Corporate Accountability and WorkPlace  
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Twinkie CEO Admits Company Took Employees Pensions and Put It Toward Executive Pay

Hostess company continues to screw over its workers.

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On August 12 of 2011, the employees got a letter that said that the company was going to “temporarily suspend payments” to its pension funds.  That would be the $3 per hour that this worker had negotiated as part of his compensation – instead of paying it to him by putting it into his pension fund now, the company said they were going to put it in later. 

As the letter said, “I want to be clear that this temporary suspension of payments to the pension fund will not affect your pension benefits.”  

Workers believed management, and kept on working.  

But, it turned out, as we learned from that interview in today’s Wall Street Journal, that the senior management wasn’t just “borrowing” the pension funds – they were using them to fund ongoing operations.  Including big paychecks to the fatcats. 

Hostess CEO Gregory Rayburn wanted to make it clear that he wasn’t around when that particular thing happened. "Whatever the circumstances were, whatever those decisions were, I wasn't there," Rayburn told the Wall Street Journal.  After all, Rayburn isn’t a baker – he’s a bankster.  He’s the owner of Kobi Partners, a company that tells corporations how to “restructure.” Think Mitt Romney. And he’s going to make out very well on all this – the bankruptcy court just okayed $1.8 million in Christmas bonuses for the new fatcats at Hostess. 

Ironically, if you borrow money to pay for your education, you can’t get rid of that debt through bankruptcy – one of the “reforms” of the bankruptcy law during the Bush era.  But if you’re a CEO or a buyout bankster and you borrow money from your employees’ trust fund to be able to cover your own paycheck and million-dollar bonuses, and then take your company into bankruptcy, neither you nor the company have to pay those employees back even a single penny. Part of their pension is picked up by federally-run pension insurance, and the rest is just lost.  

There used to be a time in America when businesspeople had at least a modicum of ethics. Mostly it was because the majority of businesses were small- or medium-sized and locally owned, so the owners and managers had to look the employees in the eye. Or the unions were strong enough to keep the CEOs honest.

Reagan put an end to all that when he stopped enforcing the Sherman Anti-Trust Act, wiping out most of America’s small and medium-sized businesses, and when he kicked off the modern war on unions by firing the PATCO union strikers. You can see the result most clearly at any shopping mall or any downtown in America.  What used to be locally owned business are now big chains, from food to jewelry to clothing.

It used to be that CEOs shared the pain.  Lee Iacocca famously took a dollar a year as pay when he was working to turn around Chrysler. Steve Jobs did the same when Apple was in trouble.  Pretty much everybody who’s ever started a small business knows what it’s like to make payroll for workers while taking little to nothing themselves during the early years of the company.

But in today’s post-Reagan, Bain-model American capitalism, there’s never any risk for the CEO class. Instead, all the risk is borne by the workers. 

Karl Marx famously wrote that capitalism contains within itself the seeds of its own destruction. If true, the young, green shoots of that destruction may well be the corporate and billionaire excesses, ranging from the Hostess debacle to the billionaire oligarch Koch Brothers funding anti-union efforts by Rick Snyder and Republicans in Michigan.

 
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