The quest for status

[n2doc]

Disproportionate wage ratios are nothing new in business, but the potential increase in worker resentment toward those receiving a much higher wage is causing diminished morale

“Over 99 percent of all the new income generated goes to the top one percent.” This is how Bernie Sanders, an independent senator from Vermont, began his assault on the issue of income inequality during a speech he delivered at the Brooking’s Institute earlier this year. He continued his tirade, providing examples designed to communicate the severity and scale of the rich-poor divide. He explained how the top 25 hedge managers made more than $24bn in 2013 and that this figure is equivalent to the full salaries of over 425,000 public school teachers, posing the question: “Is that really what our country should be about?”

Some political commentators will contend that Sanders is only using such powerful rhetoric because he knows that it resonates with voters, with many people thinking and hoping that the senator will throw his hat in the ring for the 2016 presidential race. But regardless of his intentions, the man from Vermont still puts forward some ideas worth pondering – mainly, if it is morally, socially and economically justifiable to continue to live in such an unequal world.

Justifying inequality

In the 1960s, the late Peter Drucker warned that CEO-to-worker pay should not exceed a ratio larger than 20:1, as it would increase employee resentment and lead to a decrease in overall morale among ordinary workers. The French economist, Thomas Piketty, in his book Capital in the Twenty-First Century, coined the term ‘meritocratic extremism’, which he used to describe the doctrine that extravagant pay – which now far exceeds what Drucker advised – is justified by the merit of performance.

But in Will Hutton’s book, How Good We Can Be, the British political economist contends that the huge salaries afforded to CEOs, “have almost nothing to do with carefully calibrated performance and everything to do with the attempts of CEOs and boards to keep up with each other in a status race substantially influenced by social and psychological rather than economic concerns”.

more

http://www.worldfinance.com/wealth-management/income-inequality-is-a-moral-not-economic-conundrum

[JayhawkSD]

1. Is there similar resentment against athletes?

Why do we resent a bank president for making $12 million per year, and flock to obtain the autograph of a baseball player making $42 million per year?

The bank president, you say, is a thief and a cheater but the baseball player taking steriods does not seem to reduce the demand for his autograph.

[n2doc]

3. Athletes are paid for their performance, and star athletes are celebrities

CEO's are paid for their connections. There is no correlation between pay and stock performance.

Ask how many people are clamoring for A-rods autographs now. Or Bonds' . Compared to non-cheater stars like Kershaw.

[WillyT]

2. HUGE K & R !!! - THANK YOU !!!

Good stuff !!!