Greed loses its glamour, even on Wall Street

TheStar.com – opinion/editorialopinion
Published On Tue Apr 24 2012.   By Carol Goar, Editorial Board

They’re just whispers in the wind, but they’re getting louder and more frequent.

In the beginning, a few isolated voices — left-wing economists, academics, social activists, labour organizers, church leaders and corporate renegades — warned that Canada was becoming a highly inequitable nation.

They wrote earnest policy papers, produced credible statistics and occasionally attracted media attention. But they were ignored, dismissed or ridiculed in the corridors of power.

The volume went up a couple of notches last fall when thousands of young people took to the streets chanting: “We are the 99 per cent.” With one simple slogan, the protesters crystallized the issue: The top 1 per cent of the population was skimming off most of the economy’s gains, leaving everybody else to scramble for the remains.

The Occupy Movement got the nation — including a few corporate executives and public figures — talking about inequality. It convinced Canadians that something was wrong.

But it had no solutions — not even any suggestions — to offer. Gradually it petered out.

There was another flurry of interest in early April when theBroadbent Institute, an Ottawa think-tank devoted to creating a more equal society, released a poll showing 64 per cent of Canadians were willing to pay higher taxes to preserve social programs and reduce poverty.

But the source — a research body created by New Democratic Party — caused many observers, even those sympathetic to the cause, to question the poll’s credibility.

Last week brought two developments that couldn’t be shrugged off or attributed to left-wing agitation.

The first was a shareholders’ revolt at one of Wall Street’s biggest banks. To the surprise — and dread — of corporate America, shareholders rejected the pay package awarded toVikram Pandit, CEO of Citigroup.

The vote was not binding. But it would be folly for the bank’s board to ignore a rebuff from institutional investors (pension and mutual fund managers) whose clients are fed up with excessive executive compensation.

“This is a shot across the bow of every corporate boardroom in America,” said Robert Reich, former U.S. Secretary of Labor.

The reverberations were felt in Canada, too. Pandit’s $15 million pay package is in the same ballpark as those routinely approved by the boards of Canada’s top banks. Ed Clark, CEO of Toronto-Dominion, for instance, took home $11.3 million for the same period. His Scotiabank counterpart, Richard Waugh, pocketed $10.6 million and Gordon Nixon at the Royal Bank got $10.1 million.

Political strategists got a surprise of their own the next day. A survey of 1,084 Ontarians — with no partisan or ideological links — found 78 per cent backed NDP Leader Andrea Horwath’s call to impose a surtax on individuals with incomes above $500,000. “It’s hugely popular,” said Lorne Bozinoff, president of Forum Research, the country’s largest polling firm.

This undermined the long-standing assumption that voters were dead set against any tax increase and would punish any politician who raised the possibility.

None of this means a change of direction is imminent.

There is still strong resistance at all levels of government to raising taxes. Premier Dalton McGuinty, who acquiesced to Horwath’s demand this week to keep his minority alive, made his reluctance clear. He vowed to get rid of the surtax within five years.

Likewise, there is strong resistance in corporate boardrooms to reining in executive compensation. High-flying CEOs and their hitherto compliant boards will be watching nervously to see what shareholders do at the Bank of America’s annual meeting on May 9.

But restive stirring is in the air. Once-passive investors are beginning to challenge the notion that corporate CEOs deserve 300 times as much pay as the average worker. Once-tractable voters are beginning to question the notion that raising taxes is unthinkable.

The pendulum, stuck at the far right for a decade, is beginning to shift.

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