without it. The one who comes closest to the date and time splits the pot with you. Better hurry though because the benefits you could bet on are leaving fast! Remember the old joke about the beatings will continue until morale improves. Looks like it wasn't a joke. Live Better. Work Union. -Doyathink?-
    • Comment 9/15/10: There you have it. A pay cut coming soon. If you had a union contract right now you would assure yourself of getting premium pay and AWS. Do something now folks. You have waited too long but it is not too late. Join your union or have IBM continue to chop you bit by bit. -chopchop-
    • Comment 9/15/10: Got to talk to a couple of people on the State of Texas account telling us during a meet up about how badly IBM Screwed up including asking any and all for 35% cuts in hours and pay on acct to having Arch's working 30-40 jobs at one time and all with one week turnarounds including cutting more PM's and sending all possible work to Dubuque GDF. Fun part was telling us about the GDF PM's working for less than 44K a year and one PM Contractor asked to come back at $ 22 a hr after working for $ 44 a hr before being RA'd. One of the GDF PM's was from Russia and barely spoke English and didn't even know a single thing about her job or even what servers were but took over for a Senior IT PM who got yanked and had the DIR people asking what happened. IBM said to cut more over next couple of months on the account as SoT starts talking to DELL and HP mostly to get other work done away from IBM, way to go for screwing up an account. -IBM UC'd-
    • Comment 9/18/10: I was RA'ed on 3/31/2010. I was a deskside support tech working in NJ. I have yet to find a job. I receive a daily job search report from the NJ State Dept of Labor and Workforce Development and in today's search there are TWO deskside support job in NJ listed with IBM for full time employment. I did a quick search and found that in Sept alone there are 4 of the same jobs and over 20 more posted in the"work in any city" category. What is the deal? Why would they let go of techs with 10+ years of experience and then go out and look for more full time people. I would have preferred to have taken a pay cut than get laid off. I know IBM is not a great place to work but being unemployed is even worse. -Confused RA in NJ-
    • Comment 9/19/10: TO -Confused RA in NJ- You obviously don't understand the politics (i.e. cost analysis of an SSR vs EXECUTIVE bonuses). In their view, the10+ year experienced person COSTS too much. Replace you with 2 to 3 new hires and their bonus goes up. Replace you with 1 to 2 new hires and their bonus goes up a lot. Quality of Service; Do you hear them laughing??? -no_ky- Alliance reply: To paraphrase the movie line: "We don't need no stinkin' QoS, man!"
News and Opinion Concerning the U.S. Financial Crisis
Minimize "It is a restatement of laissez-faire-let things take their natural course without government interference. If people manage to become prosperous, good. If they starve, or have no place to live, or no money to pay medical bills, they have only themselves to blame; it is not the responsibility of society. We mustn't make people dependent on government- it is bad for them, the argument goes. Better hunger than dependency, better sickness than dependency."

"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.

  • Salon: Why are Democrats terrified of taxing the rich? By Alex Pareene. Excerpts: The worst and scariest thing in the world is the deficit, and before we do anything to help people without jobs, we must make sure it is "deficit-neutral," and also now is probably a good time to think about some long-term entitlement cuts. Also raising taxes during a recession is madness, and we must not do so, under any circumstances, even if it makes the deficit larger.

    That is basically the official view of the mainstream political establishment, most of whom are, like 20-something idiots who claim to read the Economist and Michael Bloomberg, "socially liberal and fiscally conservative." ("Fiscally conservative" just means worrying about the deficit, a lot.) That "mainstream" view permeates the supposedly non-ideological press, and members of the press tend to believe that America is made up of "independents" with similar beliefs.

    In fact, most Americans are more or less the opposite. (Most conservatives get this!) When they claim to have a problem with government spending, or taxation, it is a problem with getting taxed and perceiving the spending as being done on someone else. What they would like is for the government to spend money on them, using money seized from the wealthy.

    Meanwhile, Democrats are terrified of taxing rich people. At least a dozen House Democrats, several Democratic candidates and four Democratic senators -- Evan Bayh of Indiana, Ben Nelson of Nebraska, Joe Lieberman of Connecticut and Kent Conrad of North Dakota -- have said they won't go along with the president's plan to allow the cuts to expire for the wealthiest Americans. Why? ...

    But it is not a particularly courageous political act to restore the top marginal tax rate on the wealthiest Americans to 90s levels. Jon Chait adds that these people's worldviews are so warped by their bubbles of privilege that they don't understand that six figures doesn't qualify as struggling. Matt Yglesias blames media framing of deficit issues. Everyone is probably right.

  • New York Times: Retiring Later Is Hard Road for Laborers. By John Leland. Excerpts: At the Cooper Tire plant in Findlay, Ohio, Jack Hartley, who is 58, works a 12-hour shift assembling tires: pulling piles of rubber and lining over a drum, cutting the material with a hot knife, lifting the half-finished tire, which weighs 10 to 20 pounds, and throwing it onto a rack. Mr. Hartley performs these steps nearly 30 times an hour, or 300 times in a shift. “The pain started about the time I was 50,” he said. “Dessert with lunch is ibuprofen. Your knees start going bad, your lower back, your elbows, your shoulders.”

    He said he does not think he can last until age 66, when he will be eligible for full Social Security retirement benefits. At 62 or 65, he said, “that’s it.”

    After years of debate about how to keep Social Security solvent, the White House has created an 18-member panel to consider changes, including raising the retirement age. Representative John A. Boehner, Republican of Ohio and the House minority leader, has called for raising the age as high as 70 in the next 20 years, and many Democrats have endorsed similar steps, against opposition from some liberal groups. The panel will report by Dec. 1, after the midterm elections. ... ...

    Mr. Hartley had planned to retire at 58, but he and his wife had high medical expenses, and the company froze one year of its pension plan, reducing benefits. He is, he said, “stuck here.” ...

    “People who need to retire early — and they need to — are folks that start working in their late teens, whereas people who are promoting raising the retirement age are people who were in graduate school or professional school and got into jobs that would logically take them into their late 60s and 70s,” she said.

    Selected reader comments follow:

    • Companies are already kicking anyone over 50 out the door no matter what profession. How on earth are people going to work until they're 68? Where will they work?
    • I get so irritated when Congress talks about raising the retirement age. We have lost our pensions, lost our jobs, lost our health insurance and now they want to take away our social security which we have paid into our entire work lives. Instead why don't we take away all benefits paid to members of Congress so they can see what they have done to the average American worker?
    • I would love to work until I am 70. Unfortunately, I am currently "between positions", and no one will hire a person my age. This is the moral equivalent of inviting your elders to take a long walk in the blizzard because you no longer want to feed them. What kind of savages are we?
    • If members of Congress (most of whom will enjoy generous taxpayer-provided retirement) would quit funding wars for the futile sake of nation-building, there would be plenty of money to leave the Social Security promise to the American people alone.
    • The workplace doesn't like people over age 50 now. What's going to happen to people over age 65? I know several people, who had great careers and once they turned 50, were harassed out of their jobs. Employers made their lives so miserable they couldn't take it anymore. Its a cute trick invented by management to avoid unemployment claims. Congress doesn't have a clue about the American workplace and office politics. Retirement planning now becomes pick your bridge and find a really good cardboard box. That's what you have to look forward to.
    • As a higher income worker, I would find it more appealing to pay social security taxes for the full year than having the retirement age raised on other Americans who work in labor-intensive jobs. Simply eliminating the cap on social security taxes is a simple way to address much of the funding shortfall. The cost to me is the price I should pay for living in a decent society.
    • The conservatives drum beat to diminish social security benefits keeps on. Under Bush their plan was to privatize it which would have been brilliant leading into the 2008 financial collapse. That surely would have killed retirement for middle America.

      Now the plan is to scare Americans into believing the only way to SS solvency is to raise the retirement age. The fact that Alan Greenspan in 1983 was the great mind behind SS overhaul tells us why the SS tax rate on low and middle income Americans but has been capped for anyone making over $100K!! So while Bush and his Republican Congress cut dividend tax rate by 50%, Social Security taxes from 1983 to 2009 have tripled. Now we see why the standard of living of middle income is dropping but for the super rich it has been increasing.

      The solution? Simple. Drop the Social Security tax rate by 50% for all individuals and employers. Pay for this cut by eliminating the salary cap and income all income (interest, dividend and wages) in the Social Security tax. That will put the SS system immediately into the black.

      Democrats need to do something dramatic like a permanent SS tax break in order to save the economy and save middle income families.

    • Don't talk to me about cutting social security when tax rates for the very rich are way too low and while wasting trillions on useless wars and a bloated military. In addition, Social Security was put in place when workers had employer pensions as their main retirement income. Since the greedy corporate elite eliminated those (except for themselves, of course), Social Security benefits need to be increased, not decreased. Cutting Social Security will start another revolution to replace our corporate controlled government with one that works for the people again. Go ahead Congress. Make our day!
    • This is just another attack by the affluent on the working/middle class. For the last 35 years the Republican mentality (and that of their Democratic collaborators) has been to take as much as possible from the working classes and transfer it to the pockets of their wealthy contributors. The evidence of that is that since 1975 all gains in income have gone into the pockets of the top 20 percent of American households. The top 1 percent of households get 24 percent of all income. In 1915 the top 1 percent got 18 percent. If America wants to avoid the specter of class warfare, we need to find ways to pay workers more and CEO and management less. If Social Security is diminished or eliminated we will see a staggering growth of the poverty rate. And for those who say that Social Security won't be there in 30 years - that's up to you. The fixes are easy. You just need to elect people who believe in that.
    • I wanted to add that a big reason for discrimination for people over the age of 50 has to do with the cost of providing health insurance. A person can agree to accept reduced wages, but can't require an insurer to lower the cost of insurance for them. Paradoxically, that makes people over 65 a better bargain, because they have Medicare. As a society, we barely seem to understand or acknowledge how our private, employer based health insurance arrangements distort the lives and livelihoods of so many people.

  • New York Times op-ed: A Recovery’s Long Odds. By Bob Herbert. Excerpts: Americans are not being honest with themselves about the structural changes in the economy that have bestowed fabulous wealth on a tiny sliver at the top, while undermining the living standards of the middle class and absolutely crushing the poor. Neither the Democrats nor the Republicans have a viable strategy for reversing this dreadful state of affairs. (There is no evidence the G.O.P. even wants to.)

    Robert Reich, in his new book, “Aftershock,” gives us one of the clearest explanations to date of what has happened — how the United States went from what he calls “the Great Prosperity” of 1947 to 1975 to the Great Recession that has hobbled the U.S. economy and darkened the future of younger Americans. He gives the Obama administration and the Federal Reserve credit for moving quickly in terms of fiscal and monetary policies to prevent the economic crash of 2008 from driving the U.S. into a second great depression. “But,” he writes, “we did not learn the larger lesson of the 1930s: that when the distribution of income gets too far out of whack, the economy needs to be reorganized so the broad middle class has enough buying power to rejuvenate the economy over the longer term.”

    The middle class is finally on its knees. Jobs are scarce and good jobs even scarcer. Government and corporate policies have been whacking working Americans every which way for the past three or four decades. While globalization and technological wizardry were wreaking employment havoc, the movers and shakers in government and in the board rooms of the great corporations were embracing privatization and deregulation with the fervor of fanatics. The safety net was shredded, unions were brutally attacked and demonized, employment training and jobs programs were eliminated, higher education costs skyrocketed, and the nation’s infrastructure, a key to long-term industrial and economic health, deteriorated. It’s a wonder matters aren’t worse. ...

    There was plenty of growth, but the economic benefits went overwhelmingly — and unfairly — to those already at the top. Mr. Reich cites the work of analysts who have tracked the increasing share of national income that has gone to the top 1 percent of earners since the 1970s, when their share was 8 percent to 9 percent. In the 1980s, it rose to 10 percent to 14 percent. In the late-’90s, it was 15 percent to 19 percent. In 2005, it passed 21 percent. By 2007, the last year for which complete data are available, the richest 1 percent were taking more than 23 percent of all income.

    The richest one-tenth of 1 percent, representing 130,000 households, took in more than 11 percent of total income in 2007. ...

    A male worker earning the median wage in 2007 earned less than the median wage, adjusted for inflation, of a male worker 30 years earlier. A typical son, in other words, is earning less than his dad did at the same age. This is what has happened with ordinary workers as the wealth at the top has soared into the stratosphere.

  • Jim Hightower: A Gross Insult to Unemployed Americans. Excerpts: At last, Obama is getting serious about America's jobs crisis, proposing a $50-billion effort to put Americans to work repairing our national infrastructure. Of course, congressional Republicans have responded as they always do: petulantly shouting "no" and plopping their fat butts down in the middle of the legislative path to block progress.

    But Obama could take one symbolic step on his own that would create jobs for about a dozen American workers. It involves the construction of a memorial and statue of Martin Luther King, Jr. on our National Mall. After all, King's historic 1963 march on Washington was about jobs and poverty – so why not have some of our highly-skilled bricklayers and stone masons who're now unemployed build this monument in honor of King's legacy?

    Seems sensible, but guess what? The quasi-governmental foundation overseeing the King memorial project doesn't seem to have much sense. It is importing eight to 12 workers from – believe it or not – China to do this job!

    Why don't they just poke every out-of-work American in the eye with a sharp stick? As the Bricklayers union said in exasperation, this is "wrong, wrong, wrong."

    Well, sniffed a spokeswoman for the foundation, only the centerpiece of the memorial is outsourced to Chinese craftworkers, so stop your griping. Ironically, that centerpiece is named the "Stone of Hope," but apparently no one at the foundation has any grasp of irony, so they are proceeding to obtain work visas to bring the Chinese into our nation's capital and construct King's monument. Presumably, America's vast pool of jobless workers will be allowed to watch them.

  • USA Today editorial: Our view on the federal budget: Tax debate reflects breathtaking disconnect. Excerpts: When George W. Bush took office in 2001, he inherited a federal budget surplus so robust that then-Federal Reserve chairman Alan Greenspan worried aloud about the consequences of paying off the national debt.

    Talk about your misplaced concern.

    Bush and a Republican-controlled Congress promptly slashed taxes by $2.3 trillion over 10 years, then dramatically increased the rate of federal spending to finance wars in Iraq and Afghanistan, build up an intelligence-industrial complex in response to 9/11, start a costly Medicare prescription benefit and do a hundred other things with little regard for the cost. The Great Recession, the Bush bank rescue and President Obama's stimulus program pushed already-scary deficits to Third World levels.

    So with the Bush tax cuts set to expire at year's end, Washington is consumed with debate. Not over how to restore responsibility and salvage the USA's financial future, but over whether the tax cuts should be extended for everyone or just the 96% of taxpayers making less than $200,000. The disconnect is breathtaking.

    Tax-cut supporters routinely decry deficits, but then do the very things that make them worse. Republicans, in particular, have elevated lower taxes to a sort of religious truth — always good, always necessary, always effective. When House Minority Leader John Boehner, R-Ohio, said over the weekend that, if push came to shove, he'd vote to raise taxes on the wealthy, he was roundly denounced by members of his own party. Americans are "tired of Democrat leaders in Washington pursuing the same government-driven programs that have done nothing but add to the debt," Senate GOP leader Mitch McConnell, R-Ky., declared Monday as he announced legislation to keep the tax cuts for everyone. Never mind his own votes creating the debt, or that he's offering no way to pay for them. ...

    The most frequently repeated claim about raising taxes on the wealthy is that it's a job killer, because those taxpayers include many small-business owners. This is clever but misleading. A report from Congress' Joint Committee on Taxation shows that the top two tax brackets — which begin at about $172,000 — account for just 3% of taxpayers with net positive business income. Judging by tax-cutters' rhetoric, higher rates for the best-off Americans would throttle the economy. How come, then, that when tax rates were higher for everyone in the 1990s, the debt fell, unemployment plunged and the economy thrived? Or that the economy prospered in the 1950s, when the top rate exceeded 90%? ...

    The truth is that the modest tax hikes being debated make little difference compared with enormous economic forces such as the housing bust, technological disruption and global labor markets. An even more inconvenient truth is that the Bush tax cuts are no longer affordable. Not for the wealthy. Not for anyone else. Even Greenspan now says all the tax cuts should expire as a way to preserve the nation's economic viability.

  • TPM: Meet The Democrats Who Want To Preserve Tax Cuts For The Rich. By Brian Beutler. Excerpts: Rep. Michael McMahon (D-NY), who is fighting to preserve the top-bracket tax cuts for at least a year, says he has somewhere between 25 and 50 members on his side. "I think the difference is there," he told TPM after a House vote yesterday afternoon.

    McMahon is a signatory to a letter authored by Rep. Melissa Bean (D-IL) and others designed to pressure leaders to give wealthy Americans another tax break. His view represents a political and policy consensus shared by a significant, and vocal faction of the Democratic party -- a consensus that party leaders are doing little to weaken.

    "Sometimes we forget how we became the majority. We did it by winning some affluent districts," Rep. Gerry Connolly told reporters earlier this month. ...

    In McMahon's district, he says, a couple making $300,000 might still be living paycheck to paycheck. But freezing tax rates is important, in his view, to speed up the recovery nationally.

  • New York Times op-ed: The Tax-Cut Racket. By Paul Krugman. Excerpts: “Nice middle class you got here,” said Mitch McConnell, the Senate minority leader. “It would be a shame if something happened to it.”

    O.K., he didn’t actually say that. But he might as well have, because that’s what the current confrontation over taxes amounts to. Mr. McConnell, who was self-righteously denouncing the budget deficit just the other day, now wants to blow that deficit up with big tax cuts for the rich. But he doesn’t have the votes. So he’s trying to get what he wants by pointing a gun at the heads of middle-class families, threatening to force a jump in their taxes unless he gets paid off with hugely expensive tax breaks for the wealthy. ...

    So, about those tax cuts: back in 2001, the Bush administration bundled huge tax cuts for wealthy Americans with much smaller tax cuts for the middle class, then pretended that it was mainly offering tax breaks to ordinary families. Meanwhile, it circumvented Senate rules intended to prevent irresponsible fiscal actions — rules that would have forced it to find spending cuts to offset its $1.3 trillion tax cut — by putting an expiration date of Dec. 31, 2010, on the whole bill. And the witching hour is now upon us. If Congress doesn’t act, the Bush tax cuts will turn into a pumpkin at the end of this year, with tax rates reverting to Clinton-era levels.

    In response, President Obama is proposing legislation that would keep tax rates essentially unchanged for 98 percent of Americans but allow rates on the richest 2 percent to rise. But Republicans are threatening to block that legislation, effectively raising taxes on the middle class, unless they get tax breaks for their wealthy friends. That’s an extraordinary step. Almost everyone agrees that raising taxes on the middle class in the middle of an economic slump is a bad idea, unless the effects are offset by other job-creation programs — and Republicans are blocking those, too. So the G.O.P. is, in effect, threatening to plunge the U.S. economy back into recession unless Democrats pay up. ...

    Polls show that a majority of Americans are opposed to maintaining tax breaks for the rich. Beyond that, this is no time for Democrats to play it safe: if the midterm election were held today, they would lose badly. They need to highlight their differences with the G.O.P. — and it’s hard to think of a better place for them to take a stand than on the issue of big giveaways to Wall Street and corporate C.E.O.’s.

  • Wall Street Journal: Lost Decade for Family Income. By Conor Dougherty and Sara Murray. Excerpts: The downturn that some have dubbed the "Great Recession" has trimmed the typical household's income significantly, new Census data show, following years of stagnant wage growth that made the past decade the worst for American families in at least half a century.The bureau's annual snapshot of American living standards also found that the fraction of Americans living in poverty rose sharply to 14.3% from 13.2% in 2008—the highest since 1994. Some 43.6 million Americans were living below the official poverty threshold, but the measure doesn't fully capture the panoply of government antipoverty measures.

    The inflation-adjusted income of the median household—smack in the middle of the populace—fell 4.8% between 2000 and 2009, even worse than the 1970s, when median income rose 1.9% despite high unemployment and inflation. Between 2007 and 2009, incomes fell 4.2%.

  • Vermont Public Radio: Sanders Opposes Tax Cut On Incomes Over $200K. By Bob Kinzel. Excerpts: Speaking on VPR's Vermont Edition, Senator Bernie Sanders argued that it makes no sense to cut tax rates for wealthy people:
    "At a time when we have the most unequal distribution of income and wealth in any major country on earth; when, during the Bush years the top two percent did extraordinarily well while they have seen a lowering - a substantial lowering - of their tax rates... No, I don't believe we can afford over a ten year period to give $700 billion in tax relief to the top two percent."
  • Wall Street Journal: Economic Ride Turns Bumpier for the Rich. By Mark Whitehouse. Excerpts: It's not as easy to be rich as it used to be. In the past, America's wealthiest people barely felt the ups and downs of the economy. Over the past few decades, though, the roller-coaster ride has become more extreme for them than for any other income group, according to a new paper by two Northwestern University economists.

    In the first year of the recession that began in 2007, the top 0.01% of earners in the U.S. saw their pretax income fall by an average of 12.7%, compared with 2.6% for all earners, according to an analysis of data from income-tax returns by economists Jonathan Parker and Annette Vissing-Jorgensen, in a paper presented Thursday at a Brookings Institution conference.

    The richest also did better on the way up. In the four years leading up to the recession, their income rose at an annualized rate of 13.9%, compared with 1.8% for everyone. ...

    To be sure, the greater volatility doesn't mean poorer folks should feel sorry for the rich. On average, the people in the top 1% and 0.01% had pre-tax incomes of about $900,000 and $17 million, respectively, in 2008. So they were well able to absorb big losses. "It's hard to think of that as being really hard," says Mr. Parker.

    Selected reader comments concerning the above article follow:

    • This article should have run in The Onion. How absurd to characterize the situation of the extremely rich as "risky." Does it mean that some years they can buy new yachts, and other years have to make-do with last year's model? Compare this with the real risks borne by poor and working-class people: unemployment, homelessness, inability to afford medical care. How appropriate this piece should run on the same day as two related headlines: "Millionaire Population Soars-Again" and "U.S. Poverty Rate Rises to 14.3%.'
    • Has anyone checked out the ridiculous price for truffles these days?
    • Uh oh! The rich experiencing a ripple against their yachts from Hurricane MultinationalCorporationAbandoningAmerica? How can this be? Didn't they make sure all the Americans were laid off and all their investments were made in China?!?!?!?

  • Huffington Post: Poverty Rises as Wall Street Billionaires Whine. By Les Leopold. Excerpts: While 43.6 million Americans live in poverty, the richest men of finance sure are getting pissy. First Steve Schwartzman, head of the Blackrock private equity company, compares the Obama administration's effort to close billionaires' tax loopholes to "the Nazi invasion of Poland." Then hedge fund mogul David Loeb announces that he's abandoning the Democrats because they're violating "this country's core founding principles" -- including "non-punitive taxation, Constitutionally-guaranteed protections against persecution of the minority, and an inexorable right of self-determination." Instead of showing their outrage about the spread of poverty in the richest nation on Earth, the super-rich want us to pity them?

    Why are Wall Street's billionaires so whiny? Is it really possible to make $900,000 an hour (not a typo -- that's what the top ten hedge fund managers take in), and still feel aggrieved about the way government is treating you? After you've been bailed out by the federal government to the tune of $10 trillion (also not a typo) in loans, asset swaps, liquidity and other guarantees, can you really still feel like an oppressed minority?

    You'd think the Wall Street moguls would be thankful. Not just thankful -- down on their knees kissing the ground taxpayers walk on and hollering hallelujah at the top of their lungs! These guys profited from puffing up the housing bubble, then got bailed out when the going got tough. (Please see The Looting of America for all the gory details.) Without taxpayer largess, these hedge fund honchos would be flat broke. Instead, they're back to hauling in obscene profits.

    These billionaires don't even have to worry about serious financial reforms. The paltry legislation that squeaked through Congress did nothing to end too big and too interconnected to fail. In fact, the biggest firms got even bigger as they gobbled up troubled banks, with the generous support of the federal government. No bank or hedge fund was broken up. Nobody was forced to pay a financial transaction tax. None of the big boys had a cap placed on their astronomical wealth. No one's paying reparations for wrecking the US economy. The big bankers are still free to create and trade the very derivatives that catapulted us into this global crisis. You'd think the billionaires would be praying on the altar of government and erecting statues on Capital Hill in honor of St. Bailout. ...

    Dwight D. Eisenhower was no radical, but he accepted the reality: If America was going to prosper -- and pay for its costly Cold War -- the super-rich would have to pony up. It was common knowledge that when the rich grew too wealthy, they used their excess incomes to speculate. In the 1950s, memories of the Great Depression loomed large, and people knew that a skewed distribution of income only fueled speculative booms and disastrous busts. On Ike's watch, the effective marginal tax rate for those earning over $3 million (in today's dollars) was over 70 percent. The super-rich paid. As a nation we respected that other important American value: advancing the common good.

    It's time to take Eisenhower's cue and redeploy the excessive wealth Wall Street's high rollers have accumulated. If we leave it in their hands, they'll keep using it to construct speculative financial casinos. Instead, we could use that money to build a stronger, more prosperous nation. We could provide our people with free higher education at all our public colleges and universities -- just like we did for WWII vets under the GI Bill of Rights (a program that returned seven dollars in GDP for every dollar invested). We could fund a green energy Manhattan Project to wean us from fossil fuels. An added bonus: If we siphon some of the money off Wall Street, some of our brightest college graduates might even be attracted not to high finance but to jobs in science, education and healthcare, where we need them.

    Of course, this pursuit of the common good won't be easy for the billionaires (and those who identify with them.). But there's just no alternative for this oppressed minority: They're going to have to learn to live on less than $900,000 an hour.

If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

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