We continue to express our outrage at the excesses of Wall Street and the great and growing disparities between those of great wealth and income and ordinary working Americans.
No longer is it acceptable for the wealthy and the corporate and banking elite of this country to dominate capital markets, democratic institutions and political power. What is needed is for ordinary citizens to have a voice in determining their own economic and political fate.
What We Have Done and Will Continue To Do
For over thirty-two years, we have been challenging corporate power and advocating for civil society governed by stakeholders rather than insiders. Our agenda has included:
Move your Money
One of the most important individual financial actions that can be made is to withdraw accounts from money center large global financial institutions and transfer assets to community-based banks and local savings banks, savings and loan associations and credit unions not controlled by the largest financial institutions.
A Brief Background to the Current Crisis
For almost four decades, the growing divide between the rich, the middle class and the working poor has been growing faster, both in terms of income and wealth. The richest 1% of Americans possess over a third of the country’s wealth, more than the combined wealth of the bottom 90% of American families. The top 10% of American households take in 42% of all income and hold 71% of all wealth.1 Since the mid-1980s, the top 10% of Americans have increased their share, the largest of the gains accruing to the richest 1%; and half of those gains going to the top 0.1%.2 From 1979 to 2005, the top 1% of all taxpayers went from gathering 9.18% of all U.S. income to 16.97%, or an increase of 85%, while finance professionals in the top1% went from controlling 0.82% of all U.S. income to 2.77%, or an increase of 238%.3
Between 1980 and 2005, CEO pay in the U.S. increased 442% adjusted for inflation,4 as top executives earned about 364 times the average employee salary.5 In the midst of the worst U.S. financial crisis since the Great Depression, according to the AFL-CIO, which collected data on CEO pay in 2008 and 2009, the highest paid CEO made over $133 million and the lowest paid of the “100 Highest Paid CEOs” made almost $18 million.6 This understates what money many CEOs actually make in any given year. For example, from 2000 to 2002, Larry Ellison, CEO of Oracle Corporation pulled in $871.4 million and John Chambers, CEO of Cisco Systems, gathered $157.6 million, while their technology company stocks declined 61% and 76%, respectively.7 More recently, Lloyd Blankfein of Goldman Sachs, in 2009, made $68.5 million and created a $15.4 billion bonus pool for top traders and other Goldman employees.8 In 2008, Aubrey McClendon, CEO of the fracturing leader, Chesapeake Energy Corporation, made $112 million, while company stock declined 60%.9 Executive salaries are already on the rise again in 2013-2014.
Many corporations do not pay any federal taxes and many hide their overseas profit from the U.S. government by moving money illicitly through numerous tax havens. Google, for example, in 2009 had $12.9 billion in sales outside the U.S. and paid only 2.4% in federal taxes by sheltering profits in the tax haven of Bermuda.10 Citizens for Tax Justice and the Institute of Taxation and Economic Policy reported that from 2008 through 2010, 78 large corporations paid no taxes – or had a negative tax rate – for at least one year due to nearly $223 billion in tax subsidies, 17% of which went to the financial services industry, while thirty corporations went tax free for all three years.11 This is consistent with the fact that the corporate tax share of federal receipts is only 9%, down from 32% in 1952.12 Corporations and the wealthy continue to make more money and pay less in taxes.
Corporations and the wealthy also continue to buy politicians and lobbyists to carry their water. Total lobbying expenses for the 12,967 lobbyists in Washington, D.C. for 2010 was $3.51 billion, with finance, insurance and real estate categories totaling $62,909,712; the securities industry from 1998 until 2011 spent $848,948,340 on lobbying and $14,891,735 to elect Barack Obama.13 From 1999 to 2008, the financial sector alone expended $2.7 billion in lobbying expenses and individuals and political action committees in the sector made more than $1 billion in political contributions.14
Interestingly, around the same time, between 1990 and 2005, 74 bank mergers occurred, increasing overall banking assets of the ten largest banks from 25% to 55% of all U.S. banking assets. Between 1998 and 2007, the five largest banks’ assets – Bank of America, Citigroup, JPMorgan Chase, Wachovia (now owned by Wells Fargo) and Wells Fargo – themselves the product of multiple mergers, tripled in assets from $2.2 trillion to $6.8 trillion.15 Even more interesting, from 1978 to 2007, the amount of debt held by these same financial institutions soared from $3 trillion to $36 trillion, more than doubling as a share of gross domestic product.16
We all know what happened in 2008: these U.S. banks and many of their European colleagues were bailed out by the American taxpayer. This bailout totaled over $1.2 trillion, which according to Bloomberg News was “. . . about the same amount as homeowners owe on 6.5 million delinquent mortgages, three times the size of the federal deficit in 2008, and more than the total earnings of federally insured banks in the last decade.”17
Who We Are
Harrington Investments, Inc. (HII), a family-owned and controlled small business corporation, has been trying to “occupy” Wall Street for over thirty-two years. HII is a socially responsible registered investment advisor managing assets for individuals and institutions screening out companies that are involved in socially injurious and egregious practices, engaging in shareholder action to advocate for economic democracy, and working with our clients to find and invest in profit and non-profit entities that create community wealth, jobs and empowerment.
We believe that large financial institutions and corporations dominate the global economy and the American political system. We will continue to advocate for our responsible investment clients who are socially responsible investors and stakeholders and who believe corporations, including financial institutions, have excessive economic power that has become excessive political power. These institutions must be controlled by the public.
Since 2010, when the Dodd-Frank Act was enacted by Congress and signed by President Obama, the federal government, including the U.S. Treasury department, the Securities and Exchange Commission (SEC). the Department of Justice (DOJ), the Comptroller of the Currency and the Commodities Future Trading Commission (CFTC) have all attempted to constrain corporate and financial institutional social injury. These institutions continue to fail to restrain corporate power and the banks have grown larger and stronger. These banks are not only “too big to fail”, they are uncontrollable and ungovernable. Shareholders are unable to control them, as these institutions are so complex and multifaceted that directors, acting as fiduciaries, don’t even understand them, nor can they oversee or have knowledge of the esoteric investment instruments which the banks trade and leverage, both domestically and overseas.
Moral philosopher and the father of capitalism, Adam Smith, maintained that businesses would often engage in activities to advance their own materialistic self-interest while ignoring the public interest, knowing that, “man whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have upon many occasions, both deceived and oppressed it.”18
Milton Friedman, a staunch conservative supporter of capitalism, based his theory of political freedom upon the separation of economic and political power by arguing: “The kind of economic organization that provides economic freedom directly, namely competitive capitalism, also promotes political freedom because it separates economic power from political power and in this way enables one to offset the other.”19
Large corporations and financial institutions have consolidated wealth and power. They have not only gained control of the economic marketplace, but have utilized their wealth and power to dominate the political arena as well. Economic power is no longer separate from political power. It is one and the same.
1. Michael Sandel, Justice: What’s The Right Thing TO Do? (New York: Farrar, Straus and Giroux, 2009), 58.
2. Eduardo Porter, “Deconstruction: Wall Street Protestors Hit The Bull’s-Eye,” New York Times, October 30, 2011, SR10.
4. John Harrington, The Challenge To Power: Money, Investing and Democracy, (White River Junction: Chelsea Green, 2005), 72.
5. Joe Weisenthal, “Group of Nuns Attack Goldman Over Large Bonuses,” Business Insider, October 14, 2009.
7. Harrington, 72.
9. Russell Gold, “Chesapeake Tweaks Big Payday,” Wall Street Journal, November 3, 2011, B1&B2.
14. Financial Crisis Inquiry Report, January 2011, xviii.
15. Financial Crisis Inquiry Commission, Preliminary Staff Report: Government Rescues of “Too Big To Fail” Financial Institutions, August 31, 2010, p.14,
16. Financial Crisis Inquiry Report, January 2011, xvii.
18. Adam Smith, Wealth of Nations, (New York: Bantam Dell, 1776), 572.
19. Milton Friedman, Capitalism and Freedom, (Chicago: University of Chicago Press, 1962), 9.