Robert Reich on the Concentration of Wealth
Title: Re-slicing The Pie
Source: Robert Reich on NPR
Date: July 15, 2004
This article contains a remarkably clear statement of how the concentration of wealth works in America today. From the article:
- The American economic pie is growing at a solid pace. The odd thing is how the pie is now sliced between the portion going to profits and the portion going to wages. According to the commerce department, the wage slice is now smaller than it's been in 38 years, while the slice going to after-tax corporate profits is bigger than it's been since the government began tracking profits back in 1947. This wage squeeze is hurting middle-class families who, even if they own shares of stock, depend mainly on wages.
- The wage slice is now smaller than it's been in 38 years
- The profit slice is bigger than it's been since the government began tracking profits back in 1947
Why is this acceleration in the concentration of wealth occurring? According to the article:
- advances in telecommunications now enable many more companies to outsource to places like India and China, where wages are far lower. Or they can easily substitute computers and software for employees who might otherwise expect a raise. If these trends weren't enough to keep wages down, consider that big corporations are bigger and more powerful than ever. Think of Wal-Mart, now employing more Americans than the entire U.S. auto industry. Employers with this kind of clout can keep wages low just by refusing to raise them.
- executive receives $78 million severance package
- executive receives $25 million for 2 month's work
- 10 top executives at New York City's brokerage and financial firms get $231 million
- executive at Lucent gets $44 million
- And do on...
Here is the other important question to ask: Where is all of the money for rising profit coming from? It comes from consumers -- it comes from you and me. We pay for it through highly inflated prices. Take, for example, this article mentioned in the Liberal Hyperbole blog:
Bank of America Profit Up 41 Percent
From the article:
- Bank of America Corp., the No. 3 U.S. bank, on Wednesday said quarterly profit rose 41 percent, helped by the purchase of FleetBoston Financial Corp. and higher consumer and commercial lending.
The Charlotte, North Carolina-based company said second-quarter net income rose to $3.85 billion, or $1.86 per share, from $2.74 billion, or $1.80 per share, a year earlier.
Bank of America is just one bank. See also: Robotic Freedom.