Beautiful Perfect Capitalism - No. 1
How much would you require in bounty to steal from your neighbors? The first in a forever ongoing series of our sick and insane economic system.
How much would you, Joe Sixpack, need to be compensated to steal from your neighbors? 100% of the bounty? 50% of the treasure? 10% of the ill-gotten gains? Surely the juice must be the squeeze, right?
Well you, dear reader, are likely of higher moral fiber than the protagonist in today’s adventure.
Over the Christmas holiday, the generally right-leaning, capitalist-believing-in Wall Street Journal published an article surprisingly lamenting, rather than celebrating, an effect of cut-throat, winner-take-all capitalism (which it usually is fond of).
The article details how AT&T, reeling from a series of misguided growth plans (DirecTV, Time Warner), and facing a declining stock price, did what boomer-managed, shareholder-returns-focused companies do best - they cut benefits to the rank and file. In this case, AT&T cut a post-employment benefit promised to ~200,000 former employees over the years, a fairly generous (by today’s standards) retiree life insurance policy/death benefit. Retirees had been promised ~$50,000-$75,000, which can go a long way to settle end-of-life expenses, pay for a funeral, and provide a little extra to a widowed spouse. Such benefits were not contractually locked in stone (i.e. AT&T can legally do this), but the multiple employees interviewed in the article lament feeling backstabbed, as they had spent careers at AT&T with lower-than-market salaries due to benefits such as these, which have now been yanked away right as they were about to be potentially needed.
But the callousness of AT&T as an entity doing so is not the focus of this Beautiful Perfect Capitalism edition No 1. Firstly, this is generally expected behavior in today’s corporate America, unfortunately. But more importantly, it is because there appears to be a true villain in this story.
I’ll first revisit the opening prompt - if you were going to steal from your neighbors (in this case, hundreds of thousands of former colleagues who had spent decades working towards the success of your company) - you’d at least require a pretty big bounty, right?
Well the sad truth is, whether it’s due to apathy, narcissism, AT&T shares still held, pure brainwashed belief in The Goodness of Capitalism, or disdain for your fellow man - the price here was disappointingly low.
The WSJ’s article, in its final paragraph, as if it was a point intended to be buried by an editor but insisted upon by the author, calls out who may be the architect of this destruction of the many:
Retiree benefits remain on AT&T’s financial radar. In a consulting agreement with a former AT&T finance chief, John Stephens, the company has offered to pay him an extra $500,000 if AT&T meets any of three financial targets. One is cutting $1 billion more from AT&T’s obligation for retiree pensions and benefits. Through an AT&T spokesman, Mr. Stephens declined to comment.
Stealing $1,000,000,000 from hundreds of thousands of individuals was done for a bounty of $500,000. (Or, perhaps, this is only part of the “cost savings” that will be realized in multiple steps, but the bounty is what it is).
That’s like seizing a million dollars from your neighbor so that you can keep $500.
That’s like robbing $100,000 from a bank to keep $50.
But in this case, since the moral theft is legal and approved by the business world and our country that worships it, there’s no shame in doing so.
And its not like this guy is hurting for money - Walter White selling meth to pay for cancer treatment is sympathizable - but Mr. Stephens spent 10 years as the CFO of ATT. I would guess that he’s worth tens if not hundreds of millions of dollars. He almost certainly has accumulated enough wealth that no relative of his will ever have to worry about money ever again.
So why do it?
Is it just enjoying the sport of capitalism? Simply racking up numbers on the scoreboard (whether his personal wealth, helping AT&T’s stock price go up out of some misguided sense of loyalty that values the share price over its former employees)?
Is it because that’s what business school and a career as a corporate executive taught him? Serve the company and the shareholders, above all else?
I truly cannot understand the person who would make this type of decision. And I’m not saying that Mr. Stephens is evil (I don’t know the man), but this act certainly is.
But hey, that’s Beautiful Perfect Capitalism for you.
I’m not a socialist like you Elmer, but this one rings true my man.