If Barack Obama were a white Republican, they’d be carving his face into Mount Rushmore by now. By practically any measure, whether those measures are themselves flawed or not, his presidency has been an outstanding success. Still, plenty of time left to cock it up.
It seems that Mr Obama is intent on squandering much of his popularity and even much of his legacy on trade agreements that, according to their opponents, stink to high heaven. It’s not just the Transatlantic Trade and Investment Partnership that is under fire; such is Europe’s dismal stock over here that it hardly gets a mention. No, it is the Trans-Pacific Partnership (TPP) that is grabbing all of the headlines, for exactly the same reasons.
Political wrangling in Congress has been so fast paced this week that keeping up with events is pretty difficult. As of Friday morning, a deal had been struck between Senate Republicans and enough right-wing Democrats to allow the White House to “fast track” proceedings. Senate Democrats showed some spine for about 48 hours, probably a new record.
The biggest problem with the TPP is that the proposed agreement is less about tariffs than it is about breaking down what little remains of worker and consumer protection in the handful of countries willing to put their names on the line, including Chile, Australia and Vietnam. Those that aren’t invited to the table, like Cambodia and Ecuador, aren’t going to do much better.
The only winners are the corporations that appear to be getting their every wish granted, including new protection for intellectual property and alterations in judicial processes.
That corporations may be able to sue governments because consumer protection laws are lowering profits is horrific – something that is likely to bring out the worst in corporate America. It already has: the Marlboro cigarettes maker Philip Morris is already suing Australia and Uruguay for trying to cut smoking by including graphic photographs of cancer patients on cigarette packets.
The President chose Nike, of all companies, as a backdrop to help drum up support – a crass decision from someone who otherwise has shown himself to be one of the smarter men to occupy the White House. The shoe industry is perhaps the worst job exporter of them all – 98 per cent of sports shoes sold in the US are made abroad, and Nike has time and time again been accused of crossing ethical boundaries.
Anyone who says that deals such as this are going to usher in a new world of prosperity for everyone involved is bonkers. Yet there is no shortage of very clever people who will say just that.
In the last 30 or so years, the world has opened up to free trade like never before, creating new markets as political boundaries have melted away. And how are people doing? Well, they have more stuff to buy. Americans certainly aren’t much better off, at least on measures such as real wages and social mobility. It remains unclear how exactly another trade pact, further weakening labour at the expense of capital, is going to reverse that.
The real details of the TPP are yet to be published and, as we all know, that’s where the devil is. On that basis President Obama’s supporters should be willing to reserve final judgement and cut him some slack. But he has made a complete pig’s ear of this so far.
Executive pay at Chipotle is revolting, and so are investors
Chipotle Mexican Grill is one of the reasons why established fast food places like McDonald’s and Wendy’s are having such a tough time, and are going to continue to have a tough time for the foreseeable future. It’s not difficult to see why – tastes change, and Chipotle tastes better.
However, the absurd amount of money Chipotle’s chief executives pay themselves is nothing other than repulsive greed. Yes: themselves. Because running Chipotle is such a tough gig that it requires joint chief executives – the founder Steve Ells and the more recent addition Monty Moran.
Chipotle, whose growth has stalled somewhat in the past couple of years, still saw fit to pay them a combined $57.1m (£36m) in 2014, not including another $41m that Mr Ells made by exercising stock options. No wonder an estimated 77 per cent of shareholders rejected the company’s executive pay proposals at last week’s annual meeting.
Hang on. Shareholders rejected an executive pay proposal? Well, don’t get too excited by this moment of sobriety on the part of institutional investors. It was only an advisory vote, and investors were critical of executive compensation proposals last year and it made no difference. Even so, rarely have so many voiced their displeasure.
The problem isn’t that these two people make a lot of money. They are running a multimillion-dollar business effectively and successfully. People who do that should make good money, very good money. It’s not about punishing success – an accusation that is as absurd as their pay; it’s about not allowing executives to treat a business full of hard-working people, earning slave wages, like a piggy bank.
For comparison, Steve Easterbrook, the man at the helm of McDonald’s, has a salary plus potential bonus this year of less than $3m. Good dough, but in 2014 McDonald’s had revenue of over $27bn. That’s more than 6.5 times the revenue Chipotle generated. The two companies may be heading in opposite directions, but Chipotle still has a long way to go to catch up with the Golden Arches.
Chipotle has partly marketed itself as being a decent employer in a market full of dreadful employers. Yet the average burrito maker at Chipotle makes a paltry $8.57 an hour while the chief executives pay themselves something in excess of $9,000 an hour (assuming they work a 60-hour week without holidays). That ain’t cool.
Chipotle says that it takes the rejection of its pay proposal “very seriously”. I’ll believe that when I see it. Investors have given Mr Ells and now Mr Moran an easy ride because they have made good money in return – but with the stock down almost 7 per cent this year against a strong market, maybe that free ride is about to end.Reuse content