The rich get richer

Who got the most this year? Who got much more, or less, than last year? Pay becomes social status and even translates into influence and power.

March 22, 2007 19:59
3 minute read.
The rich get richer

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At this time of year, the financial media - and to a growing extent, even the general media - become focused on the juicy subject of executive pay. As major companies announce their results for the previous year and, as part of their financial statements disclose the salaries, bonuses and the equity and option components of the "compensation packages" of their most senior executives, lists are compiled and league tables are calculated. Who got the most this year? Who got much more, or less, than last year? Pay becomes social status and, increasingly, translates into influence and even power. It's all become a bit of a ritual. The bottom line of all the bottom lines is that the boss class gets steadily higher packages. This is despite the fact that innumerable studies have shown that the connection between performance and pay is tenuous at best, non-existent at worst. Meanwhile, other studies confirm what many people have personal knowledge of, namely that over the last 10-20 years the real value of salaries paid to the bulk of employees has risen very slowly - if at all. There is a good deal of evidence to suggest that in the US, for one, "middle-income" groups have experienced stagnation in their real income levels. The same is true for several European countries. As a result, almost everywhere, income gaps between the top and the middle are widening - in some cases dramatically. In short, the rich are certainly getting richer, while the merely "comfortable" or "affluent" middle classes are having to work harder and longer to keep themselves moving ahead. The property boom in most of the developed world has boosted middle-class wealth levels for many years, thereby papering over any erosion of middle-class families' incomes. Once again, the US is the place to watch to see how this trend develops: as the property bubble deflates, will the strains on income levels be exposed - and if so, how will the middle-class react? And what of the poor? Of the two halves of the old saying that "The rich get richer and the poor have babies," the first half has never been truer while the second half is certainly no longer true. Birth rates in developed countries are very low almost everywhere and, except in backward countries such as Britain, teenage pregnancy is becoming a rare phenomenon. The immigrant poor still tend to have babies, albeit to a lesser degree than in the past, but the indigenous poor don't. They just moulder in a culture of welfare-state-supported idleness, doomed by their lack of education to an absence of opportunity and hence to a second-rate existence, increasingly threatened by addictions to junk food, junk media and drugs. This state of affairs is now generally accepted as normal and, indeed, inevitable. In itself, this acceptance is remarkable in two ways. First, as recently as 30 to 40 years ago, it would have been unthinkable in every respect. The fat cats could not then have dreamed of creaming off so large a chunk of national wealth for themselves, the middle-class would not have quietly resigned themselves to working harder for less, and no one would have tacitly written off large chunks of the population on a permanent basis. Social awareness and activism, in the broadest sense, was then alive and well. This hints at the second remarkable aspect of "the way we live now." We are witnessing a reversion of society to early-modern, or even pre-modern, social structures. True, compared to the middle-ages the middle-class is vastly bigger and the poor are a relatively smaller element of the population. But the passive acceptance of a rigid social structure in which wealth is concentrated among a narrow class of wealthy and powerful people, while many rot in poverty, is a key feature of medieval society which has - almost incredibly - been resurrected in the supposedly advanced, developed and technologically sophisticated society of the early 21st century. Ironically, what has made possible the repression of middle-class aspirations and allowed the poor to be buried in ignorance and ignored in their inner-city burial grounds, is the rise of the global economy. In simplistic terms, the endless supply of industrialized serfs in China, India et al, has facilitated the rolling-back of social progress and economic equality in advanced economies. However, globalization is a dynamic process which is still unfolding, providing grounds for hope that the current regressive trends will prove temporary and that a more inspiring model of how a wealthy society distributes its riches will eventually emerge.

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