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Eat the Rich and other reasonable suggestions

by Jesse Fruhwirth
- Posted // 2010-01-20 -

I've been doing my best to curate--and occasionally contribute to--a debate our readers are having over income disparity in the United State today. I'm really excited to see the topic generate so much interest, both from those who defend the wealthy, and those that want to take them down a notch.

Admittedly, I'm on the side of "take them down a notch," as I made clear two weeks ago in my regular Rant Control columnlette. In response to what I wrote then, I got a great e-mail from a guy who defends the wealthy. He wouldn't comply with out Letters to the Editor policy (he would not consent to having his name printed with the letter), so I'm publishing excerpts anonymously.

Mr. Fruhwirth,

I am writing this in response to your request for someone to defend “The Rich” and their extravagant spending. First of all, I am not rich, nor have I ever seen an ice sculpture that urinates vodka. What I am is an average Joe that works for a living. A living that is supported by a millionaire. You see, I work for a company that is running in the red to the tune of $45,000 a month. We have half a dozen employees that would be part of the unemployed if it weren’t for a very wealthy person that continues to write the checks that keeps this company paying its bills (and payroll). This same millionaire also supports another company with a dozen employees that is also running in the red. ... If the “Eat the Rich” crowd had their way, he would not be rich and dozens of innocent hard working people would suffer for it. How does this help us “little people”? I fail to see the benefits. ...For another example, let’s look at what happened in Indiana. Over 100,000 people unemployed from the RV manufacturing industry. Who was the general purchaser of these RV’s? Well, it wasn’t the poor. ... Now that the rich have ceased making these outrageous purchases, the true losers ARE the little people.

I love this e-mail. This guy seems genuinely interested in creating a better world, he's thought it through, and can't conceive of a better world than we have now. I still have the idealism and imagination to do so on his behalf. Below is my response.

Hello Sir,

I never heard back from you, so I presume you do not want your letter published in our pages. That's OK. Let me just respond briefly to your e-mail.

With all due respect, your argument in favor of income inequality is circular. Your argument is basically that very rich people employ dozens (sometimes thousands) of humble people, and without a super-rich person at the helm, those humble jobs would evaporate. That argument can be summed up as "we need rich people, because without them a critical number of jobs would be lost, therefore we need rich people," or as you put it, "If the 'Eat the Rich' crowd had their way, [your boss] would not be rich and dozens of innocent hard working people would suffer for it." You also added something like a converse argument to your original argument, by stating the luxury goods industry employs many humble people, and without the wealthy to buy those luxury goods--POOF--those jobs disappear as well.

But both arguments ignore other possible economic structures that would still create jobs without dramatic income disparity, or at least with less dramatic disparity. Indeed, these structures are more than theoretical. Our own American system during very recent and better economic times was more equal.

Check out the graph on the following page which tracks the trend in CEO-to-average worker pay. As recently at 1989, the average CEO made 71 times as much as his/her average employee. By 2005, that number had jumped to 262 times as much. I don't mean to pick on only business people. The income generated by entertainers and athletes (and the inheritance of trust fund babies), for examples,is also troubling, but let's stay with CEOs for a minute because the data there is available.

Certainly those CEOs with 262 times the income of their workers can buy fancy boats, jets, haute couture, precious metals and gems and other expensive things that humble people can build, tailor or mine to earn a living. But it's not hard to imagine much of that rich person's wealth--which was generated as a partnership between the CEO and workers after all--spread amongst the workers as opposed to consolidated at the top. So rather than having a CEO that can afford a luxury jet or three, instead you could have hundreds of employees who can afford to purchase a new car, a bigger home, better health care, better education for their children, or simply pay off their debt. Either way, the money gets spent, goods will be manufactured, and humble people will have jobs working at or owning the companies that produce those goods. Better income distribution would be terrible for the luxury goods market, certainly, but it would benefit companies that make goods for humble people.

As for business people avoiding layoffs by using their wealth to "run in the red" during hard times, this can also be accomplished by worker-owned business cooperatives. In that way, the decision to "run in the red" would be made by the worker-owners, not just the person at the top.

It's just a matter of how you want to distribute the benefits of the work done by companies. I ask you, what is a reasonable "CEO to average worker pay ratio"? Should the boss earn 262 times as much as the average worker? Is 150 times more reasonable? Couldn't we, as a country, strive to return to the world left us by Ronald Reagan when he left office when CEOs earned only 71 times as much as the average worker? Will the sky fall if companies that pay their workers more and executives less than is currently "normal" are given tax advantages over those companies that create wider disparity?

Also, it should be mentioned, that even as CEOs wages' have increased, they've demanded more and harder work out of their employees. American worker productivity is now higher than ever before. Jonathan Tasini is fairly eloquent on this point, and raises it often on his blog, Working Life.

Henry Ford famously understood this concept, but he was focused predominantly on making his humble workers thoroughly middle class. That's a nice endeavor. I find myself more often obsessed with the plight of the impoverished, including the disabled, and their ability to live decent lives. From Martin Luther King Jr.'s "Beyond Vietnam" speech:
A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies. On the one hand, we are called to play the Good Samaritan on life's roadside, but that will be only an initial act. One day we must come to see that the whole Jericho Road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life's highway. True compassion is more than flinging a coin to a beggar. It comes to see that an edifice which produces beggars needs restructuring.
There's another argument I heard on the radio (on American Public Media's Marketplace) just last night that university presidents, for example, must earn a million dollars per year because without that huge wage, no one would want these highly complex and difficult jobs. That's simply a failure of the imagination. If you divide both the responsibility and wage of a $1 million university president into three to five parts, I'm sure you could find competent people to share the divided load for $200,000 to $300,000 per year, and you would create good-paying jobs in the process. It's a win-win-lose situation in which the only looser is the super-wealthy, and I'm not going to cry any tears if they can no longer afford their jets.

Thanks for reading,

Jesse Fruhwirth

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