Corporate Executives have More Money

The Washington Post reported on a headline based upon the Gini index, which
gathers data and reports on income inequality, and the 4 1 1 is bad news for us all. To
simplify things an index of zero would indicate that everyone for the most part has a
piece of the pie, and 1 would be a world where a few people lived like kings while the
world around them fought for food. Our score is almost a .5 which is 25% worse than
any other country in the world.

The Gini index would nearly certainly trace the origin of this movement of wealth from
many to few, which I call “Croupier Economics,” to 1913 when the Federal Reserve
bank was founded. The US borrows money which is an unseen drag on the quality
and standard of living of every citizen. The government borrowing today is mostly
distributed to the defense and medical industries along with medicare and interest
which are not a direct benefit to an average citizen.

Why does this matter? Thomas Friedman wrote “The World is Flat” which offers purist
economist insight into the natural trendlines across the world to fluctuate towards an
equilibrium. Products want the cheapest labor, compliance and other unit economics,
and although consumers have some say in defining the “line in the sand” of sacrifices
they won’t make for lower prices, Adam Smith’s “invisible hand” can be relied upon to
reduce income in the United States and increase it elsewhere until some equilibrium
is found.

There are some elements where this purism is not what should be aspired to,
particularly in the United States where all the long term assets citizens believe are
safe; social security funds, annuity funds, pension funds, savings and investments are
risk managed by experts, regulations and policies. If people were told to get college
educations, paid 1,100% more than their parents to do that and took massive loans
the salaries should reflect that promise.

I have blogged about the five hundred or so million Michael Eisner made running the
Disney corporation back when this Gini disparity and the gap between workers and
bosses began to expand massively. CEOs earn a thousand times worker pay and
honestly although I have met some extraordinary people, I have yet to meet the
person who was a thousand times better than another person.

Our borrowing is so ridiculous few reports ever toss out the aggregate, except a few
citizen groups like “truthinaccounting” who place the current number at $120 trillion
dollars. I cannot stress enough that people borrowing for furniture, vacations or food
is completely insane, but probably not as insane as taking trust money for medicare
and social security obligations and just signing IOUs to future generations to meet the
shortfalls.

At the end of this rainbow ultimately is a devalued currency and a standard of living
that is sub poverty for a generation in the future. Capitalism only works when there is
some integrity to it and where every level participates in bounty so the exchange and
barter, currency or otherwise circulates every day. There are some billionaires who
feel safe behind the gates with one percent of the folks holding 51% of all that is. If
we don’t change these trends, people will one day revolt against it or die trying. In the
meantime it’s time to do something about it.

Be mindful, be watchful and good luck!