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REMUNERATION
MASSIVE INEQUALITY
Top management has taken advantage of the power
it has to remunerate itself very generously
Payroll Accountability ... taking issue with payroll inequality
Peter Burgess COMMENTARY
This factoid is from 2014 ... almost 10 years ago. If anything the issue has degraded even further in subsequent years with almost nothing done to address the issue and reverse the trend.
There was a decent correlation between wages, productivity and profits for most of the time between the end of WWII and the end of the 1960s, but this changed dramatically in the 1970s with the OPEC oil shock, huge profit drops and stock market weakness.
Since around 1980 there has been a massive relocation of production from the industrial heartland of the United States into lower wage 'right to work' states mainly in the South and then overseas to low wage countries mainly in Asia.
Almost all high wage American production jobs disappeared and were replaced by a variety of low wage jobs mainly in the service industry and agriculture. Companies were optimized for financial profit and from the early 1980s to the present time, productivity and profits have increased substantially while the level of wages have flatlined ... for around 40 years or about 2 generations!
Stock markets and investors do not see a problem with this ... but society has become stressed and nobody with access to the levers of power has done anything meaningful to address the problem.
President Obama made a start on addressing the problem together with addressing the Bush (43) era financial crisis and affordable health, but when the GOP gained control of Congress all legislation of significance was blocked. When Trump's GOP took control of Congress economic growth accelerated but inequality increased even more. President Biden has a Progressive Policy Agenda and in spite just a tiny majority has enacted significant legislation to improve society and the economy, not to mention some long needed environmental legislation ... without any support from the Republican Party.
It has become clear that there are more risks in the modern global economy than there have been for most of the last 70 years ... but it is also true that the technical potential in the modern world could make the world a better place than it has every been. There was a time when great economists like Maynard Keynes were talking about a time when most people would be able to work a 3-day week to produce all the goods and services needed by the world's people. What happened? Instead of optimizing policy to that end, there has been financialization and policy frameworks promoted by the Harvard Business School, Milton Friedman and others that have enabled the greatest flood of wealth surging up to the top of the wealth pyramid at the expense of everyone else. President Biden has made modest progress ... a good start, and hopefully more will be possible in the years ahead. The foundational technology to support high productivity exists ... but using it for the betterment of us all is also important.
Peter Burgess
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