By Christia Freeland, In The Atlantic, January/February 2011, in an article entitled: The Rise of the New Global Elite
One reason for the spikes is that the global market and its associated technologies have enabled the creation of a class of international business megastars. As companies become biggerm the global environment more competitive, and the rate of disruptive technologal innovation ever faster, the value to shareholders of attracting the best possible CEO increases correspondingly. Executive pay has skyrocketed for many reasons--including the prevalence of overly cozy boards and changing cultural norms about pay--but increasingly scale competition, and innovation have all playued major roles.
Many corporations have profited from this economic upheaval. Expanded global access to labour (skilled and unskilled), customers, and capital has lowered traditional barriers to entry and increased the value of anahead-of-the-curve insihgt or innovation. Facebook, whose founder Mark Zuckerberg, dropped out of college just six years ago, is already challenging Google, itself hardly an old-school corporation. But the biggest winners have been individuals, not institutions. The hedge-fund manager John Paulson, for instance, single-handedly profited almost as much from the crisis of 2008 as Goldman Sachs did.
Meanwhile, the vast majority of U.S. workers, however devoted adn skilled at their jobs, have misse out on the windfalls of this winner-take-most- economy--or worse, found their savings, employers, or professions ravaged by the same forces that have enriched the plutocratic elite. The result of these divergent trends is a jaw-dropping surge in U.S. income inequality. According to economists Emmanuel Saez of Berkeley and Thomas Piketty of the Paris School of Economics, between 2002 and 2007, 65 percent of all income growth in the United States went to the top 1 percent of the population. The financial crisis interrupted the trend temporarily, as incomes for the top 1 percent fell more than those of the rest of the population in 2008. But recent evidence suggests that, in the wake of the crisis, incomes at the summit are rebounding more quickly than those below. One example: after a down year in 2008, the top 25 hedge-fund managers were paid, on average, more than $1 billion each in 2009, quickly eclipsing the record they had set in pre-recession 2007.
If anyone doubts not only the inequality of this dramatic trend line, but also the dramatic impact on the rest of the society, including the resentment, anger and profound feeling of injustice at these numbers, the just wait for the long-term impact of these numbers to unfold.
Along with their spike in wealth, these megastars do not give a fig for the rest of the society, because they believe it was the middle and lower class stupidity and gullibility and innocence that produced the crisis of 2008 in the first place, not the creation of derivatives and phony money instruments that were designed and sold to unsuspecting buyers around the world by Wall Street.
So the gap is not only in income inequality, it is also in belief systems, based on completely different perceptions of the truth and the reality of responsibility for the growing chasm.
So long as these two different worlds continue to beat each other up through the political debate, through the creation of legislation favouring the rich and stripping the social programs of much of their fiscal heft, and through the gutting of collective bargaining rights and the total evisceration of the middle class, the numbers of both mass demonstrations and mass conflicts will continue to grow, including violence and chaos.
And that chaos will not be restricted to a few cities in the Middle East, or in Wisconsin and Ohio.
So long as the political class continues to be a voice for the financial Gepetto's, there will be little grasp of the totality of the economic and cultural chasm among the political class. There will be fewer and fewer voices for the lower and middle classes. As the flood of private money flows into the coffers of the men and women who have been elected to vote for legislation, how can those men and women not become merely puppets for the sources of that wealth.
And as long as "winning" consists of the biggest pile of dollars, bonuses and coupons from stock options and that image is the "goal" of all the best and brightest minds in the universities and in graduate schools and then in the offices of the hedge funds, this class warfare will continue to escalate.
We need at least two or three Michael Moore's and Ralph Nader's in every town and city, courageous, imaginative, sensitive and compassionate and informed voices to bring some push-back to this tsunami of money in the hands of these megastars, including the Bill Clinton's and the Bill Gates' who, admittedly, do bring about a flow of some of this cash to some of the significant global causes and issues.
However, we need a political body of international players, with both financial and political clout, to mediate the international markets, to monitor and pass global legislation and regulations on the flow of money, on the payment of taxes, on the provision of global services and institutions that reach beyond national boundaries, in order to keep pace with the new world developments.
All nations have to give up some of their sovereignty, in order that all people will be represented in such an international political entity. Whether that means a restructured and reshaped United Nations, or a completely new and independent set of institutions is a little hair-splitting.
The need is obvious. The political will is, from all appearances, completely absent. And as long as a class of money managers is more powerful than their national political class, the irrelevance of that political class will continue to grow. That money, including the exorbitant profits and bonuses will continue to be taxed at rates that are able to evaded, through the designs and strategies and tactics of creative and courageous and highly paid accountants and lawyers, themselves captives of the same megastars.
The powerlessness of the United Nations, even in the face of the current violence in Libya, for example, to declare a no-fly zone and then enforce such a declaration, in the face of pirate planes firing on innocent citizens, and to bring together a United Nations Peace Force, to bring an end to the violence in that country, and to stand ready in the event more violence erupts in neighbouring countries, is an international shame.
Any argument of disengagement, as the one used by the leader of NATO, is like those arguments used to avoid and evade any interference with the Third Reich in 1938 and 1939, simply inexcuseable.It may be that NATO itself cannot decide to move in to Libya, but NATO forces could certainly be used, if requested by a respected body of world nations. And if the U.N. is not that body, (and the U.S. has certainly done its share of undermining that body), then the world needs to create an international political institution, including a law enforcement component, and a peace-keeping component, an enhanced international judicial system, and an international system of addressing the many and different threats to humanity in all corners of the globe.
And that suggestion does not mean we need a single global leader, but rather a collective group of political leaders to take the bull by the horns, at a level far exceeding the International Monetary Fund, and the World Bank, and the International Court at the Hague, and the G20 group of countries...
This is a kind of kindergarten of the kind of institution(s) that are needed. And the time is not unlimited, in which to develop such a proposal.