From the Guardian
"The ratio of the total rewards enjoyed by chief executive officers of FTSE 100 companies to the pay of the average UK employee rose from 45:1 in 1998 to 120:1 in 2010. By contrast, over the past 30 years the share of national income going to the bottom half of earners in Britain has fallen steeply. Real wages nearly doubled overall during those 30 years, but only 8% of that growth went to the bottom earners. The wages of the top 1 to 5% of the working population have gone on zooming into the stratosphere, recession or no recession, while wages at the bottom remain virtually stagnant.
At a time when average living standards are being severely squeezed, Incomes Data Services reported at the end of October 2011 that the pay packages of directors of FTSE 100 companies had soared by 49% in a single year, to an average figure of £2,697,644. Chief executive officers collected rather more, an average of £3,855,172. Some of their number soared far beyond that level: Mick Davis of Xstrata collected more than £18m, Michael Spencer of Icap more than £13m. ((By contrast, after the great crash of 1929, the salaries of the discredited and demoralised bankers and CEOs shrank rapidly, and remained in relative decline for several decades.)
If global competition levels down the wages of people who make trainers or motor cars – which it obviously does – then why doesn't it level down the wages of managers and the professionals, too? There are, for example, millions of well-educated Indians who can handle a spreadsheet and could easily acquire those precious managerial skills (if they haven't already), and who will travel anywhere in search of better opportunities. This sort of competition from the emerging nations ought to nudge top-level rewards downwards, just as it does for workers in call centres and car factories, other things being equal. The suspicion grows that perhaps other things are not equal. Are the markets for top talent genuinely free? Or are they constrained and distorted in various ways – by monopoly power, by professional cartels to keep wages high, by government regulation, by stitch-ups in the boardroom, by undetected market abuse, and by outright looting?
Some people would prefer to brush the whole question aside. "Surely," they will claim, "it is better to tolerate some degree of inequality if it energises the economy. A rising tide lifts all boats?" The truth is that wealth is not trickling down to anywhere near the bottom. Many of the worst off are sinking into a demoralised and detached underclass, just as the top earners are congealing into a super-class.
George Orwell said in 1946 that "for quite 50 years past the general drift has almost certainly been towards oligarchy." He detected then "the ever-increasing concentration of industrial and financial power and the diminishing importance of the individual capitalist or shareholder". In The Modern Corporation and Private Property, published in the depths of the great depression, Adolf Berle and Gardiner Means pointed out that the powers of shareholders to control runaway executives had already become an illusion. The concentration of power had brought forth "princes of industry", or as Tom Wolfe called them half a century later, "masters of the universe". Adam Smith warned us about the dangers of merchants conspiring together and of ownerless corporations."
We all know what Karl Marx advocated. The abolition of capitalism. A surer means of solution rather than more regulation (and consequently more loop-holes)
"The ratio of the total rewards enjoyed by chief executive officers of FTSE 100 companies to the pay of the average UK employee rose from 45:1 in 1998 to 120:1 in 2010. By contrast, over the past 30 years the share of national income going to the bottom half of earners in Britain has fallen steeply. Real wages nearly doubled overall during those 30 years, but only 8% of that growth went to the bottom earners. The wages of the top 1 to 5% of the working population have gone on zooming into the stratosphere, recession or no recession, while wages at the bottom remain virtually stagnant.
At a time when average living standards are being severely squeezed, Incomes Data Services reported at the end of October 2011 that the pay packages of directors of FTSE 100 companies had soared by 49% in a single year, to an average figure of £2,697,644. Chief executive officers collected rather more, an average of £3,855,172. Some of their number soared far beyond that level: Mick Davis of Xstrata collected more than £18m, Michael Spencer of Icap more than £13m. ((By contrast, after the great crash of 1929, the salaries of the discredited and demoralised bankers and CEOs shrank rapidly, and remained in relative decline for several decades.)
If global competition levels down the wages of people who make trainers or motor cars – which it obviously does – then why doesn't it level down the wages of managers and the professionals, too? There are, for example, millions of well-educated Indians who can handle a spreadsheet and could easily acquire those precious managerial skills (if they haven't already), and who will travel anywhere in search of better opportunities. This sort of competition from the emerging nations ought to nudge top-level rewards downwards, just as it does for workers in call centres and car factories, other things being equal. The suspicion grows that perhaps other things are not equal. Are the markets for top talent genuinely free? Or are they constrained and distorted in various ways – by monopoly power, by professional cartels to keep wages high, by government regulation, by stitch-ups in the boardroom, by undetected market abuse, and by outright looting?
Some people would prefer to brush the whole question aside. "Surely," they will claim, "it is better to tolerate some degree of inequality if it energises the economy. A rising tide lifts all boats?" The truth is that wealth is not trickling down to anywhere near the bottom. Many of the worst off are sinking into a demoralised and detached underclass, just as the top earners are congealing into a super-class.
George Orwell said in 1946 that "for quite 50 years past the general drift has almost certainly been towards oligarchy." He detected then "the ever-increasing concentration of industrial and financial power and the diminishing importance of the individual capitalist or shareholder". In The Modern Corporation and Private Property, published in the depths of the great depression, Adolf Berle and Gardiner Means pointed out that the powers of shareholders to control runaway executives had already become an illusion. The concentration of power had brought forth "princes of industry", or as Tom Wolfe called them half a century later, "masters of the universe". Adam Smith warned us about the dangers of merchants conspiring together and of ownerless corporations."
We all know what Karl Marx advocated. The abolition of capitalism. A surer means of solution rather than more regulation (and consequently more loop-holes)
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