That Top One Percent

Anyone who’s been living under a rock and is hence unaware of the income shift in the USA might want to read this short article from NPR: “Why Has Income Gone up So Much for the Top 1 Percent?

Here are my favorite paragraphs:

Why have salary, bonus, etc. gone up so much for this group? Lots of economists have been asking this question, and CBO runs through some of the possibilities, without really settling on an answer [emphasis added]. Three of the possibilities suggested by the report:

1. Companies have grown larger and more complex. So a single executive can have a bigger impact on profits. Therefore, it’s rational for companies to pay executives a lot more.

2. A shift toward paying execs with stock options means that the value of their pay packages can shoot way up when the stock market rises.

3. “Weaknesses in corporate governance have enabled corporate executives to overpay themselves.” In other words, it’s not rational for companies to pay executives so much.

“Without really settling on an answer”?! Had I not recently read William Domhoff’s Who Rules America and John Bogle’s Battle for the Soul of Capitalism, it might have taken me a nanosecond to figure out the best answer.

Unfortunately, having read those two books and several others, I felt almost grateful that the Congressional Budget Office at least threw out the that third possibility.

I will refrain from sarcastic mutterings and simply move on to read the whole report from the Congressional Budget Office. It’s here: Trends in the Distribution of Household Income between 1979 and 2007

Once again I’ll most likely dream of sharpened pitchforks.



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