Over the holidays a couple of interesting reports were released. One put out by Ipsos Reid on January 2 was on a poll taken of 22,000 people in 22 different major economies. It asked about how people felt about the influence of large companies on government. Seventy-four percent said that large companies have too much. In Canada the number was eighty percent, in the US eighty-two.
Despite the fact that more Americans thought that large companies were too influential, only sixty-seven percent of them thought that government should be more aggressive with its regulations as opposed to seventy-seven percent of Canadians who thought so. Go figure.
The good news about this survey is that apparently the world is waking up more to the dangers presented by corporations and the concentration of power in private hands. Along with the environmental nightmares that the corporate economy has brought us, the past few decades have seen a change in social development from a more equitable society to a more inequitable one. The growing inequity between a few wealthy people and the rest of us no doubt plays a role in how the public is beginning to view the big corporations.
On the same day as the IPSOS poll the Canadian Centre for Policy Alternatives (CCPA) released a report on CEO pay and the disparity between the top earners in the country and everyone else. The average annual wage in Canada is $38,998. The top 100 CEOs average slightly more than that every ten hours. They make as much in four hours as a full-time full-year minimum wage worker.
This is a problem that is getting worse. In 1976 the richest ten percent of Canadians raising children earned thirty-onetimes more than the poorest ten percent. By 2004 they were earning eighty-two times more. The biggest share of economic growth in Canada is being taken by only about ten percent of the population. The other eighty-percent get to divide the crumbs, and many are losing ground, even though they are working more than they use to. As a result savings are down and personal debt is increasing.
If we look at the trend in the US over the past century we see that in 1928 just before the Depression hit the top one percent of the population was taking over twenty-three percent of the income. Then it dropped and bottomed out in the 1970s when the top one percent was down to just over eight percent of the total income. With the rise of conservative governments in the US in the 1980s the trend reversed as policies were enacted to shift wealth back to the rich. By 2005 the top one percent were now taking almost twenty-two percent of the income.
Politics for the most part is about distribution of wealth, about how we cut the pie that is there to support all of us. Conservative politicians exist to serve the interests of the wealthy. When in power they do all that they can to see that private interests, and not the public, control as much of the wealth as possible. They talk about free markets but what they really mean is free booting, creating a friendly environment where wealth can be accumulated in fewer and fewer hands at the expense of overall social well being.
Given the trend in economic development the past thirty years it is no wonder that people are starting to question the power of corporations. A wide gap is opening between the few who control the world with their accumulated wealth and the vast majority of us who are losing ground. And in their pursuit of wealth accumulation with their policy of continual growth and consolidation the rich are not only taking a larger and larger share of the economic pie, their methods are destroying the environment that we all depend on for our survival.
As has happened before in history, something will have to give, the environment may collapse to the point that it can no longer sustain many of us, the resentment and desperation of the expanding poor may explode into cataclysmic violence, or we may be smart enough to use the power of our numbers to force political changes to reverse the trend and more fairly distribute the resources among us. In a democracy we have the power if we can think beyond the sound bytes and sloganeering and consider the long view. If we don't, well then we get what we vote for.
http://www.island.net/~record/
Jerry West is Editor and Publisher of THE RECORD newspaper in Gold River, BC. Graduate with Honors, UC Berkeley. Former Sgt. USMC
Your article raises some interesting points, but overall, I feel your analysis is incorrect.
“If we look at the trend in the US over the past century we see that in 1928 just before the Depression hit the top one percent of the population was taking over twenty-three percent of the income. Then it dropped and bottomed out in the 1970s when the top one percent was down to just over eight percent of the total income. With the rise of conservative governments in the US in the 1980s the trend reversed as policies were enacted to shift wealth back to the rich. By 2005 the top one percent was now taking almost twenty-two percent of the income.”
Interesting correlation, but I also ask you to take note that this is also the era of no gold standard.Nixon removed the United States from our pseudo-gold standard in 1971, and as a consequence, we saw rising prices and a devaluing dollar, which exacerbated the coming unemployment crisis.This was the famous “Stagflation” that the mainstream economics (Keynesians) couldn’t explain.
My point, however, is that inflation is the main culprit for the gigantic (and growing) income gap.An increase in the money supply, despite praises from most mainstream economists (including the supposedly free-market Milton Friedman), is essentially a regressive tax.Any time the quantity of money in the economy is increased, the purchasing power of the monetary unit goes down.
This phenomenon is simply an increase in the supply of money for a NOT increased supply of resources.Thus logically, the worth of each dollar goes down.This devaluation is reflected in generally rising prices on the market.For example, I remember when a can of soda was a quarter… now it costs 75 cents in many areas.
Furthermore, the effects of inflation are not immediate, and they are not uniform.The effects ripple through the economy. They benefit the people that get the money first (through corporate welfare, government contracts, unsustainably low interest rates generated by our centralized cartel fractional reserve banking system, etc.), because they do not suffer the rise in prices that will result as their money circulates through the economy.The wage earners and such are the last to get the new money, and by the time they get it, the effects of inflation are rampant.In other words, cost of living is increasing faster than their pay can keep up with.
“…savings are down and personal debt is increasing.”
This is directly related to inflationary problem.Savings are discouraged, because the devaluation of the currency means that savings can’t keep up with inflation.Back in early American history (before the era of inflation), it was possible for a parent to save money throughout their lives in order to have the ability to send their children to college.Generally, it is common that the previous generation wants to improve conditions for the future generation through means such as this.Now, it would be difficult for an average working parent to afford college through savings like before, because who knows how much each dollar will be worth 20 years down the road.Personal debt is almost necessary to keep pace with the rising prices, to the point where it is almost necessary to take out loans to pay for education.A more extreme example of this point is to look at the hyper-inflation in Germany before World War II.One story is of a man that had a life insurance policy for some 2,000,000 or so Marks in the pre-inflation time.After he died, his wife received a check for the 2,000,000 Marks, but by that time, 2,000,000 Marks was not even enough to pay for the postage stamp on the mailed check.This inflationary tendency is a major hamper against the poor in terms of social mobility; it stacks the deck for the wealthy, so to speak.
The effects of inflation go much deeper, but to discuss it in depth would take a large book… a little outside the scope of this argument.
On the rest of your argument, I disagree with you ideologically… but this is a progressive liberal op-ed site, so I won’t go into those disagreements.However, I feel that the inflationary problem is not well understood by the majority, and it must be if we are to ever get to a fair system.
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Leon Kassab (0 articles, 0 quicklinks, 0 diaries, 24 comments)
on Sunday, January 13, 2008 at 2:39:45 PM
Inflation is certainly part of the dynamic. However, inflation is a result of policy, as even you indicate. Policy, not inflation, would be the main culprit.
You are right about Nixon and perhaps I should have expanded my comment to say the rise of conservative governments in the 1970s instead of the 1980s. The main point still remains that policy over the last 30 years has favored the increase in the gap between the top of the food chain and the rest of us.
"On the rest of your argument, I disagree with you ideologically… but this is a progressive liberal op-ed site, so I won’t go into those disagreements."
Why not? It might be fun. :)
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Jerry West (18 articles, 0 quicklinks, 1 diaries, 7 comments)
on Sunday, January 13, 2008 at 3:38:17 PM
