By Dominic Elliott
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Here’s an idea for how to end corporate greed and reverse the trend of growing income inequality worldwide: impose a new rule that would limit the pay of top executives to just 12 times that of the lowest-paid employees at the same firm. In other words, prevent CEOs from earning more in one month than the lowliest shop-floor worker earns in a year.
It was a sermon — of sorts.
President Barack Obama’s address at the Lincoln Memorial on Wednesday only rarely echoed the cadence — the preacher’s rhythm — of the speech he was there to commemorate, and could not match its moral force. But this was a sermon all the same.
Fast-food workers in more than 50 cities Thursday are striking for fair pay and the right to form a union — the biggest walkout to hit the industry. This latest round of labor unrest comes 50 years after hundreds of thousands of Americans, led by Martin Luther King Jr., joined the March on Washington for Jobs and Freedom, demanding not only civil rights, but also good jobs and economic equality.
A month has passed since Congress allowed interest rates on federal student loans to double for some borrowers, increasing the cost of their college educations by as much as $4,500. While the debate continues to focus on the interest rate for future borrowers, it is ignoring the larger problem with student debt: the more than $1 trillion that had already been borrowed before the interest rate debate. This existing debt will continue to drag down borrowers’ financial security, which in turn drags down the entire economy. By how much? Demos, the public policy group where I work, has just released a study that estimates the economic impact of the existing student debt burden, and finds that it may cost the country more than $4 trillion in lost economic activity.
I enjoyed reading Reuters’ textured survey of the nature of inequality in America, and how government shapes it, shrinking the gaps between us through some of its actions and widening them through others. One comes away from the series with an appreciation for the complex blend of factors — federal policy, technology, unevenness of educational opportunity, the evolution of the market — that has helped propel some of us to where we are today, while failing to lift others.
Mark Twain labeled the late 19th century the Gilded Age – its glittering surface masking the rot within. This term applies today for the same reasons: The rich get richer; most everyone else gets poorer. And the public thinks corruption rules.
What do we mean by “inequality,” and why exactly is it bad for American democracy? Are we discussing inequality of wages within a given firm or industry? Or inequality in household income — i.e., the difference between the poor and the middle class, or between the rich and everyone else? What about political inequality — is it a cause or an effect of economic inequality?