CONVENIENT ARGUMENTS….Daniel Gross writes in the New York Times about growing income inequality:
Two professors — Thomas Piketty of the Paris School of Economics and Emmanuel Saez of the University of California, Berkeley — have found that the share of gross personal income of the top 1 percent of American earners rose to 17.4 percent in 2005 from 8.2 percent in 1980.
….Public policies have played a significant role in contributing to the growth of income inequality. That’s the argument made in a recent, brilliant National Bureau of Economic Research working paper by Professor [Frank] Levy and Peter Temin….[Since 1980] unions have weakened, the minimum wage hasn’t come close to keeping up with inflation, and marginal income tax rates have been cut — the top marginal rate is now 36 percent, down from 70 percent in 1980. A result has been declining bargaining power for workers and the rise of a winner-take-all environment.
….It is commonplace to hear that the current set of arrangements and policies is the only possible way the economy can work, given trends like the rise of China and global economic integration. As Professor Levy said, “That’s a very convenient argument for people to make if they’re doing very well.”
On a related noted, today the LA Times prints this year’s list of the 100 highest paid executives in California. For the first time ever they’ve started listing CEO pay as a percentage of total corporate profits. Why? Because CEO pay has finally gotten so out of hand that shareholders are starting to notice that it’s making a serious dent in earnings all by itself. Just think what they’d find out if they took at look at the top dozen executives instead of just the CEO.