Mark Karlin | Truthout | December 13, 2015
The following is the Truthout interview with Les Leopold, author of Runaway Inequality.
Mark Karlin: You created a phrase, “Better Business Climate,” that describes the pro-corporate juggernaut that we are experiencing in our economy. Can you explain what that term means in the context of your book?’
Les Leopold: That phrase, coined by labor economist Ken Peres, refers to what many have called Reaganomics, trickle-down economics or neoliberalism. Basically, it is a set of policies that took hold in the 1970s and 1980s that called for the deregulation of the economy, tax cuts (especially for the wealthy) and cutbacks in government social services so that more people would be hungry for work. Together these policies were to create a profits and investment boom to make all boats rise. Of course, it didn’t work out that way. The policies created an enormous boom for Wall Street and CEO incomes, while wage stagnation hit most of the rest of us.
How does this relate to what you call financial strip-mining?
The deregulation of Wall Street turned out to be the most critical policy within the Better Business Climate model. By removing most of the stringent New Deal controls, Wall Street moved forcefully into buying up corporations. They used enormous amounts of borrowed money to buy up thousands of corporations and then stuck those corporations with all the debt. They then paid themselves “special dividends” for pulling off the deal and incentivized the new CEOs to jack up the price of the stock so that the buyout artists could quickly cash in – pump and dump. The method of choice was to use nearly all the cash flow of the corporation to buy back its own shares, which increases its price, all things being equal. CEOs, not paid almost entirely with stock incentives, became overseers of the strip-mining operation.