Are CEOs 300 times more valuable than their lowest-paid workers?
The dangers to such income inequality should be obvious, but Washington is a cool climate for populist politicians. We need someone who'll make it tough for Congress to coddle the rich.
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Right now the politicians and press in Washington are obsessed with the challenge of the huge budget deficit and accumulating federal debt, so the climate for populism is cool. Vermont Senator Bernie Sanders is probably the only major politician who regularly speaks on issues of economic inequality with a populist flair.Skip to next paragraph
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Obama's tax proposal not enough
President Obama in his proposed new budget mildly calls for eventual tax increases for upper-income individuals making more than $200,000 a year and couples who earn more than $250,000, letting expire the Bush tax cuts for the rich. He’s also proposing to raise slightly the tax rates for corporate dividends and capital gains. This change wouldn’t take effect until 2013 and would only affect those above the $200,000/$250,000 threshold. It would not hurt most of the middle class, because the top 10 percent of Americans own 90 percent of all US stocks, bonds, and mutual funds, while the top 1 percent control 51 percent.
Nor does the proposed budget raise estate taxes; it merely “resets” them to 2009 levels. Raising them would be another way to stop or slow the growing concentration of wealth – and to pay for deficit reduction.
The economy thrived decades ago when estate taxes and income taxes on the rich were far higher. Though the rhetoric of conservatives maintains a boost in taxes on the rich now would clobber the economy, it is hard to imagine why it is so different now than in the 1960s or 1970s.
Are CEOs really 300 times more valuable?
When this writer attended annual gatherings of the CEOs of the nation’s biggest corporations in the 1960s, they were paid about 30 times the wages of their lower-paid workers. Today’s corporate chiefs are paid around 300 times the wages of their low-paid workers. Are today’s executives really ten times brighter and more able than their counterparts were 50 years ago? Common sense says no. They have merely managed to persuade members of corporate boards that they deserve fantastic pay. Potential members are unlikely to get invited to join a board by the CEO if they have a reputation for toughness on pay. And CEOs tend to mistakenly measure their own individual worth by their level of pay.
By the way, some hedge-fund managers that received hundreds of millions in compensation for amazing returns on their investments in recent years are being charged now with cheating – receiving insider information.
So an eloquent populist in the nation’s capital, by highlighting the growing concentration of income and wealth, could make it politically embarrassing for conservative members of Congress to continue coddling the rich.
David R. Francis was a longtime Monitor economics reporter and columnist.