Saturday, May 26, 2018

What is not earned is usually lost.

"Resentment of the crazy-rich isn't just envy," wrote Prof Noah Smith. "Since 1980, income gains for the top 20% of US earners -- except for top 1% -- have been barely larger, in percentage terms, than gains for the middle 60% of the bottom 20%. Meanwhile, the top 1%'s income has soared. But even within the the top 1% there are vast disparities. The top 0.01% of earners -- those making more than $7.5 million a year as of 2015 -- had much bigger gains than the rest of 1%." The problem is worse in the US which has "more than a third of the world's billionaires despite representing less than a quarter of he global economy. Chief executives in the US are paid about 345 times as much as the average worker..." Last year CEOs received an 8.5% raise in salary so that, " The typical CEO made 164 times the median pay of their employees, according to Equilar's analysis." "At Yum Brands, CEO Greg Creed's $12.3 million was 1,358 times higher than the company median of $9.111." Of course, median is not the same as average so the numbers seem different. Indian CEOs earn 229 times more than average workers which has caused a lot of discussion. This is only for those who have managed to find a job. The government's 2018 Economic Survey observed "that 90% of all employees in the formal sector earn less than Rs 15,000 a month. That is, most of those who are privileged to have a formal job in the country (including experienced seniors) earn less than Rs 15,000 a month.," wrote Chakravarty and Ramesh. Nearly 81% of employed people work in  the informal sector in India, where salaries are lower still, said a report by the International Labor Organization. The study also found that 98.3% of those who are 15-24 year old are in informal employment. "The working poor are not poor because they don't have jobs but because the existing jobs are insufficient to provide them a decent income," wrote Prof Himanshu. "Most of the Jats, Patels and Marathas who are demanding government jobs are also not unemployed but are dissatisfied with the existing income in agriculture. The demand for jobs is not just about subsistence, it is also about aspirations. For a majority of those who are struggling at the bottom of the distribution chain, the reality is either stagnant incomes or decline in real incomes." So what is the solution? "...about 38% of American billionaires inherited at least a substantial part of their fortunes." "Taxing these unearned billions seems like a great way to allay public concerns about the super-rich," wrote Smith. A few billions from taxes in an $18 trillion economy will hardly help. It seems small-minded and mean to get pleasure by deliberately making people poor. In any event, 90% of wealthy families lose their wealth in 3 generations. Winning the lottery is also unearned wealth but most quickly lose everything. Why worry? 

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