Sunday, June 04, 2006
Dicked Over Down Under
We imagine that rising income inequality and the uncontrolled acromegaly of the executive paycheck are peculiarly American problems, but they happen Down Under as well. The business news from Australia and New Zealand is depressingly familiar. The CEO of a leading Australian bank rakes in two percent of its net profit, an increase of 164 percent in the last three years. The income share of the top one percent of Aussies is now higher than at any time since 1951. Who makes up that top one percent? It's mostly businessmen, according to the Sydney Morning Herald. Most professionals have not shared in the bloated salary increases, and have actually seen their income decline relative to other Aussies over the last eighty years. High court judges earn just eight times the average wage today, while they earned 17 times that in 1921. Top public servants earn just five times the average wage, while they earned ten times that in 1921. Even politicians have seen their relative income decline by half in the same time period. In contrast, executive earnings have increased from 27 times the average to 98 times the average just since 2002. Some claim that chief executives - like sports figures, show business types and high-flying attorneys - are simply claiming the rewards of their "superstar" status. But sometimes they benefit more from luck than from performance - as in the case of oil company executives skimming the cream off escalating petroleum prices. Even when they are rewarded for good luck, they are rarely penalized for either bad luck or incompetence. The closed guild of top executives is to a large degree responsible for setting the income standards of its own profession, irrespective of free market conditions. Fully one half of the profit from productivity gains in the United States since 1966, for instance, went into the pockets of the top 10 percent, while real wages for the bottom 90 percent fell. The only silver lining in these clouds wafting up from The Antipodes is our realization that the wages of sin for "globalization" will inevitably be global awareness.
"The super rich CEOs" from the Sydney Morning Herald