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6, 2000 April, 2000

Highlights—January 14, 2012

  • Book TV: "Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers (video)" By Ellen Schultz. About the program: Ellen Schultz argues that many large employers have plundered employee pension plans over the past decades. She also talks about the crisis this "theft" has created. Hosted by the National Retiree Legislative Network.
  • Business Ethics: The Corporate Capture of the United States. By Robert A.G. Monks. Excerpts: American corporations today are like the great European monarchies of yore: They have the power to control the rules under which they function and to direct the allocation of public resources. This is not a prediction of what’s to come; this is a simple statement of the present state of affairs. Corporations have effectively captured the United States: its judiciary, its political system, and its national wealth, without assuming any of the responsibilities of dominion. Evidence is everywhere. ...

    The “smoking gun” is CEO pay. Compensation is an expression of concentrated power — of enterprise power concentrated in the chief executive officer and of national power concentrated in corporations. Median US CEO pay for 2010 was up 35 percent in the midst of a lingering recession, while CEO pay over the last decade has doubled as a percentage of pre-tax corporate income. Yet there has been no justification for current levels of CEO pay based on economic value added. ...

    Retirement risk has been transferred to employees. During the same period that CEOs were doubling their own compensation, the “best” CEOs of the “best” companies abrogated the century-old commitment by employers to provide pensions to their workers. IBM has been the corporate leader in abolishing a “real” pension system for its employees. The 2006 elimination of on-going defined benefit plans will “save [IBM] as much as $3 billion through the next few years and provide it with a more ‘predictable cost structure’,” TK said at the time. Translation: The worker bees are on their own.

    The financial power of American corporations now controls every stage of politics — legislative, executive, and ultimately judicial. With its January 2010 decision in the Citizens United case, the Supreme Court removed all legal restraints on the extent of corporate financial involvement in politics, a grotesque decision that can have only one effect: maximizing corporate – not national — value. Today’s CEOs have been granted the power to direct political payments and organize PAC programs to achieve objectives entirely in their own self-interest, and they have been quick to use it. ...

    Capture has been further implemented through the extensive lobbying power of corporations. Abraham Lincoln’s warning about “corporations enthroned” and Dwight Eisenhower’s about the “unwarranted influence by the military/industrial complex” have been fully realized in our own time. Reported lobbying expenditures have risen annually, to $3.5 billion in 2010. Half of the Senators and 42 percent of House members who left Congress between 1998 and 2004 became lobbyists, as did 310 former appointees of George W. Bush and 283 of Bill Clinton. ...

    Capture has placed the most powerful CEOs above the reach of the law and beyond its effective enforcement. Extensive evidence of Wall Street’s critical involvement in the financial crisis notwithstanding, not a single senior Wall Street executive has lost his job, and pay levels have been rigorously maintained even when, as noted earlier, TARP payments had to be refinanced in order to remove any possible restrictions. ...

    Finally, capture has been perpetuated through the removal of property “off shore,” where it is neither regulated nor taxed. The social contract between Americans and their corporations was supposed to go roughly as follows: In exchange for limited liability and other privileges, corporations were to be held to a set of obligations that legitimatized the powers they were given. But modern corporations have assumed the right to relocate to different jurisdictions, almost at will, irrespective of where they really do business, and thus avoid the constraints of those obligations.

  • New York Times: Unboxed Extra: I.B.M. and America’s Job Challenge. By Steve Lohr. Excerpts: I.B.M. is still probably the largest private employer of technology workers in the United States. But the mix of jobs is very different than it was a decade or so ago. And the company is continually adding some jobs and eliminating others, in the United States and other countries. It spends $400 million to $500 million a year on “work force rebalancing,” payments to workers let go. It also spends about $600 million a year on worker education, training and retraining. ...

    “We do a lot of retraining every year,” Mr. Palmisano continued, “and we still find ourselves in the situation where people can’t move up the skill ladder. That’s a lot of what’s going on. They can’t get up the skill ladder. So we have to replace them with current skills.”

  • Yahoo! IBM Employee Issues message board: "Re: NYT: Unboxed Extra: I.B.M. and America’s Job Challenge" by "teamb562". Excerpts: If this weren't so sad it would be funny....or do I have that backwards. It's so pathetic the way these exec's can blatantly lie and live the next day able to lift their head and show their face:
    ""We do a lot of retraining every year," Mr. Palmisano continued, "and we still find ourselves in the situation where people can't move up the skill ladder. That's a lot of what's going on. They can't get up the skill ladder. So we have to replace them with current skills."

    Training....really? Where/who/when? IBM closed the education center at my lab location years ago. They spin and spin to the point they believe this crap themselves and apparently they have Washington convinced as well. Can't wait to get off this train, hey, that's my stop up ahead. Toot toot.

  • Yahoo! IBM Employee Issues message board: "Re: NYT: Unboxed Extra: I.B.M. and America’s Job Challenge" by "alwaysontheroad4bigblue". Full excerpt: I'm in GBS. Education (that costs anything) and attendance at conferences has been "on hold" since at least 1999.
  • Yahoo! IBM Employee Issues message board: "Re: NYT: Unboxed Extra: I.B.M. and America’s Job Challenge" by "sby_willie". Full excerpt: "We do a lot of retraining every year," Mr. Palmisano continued, "and we still find ourselves in the situation where people can't move up the skill ladder. That's a lot of what's going on. They can't get up the skill ladder. So we have to replace them with current skills."

    Can't move/get up the skill ladder said not once but 2X. Sam unprepared for a pet answer. There is no $600M IBM education budget. If there was then at least some would be some more able to climb the skills ladder (Sam, definition please of IBM skill ladder). IBM employees are not that stupid.

  • Yahoo! IBM Employee Issues message board: "Re: NYT: Unboxed Extra: I.B.M. and America’s Job Challenge" by "teamb562". Full excerpt: Agree, IBM employees not that stupid, but the general public who read this crap are. It's all message and perception, it's all that matters and they know it.
  • Yahoo! IBM Employee Issues message board: "Re: NYT: Unboxed Extra: I.B.M. and America’s Job Challenge" by "flatsflyer". Full excerpt: I guess that Randy has been telling Sam a big lie and pocketing the money for his own use rather than actually paying for education of employees?
  • Wall Street Journal: Pensions: the Lump-Sum Gamble Most Workers Opt for a Single Payout. Here's Why That May Be a Bad Move. (November 27, 2010). By Ellen E. Schultz. Excerpts: More than 90% of employees opt for a lump-sum payout from their pension plan when given the choice. That could be a mistake. Under rules that became effective in 2008 and that affect millions of workers, companies such as AT&T Inc., Chevron Corp., and Dow Chemical Co. have been quietly changing the way they calculate lump-sum payouts from their pension plans—phasing out their use of a Treasury-bond rate to calculate lump sums and replacing it with a higher composite corporate-bond rate.

    The result: substantially lower payouts to employees who are changing jobs, being laid off or retiring—anywhere from 10% to 60% or more, depending on age and other factors.

    Younger employees face the largest reductions. A 55-year-old employee who took early retirement or switched jobs would get about 25% less under the new legislation, while a 45-year-old would take a 50% cut, according to calculations prepared for The Wall Street Journal by Beth Pickenpaugh, a pension actuary and financial adviser at Gianola Financial Planning in Columbus, Ohio.

  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM Program Manager in Sydney (Australia): (Current Employee) “lots of hours, no certainty.” Pros: Lots of varied clients to get experience. Good place to enhance process procedures. Cons: Offshoring and movement to lower cost centres. They have consultants working whose kpi are to move as many positions offshore as possible. Contractors have absolutely no rights and can have contract terminated at any time. 2 weeks penalty if u leave before contract end. Morale is very low with people not being replaced when they leave presenting additional work to colleagues. Extreme money orientated. Advice to Senior Management: Start thinking of customer experience rather than the bottom line al the time
    • IBM Anonymous in Newark, NJ: (Past Employee - 2010) “It was great a decade ago, then jobs for Americans offshored or replaced with H-1B, L1 visa holders.” Pros: If you don't care about job security, and can get a job, it may pay well. However, IBM is shifting American workers into centers in low wage states and locations. Existing employees can relocate themselves or simply lost the moved job. Many job types were "debanded" (demoted). Today it is all about cheap labor. Cons: Enormous job insecurity. Many Americans lost jobs this year but some get to return as contractors (without benefits). Number of American workers declined to 105,000 in 2009 and is believed now to be about 95,000. This is a company with about 400,000 employees. There is job growth, but not in the USA. Advice to Senior Management: You've made your profits in recent years not by revenue, but by lowering costs, i.e., laying off Americans and reducing or eliminating benefits. What will you do for when there are no more Americans to layoff?
    • IBM Staff Software Engineer in Austin, TX: (Past Employee - 2010) “Watch out older employees.” Pros: * Leading edge technologies. * Good place to get a start. * Good support if you need time off work. Cons: * No longer a good long term employer. Older employees are targets for layoffs. Check out how many people make it to retirement from this company today -- very few. This was very different in the past. * You can no longer trust managers to watch out for you. Your career is now entirely your responsibility. If you get assigned to a "bad" project, you could get let go through no fault of your own. Watch your back - once again, very different from the old IBM.
    • IBM IT Architect in Markham, ON (Canada): (Past Employee - 2011) “Over worked and under paid - but good place to start a career. Get some skills then get out!” Pros: Workplace flexibility is the best reason to work at IBM... Also it looks good on a resume. Lots of product areas means lots to learn. Cons: Way too many lofty expectations and lack of compensation when you actually pull of what they want. The management politics and process slows everything. They make 80% of their revenue on 20% of their clients - a huge portion of which is mainframe hardware sales which are declining severely. IBM is a sinking ship that can't innovate. Advice to Senior Management: Consolidate STG (hardware) and SWG (software) presales to sell more complete solutions rather than pitching products. Pay people what they are worth (i.e.: what another firm would pay them). Build an innovative approach to selling express solutions into SMB.
    • IBM Service Delivery Manager (Strategic Outsourcing) in Singapore (Singapore): (Past Employee - 2011) “Good and Bad.” Pros: -Great learning experience due to exposure to wide range of situations and challenges. -Adoption of industry standard best practices and processes (see cons for executions of said processes.) -Management is usually supportive when help is needed.

      Cons: -Processes are poorly designed and there is a large amount of overlapping between many processes. The same information gets repeated in web portals, spreadsheets and powerpoints just to satisfy the whims of some bureaucrat. It is beyond ridiculous that I was spending 50-60% of my time filling up reports and working through bureaucracy and red tape. -Management is so detached they do not have a clue of the challenges faced by ground troops. -Compensation compares poorly with competitors and non-vendor companies. Very difficult to hold on to talented people. -Work life balance: what work life balance?

      Advice to Senior Management: IBM SO management have to pull their heads out of the sand and listen to the people on the ground to find out what kind of challenges exist. Just replying : "it needs to be done" make you guys look like you don't care about people feedback or just ignorant. Either way, it's bad management, specially when you are so worried about cost control. Do a study on how much these processes cost. Stop the rhetoric during those useless town halls. They make you look even more clueless.

    • IBM Consultant in Sydney (Australia): (Current Employee) “Meet a handful of bright stars in an otherwise dim constellation.” Pros: - Brand, Reputation; - Knowledge sharing culture; - Strong tick box in your resume. Cons: - Incompetence is rewarded rather than punished; - Bureaucracy; - No 'rising star' programs; - Total absence of career progression, performance and manager sentiment transparency. Advice to Senior Management: Look beyond quarterly targets and horizons, nurture talent instead of squeezing people into utilisation targets.
    • IBM Manager in Melbourne (Australia): (Current Employee) “Too much admin not enough work.” Pros: Large company. Looks good on CV. Tools are well implemented e.g. remote access. Cons: Work life balance doesn't exist for Managers in IBM. Level 1 Managers are glorified admin people expected to run spreadsheets and statistics rather than spend time managing their staff. IBM treat their staff as a number, no flexibility in their work conditions, if it doesn't fit policy then it is not allowed. Advice to Senior Management: Go back to basics. You suggested we read "elephants can dance" go and read it yourselves and go back to that way of doing business. Better still get the book by Bill and Dave titled "The HP Way" and implement it, you will have a much more sustainable workforce than you have today.
    • IBM Systems Engineer in Hyderabad (India): (Current Employee) “Good.” Pros: Flexibility, work culture, Job security, Remote working option, Large number of locations, allowances, work from home option, work life balance. Cons: huge company, no real work ,No appreciations. Advice to Senior Management: Please give importance to people, concentrate less on utilization factor, Give opportunities to young people, Number of years of experience.
    • IBM Senior AIX Administrative in Durham, NC: (Past Employee - 2011) “Going down hill.” Pros: Flexible work schedule. Low work load for the competent. If you're a tech geek and play the politics, you can play with lots of new toys. Still sells some hardware, software, and operating systems that are excellent tools for having stable business IT. Cons: A lack of backbone in lower management unless it's a factor in drive to rise in the ranks. Those that rise in the ranks usually have a vision of having a fiefdom instead of looking at the company as a whole. For a technology company that does consulting for banking and pharma, they can't seem to learn from processes they help implement for their customers and serve their customers well. Advice to Senior Management: If you don't have the backbone to stand up for your employees, don't get into 1st line management. If you don't care who your people are and what they do well to help the business, don't get into middle management.
    • IBM Managing Consultant: (Current Employee) “Excellent firm for starting a business career, with intelligent, dedicated colleagues.” Pros: World leader in business solutions and technology. Very strong research capabilities in technology and applied science. Truly global presence. Professional, work-oriented culture with high flexibility for work location. Faces very large proportion of Fortune 500 clients. Cons: Fairly rigid promotion processes, with limited short-term ability to reward top performers over typical strong performers. Average to below average compensation, with nonsensical salary differences between employees. Very tight expense management policies (e.g. overseas travel in economy class.) Advice to Senior Management: You risk losing the very best of your people, with policies that select and reward above-average, but not outstanding performance. Top people can easily improve career progression by switching to competitor firms. Provide practices with more freedom to accelerate promotions for top performers; reduce overly rigid controls that are unable to distinguish between differences across different parts of the business. Caution about pursuing process/expense control at the risk of preventing growth and creativity.
    • IBM Marketing Manager in Austin, TX: (Current Employee) “A good stable job.” Pros: Work from home, Internal movement and transition is encouraged, flexible scheduling and work hours, good benefits, great job security, stable company. Cons: Lotus Notes, hard to make a difference and add value to the company, very old style in getting work done, poor middle management, bureaucracy & red tape, pointless meetings.
    • IBM Operations Manager in Atlanta, GA: (Current Employee) “Very challenging job, requiring more work to be performed many evenings and into the weekends.” Pros: Enjoy working with people who have a passion for the jobs they perform. Most IBMers are very knowledgeable in their areas of expertise and will help you wherever possible. Cons: As in most companies, I believe we are working far longer hours then ever before. If you are an exempt employee, your hourly rate drops significantly due to the excessive nights and weekends worked. As much as you earn, when you look at an hourly rate, it's not always that impressive. Advice to Senior Management: Seems like even in the best of times, IBM still does not offer much of a bonus or salary increase plan. Even as a top performer, you're lucky if your increase is 1-1.5%. I find this no way to retain top performers and talent. IBM seems to be moving towards a company that hires top talent, but that these people will only stay for 5 years. There is far more churn in attrition than ever before.
    • IBM Anonymous in Chicago, IL: (Current Employee) “My experience has been satisfactory.” Pros: The benefits, such as health benefits and 401K are very good. Resources within IBM are great as well. The intranet and all its contents are great resources for employees at IBM. Cons: I do not enjoy working for such a large company. There is excessive regulation and rigid conformity to formal rules working for such a large company where I have never had that working for other companies in the past. By being a consultant that travels, we have to file taxes in each state we travel to. The per diem rates we receive through IBM are considerably lower then that of the GSA federal rates and we as the employee lose out in the end. Advice to Senior Management: I enjoy working for my manager. The only feedback I have for the leaders at IBM is to communicate with your employees as well as listen to what each employee has to say.
  • Alliance for Retired Americans Friday Alerts. This week's issue includes these stories:
    • Mitt Romney Wins New Hampshire; Florida Alliance Members Voice Disapproval
    • West Palm Beach a Hotbed of Activity This Week
    • Indiana Alliance Joins with Partners to take on “Right to Work”
    • Racial Divide Emerges Over Mississippi Voter ID Constitutional Amendment
    • State Chapter Report: North Carolina
  • AARP Bulletin: 25 Things We Don't Need Now That We're Over 50. A humorous look at the joys of downsizing. By Jacquelyn Mitchard.
  • AARP Bulletin: Toughest States for Retirees. Poor fiscal health lands Illinois at the bottom of TopRetirements.com's list. By Kelly Miller.
  • Huffington Post: Anti-Outsourcing Bill Stirs Fears In India, Philippines. By Dave Jamieson. Excerpts: A bill that would punish American companies for sending their customer call centers overseas has caused an uproar in India and the Philippines, where politicians and corporations fear lost business due to the U.S. bill's protectionist measures.

    The legislation, pushed by Rep. Tim Bishop (D-N.Y.) and the Communications Workers of America (CWA) union, would make companies that outsource their call center work ineligible for guaranteed federal loans and grants for a period of five years. The bill, entitled "U.S. Call Center Worker and Consumer Protection Act," would also require those companies to report themselves in advance to the Labor Department, which would maintain a public list of the companies who outsource.

    Home to the largest call center industries in the world, India and the Philippines would stand to lose the most if such a law succeeded in deterring American corporations from taking their customer operations out of the U.S. in order to save on labor costs.

    Last week, a Filipino parliamentarian publicly urged President Benigno Aquino III to dispatch "a strong lobby team" in Washington to stop the bill in its tracks, warning that it would "kill" the industry in the Philippines. Similarly, India's ambassador to the United States has suggested that country also plans to lobby hard on the bill.

    When asked about such reactions, Bishop said that the fears in India and the Philippines reinforce the argument for the legislation. "Frankly, the fact that both the Indian government and the Filipino government are reacting like this says that our bill is very badly needed," he said. Most of the call center jobs lost in the U.S. are "sent primarily to India and the Philippines. So I hope [the bill] does have an impact."

  • Washington Post: The 23 Best Countries for Work-, Life Balance (We Are Number 23). By Derek Thompson. Excerpt: With the lowest child-poverty rate among developed nations, Denmark was named the best country for work-life balance in a 2011 report from the OECD. All three Scandinavian countries -- Denmark, Sweden, and Norway -- finished in the top seven in the ranking. So famous for their generous social safety net, which sharply divides liberals and conservatives between envy and consternation, northern Europe dominated the list, taking almost all the top ten spots.

    What constitutes a balance between work and life? The OECD settled on three chief variables: (1) The share of the labor force that works extreme hours; (2) leisure time; and (3) employment rates for women who have children. The United States, which leads most of the world in share of mothers who are working, lagged in leisure time and share of overworked employees. Onto the list, with some analysis below,

  • Economic Policy Institute: “Right-to-work” hurts private-sector pension coverage. By Ross Eisenbrey. Excerpts: Retirement insecurity is one of the scariest problems confronting working families, as Social Security replaces less and less of pre-retirement income, pension coverage declines, and personal savings in IRA and 401(k) accounts prove inadequate. Thus, one might expect politicians to avoid any policy that further reduces pension coverage. Yet Indiana lawmakers and Gov. Mitch Daniels are debating legislation – a so-called “right-to-work” law – that would do precisely that.

    EPI economists Heidi Shierholz and Elise Gould report that RTW is associated with a significant reduction in private-sector pension coverage. In a study published last year, Gould and Shierholz analyzed the relationship between RTW status and wages and benefits after controlling for the demographic and job characteristics of workers, in addition to state-level economic conditions and cost-of-living differences. They found that the rate of employer-sponsored pensions is 4.8 percentage points lower in RTW states. If workers in non-RTW states were to receive pensions at this lower rate, 3.8 million fewer workers nationally would have pensions.

  • Washington Post: Federal agencies tighten belts with buyouts, early retirements. By Joe Davidson. Excerpts: While Republican presidential hopefuls are talking about pink slips and the joys of firing people, many agencies in the Obama administration are quietly paying employees to leave their jobs. Buyouts and early retirement programs are the scalpel Uncle Sam uses before he has to turn to the hatchet of layoffs. ...

    OPM uses two tools to help agencies reduce their staffing levels without resorting to pink slips and firings. One is the Voluntary Separation Incentive Payments (VSIP) program, which is government-speak for buyouts. Employees can get up to $25,000 to quit. The other is the Voluntary Early Retirement Authority (VERA), which allows workers to get annuities years earlier than usual.

    These programs give agency officials “the flexibility to respond to the budget situation,” Berry said, allowing them to create a “glide path” to workforce reduction rather than the crash that layoffs would be.

    But if the two V’s don’t get the job done, he added, “agencies do have the tool box, which we all know goes in the direction of reduction in force” or RIFs, which means pink slips.

  • Business Insurance: Keep pension plan for flight attendants: American Airlines union. By Jerry Geisel. Excerpt: “American Airlines flight attendants have earned their pensions, and we have sacrificed wages and other benefits in exchange for them,” Laura Glading, president of the Assn. of Professional Flight Attendants, which represents 16,000 American Airlines flight attendants, said Thursday in a statement. With an average age of 51, the impact of a pension plan termination or freeze on the airline's flight attendants would be “particularly devastating,” the Euless, Texas-based association said. “Employees nearing retirement would have little opportunity to save the additional amount necessary to make up for the loss of their pension benefits,” AFPA said. ...

    ...an American Airlines spokesman last month said the airline's pension plans are “very expensive” and that it spends more on them than competitors spend on their retirement plans. “Given American's plans to reduce its costs to a more reasonable level in line with industry norms, these costs and many other factors are considerations when deciding whether to continue the pension plans,” the spokesman said.

  • The Smirking Chimp: "Bain Capitalism": Mitt's Frankenstein Is a Politically-Created Monster. By Richard Eskow. Excerpts: Bain Capital must seem like a Frankenstein's monster to Mitt Romney's campaign Like Mary Shelley's creature, it's stalking its creator just as he's about to claim the thing he loves most. But Bain Capital -- and Bain Capitalism -- isn't Mitt's creation. It was sewed together from the corpses of dead ideals and shocked into life in Washington's political laboratories.

    Mitt's monster was created by a broken political process that's allowed politicians in both parties to create an artificial, destructive and exploitative form of pseudo-capitalism -- and often to get rich from it. Romney's campaign will probably survive, but the monster will go on destroying lives and dreams.

    Conservatives and self-described "centrists" speak about "Bain Capitalism" -- aka "vulture capitalism" -- as if it were the inevitable result of immutable economic laws. But it's only been around for thirty years or so, after government policies in taxation and bank regulation made it possible. That's right: Government, not free enterprise, made Bain Capitalism.

    And what government has made, government can unmake.

    The "Bain Bailout" They're calling it the "Bain Bailout" -- although Bain didn't receive any actual funds. But when a federal regulator took over a failing New England bank, it decided to "forgive" several million dollars for loans that Bain had received from the bank.

    Why? Nobody's been asked to explain. But that decision reflects a long history of cozy relationships between regulators and the financiers who might one day pay them a hefty salary after they've left government service.

    If the millions in 'forgiveness' were intended to make sure that jobs stayed in New England, it backfired. As we'll see, job creation is used a lot to justify government actions that make a few people rich without creating any jobs -- and often destroy them.

New on the Alliance@IBM Site
  • CWA Statement On Public Financing of Elections and State of the State. Full excerpt: The following statement can be attributed to Chris Shelton, District 1 Vice President of the Communications Workers of America:
    We commend Governor Cuomo's call to give all New Yorkers an equally important voice in the political process. Like the Governor, we believe that public financing of New York elections will help level the playing field for all candidates and ensure our members' votes matter and their voices are heard. Enacting reform this year will be a enormous step towards removing the many blocks keeping average citizens from participating fully in our Democracy.
    Over the coming weeks and months, CWA Members in New York and nationwide will be fighting back against the money in politics that is destroying our democracy; contacting their legislators and demanding reform at the federal and state levels. Corporations are not people, and should not be afforded the opportunity to manipulate the political process in their favor against the interests of middle-class Americans. We hope other leaders will follow Governor Cuomo's bold example and propose similar measures.
  • Job Cut Reports
    • Comment 01/07/12: Peter Drucker, considered the Father of Modern Management, staunchly defended the need for businesses to be profitable but he preached that“employees were a resource, not a cost”. IBM management clearly has inverted this and this is now part of the IBM culture that our new CEO brags about. Within IBM it is predominantly about cost.

      I have not been able to attend a class in over 8 years since we never have money in our budget for education. Education is totally the responsibility of the employee now. There may be some exceptions but for Sam to talk about IBM retraining or re-educating employees is laughable. Up until a few years ago, our time claiming system classified education as non-productive time. While it is true, as Sam stated, the more skills you have the better off you are it does not necessarily hold true within IBM. I know many highly skilled employees, and some Distinguished Engineers, that have been let go simply because IBM could outsource their job at a lower cost. So I think it is disingenuous of Sam to suggest maintaining or increasing your skills is the answer. If IBM can outsource your job at a lower cost than it does not matter what your skills are. At IBM “employees are a cost not a resource”. -Jake-

      Alliance Reply: Well stated. Thank you for saying what Alliance@IBM has been saying for many years. IBM perpetuates a lie. Just like that saying goes, "You tell a lie often enough and sooner or later, people believe it's the truth". Offshoring has ALWAYS been about cost and NOT about skills. IBM, Microsoft, and HP are just a few of the IT companies that have preached this lie over and over, in the media, enough to convince politicians and the public that IT workers are "lacking the skills to compete globally". It's a bald faced lie that has been overemphasized since the late 1990's. The truth is simply "cheap labor".

    • Comment 01/08/12: I think any employee knows the truth - next to nothing is being spent on training. Simple version - 600 million would be $1500 to $2000 per employee. No one I know has been able to do any training for the last number of years. The joke "mandatory" ethics/conduct/business process courses are the closest it comes - and any 6 year old should be able to answer these correctly. I couldn't care less about ibm training - at least take the imaginary $600 million for training and give it out in bonuses that we should all be getting as per the HR policies. -canuck-
    • Comment 01/08/12: Software group and Hardware Group got hit With reorganizations on Friday. I Know of at least 16 people that have 90 days to find new jobs... there are more but they are keeping it fairly quiet -FEDIBMER-
    • Comment 01/08/12: -Jake- IBM management (HR, Randy MacDonald, et. al.) has mentioned that IBM employees are IBM's most important asset. But the question is which EMPLOYEES are IBM precisely talking about. Since IBM executives are employees I think that is what IBM is attesting to. Why I believe this is when was the last time an IBM executive was RAed?!? -anonymous-
    • Comment 01/08/12: Resource Actions are more than just outsourcing or offshoring labor. IBM RAs employees to also reduce headcount when the employee being eliminated is never replaced. An RA is for IBM to reduce costs in any and all ways. Curious that IBM only started to outsource employees when Gerstner took over. IBM could have always outsourced employees since they are INTERNATIONAL business machines but IBM and it's former executive leadership must have been more ethical before Gerstner and didn't pit globalism over nationalism for profits. It's sad that absolute gluttony over creating and sustaining excessive IBM profits at the cost of employees' welfare has consumed IBM. -Thunkaboutit-
    • Comment 01/08/12: There has been no money available for training in IGS IGA for years now. Is Palmisano that out of touch with reality, or is he just lying? -Anonymous-
    • Comment 01/09/12: Per Randy MacDonald, IBM has recently RAed 143 H/R positions. I worked in Armonk corporate H/R. Randy MacDonald has no degree in H/R and does not have a SPHR. He was given this position by Lou Because he was a political hack for Lou. The executives in H/R will never be RAed.Join the union. -ANA-
    • Comment 01/09/12: top executive management has directed the 3 performers this year to be in the higher bands for the skew. Targeting older persons band 8 9 10 in the US and Europe. Avoids age discrimination and labor laws and no expensive payout if poor performers are terminated not resource action. -noprotection-
    • Comment 01/11/12: Just went from a 1 rating to a 3... very disappointed with this rating.. -Anon- Alliance Reply: Disappointed enough to do...what...anything? If you live in Canada and work for IBM there, you could contact this organization: http://fpcep911.sasktelwebhosting.com/index.php
    • Comment 01/11/12: In GTS Delivery Services we are now being told that IBM will no longer pay for "personal" cell phones as of 1/1/12. The primary reason a lot of us even have cell phones is that we are frequently on call and attempting to fulfill service level agreements (SLAs) that IBM is contractually obligated to meet. We are being allowed to order pagers so we can still be contacted while on call, but I wonder what am I supposed to do when I'm out and about and not near a phone?

      There are no pay phones out there anymore and if IBM is not footing the bill for my cell phone then I'm sure as hell not going to use it for business purposes. In fairness, we've been told they will pay for any charges over and above the normal cell phone expenses, but mine are typically just the monthly service charge and taxes and they will not pay for that.

      I believe this could result in IBM violating more service level agreements and incurring monetary penalties that could exceed any cell phone expenses. I have a pretty good idea who's going to get blamed for that when it happens. This move is incredibly short sighted, impractical, and in no way a benefit to IBM customers. This is right in line with the decision a while back to no longer pay for Internet access for work at home employees. It's very frustrating and sad to watch IBM nickel and dime it's own employees like this and to have to be a part of it. And yes, I am an Alliance Member. -Gray_Hair-

      Alliance Reply: As an Alliance member, what ideas do you think would help IBMers fight back over this issue? What could a large number Alliance-member IBMers in GTS Delivery Services do together that could force IBM to re-consider that policy or any other action? How many of your co-workers that you know, know about Alliance@IBM? If you would like to discuss this with us, please contact us through this email: ibmunionalliance@gmail.com or send a message via our contact page link here: Contact Us

    • Comment 01/11/12: More business expenses pushed onto underpaid employees. More RA's. More attrition due to bogus appraisals. Pay cuts. Benefits more expensive. Job Security non-existent. How damn many reasons do people need to say enough is enough and organize? -Exodus2007-
    • Comment 01/11/12: Being told by senior management on the GBS side that they are "moving the bell curve" and people are being severely reprimanded for little things not related to the BS 110% utilization goal. There will be quite a few #3 PBCer's this year! I'll bet the next layoff is end of February like clock work! -Getting Old-

      Alliance Reply: And I'm sure our message to organize and grow the numbers of IBMers that belong to Alliance@IBM, is getting old, too; but it's still true and still is the best way to fight back for your right to collectively bargain for a contract that protects IBM workers from the abuses that IBM is delivering and has been delivering to IBMers for several years.

    • Comment 01/11/12: I presume all of you complaining here are alliance members? If you do not join, expect even more draconian measures. Hey IBM, how about charging for employees using the parking lot? Or the bathrooms? Lee has been killing himself for years in an attempt to help those who are not willing to help themselves. And Anon 1 to a 3, you are just DISAPPOINTED???? I presume you either peruse this board or talk to other IBMers. What did you expect???? -Jim-
    • Comment 01/11/12: -Exodus2007- The feeling in IBM is still "...it ain't true. It will not happen to me." IBMers have to look at the person in the mirror before that person disappears figuratively and/or literally. Yes, Union now! -IBMUnionYES!-
    • Comment 01/11/12: "Just went from a 1 rating to a 3." Really? No warning. Your manager never told you, you would drop so much? How could IBM HR allow this, huh? This is why you need a union contract. -Anonymoose-
    • Comment 01/11/12: PBC is around the corner and if it is not a 1+ or a 1 after all my hard work this year than I am convinced that all 1st line managers are useless to the world. -Moron for staying so long-
    • Comment 01/11/12: New Years resolution: No more comp time for evening or weekend work. It's called OT morons, you either pay it or do not schedule us to work the extra hours. Stick the comp time up your a$$ losers. -Johan-
    • Comment 01/12/12: "Just went from a 1 to a 3." I have heard rumors that severance packages will now be based on your performance. So I'm sure everyone will be 3 in 2012. -gonein11-
    • Comment 01/13/12: AlreadyDone, in regards to fighting a PBC3 and the following RA, why not cherish a PBC3 and get the hell out of the pig? -splitThePig-
    • Comment 01/13/12: FightBack, for the most part the "evil" is not from 1st lines, they're just struggling to keep their jobs like you. The "evil" are the rules that descend from IBMHR. These set the overall tone, impossible goals (3's), the miserable environment and low morale index that exist today. Management has no incentive to change any of this as long as there are more potential employees then jobs. -HRtheEvilOnes-
  • Comment 01/13/12: "Just went from a 1 rating to a 3... very disappointed with this rating.. " There is no protection for US IBM employees in reference to PBC ratings. Without a union to represent you, You have no say. PBC ratings are only used to get rid of people and are based on head count and second line managers head count reductions. IBM does not care about you or your years with the company. Without a union, you are on an island by yourself. Management will win every time. If you want to stop this abuse,join the union. -ANA-
  • Comment 01/13/12: What is with the pbc's being dropped from 1's to 3's? That seems drastic and unreasonable. -workerbee- Alliance Reply: Some our sources are saying this is the way to get around resource actions. You are dropped in PBC level and then forced out for "performance issues". As a firing or force out it is not a resource action. IBM saves money and severance pay is lower. It is also a way to hide the continued decline of the IBM US employee population. Make no mistake, many of you now are a target for an unreasonable and unjust job loss. It does not matter how good a job you are doing. Being dropped from a 1 to a 3 proves that. And yes offshoring is still playing a role here. Organize and fight back!
  • Comment 01/13/12: There is an initiative to lower everyone's PBC. This came out in November 2011. The 'bar' has changed. Last year 50% of the employee population could be 2+ or higher. This year it has been lowered. 40% or less can be 2+ or higher. Most will be 2s or 3s this year. Another way for ibm to save by not giving you a raise this year, and lowering your March bonus. Don't be surprised when you receive your rating this month to see it lowered. It's standard across the board. -dun-4-
  • Comment 01/13/12: "First they came for the communists, and I didn't speak out because I wasn't a communist. Then they came for the trade unionists, and I didn't speak out because I wasn't a trade unionist. Then they came for the Jews, and I didn't speak out because I wasn't a Jew. Then they came for me, and there was no one left to speak out for me." -Pastor Martin Niemöller-

    I am an Alliance member because I believe we need to start standing up for ourselves - together. I pay the dues because I can - I have a job (and it's not that much money). If the time comes when I have no income and that has to change, I'll worry about that then, but we need to help get the word out and make sure people know how these companies treat their employees, and we need to get together and act as one - they keep whittling us down little by little and individually, we don't stand a chance.

    Joining the union will help (note that I am not an officer, administrator, or receive any compensation from the Alliance). We can read between the lines. We all know this isn't about making good business decisions in a free market...it's about greed and a handful of people exploiting the rest of us. Treating us like ****, constantly taking away from us, and firing us to give themselves more money (and then making those who are left "do more with less" - more work, less pay and benefits. More fear of losing your job (and thus intimidating you into not speaking up), less hope for the future). Don't just shrug your shoulders and let it go....DO SOMETHING!!! -juggernaut-

  • Comment 01/13/12: I am an ex manager that left IBM last year just sick of the I am just following orders BS. Fight a "3" always. Relative contribution is a lie because it can't be quantified. This is on purpose within IBM to support the skew. It is no accident in a metric based company like IBM there is no clear metric to individual performance and a commitment to pay bonuses or raises. All the Americans will get picked off one at a time through the performance process. Your only chance to keep your job in the next few year is to join the union so you can demand fair, measurable performance ratings and raises. -exguard-
  • Comment 01/13/12: For those of you receiving a PBC 3 rating this year - if you didn't have a mid year review and your manager hadn't had a conversation with you, you should protest it. As a former manager, I can tell you that a PBC 3 should NEVER be a surprise to an employee. They should have an idea it is coming and the groundwork for that rating should have shown up in a midyear review or other meeting with your manager. I can't promise you will win, but at least your first and second line will sweat bullets when they have to answer why there were no mid year reviews or other performance discussions held prior to the rating notification. -LowlySDM-
  • Comment 01/13/12: -AlreadyDone- If your PBC went from a 2 to 3 and you had a union contract you could file a grievance and have your union help fight for you to get your performance better reviewed. -union_guy-
  • Comment 01/13/12: a summary of a CWA contract http://www.cwalocal1111.com/assets/pdfs/verizon/contracts/D1summary.pdf -unionyes-
  • Comment 01/14/12: Nice job posting the contract examples. Should help cover the "what's in it for me" excuse for being a fence sitter. A contract summary link was also posted by -union yes- that is brief and to the point - maybe that one also could be added to the "Home Front" tab? A contract like this one with free retiree medical and pension increases would be priceless for ibm retirees. And from recent posts, it looks like the pbc rating games continue. They've been doing this for a while now, haven't they? This is just another great reason to get out there and organize a union to protect yourself with a contract! Seems like there's no shortage of reasons, doesn't it? -Dave G.-

    Alliance Reply: Thanks Dave. The Contract Summary IS part of the "Home Front" tab, and I also posted the same list of contracts on the Front page of our web site, titled "Sample Contracts" at the top. I will add more sample contracts as I get them or find them in our archives. Yes, we agree. These contracts may be many pages; but they cover everything in strict detail and leave no open loopholes for management to circumvent the contract's intention. Incidentally, CEO's and top company executives get contracts drawn up just as air tight if not tighter, so that they are protected from the BoD, should anything 'go wrong' during their tenure. Why shouldn't the employees have a similar advantage and protection? There are no reasons I can think of.

  • Comment 01/14/12: -dun 4- and -exguard- Fully agree with you. Last year first level and other managers informed people that prior to the year end review HR had informed the departments the numbers allowed for 1, 2+. There is a bell curve for 2's. HR sits in at the final Department roll up when the decision is made. It is obscene that one has to boil down a years work to fit a power point slide with a predefined template. Making font smaller to fit more is not allowed. Top it off with requiring a photo id so they know who they are talking about. We were told that the upper level process allows only 60 seconds per employee for the final culling - sorry decision. This years ranking gives rise to reflect. I will continue to do my job. I no longer will as be efficient or quick as to identify that which will damage image and impact revenue. Wake up to reading it in the news now. -Anon-
  • Comment 01/14/12: Resource action announced Jan 13 2012. Impacts north America sales and distribution. Execs and non execs impacted -Anonymous-
  • Comment 01/14/12: To - Lowly SDM- There is no such thing as protesting a PBC rating. First and second line managers are given amount a employees each year to cut head count. The only thing that will stop this abuse of IBM employees is a union. All the discussions in the world will not change your PBC rating. If you are over 50 years of age you a have target on your back to be RAed. Join the union. -ANA-
  • Comment 01/14/12: Thanks folks for the advice re fighting my 3 rating, will let my manager know I want to contest it... BTW - an ex-IBMer I worked with a few years back called me up out of the blue and said there is an opening at his company for a Pre Sales rep which I will also pursue... IBM has become too stressful of a company to work for without representation, management only treats their so-called friends with respect and diss the rest, it really does not matter how much you do anymore for this company… Hope I land the presale job and get the hell out of this Stressful Pit.. -Anon-

    Alliance Reply: Your comment "...without representation" is exactly what Alliance@IBM has been trying to achieve since 1999. When do the dots connect for US IBMers, and reveal that organizing a union of IBMers is an alternative to quitting a company that abuses its employees to the 'tenth' degree? I hope things work out for you; however, IBMers will still be "without representation" after you are gone...unless they decide that enough is enough, and they are willing to fight back together, to make IBM the place they would rather work for, than somewhere else.

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Washington Post opinion: The Affordable Care Act, helping Americans curb health-care costs. By Kathleen Sebelius. Excerpts: If health-care costs continue to rise unchecked, they will threaten America’s ability to compete and will become unaffordable for most families. One of the major reasons we passed the Affordable Care Act was to bring down costs, something the health-care law does in three ways: by increasing insurance-market competition, assisting those who can’t afford coverage, and tackling the underlying cost of medical care. ...

    The Affordable Care Act is putting consumers back in charge with two new rules that shine much-needed light on the health insurance market. The first requires insurers to justify premium increases of more than 10 percent and to post that information online. The second is the “80-20 rule,” which requires insurers to spend at least 80 percent of premium dollars on health care, rather than on advertising or executive pay. If they don’t, you get a rebate. Together, these changes are creating a health insurance market where premiums stay in check and Americans get their money’s worth.

  • Huffington Post: Insurer Profits Are Up In The Wake Of Health Care Law They Opposed. By Alexander Eichler. Excerpts: Since insurance companies undertook extensive lobbying efforts against health care reform -- spending millions in an attempt to derail the legislation while it was still going through Congress, and allegedly instructing their own employees to launch letter-writing campaigns in protest -- they've actually been doing quite well since it passed.

    Profits are up at some of the nation's largest insurers, including Aetna, WellPoint and UnitedHealth Group, according to an analysis by Bloomberg Government. That's the opposite of what the insurers themselves predicted would happen, and comes about mainly a result of the companies taking on more business through Medicare and Medicaid. ...

    The Bloomberg report surveys the recent earnings of five of the country's largest insurers -- WellPoint, UnitedHealth Group, Aetna, Humana and Cigna -- and finds that their profit margins have climbed to an average of 8.24 percent in the year and a half since the health care reform package was signed into law. By contrast, in the 18-month period before health care was passed, profit margins at these five insurers averaged just 6.88 percent.

  • Wall Street Journal: When Insurance Fails, Cheaper Policies Bought in the Workplace Can Have Drawbacks. By Leslie Scism. Excerpts: Many people assume insurance offered by their employer is a better deal than they can get on their own. But while the premiums can be lower, such policies have drawbacks. Employer-sponsored insurance has become much more common in recent years. Premiums from new sales of life, disability, supplemental-medical and other types of insurance sold through work sites totaled an estimated $5.4 billion in 2011, up from $2 billion in 1997, according to benefits-expert Eastbridge Consulting Group.

    But whereas traditional insurance is subject to state laws and disputes can be tried before juries, with the potential for punitive damage awards, policies sold through employers typically fall under the 1974 federal Employee Retirement Income Security Act, or Erisa—with a federal judge ruling on disputes and no damages allowed.

    In disputes over traditional policies, judges often interpret ambiguities in policy language in consumers' favor on the basis that the insurer wrote the contract, experts say.

    With Erisa-governed policies, insurers often have discretion to interpret policy language, and a judge can overrule a coverage decision only if the insurer has advanced an illogical policy interpretation or acted in an "arbitrary and capricious" manner, says Mark DeBofsky, a plaintiffs' lawyer and professor at John Marshall Law School in Chicago.

    "No matter how egregious the insurer's conduct, the only consequence faced by the insurance company is a ruling to make good on the denied benefit and perhaps pay attorney's fees," Mr. DeBofsky says. That gives insurers an incentive to deny more claims, he says.

  • Crain's New York Business: Need to buy health insurance? Good luck. Owners scramble as insurers back away from small biz market. By Elizabeth MacBride. Excerpts: Empire BlueCross BlueShield's decision to pull back from the small group market this fall merely reinforced what most company owners already knew: They are facing a tumultuous market for health insurance, one in which prices continue to climb, plan designs are growing skimpier and skimpier, and there are fewer insurance companies to pick from.

    “People are just buying down,” said Richard Allen, president of American Corporate Benefits Inc. Companies are opting for plans with fewer benefits, and employees are swallowing hard and accepting the changes. “It used to be that if you were going from a $5 to $15 copay, it was the scuttlebutt of the company. Now you go from $25 to $50, and no one blinks an eye.”

  • New York Times: What Price Pluralism in Health Insurance? By Uwe E. Reinhardt. Excerpts: But as I mentioned in an earlier post, the consulting services of private insurance brokers in the individual- and small-group market do not come cheaply, either. Depending on the commission rate as a percentage of the premium — which can range from 2 percent to 10 percent, and, on occasion, even more — and the size of the premium, these private consulting services can cost as much as those of the Texas program or more.

    So to anyone familiar with other nations that rely mainly or wholly on private health insurers — e.g., Germany, the Netherlands, Switzerland — the question remains, why is it so much more difficult and expensive, in time and money, to choose among health-insurance options in America?

    All residents in Switzerland, for example, are mandated to procure health-insurance coverage for a federally specified benefit package. The system relies fully on 62 private health-insurance companies that compete for enrollees on a well-organized and government-regulated, federal, electronic health-insurance exchange for individually purchased health insurance. The smallest company, the Krankenkasse of the village Zeneggen, has only 170 insured people; the largest, CSS Krankenversicherer, insures 858,000.

    Premium shopping among insurers is easy, because the standard benefit package is common to all. Prospective enrollees, however, can choose from several annual deductibles ranging from a stipulated minimum of 300 Swiss francs (about $318) to a maximum of 2,500 Swiss francs (about $2,654). Furthermore, they can purchase supplemental insurance on top of the basic package, mainly for superior amenities.

    It can be doubted that many people in Switzerland need to bear the high time and money costs Americans must bear in choosing health-insurance coverage in the market for individually purchased coverage. Public and private Web sites in Switzerland help prospective enrollees easily navigate the national insurance exchange with user-friendly information, including calculated premium differentials between one’s current insurer and competitors. ...

    Choice among private health insurers in Germany, the Netherlands and Switzerland is straightforward and relatively inexpensive in terms of time and money, because price comparisons are based on a common benefit package. More customized coverage can be purchased, but only in the form of supplements to the common package.

    Choice in the United States is expensive, because it requires prospective enrollees to do near-Talmudic studies of the fine print of each insurer’s offerings — many times multiple distinct offerings per insurer.

  • Kaiser Health News: The Public Option Did Not Die. By Sarah Varney, KQED. Excerpts: In a cavernous room just east of San Francisco, an army of phone operators fields calls from their customers. A large computer screen blinks the number of people on hold: two, and the average wait time: one minute, 12 seconds.

    These phone operators working in a nondescript office park in Alameda are employed by a large health insurance plan, and they're willing to go the extra mile for their customers. They'll schedule a doctor to come to your home, a pharmacist to drop off a prescription, and they'll even help you fill out an application for food stamps.

    "We do things for them that a traditional, commercial health plan doesn't do," says Ingrid Lamirault, chief executive officer of the Alameda Alliance for Health, a county-run, not-for-profit insurer.

    The much celebrated, and much maligned, public option may have died in Congress, but it's alive and well in California. Unique in the nation for having public health insurance plans that are run by counties, California has plans that stretch from San Francisco to the Mexican border and cover 2.5 million residents.

  • New York Times: U.S. Seeks Rollback of a Health Insurer’s ‘Excessive’ Rate Increase. By Robert Pear. Excerpts: The Obama administration said Thursday that rate increases sought by a health insurance company were unreasonable, and it ordered the insurer to rescind them or justify its refusal to do so. Kathleen Sebelius, the secretary of health and human services, issued the finding against the carrier, Trustmark Life Insurance Company, a unit of Trustmark Mutual Holding Company. Ms. Sebelius said that “the excessive rate increases” would affect nearly 10,000 people in Alabama, Arizona, Pennsylvania, Virginia and Wyoming. ...

    The law, signed by President Obama in March 2010, set detailed federal standards for health insurance, which had for decades been regulated mainly by the states. The law calls for the annual review of “unreasonable increases in premiums.” Under rules issued last year by Ms. Sebelius, rate increases of 10 percent or more must be reviewed by state or federal officials. ...

    The administration did not release details of its calculations, but said that Trustmark was seeking rate increases of 13 percent in each of the five states. Combined with other rate changes in the last 12 months, it said, these proposals would result in rate increases averaging 27 percent in Alabama, 18 percent in Arizona and 15 percent in Pennsylvania.

  • Plan Sponsor: Retiree Health Benefit Offerings Continue to Tick Down. Excerpt: The Benefits USA 2011/2012 survey results found 21.9% of companies offer supplemental retiree health coverage to retired employees. That's a slight dip from 22.9% reported in 2006. Employees are required to work an average of 12 years for their employer in order to qualify to receive this benefit upon retirement.

    The offering of retiree health benefits varies widely by industry as 69.1% of companies in utilities offer them. Not-for-profit and banking and finance organizations offer retiree health benefits at a rate of 37.6% and 31.5%, respectively. Companies in healthcare offer the benefit at a rate of 15.8%, while hospitality employers offer it the least, 3.3%. On average, retirees are required to pay 65.1% of the premium for their retiree health benefits.

News and Opinion Concerning the "War on the Middle Class"
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.

  • New York Times: Harder for Americans to Rise From Lower Rungs. By Jason DeParle. Excerpts: Benjamin Franklin did it. Henry Ford did it. And American life is built on the faith that others can do it, too: rise from humble origins to economic heights. “Movin’ on up,” George Jefferson-style, is not only a sitcom song but a civil religion.

    But many researchers have reached a conclusion that turns conventional wisdom on its head: Americans enjoy less economic mobility than their peers in Canada and much of Western Europe. The mobility gap has been widely discussed in academic circles, but a sour season of mass unemployment and street protests has moved the discussion toward center stage. ...

    John Bridgeland, a former aide to President George W. Bush who helped start Opportunity Nation, an effort to seek policy solutions, said he was “shocked” by the international comparisons. “Republicans will not feel compelled to talk about income inequality,” Mr. Bridgeland said. “But they will feel a need to talk about a lack of mobility — a lack of access to the American Dream.” ...

    While Europe differs from the United States in culture and demographics, a more telling comparison may be with Canada, a neighbor with significant ethnic diversity. Miles Corak, an economist at the University of Ottawa, found that just 16 percent of Canadian men raised in the bottom tenth of incomes stayed there as adults, compared with 22 percent of Americans. Similarly, 26 percent of American men raised at the top tenth stayed there, but just 18 percent of Canadians. “Family background plays more of a role in the U.S. than in most comparable countries,” Professor Corak said in an interview.

  • Investment News: Romney tax plan more deficit booster than deficit buster: Study Scheme would add $600B to shortfall, says Tax Policy Center; less damaging than rivals' proposals, though. Excerpts: Though the Tax Policy Center said Romney's tax plan would “reduce federal tax revenues substantially,” the budget hit isn't as severe as some of his competitors. The same group previously said former U.S. House Speaker Newt Gingrich's tax plan would increase the deficit by $1.3 trillion and that Texas Governor Rick Perry's proposal would boost the shortfall by $995 billion. ...

    Romney's economic plan calls on Congress to immediately lower the top corporate tax rate to 25 percent from 35 percent. He has said he would be open to additional rate cuts if they are accompanied by measures that would broaden the income base. ...

    He would move the U.S. to a so-called territorial system of taxation, in which the government taxes only domestically generated corporate income. Republican leaders in Congress have shown interest in this concept. House Ways and Means Chairman Dave Camp, a Michigan Republican, introduced a proposal in October that would shield 95 percent of profits earned offshore from taxation in the U.S. ...

    For individuals, Romney would lower the maximum tax rate over time, though he hasn't specified a rate target. He would eliminate the estate tax and make permanent the current 15 percent rate on dividends and capital gains. Taxpayers with an adjusted gross income of less than $200,000 wouldn't pay any taxes on capital gains or dividends.

  • AlterNet: Romney's Tax Plan is Robin Hood in Reverse: Take from the Poor and Give to the Rich. Excerpts: The Tax Policy Center’s analysis is online and well worth checking out. To briefly summarize, Romney would give the wealthy yet another significant boost by making the Bush-era cuts permanent, reducing the corporate tax rate, and repealing the estate tax. Those with the least, meanwhile, would take it on the chin: Romney would scrap all Obama-era tax breaks, including the expansion of the Earned Income Tax Credit, the American Opportunity tax credit for higher education, and the more generous child credit. The changes for those in the bottom 20% would see an annual increase of about $157 a year.

    The bottom line: if you’re very wealthy, Romney intends to stuff more money in your pockets. If you’re already struggling, Romney intends to increase your tax burden.

    Or put another way, the multi-millionaire who’s hiding his tax returns, owns a few mansions (one of which he’s quadrupling in size), and who got rich orchestrating leveraged buyouts and laying off thousands of American workers, has quite a policy agenda in mind for 2013: free rein for Wall Street, taking health coverage away from millions, slashing public investments that benefit working families, more foreclosures, tax increases on those already struggling, and tax cuts for the rich.

  • New York Times opinion: Happy Lobbyists, Unhappy Citizens. By Thomas B. Edsall. Excerpts: Few people were more elated at 2:20 a.m. Wednesday morning when Mitt Romney was declared the winner of the Republican caucuses in Iowa than a small group of lobbyists unknown outside of the Washington Beltway. All indications suggest that the New Hampshire primary this Tuesday will bring similar joy.

    These 15 men are leaders of what might be called Romney’s K Street army. They are key players in the mobilization of Washington’s $3.5 billion lobbying industry in support of his candidacy. Romney, more than anyone else who is running, is the favorite of the capital’s influence-wielding establishment. ...

    The open participation of lobbyists in the current campaign is one more element in the collapse of campaign-finance reform. Two waves of reform — the first in the post-Watergate era of the mid-1970s and the second culminating in 2002 with the passage of the McCain-Feingold act, which sought to end the use of “soft money” in campaigns — are essentially moot.

    But these reforms have been gutted by Supreme Court decisions, especially the Jan. 21, 2010 decision Citizens United v. Federal Election Commission, and by a lax Federal Election Commission. Corporate donors, labor unions and individuals willing to write big checks are free to use their money to favor certain candidates. If they want to keep the contributions secret from public view, there are many opportunities for concealment. ...

    The interests represented by these particular Romney supporters run the gamut of national and international corporate powerhouses.

    A very abbreviated sampling includes much of the financial sector, including the Blackstone Group, PricewaterhouseCoopers, Visa, MasterCard, JPMorgan Chase, the Mortgage Bankers Association, the American Bankers Association, most of the pharmaceutical industry including Eli Lily & Co., Pfizer, Bristol-Meyers Squibb, the Pharmaceutical Research & Manufacturers of America, and companies like Verizon, AT&T, Walmart, Coca-Cola and General Motors.

    he ever-expanding role of lobbyists in politics is a major victory for corporate America. Overwhelmingly, the companies and trade associations that dominate top-dollar lobbyists’ clientele are seeking to protect their own legislated competitive advantages, including special tax breaks, favorable procurement rules and government regulations that prevent new challengers from entering the marketplace. ...

    The weaponry of the special-interest community has become increasingly powerful. Lobbyists not only have ever greater resources at their disposal, they are also armed with the sophisticated technology of influence — polls, television, focus groups, computerized data banks, micro-targeting, each of them important in itself, and devastating when deployed in effective combinations. The net result is that the power of the electorate relative to the power of the Washington establishment has inexorably declined.

  • Los Angeles Times: A closer look at Mitt Romney's job creation record. The Republican presidential contender says he learned about expanding employment during his time heading a private equity firm. But under his leadership, Bain Capital often maximized profits in part by firing workers. By Tom Hamburger, Melanie Mason and Matea Gold. Excerpts: Shortly after Mitt Romney resigned from Bain Capital in 1999 to run the Olympics in Salt Lake City, potential investors received a prospectus touting the extraordinary profits earned by the private equity firm that Romney controlled for 15 years. During that time, Boston-based Bain acquired more than 115 companies, according to the prospectus. Bain's estimated annual returns were more than five times that of the Dow Jones Industrial Average in the same period. ...

    Bain expanded many of the companies it acquired. But like other leveraged-buyout firms, Romney and his team also maximized returns by firing workers, seeking government subsidies, and flipping companies quickly for large profits. Sometimes Bain investors gained even when companies slid into bankruptcy.

    Bain managers said their mission was clear. "I never thought of what I do for a living as job creation," said Marc B. Walpow, a former managing partner at Bain who worked closely with Romney for nine years before forming his own firm. "The primary goal of private equity is to create wealth for your investors." ...

    Four of the 10 companies Bain acquired declared bankruptcy within a few years, shedding thousands of jobs. The prospectus shows that Bain investors profited in eight of the 10 deals, including three of the four that ended in bankruptcy. ...

    In 1999, as economic challenges mounted, GSI sought a federal loan guarantee intended to help steel companies compete internationally. The loan deal was approved, but in 2001, before it could be used, the company went bankrupt, two years after Romney left Bain. More than 700 workers were fired, losing not only their jobs but health insurance, severance and a chunk of their pension benefits. GSI retirees also lost their health insurance and other benefits. Bain partners received about $50 million on their initial investment, a 100% gain. ...

    "Bain was demanding certain financial performance with no understanding of what the problems were on the ground," said David Foster, a former steelworkers union official who negotiated labor contracts with GSI management from 1994 until the bankruptcy. He said Bain "bled the company," withdrawing cash for dividends and management fees even as circumstances in the steel industry deteriorated.

    "If I were looking for effective management of a project, a company or a country, this is exactly the kind of management I would not want to have," Foster said of Bain. "Bain partners think the profits they made are a sign of their brilliance. It's not brilliance. It's lurking around the corner and mugging somebody."

  • New York Times: A Paradox of Smaller Wall Street Paychecks. By Andrew Ross Sorkin. Excerpts: Is Wall Street cutting bonuses enough? That is a question worth considering amid chatter that investment banking bonuses are expected to be the lowest they have been since 2008 amid lackluster profits.

    Few people outside the industry are shedding tears. The average Goldman Sachs employee was paid $292,397 in the first nine months of 2011, down about 21 percent from the same period in 2010, when the average payout was $370,056. That is of course, an average, and includes the salaries of those on the lower scales, like support staff.

    Each Goldman partner is still expected to take home at least $3 million; in previous years, payouts twice that amount were considered common for the top echelon.

    It is an odd Wall Street paradox: in down years, a higher percentage of a firm’s revenue is paid to employees. “In the tug of war between employees and shareholders, the employees are winning,” Mr. Mayo said. He pointed out that it was still often employees in the upper ranks, including those in the C.E.O. suites, who took home the largest share of the compensation. “Wall Street has its own 99 percent and 1 percent,” he said. “The 1 percent continues to win against the 99 percent.” He continued: “Is the incentive pay an incentive, or is it an entitlement?”

  • Huffington Post: Over Two-Thirds Of Corporations Pay No Federal Corporate Income Tax. Excerpts: At a time when the federal government is starved for cash -- and facing layoffs and cuts in services across the board -- more and more corporations are sidestepping their traditional tax rate and keeping millions of dollars for themselves.

    The number of U.S. corporations structuring their businesses in such a way that they can avoid higher taxes has skyrocketed in the past quarter century, The Wall Street Journal reports.

    Advocates for the business community have expressed frustration with the country's 35 percent corporate income tax rate, calling it unreasonably high. In practice, though, it's common for big businesses to pay much less, thanks to a cornucopia of tax-code loopholes and exemptions won by lobbyists. ...

    According to a recent analysis of nearly 300 Fortune 500 companies by the Citizens for Tax Justice, the average company was paying just 18.3 percent in taxes -- a little more than half the official rate. And by using techniques like industry subsidies, stock option packages, and moving assets overseas where they can't be taxed, 30 companies mentioned in the report -- including Wells Fargo, Verizon, Boeing and General Electric -- didn't pay a cent in federal taxes in 2008, 2009 or 2010, the report found.

  • Washington Post: For those hurting most, Fed’s remedies limited. By Neil Irwin. Excerpts: In the most difficult economy in a generation, middle-income and poor Americans are hurting the worst. Congress is tied in knots, barely able to pass even the most basic measures to help.

    That has put pressure on the one arm of government with the power and the flexibility to try to boost ordinary Americans’ fortunes: the Federal Reserve. But the limited policies the Fed has at its disposal mostly put money in the hands of the affluent, at least through their direct effects. The affluent, in turn, are less likely than most to spend that money in the wider economy.

    That may be a key reason that a series of dramatic steps by the central bank has not done more to raise living standards for American workers. ...

    A wide range of research shows that the poorer people are, the more likely they are to spend any new money they get, which keeps it circulating through the economy. Wealthier people are more likely to save it, which does little to foster economic activity. In 2010, middle-income families — those making about $46,000 a year — spent 91 percent of their after-tax income. The upper 20 percent, those who make an average of $157,000, spent 62 percent. ...

    “The Fed can pump an extra $2 trillion into the economy, but it can’t control where it goes,” said Dhaval Joshi, chief European strategist at BCA Research, who has examined the effects of similar policies in Britain. “We’re not saying it didn’t help the economy, but we’re saying that if you look at who it benefits, you see that it fuels stock prices and corporate profits but isn’t having much impact on wages and employment.”

  • Washington Post: Mitt Romney and our overdue debate about capitalism. By E.J. Dionne Jr. Excerpts: Thanks to Mitt Romney and such well-known socialist intellectuals as Rick Perry and Newt Gingrich, the United States is about to have the big debate on the nature of modern capitalism that should have started back in 2008. The focus will be on whether some kinds of capitalism are bad for the system as a whole. ...

    What if a certain class of capitalist makes scads of money not by building up companies but by tearing them down? What if there is a distinction between the capitalist we typically honor who comes up with a good product and hires people to make and market it; and another kind who takes over a company, pulls out all the cash he can, and then abandons it to die?

    This is not the narrative of some Marxist intellectual writing in an obscure journal. It’s how Perry, who last I checked was a rather ardent conservative, described Romney’s line of work. “They’re just vultures,” Perry declared. “They’re vultures that are sitting out there on the tree limb waiting for the company to get sick, and then they swoop in, they eat the carcass, they leave with that and they leave the skeleton.” ...

    But that goes to the heart of the matter: “Free” for whom and under what circumstances? Capitalists of Romney’s sort never want to acknowledge how much their ability to make money depends on what government does. How does it structure the laws related to property, taxation and debt? What rules does it write on how companies can be acquired and how power within firms is apportioned among shareholders, employees, managers and other stakeholders? These are not natural laws. They are the work of politicians and the lobbyists who influence them.

    Which leads to this observation from Gingrich: “I think there’s a real difference,” he said, “between people who believed in the free market and people who go around, take financial advantage, loot companies, leave behind broken families, broken towns, people on unemployment.” Yes, there are different kinds of capitalism.

  • Financial Times: Three Carlyle founders shared $413m last year. By Dan McCrum in New York and Henny Sender in Singapore. Excerpts: The three founders of Carlyle shared a $413m pay-out last year, focusing more attention on the extraordinary wealth earned by private equity industry executives at a sensitive time in the US presidential election race.

    Private equity already faces scrutiny for the way it has enabled executives, including Mitt Romney, frontrunner for the Republican nomination and former chief executive of Bain Capital, to build fortunes helped by a highly favourable tax perk. ...

    The primary source of income for the most successful private equity executives is carried interest, profits on investments made with money from outside investors such as pension funds. This is taxed at 15 per cent as a capital gain rather than the usual 35 per cent for income.

    Selected reader comments follow:

    • Dmitriy. That's what we call democracy! George W. Bush advised Carlye ... They legalized bribes to call it democracy. Corrupted Russia ... Come on US, it is a pity corruption is legal here. Great! Learn more about this group, and, so far, it will exist, as too many officials are very interested to continue its existence.
    • Skipuke. Romney said this morning on CNBC he wants to cut capital gains taxes to 0%. That should garner a lot of support from his private equity and hedge fund friends!
    • RM HK. As Warren Buffet said, there has been a class war in the US for 20 years, and the rich have won. I have benefited from the tax perk cited above, and whilst I have a few less "000's" than Mr. Buffet, I share his view these perks should be eliminated.
    • Repentant Banker. I have no problem at all with people earning large amounts, but the tax treatment of carried interest in US and UK is a scam. There is no doubt that PE execs get carried interest because of their role as managers not because they are investors - so it should be taxed as income.
    • Ernst Stavro Blofeld. The tax perks of PE houses in the UK and the US is a scandal. Repentant banker is right: this is income, not risk capital, and it should be taxed as such. And it needs to shouted loudly from the rooftops that in the UK the political party that put this outrage on the statute book was the supposedly fairness-fixated Labour party!
    • GDKD. $138m for one year at 15% tax. Never mind the avalanche of money that will come their way once their ironic concerns over timing for the IPO are resolved.

      Assuming these three individuals are sufficiently immoral to not think of setting an example by limiting their personal gain, then Carlyle is surely a perfect test case for the US government to amend the ridiculous loopholes in Private Equity. Carlyle's patriarchal underbelly and highly dubious history in Defence mark it out as the most cynical PE vehicle. Quite some achievement in itself.

      One could go a step further. Assuming Obama defeats King Bain then, in what would be his final term of office, would it not be interesting to see Mr Obama corral the exemplars of socially responsible capitalism, especially Warren Buffet, and introduce a 90% tax rate on any individual earning more than $ 25m per annum - through PE vehicles, Trusts or otherwise. No offshore wheezes, no Blair like FLP's and mandatory full disclosure by all.

      The prospect of not being able to afford a £30m Picasso every 3 years will no doubt make the patrician class blanche and Obama would no doubt be crucified by both Congress and the Senate. However, a radical legislative move is needed to puncture our restless tolerance of unfettered greed. Mr Obama's legacy would be that he catalysed genuine and much needed change. He would create the platform for the forthcoming generation of disenfranchised and debt laden young voters to follow through on his example and finally temper the obscene greed of the current super capitalists.

      Galbraith suggests that the greedy are quickly returned to respectability once the economic cycle turns for the good but that won't happen by 2013 so if Mr Obama really wants to deliver on his promise to Change then he has that opportunity.

  • Washington Post: Mitt Romney, Bain Capital and the gospel of ‘creative destruction’. By Jia Lynn Yang. Excerpts: Mitt Romney’s rivals this week intensified their attacks over business failures that happened on his watch at the investment firm Bain Capital. But even the successes touted by Romney’s campaign involved some painful decisions and layoffs. Both the successes and the failures reveal the candidate’s faith in “creative destruction,” the notion that the new must relentlessly replace the old so that companies and the economy can become more efficient. ...

    But like Romney’s work on all the businesses Bain invested in, the primary goal with these companies wasn’t job creation but making them more profitable and valuable. This meant embracing aspects of capitalism that have unsettled some Americans: laying off workers when necessary, expanding overseas to chase profits and paying top executives significantly more than employees on lower rungs.

  • Huffington Post: Please Tell Romney We're Not Envious, We're Fed Up. By Rev. Al Sharpton. Excerpts: Last night, GOP candidate Willard Mitt Romney delivered what many believed to be a general election speech after winning the New Hampshire primary and setting his sights on South Carolina. But out of all of the grandiose statements made in his teleprompter-assisted speech, Romney's most outrageous and insulting words came with a reference to the 'politics of envy'. Once again validating his love for the wealthy, and proving just how out of touch with reality he is, the presidential hopeful failed to realize that the majority in this country aren't jealous of the rich -- they are simply tired of a select few controlling a disproportionate amount of our money. It is beyond arrogant and insensitive to think that people seeking fairness and an even economic playing field are envious. And believe me Mr. Romney, they will remember come this November. ...

    Romney, the people are not jealous of your mansions or boats. They are simply tired of income inequality, and tired of course of your condescending tone.

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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