According to the Bureau of Labor Statistics, the average pay of company CEOs has increased 715 percent over the past three decades compared to the average pay of all workers during that time. That ratio is now 300-to-1. So who cares, as long as everyone else’s pay is growing as well? But it is not. Over the same 30 years, 98 percent of pay gains have gone to the 10 percent at the top of the organization chart. All boats are not rising, only the yachts.
As high unemployment and economic fatigue hang around like a bad cold threatening to become pneumonia, the 98 percent of American workers who got only 2 percent of the pay gains, and who are haunted by the specter of unemployment, are paying more attention to how the pay scales are tilted.
While envy is not one of humanity’s more admirable qualities, neither is greed. Americans will accept the promises of free-market capitalism and its inevitable wealth disparities as long as they are not suffering deep, prolonged, economic deprivation — and they believe the game is not rigged.
The increasing wealth disparity among Americans results less from the risk-reward mechanism of capitalism than it does from the fraternity of hogs who endeavor to keep the slop flowing only to their troughs. The economic elite influence public policy makers like the hoi polloi cannot. Furthermore, many in government are among the economic elite. How do fabulously wealthy corporations continue to get subsidies from the public treasury and generous tax breaks as well? How do perfidiously, profiteering Wall Street bankers wreck the economy, get bailed out by taxpayers, and still collect huge salaries and bonuses?
From the perspective of the tradesman or clerk who has lost his or her job and cannot find another one, the game looks rigged. From the perspective of the degreed professionals who have lost jobs to much lower-paid foreign workers as increased profits translate into bigger bonuses for top management, the game looks rigged. To those workers who believed in the market and invested in 401(k)s, the game looks rigged.
Hoggery is not restricted to the usual big corporate suspects. In America today, everything — education, medicine, public service, organized labor, even charity — is a profit center increasingly benefiting those at the top of these organizations at the expense of others. College students mortgage their futures to pay ever soaring tuitions while college presidents and administrators are given ever larger salaries. The unconscionable greed of the medical industry bankrupts people and leaves them for dead. Politicians and public servants drain public treasuries to pay themselves lavish lifetime benefits. Organized labor works like the mafia. And even some of our oldest, most respected charities have suffered financial fraud at the top.
The justification given for the endless escalation of executive compensation is the principle of supply and demand. We are to believe that competition for these people of uncommon talent is driving up executive pay because that talent is in short supply. How much talent did it take to bankrupt General Motors and the biggest banks on Wall Street? There should be plenty of uncommon talent looking for jobs these days.
Executive pay escalation is less likely the result of market forces than it is from hogs feeding hogs and no one saying “enough!” The boards of industry, education, medicine and other institutions are typically comprised of the economic elite. Indeed, executives of one organization frequently sit on the boards of other organizations. These boards determine executive pay — hogs feeding hogs.
Last year’s Dodd-Frank Act makes a feeble attempt to address executive hoggery. The act contains a provision that requires some publicly traded corporations to report the ratio of executive pay to the average pay of their workers. No surprise that the executives subject to this provision are strongly protesting it. Hogs are typically reluctant to step on the scales.
Economic disparity is a rubber band that can be pulled apart only so far before it snaps. As much or more so than tyranny or civil rights abuses, wealth inequity has been the fuse that has ignited social upheaval throughout human history. Desperate people who can no longer afford food or medicine have nothing to lose and can become extremely dangerous — as the French and Russian nobility learned the hard way, and as greedy Arab despots are learning today.
If you have yours, be thankful. But keep an eye over your shoulder for flying rubber.
— Santa Barbara political observer Randy Alcorn can be contacted at .(JavaScript must be enabled to view this email address). Click here to read previous columns.
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