Re-run: The “Ownership Society” and the Great Risk Shift

Ellen Goodman has just discovered the “risk shift” and written a column about it that reminds me how little we’ve progressed in the last quarter century – and how much we’ve regressed. Taking the Home Depot brouhaha as a starting point (she calls Nardelli “Bob the Un-Builder”), she connects the dots by comparing the risk factors he doesn’t share with the rest of us.

We all know about the growing inequality of income. In 1965, the average CEO was paid 24 times the average worker. In 2005, the average CEO was paid 262 times the average worker.It has taken 12 years and a new Congress just to get the minimum wage moving up to $7.25 an hour over the next two years. At Home Depot, where the average wage is $10 an hour, the boss made more every day than workers earned in a year.

But Bob the Un-Builder is also a symbol of something that has gotten a lot less attention: the growing inequality of risk.

“At one time, when corporate titans went down they went down hard,” says Jacob Hacker, a Yale political scientist. “Who could be more insulated from risk than today’s CEO? There’s never been a group of people richer or more protected from the vagaries of the economy.”

Life at the tippy top is sheltered from the “golden hello” to the “golden parachute,” no matter what happens under the CEO’s watch. That’s a level of security that’s virtually extinct in the rest of the world. Indeed, as Hacker writes in “The Great Risk Shift,” one of the hallmarks of today’s economy is that risks once widely shared by government and employers have shifted onto the American family. We carry more and more of the risks of retirement, illness, unemployment, even education. Continue reading

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The Medicare Drug Bill: Democrats Fold

In a stunning development today, the WaPo is reporting that Congressional Democrats have admitted openly that the new drug bill has no teeth because they were afraid big pharmaceutical corporations wouldn’t like it.

Before taking control of the House last week, Democratic leaders briefly considered proposing a new government-run prescription drug program as a way to reduce seniors’ drug costs, according to Democratic aides and lawmakers involved in the deliberations.

But House Speaker Nancy Pelosi (D-Calif.) and her allies chose a far less ambitious plan — to require the government to negotiate for lower Medicare drug prices — that will come to a vote today. They stepped back largely out of concern that the pharmaceutical industry would stall a complex change, denying them a quick victory on a top consumer-oriented priority, aides say. Continue reading