Sunday, June 29, 2014

218. Why embrace huge CEO raises?

The rich get richer and the poor get poorer, yet nobody really seems to care. Even though there is an increasing awareness of the disparity of wealth in this country, it is not an issue in which people seem willing to invest.

When public employees, whether they are administrators, fire fighters or teachers get a raise, it drives some people crazy—and they fret endlessly about their taxpayer money.

When the middle class fights for labor rights and fair pay, they are chastised and preached to about the evils of unionization and free markets.

When raising the minimum wage is considered, or providing healthcare to employees is required, fiscal conservatives rush to warn about job loss and higher prices.

Yet, the same people look the other way, without complaint or criticism, when CEOs make millions of dollars per year. They have been programmed into believing that the very wealthy deserve what they earn, they represent capitalism at its best, or are necessary to provide jobs to the middle and lower classes.

The problem is that it is getting worse—average CEO pay in 2013 topped 10 million dollars, an increase of 8.8 percent from 2012. They now make more than 250 times that of average workers. Workers in the United States only received, on average, a 1.3 percent increase in 2013.

Imagine if teachers received an 8.8 percent raise. Imagine if any public employee made even close to $1 million dollars. The outrage would be relentless.

The truth is that CEO pay comes from somewhere. It’s either built in the price of the product, the backs of their employees or the outsourcing of their suppliers. It may be from the services they charge clients or the advertisement rate they can obtain. We pay their salaries, each one of us, somewhere along the way.

For example, number two on the top ten list of highest paid CEOs was Leslie Moonves of CBS. Also making the list in the entertainment business was Jeffrey Bewkes of Time Warner, who received a 27 percent raise last year earning over $32 million. How do you boycott CBS and Time Warner? Not only would you have to not subscribe to cable, not watch CBS, but you would also have to boycott any and every company that works with or advertises with those corporations.

People may think they have a choice, not to support a certain company, and thereby not contribute to the excessive pay of a particular CEO, but these corporations are well diversified and intertwined with our everyday life. We pay their $10 million dollar salary just as much as we pay a teacher’s $50,000 salary.

It just trickles up, exponentially.

The problem with inequality isn’t just whether or not one can afford to buy a private jet—it’s bad for society and our political system. ThinkProgress’ Bryce Covert summarizes the negative consequences:

“It pushes Americans into more debt, makes them sicker, makes them less safe, and keeps them from moving up the economic ladder. It also hurts economic growth, while addressing it through modestly redistributive policies doesn’t.

And it destabilizes the political system. Research has found that high inequality leads to a less representative democracy and a higher chance of revolution as the less well-off come to believe that the government only serves the rich. And those people would be right, as our current political system is far more responsive to the wealthy . . . and doesn’t listen to what the middle class and poor want and need.”

Our country, even our democracy, is at risk if the people do not find a way to stand against the excessiveness and influence of a few. Our economy grows when the middle and lower classes have money to spend; even early economists recognized growth challenges when the wealthy make considerably more than they can possibly spend.

There should not be any outrage when a firefighter or a teacher, trying to pay a mortgage, raise a family and send their children to college, receives a modest raise. Our outrage should be reserved for, and attached to, wealth inequality arising from, in part, the travesty of excessive CEO pay.