It's a head-scratcher--to some. Wealth has been created globally but, somehow, a suffocating blanket of austerity is embracing the world. But it would be no surprise to the people in the streets in Greece or to the millions of people here who cannot find work to read the headline in the left-wing, socialist rag...Financial Times: "Top dogs take bigger slice of spoils".
But in recent years the most dramatic widening, at least in the US, has been between the very top and everyone else....
The share of income claimed by the top 1 per cent of American earners declined after the Great Depression and the second world war, but from the late 1970s it suddenly started to rise. Meanwhile, wage growth for many in the middle has stalled.
Between 1976 and 2007 in the US, 58 per cent of the total growth in income was captured by the top 1 per cent. Not only that, but the trend appeared to be accelerating; that figure was 45 per cent during the 1990s economic expansion under President Bill Clinton, but rose to 65 per cent from 2002-2007 under President George W. Bush.[emphasis added]
The piece examines whether "the super-rich have got that way because they are super-talented, super-lucky or just super-manipulative." The last reason is the most instructive:
Sceptics of economic efficiency suggest a third, more cynical explanation: that the very rich, mainly CEOs and top finance executives, have found ways to pay themselves undue amounts, often by tying compensation to the stock market during a boom. They would point to the fates of Lehman and Citigroup as evidence that large salaries were not justified. The main constraint on this is public, stockholder and employee tolerance of such behaviour.
Some circumstantial evidence supports the “super-manipulative” theory. Prof Lawrence says that US corporations have not become particularly more globalised over the past quarter century. Changing technologies may have facilitated the rise of winner-take-all industries, even within domestic economics. But the globalisation argument looks more like an ex-post justification than an actual explanation. The key question now is what happens as a result of the financial crisis. If the super-rich consolidate their rising share of income, it will run counter to previous trends. It will also provide more ammunition to those arguing that the rising share of the very rich is more to do with the ability to distort and manipulate markets. Early indications are that, with profits high and much of high earners’ pay still based on the stock market, inequality at the very top shows few signs of falling off.
So, here the take-aways:
This is a robbery that has taken place over many decades. And nothing--not Dodd-Frank, not the inconsequential financial penalties, no-jail-time, slap-on-the-wrists of the people running the financial system--has happened that changed the system.
The president should be waving this data around to underscore his demand that the rich do away with some tax breaks for corporate jets and the like(by the way, IMHO, a presidential demand that was long overdo and frankly tepid by the the scope of the robbery) . The billionaires and jet-flying class have enough--they have too much.
The specialness of corporate executives has always been a sham. They do not do anything that is particularly unique that justifies their pay and benefits--except that they are VERY GOOD at manipulating the system, using lawyers and crony-stocked corporate boards, to rob the wealth of the nation. It's all couched in absurd arguments.
The people know this more than ever before. They may not know the specifics and numbers but they know what the problem is. They are are ready to do something.
What the people need are leaders who stop giving us reams of new policy papers and repackaged, foundation-friendly, high-concept "American Dream" pitches.
We need to risk institutions, not build new ones, and vaporize this system in favor of one that reverses the stream of wealth.
Instead, are willing to risk institutions and themselves to bring down the system.