One simple metric of inequality in the UK:
in 1980 the ration of median FTSE100 CEO pay to median UK wages was: £1 - £11;
In 2022 it had become £1 - £118.
I think it's safe to say that is not commensurate with the improvement in the conduct & success of the top management of UK corporations; nor, should it be said, a fall in the contribution to the UK economy of the work of the general population.
The rentiers (as we know) have stolen our wages.
#inequality #economics #corporations
h/t FT
I find this argument weak in most cases. It’s rare to see a CEO add that much value to a company. But when it’s a company doing so badly that it requires bailing out: they cannot possible ‘retain talent’ in management because they have demonstrably bad management. They might be able to hire better management, but that’s very different.
@david_chisnall @ChrisMayLA6 Looks like they've been shamed into stepping back. What on earth were they thinking?
But this is striking: “All the parties recognise that the payments are a distraction from the major issues at hand.” I don't think they are a separate issue at all. The whole business model and how these guys are remunerated is at odds with the critical service they are there to provide. And letting sharks like KKR step in isn't going to solve the problem.
https://www.ft.com/content/db1e05e5-90f4-427e-b968-c73d2da3ab2c
as its a ratio there's not much need; you're right that the nominal value of £1 in each instance, is not the same as its 'real' (inflation) adjusted value; but as real wages have been largely stagnant for over a decade the ratio's increase still holds, as each side will have seen the nominal rises (on which the per-£1 ratio is based), while the 'real' rises will only have been seen by the CEOs, as the ratio suggests
Indeed it is; if anything the Blair Govt colluded with the development of excessive wages for CEOs...
@ChrisMayLA6 @luketrevorrow I don't have numbers but i get the impression that privatisation and contracted outsourcing have radically increased the numbers of intermediaries. Each of which enable C level people to extract these excessive C level salaries.
But they add no value. They're just standing in the flow at an artificial bottleneck.
When even Angus Deaton concludes that this current iteration of capitalism can't last much longer...
https://www.imf.org/en/Publications/fandd/issues/2024/03/Symposium-Rethinking-Economics-Angus-Deaton
Picketty & David Graeber used to be mocked; not anymore...
apologies, I boosted without checking (as I could guess what it covered) - link is also broken for me!
I just checked the link twice and it has worked both times.
Here's the article :
https://www.imf.org/en/Publications/fandd/issues/2024/03/Symposium-Rethinking-Economics-Angus-Deaton
Rethinking My Economics
ANGUS DEATON March 2024
Questioning one’s views as circumstances evolve can be a good thing
Economics has achieved much; there are large bodies of often nonobvious theoretical understandings and of careful and sometimes compelling empirical evidence. The profession knows and understands many things.
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Yet today we are in some disarray. We did not collectively predict the financial crisis and, worse still, we may have contributed to it through an overenthusiastic belief in the efficacy of markets, especially financial markets whose structure and implications we understood less well than we thought. Recent macroeconomic events, admittedly unusual, have seen quarrelling experts whose main point of agreement is the incorrectness of others. Economics Nobel Prize winners have been known to...
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....denounce each other’s work at the ceremonies in Stockholm, much to the consternation of those laureates in the sciences who believe that prizes are given for getting things right.
Like many others, I have recently found myself changing my mind, a discomfiting process for someone who has been a practicing economist for more than half a century. I will come to some of the substantive topics, but I start with some general failings. I do not include the corruption allegations that have...
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....become common in some debates. Even so, economists, who have prospered mightily over the past half century, might fairly be accused of having a vested interest in capitalism as it currently operates. I should also say that I am writing about a (perhaps nebulous) mainstream, and that there are many nonmainstream economists.
● Power: Our emphasis on the virtues of free, competitive markets and exogenous technical change can distract us from the importance of power in setting prices ...
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... and wages, in choosing the direction of technical change, and in influencing politics to change the rules of the game. Without an analysis of power, it is hard to understand inequality or much else in modern capitalism.
● Philosophy and ethics: In contrast to economists from Adam Smith and Karl Marx through John Maynard Keynes, Friedrich Hayek, and even Milton Friedman, we have largely stopped thinking about ethics and about what constitutes human well-being. We are technocrats who...
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● Efficiency is important, but we valorize it over other ends. Many subscribe to Lionel Robbins’ definition of economics as the allocation of scarce resources among competing ends or to the stronger version that says that economists should focus on efficiency and leave equity to others, to politicians or administrators. But the others regularly fail to materialize, so that when efficiency comes with upward redistribution—frequently though not inevitably—our recommendations become little...
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...than a license for plunder. Keynes wrote that the problem of economics is to reconcile economic efficiency, social justice, and individual liberty. We are good at the first, and the libertarian streak in economics constantly pushes the last, but social justice can be an afterthought. After economists on the left bought into the Chicago School’s deference to markets—“we are all Friedmanites now”—social justice became subservient to markets, and a concern with distribution was overruled...
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...by attention to the average, often nonsensically described as the “national interest.”
● Empirical methods: The credibility revolution in econometrics was an understandable reaction to the identification of causal mechanisms by assertion, often controversial and sometimes incredible. But the currently approved methods, randomized controlled trials, differences in differences, or regression discontinuity designs, have the effect of focusing attention on local effects, and away from ...
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... potentially important but slow-acting mechanisms that operate with long and variable lags. Historians, who understand about contingency and about multiple and multidirectional causality, often do a better job than economists of identifying important mechanisms that are plausible, interesting, and worth thinking about, even if they do not meet the inferential standards of contemporary applied economics.
● Humility: We are often too sure that we are right. Economics has powerful tools...
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...that can provide clear-cut answers, but that require assumptions that are not valid under all circumstances. It would be good to recognize that there are almost always competing accounts and learn how to choose between them.
Second thoughts
Like most of my age cohort, I long regarded unions as a nuisance that interfered with economic (and often personal) efficiency and welcomed their slow demise. But today large corporations have too much power over working conditions, wages, and ...
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...and decisions in Washington, where unions currently have little say compared with corporate lobbyists. Unions once raised wages for members and nonmembers, they were an important part of social capital in many places, and they brought political power to working people in the workplace and in local, state, and federal governments. Their decline is contributing to the falling wage share, to the widening gap between executives and workers, to community destruction, and to rising populism.
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Daron Acemoglu and Simon Johnson have recently argued that the direction of technical change has always depended on who has the power to decide; unions need to be at the table for decisions about artificial intelligence. Economists’ enthusiasm for technical change as the instrument of universal enrichment is no longer tenable (if it ever was).
I am much more skeptical of the benefits of free trade to American workers and am even skeptical of the claim, which I and others have made ...
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... in the past, that globalization was responsible for the vast reduction in global poverty over the past 30 years. I also no longer defend the idea that the harm done to working Americans by globalization was a reasonable price to pay for global poverty reduction because workers in America are so much better off than the global poor. I believe that the reduction in poverty in India had little to do with world trade. And poverty reduction in China could have happened with less damage to...
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...workers in rich countries if Chinese policies caused it to save less of its national income, allowing more of its manufacturing growth to be absorbed at home. I had also seriously underthought my ethical judgments about trade-offs between domestic and foreign workers. We certainly have a duty to aid those in distress, but we have additional obligations to our fellow citizens that we do not have to others.
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I used to subscribe to the near consensus among economists that immigration to the US was a good thing, with great benefits to the migrants and little or no cost to domestic low-skilled workers. I no longer think so. Economists’ beliefs are not unanimous on this but are shaped by econometric designs that may be credible but often rest on short-term outcomes. Longer-term analysis over the past century and a half tells a different story. Inequality was high when America was open,...
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...was much lower when the borders were closed, and rose again post Hart-Celler (the Immigration and Nationality Act of 1965) as the fraction of foreign-born people rose back to its levels in the Gilded Age. It has also been plausibly argued that the Great Migration of millions of African Americans from the rural South to the factories in the North would not have happened if factory owners had been able to hire the European migrants they preferred.
There are no free competitive markets, all of them are forced and monopolized, and coercive. This is the first reason for billionaire's, anti monopoly laws are unenforced, markets controlled.
That Apple paid google billions a year because search is a monopoly, is just a tech bro example.
All of which makes the current policy trajectory of Starmer, Reeves and Kendall even more despicable.
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