Is that a lot?
January 6, 2011 2:42 PM Subscribe
Together, Slim, Gates, Buffett, and Ambani control more wealth than the world's poorest 57 countries.
"We spend far too much time and energy worrying about the supposed global divide between north and south, rich country and poor country. It doesn't actually exist. The planet's real fault line is between elites and the middle class in some countries, and the bottom of the pyramid, everywhere." Carl Pope, President of the Sierra Club, contributes one of 10 Unconventional Wisdom pieces to Foreign Policy magazine's 40th anniversary issue.
"We spend far too much time and energy worrying about the supposed global divide between north and south, rich country and poor country. It doesn't actually exist. The planet's real fault line is between elites and the middle class in some countries, and the bottom of the pyramid, everywhere." Carl Pope, President of the Sierra Club, contributes one of 10 Unconventional Wisdom pieces to Foreign Policy magazine's 40th anniversary issue.
Someday, to our peril, the poor will find their own way to remind us.
fuck you karl pope.
posted by clavdivs at 2:59 PM on January 6, 2011
fuck you karl pope.
posted by clavdivs at 2:59 PM on January 6, 2011
Well, what's really isn't that "knowledge" is taking over, it's that computers are. Whereas before you would need lots of intermediaries to do things, now, you just program a computer to process the necessary information. In fact it's really the reverse of a knowledge based economy, rather then having institutional knowledge tied up in layers of management, you just have the people at the top, and the people at the bottom.
I think we need to re-evaluate the 'work ethic'. It may be that in the future, and actually probably today - it simply won't require that much labor to provide everyone with everything they need. I mean, what percentage of labor is currently tied up in farming, food distribution and so on?
Eventually what happens when even basic luxuries of middle class life are also able to be created without much labor?
The current model is mass unemployment, which drives down the wages of those who are still working and massive accumulation of wealth for those at the top. Is that sustainable? Maybe.
Is that a good idea? I don't think so.
posted by delmoi at 3:03 PM on January 6, 2011 [4 favorites]
I think we need to re-evaluate the 'work ethic'. It may be that in the future, and actually probably today - it simply won't require that much labor to provide everyone with everything they need. I mean, what percentage of labor is currently tied up in farming, food distribution and so on?
Eventually what happens when even basic luxuries of middle class life are also able to be created without much labor?
The current model is mass unemployment, which drives down the wages of those who are still working and massive accumulation of wealth for those at the top. Is that sustainable? Maybe.
Is that a good idea? I don't think so.
posted by delmoi at 3:03 PM on January 6, 2011 [4 favorites]
real fault line is between elites and the middle class in some countries, and the bottom of the pyramid
A person with a hundred dollars is nearer to a millionaire than a millionaire is to Bill Gates—both arithmetically and geometrically. You have to take the double log of wealth before you can put the millionaire and Bill Gates on the same side of the divide.
posted by ryanrs at 3:07 PM on January 6, 2011 [4 favorites]
A person with a hundred dollars is nearer to a millionaire than a millionaire is to Bill Gates—both arithmetically and geometrically. You have to take the double log of wealth before you can put the millionaire and Bill Gates on the same side of the divide.
posted by ryanrs at 3:07 PM on January 6, 2011 [4 favorites]
delmoi: "Eventually what happens when even basic luxuries of middle class life are also able to be created without much labor?
"
That device will be patented and will never be brought to market at a consumer level. You'll be able to buy your goods for the same price as always.
posted by boo_radley at 3:08 PM on January 6, 2011 [1 favorite]
"
That device will be patented and will never be brought to market at a consumer level. You'll be able to buy your goods for the same price as always.
posted by boo_radley at 3:08 PM on January 6, 2011 [1 favorite]
you just program a computer to process the necessary information
You should not help me when I ask you how you do your job so I can write an app to mirror your process. Management is not trying to make your job easier, Management trying to eliminate your job.
posted by Ad hominem at 3:11 PM on January 6, 2011 [2 favorites]
You should not help me when I ask you how you do your job so I can write an app to mirror your process. Management is not trying to make your job easier, Management trying to eliminate your job.
posted by Ad hominem at 3:11 PM on January 6, 2011 [2 favorites]
Someday, to our peril, the poor will find their own way to remind us.
Really...them and whose army? The elite class would gas us all before they'd ever give up their grip on power.
posted by AElfwine Evenstar at 3:12 PM on January 6, 2011
Really...them and whose army? The elite class would gas us all before they'd ever give up their grip on power.
posted by AElfwine Evenstar at 3:12 PM on January 6, 2011
A person with a hundred dollars is nearer to a millionaire than a millionaire is to Bill Gates—both arithmetically and geometrically. You have to take the double log of wealth before you can put the millionaire and Bill Gates on the same side of the divide.
Indeed. Now, in the real world, neither the millionaire nor Bill Gates will want for just about any life necessities, whereas the person with a hundred dollars could starve or freeze. So, in real world terms, I would say the millionaire and Bill Gates are a hell of a lot closer.
posted by kmz at 3:13 PM on January 6, 2011 [6 favorites]
Indeed. Now, in the real world, neither the millionaire nor Bill Gates will want for just about any life necessities, whereas the person with a hundred dollars could starve or freeze. So, in real world terms, I would say the millionaire and Bill Gates are a hell of a lot closer.
posted by kmz at 3:13 PM on January 6, 2011 [6 favorites]
In other words, the difference between life and death is a lot bigger than the difference between two Audis and 50 Bugattis.
posted by kmz at 3:19 PM on January 6, 2011 [12 favorites]
posted by kmz at 3:19 PM on January 6, 2011 [12 favorites]
Perhaps in personal lifestyle, due to the decreasing marginal value of wealth. But not in power.
posted by ryanrs at 3:21 PM on January 6, 2011
posted by ryanrs at 3:21 PM on January 6, 2011
Now, in the real world, neither the millionaire nor Bill Gates will want for just about any life necessities, whereas the person with a hundred dollars could starve or freeze.
A rich man asks a poor man where his money goes.
"I spent 50% of my money on rent."
"See, that's your problem right there, I only spend 2% of my budget on housing!"
Context is the line between understanding and foolishness.
posted by yeloson at 3:24 PM on January 6, 2011 [10 favorites]
A rich man asks a poor man where his money goes.
"I spent 50% of my money on rent."
"See, that's your problem right there, I only spend 2% of my budget on housing!"
Context is the line between understanding and foolishness.
posted by yeloson at 3:24 PM on January 6, 2011 [10 favorites]
So, The Onion has taken over FP?
Economies Can't Just Keep On Growing, by Thomas Homer-Dixon
Homeland Security Hasn't Made Us Safer, by Anne Applebaum
China's Rise Doesn't Mean War…, by Joseph S. Nye Jr.
…And China Isn't Beating the U.S., by Daniel W. Drezner
Understanding History Won't Help Us Make Peace, by Aluf Benn
America Pressures Israel Plenty, by Leslie H. Gelb
Actually, the Retirement Age Is Too High, by James K. Galbraith
The Rich Really Don't Care About the Poor, by Carl Pope
The Global Economy Won't Recover, Now or Ever, by Immanuel Wallerstein
Sovereignty Is Far From Dead, by Nina Hachigian
Democracy Is Still Worth Fighting For, by Morton Halperin
Sometimes, the Conventional Wisdom Is Right, by Stephen Sestanovich
posted by ennui.bz at 3:38 PM on January 6, 2011 [1 favorite]
Economies Can't Just Keep On Growing, by Thomas Homer-Dixon
Homeland Security Hasn't Made Us Safer, by Anne Applebaum
China's Rise Doesn't Mean War…, by Joseph S. Nye Jr.
…And China Isn't Beating the U.S., by Daniel W. Drezner
Understanding History Won't Help Us Make Peace, by Aluf Benn
America Pressures Israel Plenty, by Leslie H. Gelb
Actually, the Retirement Age Is Too High, by James K. Galbraith
The Rich Really Don't Care About the Poor, by Carl Pope
The Global Economy Won't Recover, Now or Ever, by Immanuel Wallerstein
Sovereignty Is Far From Dead, by Nina Hachigian
Democracy Is Still Worth Fighting For, by Morton Halperin
Sometimes, the Conventional Wisdom Is Right, by Stephen Sestanovich
posted by ennui.bz at 3:38 PM on January 6, 2011 [1 favorite]
Just Get Off Israel's Back, Mom!
You're Not China's Real Dad!
posted by boo_radley at 3:44 PM on January 6, 2011
You're Not China's Real Dad!
posted by boo_radley at 3:44 PM on January 6, 2011
A person with a hundred dollars is nearer to a millionaire than a millionaire is to Bill Gates—both arithmetically and geometrically. You have to take the double log of wealth before you can put the millionaire and Bill Gates on the same side of the divide.
Perhaps you meant "someone with a million dollars" rather than "a millionaire". 54 million is still a millionaire after all.
(or maybe I'm just missing something)?
.01 percent of one million = 100
.01 percent of 54 billion = 5,400,000
.1 percent of 54 billion = 54,000,000
.002 percent of 54 billion = 1,080,000
posted by madajb at 3:46 PM on January 6, 2011
Perhaps you meant "someone with a million dollars" rather than "a millionaire". 54 million is still a millionaire after all.
(or maybe I'm just missing something)?
.01 percent of one million = 100
.01 percent of 54 billion = 5,400,000
.1 percent of 54 billion = 54,000,000
.002 percent of 54 billion = 1,080,000
posted by madajb at 3:46 PM on January 6, 2011
Together, Slim, Gates, Buffett, and Ambani control more wealth than the world's poorest 57 countries.
Pedantry: The article doesn't say what data this comparison is based on. But it's probably comparing the billionaires' wealth with the countries' GDP, and is therefore wrong. Wealth is the stock of net assets accumulated over the individual's lifetime to date. GDP has nothing to do with accumulated assets and liabilities, it's the total amount of goods and services produced in a single year, net of all intermediate goods. No doubt all the substantive points made in the article still stand, but still: comparisons between wealth and GDP are meaningless.
posted by matthewr at 3:51 PM on January 6, 2011 [6 favorites]
Pedantry: The article doesn't say what data this comparison is based on. But it's probably comparing the billionaires' wealth with the countries' GDP, and is therefore wrong. Wealth is the stock of net assets accumulated over the individual's lifetime to date. GDP has nothing to do with accumulated assets and liabilities, it's the total amount of goods and services produced in a single year, net of all intermediate goods. No doubt all the substantive points made in the article still stand, but still: comparisons between wealth and GDP are meaningless.
posted by matthewr at 3:51 PM on January 6, 2011 [6 favorites]
See, that's your problem right there, I only spend 2% of my budget on housing
Yes, that's what I'm getting at. Consider a Ugandan coffee farmer, a dentist in California, and Bill Gates. Create pie charts showing the spending of each household, broadly categorized (e.g. food, housing, transportation, energy, etc). Viewed sided-by-side, I believe Bill Gates' budget will be the outlier, not the farmers.
Perhaps you meant "someone with a million dollars" rather than "a millionaire"
Dunno about you, but if I had a million dollars, I'd call myself a millionaire. I chose that number as an upper bound of what might be called "the middle class in some countries". If you have $54M, that ain't you.
posted by ryanrs at 3:58 PM on January 6, 2011
Yes, that's what I'm getting at. Consider a Ugandan coffee farmer, a dentist in California, and Bill Gates. Create pie charts showing the spending of each household, broadly categorized (e.g. food, housing, transportation, energy, etc). Viewed sided-by-side, I believe Bill Gates' budget will be the outlier, not the farmers.
Perhaps you meant "someone with a million dollars" rather than "a millionaire"
Dunno about you, but if I had a million dollars, I'd call myself a millionaire. I chose that number as an upper bound of what might be called "the middle class in some countries". If you have $54M, that ain't you.
posted by ryanrs at 3:58 PM on January 6, 2011
The danger is that while we have a global economy that knows how to concentrate money and power in an ever smaller set of hands, we have no robust mechanism to alert us to the injustice, dangers, and instability that come along with this package.
Say what now?
As far as I see it, there is a very large, loud effort put in to alerting the world about injustice, danger & instability, from traditional media to a quintillion bloggers. But the vast majority of people would rather try to get into that elite, or at least a bit higher up the ladder, than protest in the streets, or in newspaper columns.
Take Ambani's story, as just one example.
posted by chavenet at 4:06 PM on January 6, 2011
Say what now?
As far as I see it, there is a very large, loud effort put in to alerting the world about injustice, danger & instability, from traditional media to a quintillion bloggers. But the vast majority of people would rather try to get into that elite, or at least a bit higher up the ladder, than protest in the streets, or in newspaper columns.
Take Ambani's story, as just one example.
posted by chavenet at 4:06 PM on January 6, 2011
What does it matter how much money these people have? It is just paper in a vault, or numbers in a computer. Unless they are stealing it from people, nobody is harmed by someone else's wealth.
posted by gjc at 4:13 PM on January 6, 2011
posted by gjc at 4:13 PM on January 6, 2011
This article didn't really make any sense:
There are people who are very rich! (but Gates and Buffet are giving away most of their money)
Countries with resources are a mess! (the USA, Canada, and China have a lot of resources and are not a mess)
The system hates peasant farmers! (neglecting the fact that the system makes it even possible for peasant farmers to sell overseas)
Rich people who live in the same country have more in common than overseas peasant farmers! (duh!)
posted by meowzilla at 4:21 PM on January 6, 2011
There are people who are very rich! (but Gates and Buffet are giving away most of their money)
Countries with resources are a mess! (the USA, Canada, and China have a lot of resources and are not a mess)
The system hates peasant farmers! (neglecting the fact that the system makes it even possible for peasant farmers to sell overseas)
Rich people who live in the same country have more in common than overseas peasant farmers! (duh!)
posted by meowzilla at 4:21 PM on January 6, 2011
It is not paper in a vault. It is political and economic power. Power that is being used to accumulate more wealth and more power at the expense of a much larger poor population. Left unchecked, this feedback process will create such extreme inequity it will threaten social and political stability.
posted by ryanrs at 4:28 PM on January 6, 2011 [4 favorites]
posted by ryanrs at 4:28 PM on January 6, 2011 [4 favorites]
Eventually we are going to have to confront the fact that inequalities in wealth are creators of power and hierarchy, and that you can't have wealthy people without having corruption- both because some form of corruption is necessary to allow fortunes to grow past a certain point and because the wealthy have not at any point in history proved themselves capable of not working to corrupt the system.
We can have massive wealth disparities or we can have justice. Pick one.
posted by Pope Guilty at 4:41 PM on January 6, 2011 [6 favorites]
We can have massive wealth disparities or we can have justice. Pick one.
posted by Pope Guilty at 4:41 PM on January 6, 2011 [6 favorites]
gjc: It's also worth noting that Carlos Slim earned his fortune in large part through the privatization of Telemex, which operates as a monopoly in Mexico. A public asset was converted into a private revenue spinner which was then leveraged to fund further expansion.
The larger problem is that without a major expansion of the economy or the development of a new field, such as computing, (or in earlier ages, electricity, automobiles, industrial chemistry) there are exactly two ways to make that kind of money, 1) Be very good at market speculation and manipulation. 2) Get control of a public asset and turn it into a private money-maker. And when public investment is turned over to private hands it usually involves official corruption and always involves the public receiving a fraction of what an asset is worth.
posted by Grimgrin at 4:46 PM on January 6, 2011 [1 favorite]
The larger problem is that without a major expansion of the economy or the development of a new field, such as computing, (or in earlier ages, electricity, automobiles, industrial chemistry) there are exactly two ways to make that kind of money, 1) Be very good at market speculation and manipulation. 2) Get control of a public asset and turn it into a private money-maker. And when public investment is turned over to private hands it usually involves official corruption and always involves the public receiving a fraction of what an asset is worth.
posted by Grimgrin at 4:46 PM on January 6, 2011 [1 favorite]
It is political and economic power. Power that is being used to accumulate more wealth and more power at the expense of a much larger poor population.
Actually, I'd say Buffet and Gates are doing more to help poor people with their power and wealth than, say, the US government is.
Not to say that extreme income differential is good, but at least a couple of these guys are reasonably good actors, and more so than most governments.
posted by wildcrdj at 4:50 PM on January 6, 2011
Actually, I'd say Buffet and Gates are doing more to help poor people with their power and wealth than, say, the US government is.
Not to say that extreme income differential is good, but at least a couple of these guys are reasonably good actors, and more so than most governments.
posted by wildcrdj at 4:50 PM on January 6, 2011
Gates and Buffett are not representative of the super-rich, at least in regard to philantropy. And although the Bill & Melinda Gates Foundation may spend a larger percentage of their budget to help the poor than the US Gov't does, the difference in scale is enormous. For example, Medicaid annual spending is ten times greater than the Foundation's total endowment.
Philantropy is a poor substitute for taxation.
posted by ryanrs at 5:19 PM on January 6, 2011 [15 favorites]
Philantropy is a poor substitute for taxation.
posted by ryanrs at 5:19 PM on January 6, 2011 [15 favorites]
If there was hope, it must lie in the proles, because only there in those swarming disregarded masses, 85 per cent of the population of Oceania, could the force to destroy the Party ever be generated. The Party could not be overthrown from within.[...]But the proles, if only they could somehow become conscious of their own strength, would have no need to conspire. They needed only to rise up and shake themselves like a horse shaking off flies. If they chose they could blow the Party to pieces tomorrow morning. Surely sooner or later it must occur to them to do it? And yet-!posted by kirkaracha at 5:56 PM on January 6, 2011
It would be interesting to compare the income distribution today with that in feudal times, however inexactly.
posted by unSane at 6:06 PM on January 6, 2011 [2 favorites]
posted by unSane at 6:06 PM on January 6, 2011 [2 favorites]
Mexico's Carlos Slim is the World's Richest Man,it took 20 postings to note this fact.
posted by tustinrick at 6:41 PM on January 6, 2011
posted by tustinrick at 6:41 PM on January 6, 2011
We can have massive wealth disparities or we can have justice. Pick one.
I'm not even sure you get justice with wealth redistribution. Seems a bit of a false choice. The large-scale experiments that have been tried (North Korea, Soviet Russia, etc.) have all failed pretty badly to protect human rights.
posted by Blazecock Pileon at 7:16 PM on January 6, 2011
I'm not even sure you get justice with wealth redistribution. Seems a bit of a false choice. The large-scale experiments that have been tried (North Korea, Soviet Russia, etc.) have all failed pretty badly to protect human rights.
posted by Blazecock Pileon at 7:16 PM on January 6, 2011
I don't so much advocate redistributing wealth so much as structuring the system to make the concept of "rich" incoherent.
posted by Pope Guilty at 7:49 PM on January 6, 2011 [2 favorites]
posted by Pope Guilty at 7:49 PM on January 6, 2011 [2 favorites]
In fact, the poor pay 20 percent of the world's lighting bill -- and get only 0.1 percent of the world's lighting services in exchange.
Cite?
posted by sanko at 9:23 PM on January 6, 2011
Cite?
posted by sanko at 9:23 PM on January 6, 2011
gjc: You do understand that that "number in a computer" doesn't just sit there, right? That it moves around and earns interest and is an active element in the economy, right? Wealth is not just "paper in a vault." It moves and shakes, even when its possessors are not actively bringing it to bear. Banks exist to make sure that wealth is never left idle. That is the whole point of a bank.
Gee thanks. How does THAT hurt the rest of us?
posted by gjc at 5:37 AM on January 7, 2011
Gee thanks. How does THAT hurt the rest of us?
posted by gjc at 5:37 AM on January 7, 2011
Money supply may not technically be a zero-sum game over the long run, but in the short term--and particularly where those who command a smaller share of the wealth are concerned--it very much is a zero-sum game for all practical concerns on a transactional basis.
For example, if Company A has 10 billion in revenue, and 5 billion goes to compensation packages for only 1% of its workforce, there's only the 5 billion left in play to be divvied up to pay for material and facilities costs and labor. That's just one example of how, despite not being strictly fixed, at any given point in time, money supply is still essentially finite. So at any given point in time, there's only so much money to go around, and anyone hogging more than their fair share is effectively claiming for themselves what they are denying the rest of us and the economy as a whole.
Since at any given point in time there's only so much money in circulation, when too much of the value in the economy gets siphoned off, the entire economic system suffers for it, and the only solution is to print more money and take on more debt. The current national debt, which the rich particularly like to piss and moan about, is basically just the inevitable result of our consistently allowing too much profit to be extracted from the economy, when it should be circulated more widely to proportionally compensate the actual production of economic value.
For example, suppose our hypothetical company saw a massive increase in employee productivity in a previous quarter. On average, productivity doubled. So its CEO says, hey look how much value I added and convinces the board to give him a multi-million dollar bonus. Meanwhile, just because the CEO may have created the structural changes that encouraged the increase in productivity, the employees are the ones who've actually become more productive, and if their increased productivity isn't rewarded proportionally, then you're not only not compensating them for their share of the contribution to the economy, you are effectively changing the market baseline and cheapening the value of their labor (basically, any uncompensated productivity gain amounts to a de facto wage cut).
We've got a great big gaping hole in our economy that out-sized corporate bonuses, regulatory capture and financial corruption put there, and we're trying to fill it by printing more money, when what we should be doing is patching the hole in our life boat.
posted by saulgoodman at 7:12 AM on January 7, 2011 [2 favorites]
For example, if Company A has 10 billion in revenue, and 5 billion goes to compensation packages for only 1% of its workforce, there's only the 5 billion left in play to be divvied up to pay for material and facilities costs and labor. That's just one example of how, despite not being strictly fixed, at any given point in time, money supply is still essentially finite. So at any given point in time, there's only so much money to go around, and anyone hogging more than their fair share is effectively claiming for themselves what they are denying the rest of us and the economy as a whole.
Since at any given point in time there's only so much money in circulation, when too much of the value in the economy gets siphoned off, the entire economic system suffers for it, and the only solution is to print more money and take on more debt. The current national debt, which the rich particularly like to piss and moan about, is basically just the inevitable result of our consistently allowing too much profit to be extracted from the economy, when it should be circulated more widely to proportionally compensate the actual production of economic value.
For example, suppose our hypothetical company saw a massive increase in employee productivity in a previous quarter. On average, productivity doubled. So its CEO says, hey look how much value I added and convinces the board to give him a multi-million dollar bonus. Meanwhile, just because the CEO may have created the structural changes that encouraged the increase in productivity, the employees are the ones who've actually become more productive, and if their increased productivity isn't rewarded proportionally, then you're not only not compensating them for their share of the contribution to the economy, you are effectively changing the market baseline and cheapening the value of their labor (basically, any uncompensated productivity gain amounts to a de facto wage cut).
We've got a great big gaping hole in our economy that out-sized corporate bonuses, regulatory capture and financial corruption put there, and we're trying to fill it by printing more money, when what we should be doing is patching the hole in our life boat.
posted by saulgoodman at 7:12 AM on January 7, 2011 [2 favorites]
A person with a hundred dollars is nearer to a millionaire than a millionaire is to Bill Gates—both arithmetically and geometrically. You have to take the double log of wealth before you can put the millionaire and Bill Gates on the same side of the divide.
I don't get this. A "lower-middle class" North American is enormously wealthy compared to peasant farmers or the new urban third world poor person. So in a real sense I think you can divide the world into the wealthy few who can meet their daily caloric needs (not to mention their needs for cable tv and so forth) and the hungry many who cannot. In that sense most of us reading metafilter seem to me on par with (and as culpable as) Buffet and Gates.
I do think those two in particular have a terrifying amount of power over the daily lives of those peasant farmers and new urban poor, given their particular interests in the lives of these folks, not to mention the direct impact of e waste or the numerous polluting and exploitative industries these two figures (and their foundation) invest in.
posted by serazin at 1:05 PM on January 7, 2011
I don't get this. A "lower-middle class" North American is enormously wealthy compared to peasant farmers or the new urban third world poor person. So in a real sense I think you can divide the world into the wealthy few who can meet their daily caloric needs (not to mention their needs for cable tv and so forth) and the hungry many who cannot. In that sense most of us reading metafilter seem to me on par with (and as culpable as) Buffet and Gates.
I do think those two in particular have a terrifying amount of power over the daily lives of those peasant farmers and new urban poor, given their particular interests in the lives of these folks, not to mention the direct impact of e waste or the numerous polluting and exploitative industries these two figures (and their foundation) invest in.
posted by serazin at 1:05 PM on January 7, 2011
For example, if Company A has 10 billion in revenue, and 5 billion goes to compensation packages for only 1% of its workforce, there's only the 5 billion left in play to be divvied up to pay for material and facilities costs and labor. That's just one example of how, despite not being strictly fixed, at any given point in time, money supply is still essentially finite. So at any given point in time, there's only so much money to go around, and anyone hogging more than their fair share is effectively claiming for themselves what they are denying the rest of us and the economy as a whole.
Except that isn't how it works. (And I understand you were simplifying.) Businesses are labor consumers- just like I buy the product with the best price/performance value (hopefully), they do the same with labor. They aren't going to pay more just because they have it, and the workforce isn't going to accept the "Johnson in accounting just demanded a raise, so now you get less money" excuse.
I did the math once. I took GE and divided up the CEO's pay by the number of employees. It was something minuscule. Pay the CEO nothing, and every worker got something like another $5. A year. Fire the whole management structure, and it was $17 a year. Even in a closed system like that, the top earners' pay was dwarfed by the overall payroll.
In a non-closed system, or one that is so huge as to be close enough, one percent of the population simply cannot consume (almost) anything so much as to have any appreciable effect on the rest of us. (Real estate excluded- that might be manipulable.)
And again, except for stealing/fraud/rent-seeking, they all make their money in some form or another, by increasing value for someone. You hire the $8 million CEO because the $7 million guy might make you less money. False value perhaps, but it doesn't affect the price I pay for their goods, or the price I am offered by them for my services. We do the deal because it is the best one we can find at the moment.
posted by gjc at 6:13 PM on January 7, 2011
Except that isn't how it works. (And I understand you were simplifying.) Businesses are labor consumers- just like I buy the product with the best price/performance value (hopefully), they do the same with labor. They aren't going to pay more just because they have it, and the workforce isn't going to accept the "Johnson in accounting just demanded a raise, so now you get less money" excuse.
I did the math once. I took GE and divided up the CEO's pay by the number of employees. It was something minuscule. Pay the CEO nothing, and every worker got something like another $5. A year. Fire the whole management structure, and it was $17 a year. Even in a closed system like that, the top earners' pay was dwarfed by the overall payroll.
In a non-closed system, or one that is so huge as to be close enough, one percent of the population simply cannot consume (almost) anything so much as to have any appreciable effect on the rest of us. (Real estate excluded- that might be manipulable.)
And again, except for stealing/fraud/rent-seeking, they all make their money in some form or another, by increasing value for someone. You hire the $8 million CEO because the $7 million guy might make you less money. False value perhaps, but it doesn't affect the price I pay for their goods, or the price I am offered by them for my services. We do the deal because it is the best one we can find at the moment.
posted by gjc at 6:13 PM on January 7, 2011
The Rise of the New Global Elite
How to deal with the plutocrats
Richistan
Our global oligarchs
Philanthrocapitalism or Paternalism in New Guise?
posted by kliuless at 11:27 AM on January 9, 2011 [1 favorite]
How to deal with the plutocrats
Richistan
Our global oligarchs
Philanthrocapitalism or Paternalism in New Guise?
posted by kliuless at 11:27 AM on January 9, 2011 [1 favorite]
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well said Mr. Pope
posted by mcstayinskool at 2:51 PM on January 6, 2011 [2 favorites]