Will the disparity of weath distribution destroy America?

[John_Stamos_Left_Ear]

Although there have been rumblings from time to time about the widening gap between the rich and poor - along with a disappearing middle class - however a recent Vanity Fair article Of the 1%, by the 1%, for the 1% spells it out very succinctly:

The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent.

The article unflatteringly compares our current situation with that of the kinds of governments that the United States railed on about in the past and how it has led to upheaval in other countries, and finally concludes

The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.

Will this great divide betwene the have’s and the have not’s be catastrophic to America as a world leader? If so, what can be done to remedy this before it’s too late? Or is it already too late?

[Icerigger]

Yes, that is what is happening now. We are seeing the beginning of the structure for what is left of the middle class begin to crumble in a tangible way. With the outsourcing of high paying jobs along with all the profit generated by low cost labor siphoned to the top 10% the middle class has no way improve it self. The American worker is no longer important to the top 10% they can get low cost production anywhere from Mexico to Vietnam. It used to be true that labor had some pull along with the unions because who else was going to do the work, this is no longer relevant the top 10% it no longer has any need for “the people”. The record numbers of billionaires should tell you something is wrong.

Sadly there is really nothing that can be done, the factories are not coming back and the displaced workers blame the liberals for forcing the industries out with such communist/socialist abominations has living wages, overtime, safety regulations, minimum wages and all that stuff. The powers that be use religion, phony patriotism, hatred of unions and liberals to manipulate the vast majority into voting against their own best interests. Even such disparate voices as Ross Perot, Ralph Nader and Pat Buchanan all agree and saw this day coming a long time ago.

[msmith537]

This just in. Rich people continue to live a higher standard of living while poor people continue to struggle…
This is not new stuff. I have been hearing cries of “the death of the middle class” and “America is turning into a nation of halves and halve-nots” for over 30 years. And usually greedy corporate executives are blamed for “destroying America”. Corporations and their executives have always been greedy. Politicians have always been stupid and corrupt. Why all of a sudden has it become an issue now?
There are several economic realities that make America of 2011 a very different place from America of 1950 or whenever this magical period was where everything was supposed to be perfect:

Globalization - this is a fact. The so-called BRIC economies of Brazil, Russia, India and China are modernizing. And the N-11 (Next 11) countries of Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey and Vietnam are behind them. The days of a world divided between modern US and Western economies and the rest of the world living in poverty are coming to an end. This means competition for jobs and foreign markets.

Automation and computerization - Aside from directly replacing certain jobs, automation of mechanical and information systems also simplifies the jobs that remain, such that an uneducated high school dropout can perform them. No longer do you need to pay a high wage for someone who has studied for years perfecting their craft when all someone has to do is change a few settings and push a button.

Education - The high paying jobs of today typically require highly educated, creative individuals. Good education is very expensive. This effectively creates a very real class barrier between people who can obtain high paying jobs in finance, law, engineering, accounting, consulting, corporate management and other lucrative fields and people who work at Walmart.

Mobility - The information age has ushered in another factor that people rarely talk about - companies of all sizes can now react much quicker to market changes all over the world. That means that jobs, departments, even entire companies can form, disband or relocate much faster than before. Everyone I know changes jobs every 1-4 years. If you are lucky, you work in a big corporation or consulting firm like GE or Accenture that can rotate you around to different departments or clients as the need arisies. But more often than not, that also means a lot of moving or traveling to new cities. The side effect is that you end up with a highly mobile work force with little to no sense of community.

[Der_Trihs]

@msmith537

This just in. Rich people continue to live a higher standard of living while poor people continue to struggle…

You ignore his point that the middle class who aren’t either of those things is vanishing

@msmith537

This is not new stuff. I have been hearing cries of “the death of the middle class” and “America is turning into a nation of halves and halve-nots” for over 30 years. And usually greedy corporate executives are blamed for “destroying America”. Corporations and their executives have always been greedy. Politicians have always been stupid and corrupt. Why all of a sudden has it become an issue now?

It isn’t sudden, but it has been getting worse over time.

[Mr_Smashy]

Great post, msmith. One place I’d disagree with you, though, is your statement that education is very expensive.

I think that the coming years will see tremendous backlash against the traditional B&M institutions, who have been raising their prices faster than inflation for the last few decades due to a captive audience.

The new education channels of far cheaper online universities, hell, even free online instruction, can serve as a delivery mechanism for the next generation’s book learnin’. Those that take advantage of this will be the new upwardly mobile. Those that continue to cling to the 70’s model of how to stay in the middle class will get clowned. The unions, poster children for an inability to adapt, will suffer accordingly (and indeed, have in the private sector for decades.)

[Ravenman]

@msmith537

I have been hearing cries of “the death of the middle class” and “America is turning into a nation of halves and halve-nots” for over 30 years.

This statement is like saying, “I’ve been hearing for 30 years that cigarette smoking causes cancer!”

Uh, yes. You have. Because it is a fact. (Both the squeeze on the middle class and the cigarette smoking thing.)

There are certainly many reasons why those with middle-to-lower class jobs are having a tougher time, but would you care to comment on why is it fair that the upper class should not be also affected by the changes in the world economy? I mean, if business is getting more cutthroat, why should executive compensation continue to grow relative to other workers?

[Cheesesteak]

@msmith537

This is not new stuff. I have been hearing cries of “the death of the middle class” and “America is turning into a nation of halves and halve-nots” for over 30 years.

You do realize that the gini index has been increasing steadily for the last 40 years, and is currently much higher than pretty much every other industrialized nation.

I don’t mind if the rich and super rich have more than everyone else, it’s when they take a larger than proportionate share of the expanding economy that bugs me. If they have, let’s say, 40% of the total US wealth in 1980, I would expect them to realize roughly 40% of the economy’s growth from 1980 to 2010, not 50 60 or 70% of that growth. If the poor own 5% of US wealth, I would expect them to realize 5% of the growth, not 3 2 or 1%.

[BrainGlutton]

@John_Stamos_Left_Ear

Will this great divide betwene the have’s and the have not’s be catastrophic to America as a world leader?

The haves/have-nots divide was even sharper in the old British Empire – even within the UK proper – but I have never heard it cited as a cause of the Empire’s fall.

[Hold_Fast]

Though I’m not an economist, I can’t help but feel like this statistic, while true, is a little misleading. It sounds much worse because we’re all going through an economic stagnation, but I’d bet that this statistic would be essentially the same were our economy better then its ever been.

Though this certainly has the potential to become a problem in the future, I don’t think we’re anywhere near a wealth distrubution crisis.

[Wesley_Clark]

@msmith537

This just in. Rich people continue to live a higher standard of living while poor people continue to struggle…
This is not new stuff. I have been hearing cries of “the death of the middle class” and “America is turning into a nation of halves and halve-nots” for over 30 years. And usually greedy corporate executives are blamed for “destroying America”. Corporations and their executives have always been greedy. Politicians have always been stupid and corrupt. Why all of a sudden has it become an issue now?
There are several economic realities that make America of 2011 a very different place from America of 1950 or whenever this magical period was where everything was supposed to be perfect:

Globalization - this is a fact. The so-called BRIC economies of Brazil, Russia, India and China are modernizing. And the N-11 (Next 11) countries of Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey and Vietnam are behind them. The days of a world divided between modern US and Western economies and the rest of the world living in poverty are coming to an end. This means competition for jobs and foreign markets.

Automation and computerization - Aside from directly replacing certain jobs, automation of mechanical and information systems also simplifies the jobs that remain, such that an uneducated high school dropout can perform them. No longer do you need to pay a high wage for someone who has studied for years perfecting their craft when all someone has to do is change a few settings and push a button.

Education - The high paying jobs of today typically require highly educated, creative individuals. Good education is very expensive. This effectively creates a very real class barrier between people who can obtain high paying jobs in finance, law, engineering, accounting, consulting, corporate management and other lucrative fields and people who work at Walmart.

Mobility - The information age has ushered in another factor that people rarely talk about - companies of all sizes can now react much quicker to market changes all over the world. That means that jobs, departments, even entire companies can form, disband or relocate much faster than before. Everyone I know changes jobs every 1-4 years. If you are lucky, you work in a big corporation or consulting firm like GE or Accenture that can rotate you around to different departments or clients as the need arisies. But more often than not, that also means a lot of moving or traveling to new cities. The side effect is that you end up with a highly mobile work force with little to no sense of community.

None of this touches on the OP, which was about how growing income inequality and a lack of security for the bottom 90% of the country is going to lead to instability. It just offers some explanations for why it is happening.

Your statement on education is confusing though. There are tons of unemployed and underemployed people trained in law, engineering, finance and other fields along those lines. Education is not going to save people from poverty anymore.

I have no idea what the consequences of growing inequality are. Robert Reich predicts a meshing of right wing (anti-immigrant, nationalistic, anti-globalist) and left wing (progressive income taxes, anti-outsourcing) attitudes on economics over the next 10-20 years.

[Wesley_Clark]

@Cheesesteak

You do realize that the gini index has been increasing steadily for the last 40 years, and is currently much higher than pretty much every other industrialized nation.

I don’t mind if the rich and super rich have more than everyone else, it’s when they take a larger than proportionate share of the expanding economy that bugs me. If they have, let’s say, 40% of the total US wealth in 1980, I would expect them to realize roughly 40% of the economy’s growth from 1980 to 2010, not 50 60 or 70% of that growth. If the poor own 5% of US wealth, I would expect them to realize 5% of the growth, not 3 2 or 1%.

It is higher than other industrialized nations, but it is now almost as high as most latin american nations.

As people realize that they can’t get decent health care, affordable education, independent/dignified living arrangement and full time careers, and are forced to accept that their kids will have it even worse than they did, political instability should result. No idea if it will though. I think a lot of us are just going to avoid having kids because of it, no idea about those who actually had kids.

[BrainGlutton]

@BrainGlutton

The haves/have-nots divide was even sharper in the old British Empire – even within the UK proper – but I have never heard it cited as a cause of the Empire’s fall.

Well, with one exception: George Orwell, writing in 1941:

Probably the battle of Waterloo was won on the playing-fields of Eton, but the opening battles of all subsequent wars have been lost there. One of the dominant facts in English life during the past three quarters of a century has been the decay of ability in the ruling class.

In the years between 1920 and 1940 it was happening with the speed of a chemical reaction. Yet at the moment of writing it is still possible to speak of a ruling class. Like the knife which has had two new blades and three new handles, the upper fringe of English society is still almost what it was in the mid nineteenth century. After 1832 the old land-owning aristocracy steadily lost power, but instead of disappearing or becoming a fossil they simply intermarried with the merchants, manufacturers and financiers who had replaced them, and soon turned them into accurate copies of themselves. The wealthy ship owner or cotton-miller set up for himself an alibi as a country gentleman, while his sons learned the right mannerisms at public schools which had been designed for just that purpose. England was ruled by an aristocracy constantly recruited from parvenus. And considering what energy the self-made men possessed, and considering that they were buying their way into a class which at any rate had a tradition of public service, one might have expected that able rulers could be produced in some such way.

And yet somehow the ruling class decayed, lost its ability, its daring, finally even its ruthlessness, until a time came when stuffed shirts like Eden or Halifax could stand out as men of exceptional talent. As for Baldwin, one could not even dignify him with the name of stuffed shirt. He was simply a hole in the air. The mishandling of England’s domestic problems during the nineteen-twenties had been bad enough, but British foreign policy between 1931 and 1939 is one of the wonders of the world. Why? What had happened? What was it that at every decisive moment made every British statesman do the wrong thing with so unerring an instinct?

The underlying fact was that the whole position of the moneyed class had long ceased to be justifiable. There they sat, at the centre of a vast empire and a world-wide financial network, drawing interest and profits and spending them–on what? It was fair to say that life within the British Empire was in many ways better than life outside it. Still, the Empire was underdeveloped, India slept in the Middle Ages, the Dominions lay empty, with foreigners jealously barred out, and even England was full of slums and unemployment. Only half a million people, the people in the country houses, definitely benefited from the existing system. Moreover, the tendency of small businesses to merge together into large ones robbed more and more of the moneyed class of their function and turned them into mere owners, their work being done for them by salaried managers and technicians. For long past there had been in England an entirely functionless class, living on money that was invested they hardly knew where, the ‘idle rich’, the people whose photographs you can look at in the TATLER and the BYSTANDER, always supposing that you want to. The existence of these people was by any standard unjustifiable. They were simply parasites, less useful to society than his fleas are to a dog.

By 1920 there were many people who were aware of all this. By 1930 millions were aware of it. But the British ruling class obviously could not admit to themselves that their usefulness was at an end. Had they done that they would have had to abdicate. For it was not possible for them to turn themselves into mere bandits, like the American millionaires, consciously clinging to unjust privileges and beating down opposition by bribery and tear-gas bombs. After all, they belonged to a class with a certain tradition, they had been to public schools where the duty of dying for your country, if necessary, is laid down as the first and greatest of the Commandments. They had to FEEL themselves true patriots, even while they plundered their countrymen. Clearly there was only one escape for them–into stupidity. They could keep society in its existing shape only by being UNABLE to grasp that any improvement was possible. Difficult though this was, they achieved it, largely by fixing their eyes on the past and refusing to notice the changes that were going on round them.

There is much in England that this explains. It explains the decay of country life, due to the keeping-up of a sham feudalism which drives the more spirited workers off the land. It explains the immobility of the public schools, which have barely altered since the eighties of the last century. It explains the military incompetence which has again and again startled the world. Since the fifties every war in which England has engaged has started off with a series of disasters, after which the situation has been saved by people comparatively low in the social scale. The higher commanders, drawn from the aristocracy, could never prepare for modern war, because in order to do so they would have had to admit to themselves that the world was changing. They have always clung to obsolete methods and weapons, because they inevitably saw each war as a repetition of the last. Before the Boer War they prepared for the Zulu War, before the 1914 for the Boer War, and before the present war for 1914. Even at this moment hundreds of thousands of men in England are being trained with the bayonet, a weapon entirely useless except for opening tins. It is worth noticing that the navy and, latterly, the air force, have always been more efficient than the regular army. But the navy is only partially, and the air force hardly at all, within the ruling-class orbit.

[XT]

@Ravenman

This statement is like saying, “I’ve been hearing for 30 years that cigarette smoking causes cancer!”

Or like saying ‘The end is near!’…for 30 years. It might be, but then again it might not be. The evidence is not nearly so clear as the fact that cigarettes raise the probability of cancer in people who use them.

There are certainly many reasons why those with middle-to-lower class jobs are having a tougher time, but would you care to comment on why is it fair that the upper class should not be also affected by the changes in the world economy?

I don’t know what this ‘fair’ concept is. What does ‘fair’ mean? How do you determine ‘fair’? I will give my own WAG as to why the wealth distribution in the US seems to have skewed more towards ‘the rich’ than ‘the poor’ though. Basically automation, computational and simulation abilities and expert systems are the main culprits, IMHO. Productivity has risen steadily in the US. We are one of the most productive country on earth on an individual worker basis. But WHY has productivity risen? Is it due to the individual skill of the worker…or due to the tools the worker is using? I think it’s due to the tools. The modern systems MAKE workers more productive. At the same time they lower the skills needed by a worker to do a given job, and make the job easier. In my own field, something that used to take a highly trained IT engineer to do is now done for you. Instead of cryptic command lines, there are GUI systems, installation and configuration wizards, and help tabs links to the internet. While I won’t say a monkey could the work, it certainly doesn’t take as high a level engineer to design or configure a system today. The technology makes it easier.

And you see this in more than just the IT field. Watch a video on how cars were built in earlier times…then watch how they are built today. Watch how an air plane was designed and built in the past, or a building, or anything else, and then watch the design process as it operates today. What took rows of draftsmen and high level engineers or architects in the past can be done by a few people now…or even one person with the right system.

Then consider…if it’s the tools that make the worker more productive, why should the worker receive the majority of the benefit of the increase in productivity (i.e. the profit)? If the tools make the worker less vital or necessary because they open up a wider range of people with lesser skills who can now do jobs that only high level people could do before, why should those people make as much or more than those specialists in the past?

So…I think that this is one of the factors of why the middle class has stagnated, wage wise, in the past decade or so. My proof? I have none…it’s my own anecdotal take on things based on what I see happening in my own field, and what I see happening in other fields I’m familiar with.

Other factors I see is the desire of people to pay the cheapest price for something they can, yet still get some level of quality. People want cars and iPods and high speed internet…but they don’t want to pay premium prices for any of those things. In order to keep costs down, companies go more and more to automation and expert systems, and they look for workers who can do the job at costs that allow them to keep those prices down. There is also the factor that companies are under more and more pressure to show large profits, since that’s the baseline demanded for how well they do on the stock exchange.

And, of course, we’re in a nasty recession like period in the US right now, which tends to magnify peoples views on such things, and focus them on the fact that rich people are rich, while they might be out of a job or working a job for a lot less than they were making during the good times. It also focuses peoples attention on things like the evils of outsourcing and offshoring, such as Icerigger’s post earlier, or the inevitable posts from Le Jac that will happen as soon as he notices this thread.

The bottom line is…what would you do about this wealth disparity? Force companies to pay their employees more than they could get them for if allowed to simply pay what the market will bear? That will cause companies to raise prices…unless you then force those same companies to use price controls…which will cause other problems. Confiscate the loot from The Rich? And, what? Give it to the poor? To the middle class? Use it for the common good? How much would you confiscate…and how much would go to whom?

There is no way to be ‘fair’ IMHO…to me, that concept doesn’t make any sense in this context. Basically, if companies are paying people less than they are worth, then it’s up to the people selling their labor to make that determination. If their labor really IS worth less because of the tools they are using and the fact that a wider number of people could do their job as well as they can (and are willing to do that job for less), then I don’t see this as a problem that can be ‘fixed’ by some sort of government fiat.

-XT

[gonzomax]

The tax structure aids wealth disparity. The rich should pay a lot more taxes. The loopholes and shelters should be closed. The inheritance tax should be greatly increased.
Wealth disparity in the US as worse than the Guilded Age. It is bad for America .

[Ravenman]

@xtisme

I don’t know what this ‘fair’ concept is. What does ‘fair’ mean? How do you determine ‘fair’? … There is no way to be ‘fair’ IMHO…to me, that concept doesn’t make any sense in this context.

Just because you and I may not totally agree on what fair means in a very specific context does not give you a solid reason to reject the concept of fairness. Right now, the average CEO makes 320 times what the average worker does. Is there any number at which you would begin to say that it is unfair that there is such a great disparity in income?

Then consider…if it’s the tools that make the worker more productive, why should the worker receive the majority of the benefit of the increase in productivity (i.e. the profit)?

Again, you are answering the question of why middle class incomes have stagnated. I was asking why executive compensation should continue to grow at a pace that is just absurd.

The bottom line is…what would you do about this wealth disparity?

First of all, I think that folks should keep talking about this issue if for no other reason than to make it clear that some people are in denial about the problem. Before one leaps to conclusions that there is no solution but new laws and intrusive government, I propose hammering home the fact that argument that CEOs deserve increasingly higher rates of compensation generally break down to the following logical fallacies:

1. When a business does well, the CEO deserves more money.
2. When a business does poorly, the business needs to pay the CEO more so he will do a better job.
3. When a business does moderately, we should pay the CEO more because things could be worse.

So, step one is making people admit that they have/are defending a greed problem.

[emacknight]

@gonzomax

The tax structure aids wealth disparity. The rich should pay a lot more taxes. The loopholes and shelters should be closed. The inheritance tax should be greatly increased.
Wealth disparity in the US as worse than the Guilded Age. It is bad for America .

I heard that if you cut and paste this three times in a row, Lenin and Marx will appear in your bathroom and give you $1000.

[XT]

@Ravenman

Just because you and I may not totally agree on what fair means in a very specific context does not give you a solid reason to reject the concept of fairness. Right now, the average CEO makes 320 times what the average worker does. Is there any number at which you would begin to say that it is unfair that there is such a great disparity in income?

No, it was a serious question. I really don’t know what ‘fair’ or ‘fairness’ is in this context. It’s not so much that I reject it, as that I really don’t know what it means here.

Is there a number where a CEO’s compensation becomes ‘unfair’? Again, I don’t know what that means. If a CEO is being compensated beyond their worth than to me that’s stupid…but fairness or unfairness doesn’t really come into it. Basically, people should get what they can get for their labor…they should attempt to maximize their compensation if they think it’s important (I don’t, but I have my reasons). So…if a CEO is able to get 320 times what the average worker does, then, well, that’s what they should shoot for. If the average worker feels that they aren’t getting sufficient compensation for what their labor is worth in the market then they should also try and maximize their compensation, and not settle for less than their labor is worth. Do you disagree?

Again, you are answering the question of why middle class incomes have stagnated. I was asking why executive compensation should continue to grow at a pace that is just absurd.

Probably because there is a perception that the CEO has a greater impact on the financial success or failure of a business than any individual worker does, and so companies are willing to pay a premium for CEO’s who will maximize their profits. Whether this is reality or not, it’s the PERCEPTION that matters…it puts CEO’s in a position of being able to command top dollar for their labor. Sort of like a star athlete on a professional sports team. He might or might not ACTUALLY make a big difference on the teams ability to win, but if he’s perceived to give a larger chance of winning he’s going to be able to command top dollar.

First of all, I think that folks should keep talking about this issue if for no other reason than to make it clear that some people are in denial about the problem. Before one leaps to conclusions that there is no solution but new laws and intrusive government, I propose hammering home the fact that argument that CEOs deserve increasingly higher rates of compensation generally break down to the following logical fallacies:

I do deny it’s a problem…I don’t deny that it’s happening. It’s pretty obvious that there has been a larger gap in wealth distribution in the US. Since there isn’t a fixed pie, but instead a growing pie, while the rich get richer it doesn’t mean that that middle or poorer classes get poorer. They just don’t increase as quickly. When times aren’t as good, then people focus more on stuff like this…probably because the seemingly obvious solution is just to take all that ill gotten loot from the rich and give it to the people who REALLY need it (which breaks down to ‘me’, where ‘me’ is the person contemplating the confiscations).

1. When a business does well, the CEO deserves more money.
2. When a business does poorly, the business needs to pay the CEO more so he will do a better job.
3. When a business does moderately, we should pay the CEO more because things could be worse.

Couldn’t agree with you more, man. I think that’s exactly how it should work. If I were setting up a corporation and looking to hire a potential hot shit CEO, that’s exactly the sort of thing I’d stipulate. I’d also stipulate the same to management and to the workers as well.

So, step one is making people admit that they have/are defending a greed problem.

I think the first step is to make people understand that this isn’t a ‘problem’ that has to be ‘solved’…at least not by the government attempting to dictate how private businesses should be run. The trouble is that the government subtly encourages this (and other more serious) bad behavior in really large companies (which is what we are talking about if we are talking about CEO’s making outrageous salaries and compensation packages) by bailing them out when they fail. We do that not because we want to protect the fat cats, but because it’s painful when a large company goes under on the workers…and the public and politicians hate that sort of pain. However, we need to allow companies to fail if they do stupid shit, or else we encourage them to continue down those paths.

-XT

[Sinaptics]

@emacknight

I heard that if you cut and paste this three times in a row, Lenin and Marx will appear in your bathroom and give you $1000.

I heard it was Karl Rove that appears. Bees come out of his mouth and eat your socialist soul.

[Shodan]

@Ravenman

Right now, the average CEO makes 320 times what the average worker does. Is there any number at which you would begin to say that it is unfair that there is such a great disparity in income?

Based only on this disparity? No.

So, step one is making people admit that they have/are defending a greed problem.

I would say step one should be “show why this is a problem”. I don’t think “you’ve got it and I want it” is a good basis for social policy.

There are two distinct elements that need to be considered in these kinds of discussions. One is the notion that the government needs more money to spend. That’s a defensible position, but it has nothing to do with how much Joe Fatcat makes compared to the workers in his factories.

The other element is the idea that Joe Fatcat is doing me harm in some way by having more money than I do. And that needs to be demonstrated instead of merely assumed. How would greatly increasing the tax burden on rich people help the employment and economic security of the lower and middle classes?

If it’s just “he’s got more than me - no fair!”, then that is a discussion I have had with my younger daughter about why her big brother got to stay up later than she did. Justice is not treating everything the same; it is treating things that are the same the same.

Regards,
Shodan

[Ravenman]

@xtisme

No, it was a serious question. I really don’t know what ‘fair’ or ‘fairness’ is in this context. It’s not so much that I reject it, as that I really don’t know what it means here.

… If the average worker feels that they aren’t getting sufficient compensation for what their labor is worth in the market then they should also try and maximize their compensation, and not settle for less than their labor is worth. Do you disagree?

I don’t know what “worth” means in this context.

Well, just kidding. Is it really too difficult to understand the concept of fairness? I’ve seen you a lot on these boards, you’re a smart and opinionated person, not a sociopath who would fail to understand the consequences of actions or that the world doesn’t revolve around one person. If we lived in a world where the average CEO made 1,000 times what the average worker did, would you blink an eye? What if it were 10,000 times? Does that cause you any concern whatsoever?

Let me ask the question a different way: why are American CEOs so special that they are compensated at more than twice the rate of their European counterparts, and almost nine times the rate of their Japanese counterparts? Link.

Whether this is reality or not, it’s the PERCEPTION that matters…it puts CEO’s in a position of being able to command top dollar for their labor. Sort of like a star athlete on a professional sports team. He might or might not ACTUALLY make a big difference on the teams ability to win, but if he’s perceived to give a larger chance of winning he’s going to be able to command top dollar.

There are a lot of stupid perceptions out there. Forcefully stating that the status quo is the status quo because that’s the way things are is not a logical argument. It’s like you’re saying that there wasn’t a real estate bubble because people really really really thought that the value of their homes could never go down.

By the way, talk to any sports statistician and the difference that a star player makes on a sports team can be quantified, which leads to a better market than what I can perceive exists for CEOs.