In February 2013 Warren Buffett bought the struggling Heinz Company. The company was bleeding cash and Mr. Buffett swept in like a rescuing angel. Or so he made himself appear.
Now, a year later, and Heinz is still awash in red ink. The company lost almost $72 million in 2013. The losses continue.
The company has closed down three plants (two in the US) and laid off some 3,400 workers in an effort to regain profitability.
William Johnson, who was the CEO until the end of 2013, took home over $110 million in compensation for running the company into the ground (hmmm, it seems cutting his pay may have stanched the bleeding). The current boss, Bernardo Hees has been paid over $9 million since coming aboard last June.
This is the world of 21st century capitalism. Run a company into the ground and take a little off the top for the trouble. Isn't this an economic system that is supposed to reward success and punish failure? Isn't this an economic system that is supposed to provide incentives to make a profit?
The reality is our economic system acts as a vacuum that takes money from the pockets of those who produce the goods and puts it in the pockets of those who live off the labor of others. Companies pay outrageous salaries to CEO's who sit and fiddle while the company goes under. The high pay of executives is rationalized by claiming the company must pay through the nose to keep up with the Joneses.
Of course it helps that CEO's sit on other corporate boards - and often serve on the compensation committee - voting increased pay and benefits to their fellow CEO's.
And while Wall Street and media focus on share prices and quarterly numbers, very few folks pay attention to what's happening at the bottom. You will never hear experts and pundits in the corporate media placing the blame for the slumping global economy on the crisis of overproduction. That would require some basic questioning of the system.
While those at the top of the corporate ladder gorge themselves on the labor of others, those who actually do the work find themselves in a more precarious position every day. Just what do you think is going to happen when the masses of workers can no longer afford the products their labor produces?