Thursday, April 14, 2011

The One Percent Solution

"In the fourth quarter, profits at American businesses were up an astounding 29.2 percent, the fastest growth in more than 60 years...The median pay for top executives at 200 major companies was $9.6 million last year. That was a 12 percent increase over 2009." writes Daniel Costello. When was the last time a public or private sector everyday worker saw a 12 percent yearly raise? The national average wage in the U.S. in 2009 was approximately $41,000. Median weekly earnings were $747. The average U.S. worker makes .004 percent of what the typical executive makes.

Gretchen Morgenson revealed the large disparity between American CEOs compensation and their non-American counterparts. Statoil, a two-thirds Norwegian government-owned company has outperformed Exxon since 2001, when Statoil went public. Helge Lund, Statoil's CEO, made $1.8 million in 2010. Rex Tillerson, Exxon's CEO, received $21.7 million in 2010. The disparity is money that should be reinvested into the company or dispersed at dividends to shareholders. Maybe this is why some of our American companies are underperforming...too much money wrapped up in bloated executive pay, rather than bolstering the company.

The wealthiest Americans are plundering and pillaging the globe accumulating gratuitous amounts of money. As our infrastructure crumbles and the impoverished starve, the uber rich sharpen their skills at avoiding taxes and garnering more wealth.

"The top 1 percent has increased its share of total income to more than 20 percent today from about 10 percent in the 1960s," notes Nancy Folbre. The bottom 90 percent have been clobbered. The uber rich have crushed wages with the threat of outsourcing and have, thus, also been able to effectively redistribute the gains of their workers' labor into their own compensation. The company is more productive because the workers do more (productivity has been increasing), not because of decisions made by the CEO. Yet the CEO is claiming all the gains of the workers as his/her own.

We have heard the apologies and the revisions about the economic collapse. There is talk of onerous regulation. Republicans have continually whined about President Obama being mean to business.

Yet, those same banks that collapsed the world economy, as Jeff Madrick describes, "The six largest financial institutions in the U.S. now account for 55 percent of all banking assets." We're just continuing our march toward an even more extreme concentration of wealth. Republican laissez faire policies brought us a near-Depression. And, it seems, all we've learned is that spending must be cut and it's all the fault of public workers. Quite the switch-a-roo the Republicans have pulled here.

Tax the top 1 percent. This is nothing punitive. The 1-percent will still have more money than the other 99 percent. This is moral. It is only asking that they pay their fair share. The one percent solution - taxing the top 1 percent - is the most equitable, simple, effective way to solve any and all budget problems we face.

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