According to economist Emmanuel Saez, who has made a career of studying the impact of income inequality, in 2007, the most recent year for which we have full data, the ratio of CEO pay to the average paycheck was 344 to one. Because of the recession, it’s estimated that the ratio will decrease to 317 to one in 2010. In the 1960s, ‘70s and ‘80s, the average ratio fluctuated between 30 and 40 to one.
The slight decrease in inequality we’ve seen during the Great Recession will be only temporary unless significant changes in regulations and progressive taxation are imposed. And that won’t be easy given the brainwashing visited on America by right-wing think-tanks that have propagandized us for three decades with soothing talk about the benefits of deregulation, privatization and what Pizzigati so aptly calls "wealth worship."
Just how bad the trend has been over the past 30 years can be seen by comparing with an earlier era:
• In 1955, tax records showed that the 400 richest people in the U.S. were worth an average $12.6 million (adjusted for inflation). In 2006, the 400 richest were worth $263 million.
• In 1955, the richest Americans paid an average of 51.2% of their income in taxes under a system with a top rate of 90%, but with lots of loopholes. By 2006, the top tier paid 17.2% of their incomes.
• At the same time, wages for most Americans stagnated from 1979 to 1998, and by 2000 the median male wage was below the 1979 level, despite productivity increases of 44.5 percent. Between 2002-2004, two years of the "jobless recovery," the inflation-adjusted median household income declined $1669 a year.
• To cover this loss, households in the aggregate boosted their credit-card debt 315% between 1989 and 2006.
"Over the past 30 years, the income of the top 1%, adjusted for inflation, doubled: the top one-tenth of 1% tripled, and the one-one-hundredth quadrupled," says Pizzigati. "Meanwhile, the average income of the bottom 90% has gone down slightly. This is a stunning transformation."
Inevitably, any attempt to curb executive compensation will be decried as class warfare, that all-purpose charge never invoked by the powers-that-be when we’re talking about the destruction of poor and middle-class Americans. Reversing the inequality ratio by means of regulation and progressive taxation, however, will not only help curtail the risky behavior that ran the economy into the ground, it will be healthier at every level for our entire society, even those now pulling down those 11-digit compensation packages. That makes it not only the wise thing to do, but patriotic as well. ...
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