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The Centrist View: Why We Are Going Broke, CEO Salaries Higher, Worse Than Previously Reported

  • Category: Analysis

In his 2007 book The Conscience of a Liberal, Nobel laureate Paul Krugman reports that, compared to the 1950s when the average CEO made 30 times what the average employee made in his company, CEOs were garnering 300 times the average worker's pay.

That's incredible.

In case math matters any more, and it should, that means less money to hire workers, less money for innovation, less for research, development, less money for the workings of the company.

Money needs to circulate for an economic body to thrive, whether the economic body is a company or a nation. Too much money in one place is the economic equivalent of a blood clot. Just as blood clots harm the body with less blood circulating to vital areas, economic blood clots harm the body also. There is a finite amount of money in any economic body, whether a company, a city, or a nation. Allowing money to coagulate in cess pools means the rest of the body grows pale, and some of it dies.

Now, in 2007, it appears the disparity between pay of average workers and CEOs is even worse.

This from The Middle of the Road - The Centrist View:

In the 1950′s the pay separation between the average worker and CEO’s in what we now call the Fortune 500 companies used to be about 20 to 1 (for every dollar a mid level manager made, a CEO made 20 dollars. ) 20 to 1 was here in American and extreme compared to the rest of the world where even now it is more commonly about half of that. During the 1980s the pay gap between CEO’s and average workers grew from 42:1 to almost 85:1. By 2004 it had jumped to 301 : 1. And now???… well now, right here in the good old US of A, the ratio of CEO pay to average worker pay is running 475 to 1 while in Japan, a very profitable nation with a very good standard of living, the ratio is 11 to 1. The average Japanese CEO would kill himself in shame if his company failed so badly that it needed to be bailed out by the government in order to stop the world economy from crashing. American CEO’s take bonuses of 15 million dollars for doing that.

Time Magazine reports this week that stores catering to the top 1%, those bringing home $380,000 or more, are doing very well right now:

High-end retailers such as Ralph Lauren and Tiffany used to be pretty good indicators of where the economy was headed: when people make more luxury purchases, it's a sign of financial confidence. Those two retailers and others like them have rebounded nicely from the recession, while midmarket stores like Gap are still mired. What's going on?

What's going on is the top 1% of wage earners have become the modern day robber barons, and if they continue to pool their wealth, they will be fine, and the middle class will vanish.

Do you have it in you to survive another Great Depression?

This does not need to happen.

This is why they demonstrate on Wall Street.

This is why Congress must be purged of those who protect the top 1% at the expense of us all.

This is why we must remember that the New Deal and massive, massive government spending during World War II brought us, finally, out of the Great Depression, and Ronald Reagan got it wrong, began our slump back to the bottom.

The time for action is now.

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