back to article Feeling poor? WHO took all your money? NOT capitalist bastards?

Lies, damned lies and statistics: we all know the saying, but you'd be surprised just how many of these “facts” manage to enter the national consciousness, emerging as Guardian headlines and stories on Radio 4's Today. Allow me to tiptoe through the process as to how this happens. Let's start with this lovely little chart: A …

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Re: Howabout..

"Easy way - legalise all drugs and tax them. (Keep the quality high and at a price that cannot be matched by the criminals.)"

What criminals? Once the drugs are legal there are no criminals.

And who else would be ready to supply this new market?

The former criminals would become the new legitimate entrepreneurs and the only issue would be around collecting the relevant tax / duty.

Smuggling would therefore continue at some level but it might well be possible to convince the new industry this was something it ought to help police - the cost of doing so is easily outweighed by the benefits of being 'legit' - a competitor who was rocking the boat and at the same time undercutting your supply would be welcome to no one.

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Anonymous Coward

Re: Howabout..

total bullshit

see krugman on the zero lower bound

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Anonymous Coward

@j arthur rhymingslang

It's not clear who that is addressed to, nor why, but it might be interesting so feel free to expand a little.

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Re: Baby Boomers

...Baby Boomers who were the first generation to pay National Insurance and fo the NHS for their entire working lives and who paid the pensions of the previous generations who hadn't... Funny how the whingers never mention that...

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Anonymous Coward

Re: Howabout..

Next time you come to the UK, bring your Starbucks with you.

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Anonymous Coward

Re: Howabout..

You're just buying into the narrative that all that money that others earn, it's OURS ! (wah, wah, wah is the usual accompaniment as well). Tax avoidance is LEGAL, how can you not understand that, and much of what you think of as avoidance is simply obeying the EU dictated law of the land allowing companies to trade across boundaries.

Read up, too, about tax incidence. Companies, to put it simply, don't "pay" tax, and they don't "benefit" from it either. Tax is paid ultimately by some combination of employees, customers, and shareholders, plus to a certain extent, wider stakeholders also pay the tax. Research suggests that the major portion of a tax burden on a company is borne by the employees and customers, capital is more able to move in response to the burdens imposed.

So, it SOUNDS good, just take all that money from those evil corporations, but in practice what you're doing is taking it from its employees and customers. You've bought into the scam, the intention of which is to tax more and more but by indirect means so you think that somehow it isn't you (and yours) paying it but SOMEONE ELSE; YAY !

Mug.

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Re: Howabout..

Sorry Andy, but you're quite simply wrong; either badly misinformed, or, like those actively peddling this line, maliciously pushing untruths to push a radical socialist style economic order. The sort of economy where you don't own your earnings but get a state endorsed share that you are allowed to keep.

The resource the taxpayer paid for, is used by the taxpayer, fool, not companies. You only want someone else to pay for what you use; greed incarnate. Sadly far too many people seem to believe that there's this magic money tree that we can pluck to keep up this spend beyond our means entitlement society going. Good political meme, crap economics.

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Re: Howabout..

@Andy Enderby 1: "Can't agree Armando....... The current incarnation of capitalism has throughly corrupted politics,"

Given that government has grown faster than the private sector for nearly a century, I'd say it's the other way around.

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Re: Howabout..

"What we should be doing is trying to reduce the amount people have to work to 4 days"

I can't afford to stay alive on four days pay!

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Re: Howabout..

For most of what you wrote I agree with. The biggest problem is that the kids of the baby boomers have decided to borrow for everythings. Bigger and better every few years. Baby boomers and their parents would live in the same house for most of their lives. Moving up never gets you out of debt and thus doesn't leave anything for the kids. An investment in a house is useless until you sell it and you may not recover all the money in interest or inflation.

I am a baby boomer and a government worker. I have lived in the same house for over 30 years. I have tried to get myself 100% out of debt and will be before I retire. Run 20 year old vehicles which I do most of the work on myself. Still don't have a HDTV as my old CRT still works. 7 year old laptop which has had a new screen.

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Re: Baby Boomers

JimC, the generation BEFORE the boomers had been involved in a rather awkward little situation called World War II. I think it's a little harsh to suggest that they start coughing up taxes to pay for all the work they should have been doing instead of fighting off the Nazis invasion of Europe...

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Re: Howabout..

.....and the massive outsourcing of just about every government function currently underway in the UK resulting in directorships for the ministers concerned ?

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Re: Howabout..

you really are quite rude bugger off back to the Daily Heil.

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Scam

AC @ 19:48, you're right it is a scam - by UKUncut. They want more tax to be paid by companies even though it's the employees who suffer. In the case of UKUncut who want workers to be appreciated more and paid more, except if they are Starbucks workers in which case UKUncut will do their best to disrupt their job and ensure they are paid less.

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Re: Baby Boomers/Jediben

AH yes, good point. The baby boomers also spent their working lives paying for WW2... Aprt, of course from the Seppos, who were beig paid...

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Re: Howabout..

".....The resource the taxpayer paid for, is used by the taxpayer, fool, not companies. You only want someone else to pay for what you use; greed incarnate. Sadly far too many people seem to believe that there's this magic money tree that we can pluck to keep up this spend beyond our means entitlement society going. Good political meme, crap economics...." Just ask the Greeks (and now the Germans having to pay for the Greeks) how that worked out.

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economics......

Is apparently a science..... That being the case maybe an economist would care to state why it is that they perform no better than tossing a coin when making predictions.

Maybe they'd also like to comment on the disparity between rampantly buoyant boardroom pay and what every body else gets, and maybe on the impact that has on an economy???????? S'funny it's all gone quiet.....

Maybe the author of the article would like to comment on the impact on the economy if everybody was in a position to stick two fingers up at the tax man ???????? ........crickets......

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Re: economics......

“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”

-The Rothschild brothers of London writing to associates in New York, 1863.

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Boffin

Re: economics is a kind of science

Economics is a "social" or soft science. That is, it at the same level as psychology and other wishy washy subjects. It is not the same kind of hard science such as physics, chemistry, astronomy, etc. That's why economists don't perform much better than tossing a coin. Studying a subject as the whole population of a country is nigh on impossible and so they come up with models and try to make it fit what's happening. But with such a varied subject being studied as the economy of a country with so many variables (potentially millions) it is not easy to say what is correlation and what is causation.

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Published data

Very few economists, being funded by government agencies, are going to speak out about government folly. One of the few places that will is the Cato Institute, a libertarian thinktank in the DC area. I don't agree with everything they say there, but it is nice that there is at least honest, intellectual discussion.

Then again, P.J. O'Rourke put it best: talking about taxes to the government is like talking about garbage to your dog. You can tell the dog to leave the garbage alone, but all the dog hears is "GARBAGE!!!"

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Re: Published data

Would that be the Cato Institute that is funded by billionaire business people seeking an intellectual framework for their rampant self-interest?

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Re: Published data

As opposed to the Union funded so-called think tanks, such as the Fabians or Compass, looking after their own self-interest and trying to justify their own jaded idea of utopia?

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Re: Published data

If it is funded by billionaires, at least the billionaires choose to fund it or not. Most research is funded by government drones, who take money with a loaded IRS and give it to whomever they choose.

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Anonymous Coward

Re: Published data

I don't know when you last looked at the job ads, but most economists are employed in the finance industry, many university chairs are funded by it, and the Cato Institute is a lobbying company for oil and tobacco.

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Re: Published data

Interesting - three facts and a thumbs down. Somebody doesn't like reality.

Incidentally, Armando123, P J O'Rourke is not an economist. He is someone who has made a very successful career out of right wing humour and some memorable soundbites. One of his objections to politics seems to be that politicians and their staffs do a lot of research, which he is helping to pay for. In effect, he wants federal and state governments weakened so they cannot oppose the will of corporations. But good luck with finding anywhere in his books where he actually spells that out in print. It's all "enabling people to get rich", without specifying too closely which people.

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tl:dr, just reacting to the sub heading. That WAS the intention, right?

If it is really true that teachers, firemen and nurses took all my money, then I'm happy about that.

In fact let's abolish government and give all that money to teachers, nurses and firemen too.

We'll be healthy and well educated with no unemployment and consequently, there won't be a requirement for government anyway.

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I'll add my mite

Last time I checked the USA, teachers and firemen paid with their lives to do their jobs. Can't remember the last time a bank CEO sacrificed himself to save the helpless. If my taxes are going to be used to help someone, I know I'd prefer them not to go to executives of financial services, but to the teachers and the guys repairing the roads in sub-zero weather and the food inspectors and the firemen. The ones who make our everyday world better.

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Devil

25% of all MPs?

I thought the following was quite poetic:

"The Royal Statistical Society recently reported that only 25 per cent of MPs could work out the odds of getting two heads with two coin flips"

So I was a bit saddened to see it wasn't strictly speaking correct if this posting accurately reflects the results of the same survey.

http://www.bbc.co.uk/news/uk-19801666

So who do I trust El Reg or Auntie?

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Boffin

Re: 25% of all MPs?

You need to study statistics a bit. It's valid to ask a sample of a population a question and be able extrapolate to the whole population. In this case asking just under 1/6 of all MPs randomly chosen and asking an equal number of Labour and Tory.

What is really interesting is that Labour MPs are more innumerate than Tory ones. 77% compared to 47%. Possibly something to do with the fact that a majority of Labour MPs come from jobs that don't require much effort in terms of numeracy? A PPE does not help much except in politics.

So who to trust? I would trust El Reg who have a varied selection of writers on their books compared to the BBC who are very biased towards the left/socialist viewpoint as noted by the preponderance of Guardian reading that goes on.

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Re: 25% of all MPs?

"What is really interesting is that Labour MPs are more innumerate than Tory ones. 77% compared to 47%. Possibly something to do with the fact that a majority of Labour MPs come from jobs that don't require much effort in terms of numeracy? A PPE does not help much except in politics."

What? They are all career politicians these days, none of them have ever had a proper job that required anything more than fence sitting and being snake-tongued.

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SOrry, NO!

If you want to blame it on wages for Nurses, Firemen etc, please put up a graph showing THEIR wages over the last 20 years, and do not forget to include MPs wages, and Civil Service top tier wages, including local, district and county councils for comparison.

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Re: SOrry, NO!

Upvoted 'cos you were clearly genuinely angry when typing that.

Or drunk.

Either way, well done.

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Re: SOrry, NO!

Check it out yourself. The Office of National Statistics site is at http://www.ons.gov.uk/ons/taxonomy/index.html?nscl=Labour+Market for labour.

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Windows

Well this is strange

First point

Deprecation: whenever the company I worked for had their annual get together for the years sales figures, the split would be Wages, Material costs, Site costs(power, water, rates etc) , plant deprecation, and finally profit.

Deprecation was NEVER taken from the profit figure, it was always included in the costs of running the company.

Second point : The wage differential between the lowest paid and the highest paid has risen dramatically over the past 30 years, from a CEO who earns 40 times the lowest wage to the state today where a CEO can earn 400 times the lowest paid, and yet for all that pay, companies still report a loss sometimes and sometimes go bust.

But for all that money the CEO earns, can he spend it all and boosting the economy in the way that splitting his $10 million /yr pay among the 5000 employees can?

Third and last point: the cost of housing, 30 yrs ago a good rule of thumb for lenders was that the morgage payments should equal 1 weeks wages per month, so that a breadwinner could keep the family at least supplied with food with a bit extra for holidays etc, now the price of houses forces both parents out to work and takes 2 weeks combined income to pay the morgage, result more people on the breadline, more taxes are needed to pay income support and a generation in hock to the banks for $10 000 on the credit card.

In real terms, the wages of the lowest paid have fallen yr on yr, and god help them if they protest because then their jobs are exported abroad with the government saying 'Nothing to do with us' while handing the companies tax breaks for doing it

Tramp icon.... because we will all look like that soon... barring a revolution

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Re: Well this is strange

1. Depreciation. It might not be taken from the profit figure but it does affect the profit.

2. Wage differential between top and bottom depends on the company. Some might be only a fractional percentage, others 400%. In my small company I earn 50% of the MD salary - when he does get paid.

3. Housing costs have gone up because both parents work not the other way round. Prices can only rise when their is a market of people willing and able to pay. If only the man could work (due to legal and social issues) then there is a limit to which prices can rise to. The housing issue was not helped by politicians wanting everyone to own their own home and so creating a housing boom.

4. Wages in real terms are actually way higher than in the past. Our wages go a lot further than in the past. Even the lowest paid can afford quite a lot stuff like white goods, entertainment, takeaways, etc. In the past you had to be top end of middle class to have the same standard of living as the unskilled do today.

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Right and wrong at the same time

DISCLAIMER: I am writing from the US and my specific knowledge of UK finances is sorely lacking.

From that vantage, this seems like a straw man argument to me. It matters not a whit what the "share" is: what matters is facts on the ground. Here in the US, real wages for workers have not risen since the 70's, yet CEO pay (as of the turn of the century) had risen 535%. At the same time, the S&P 500 had risen 297%, corporate profits 116%, and worker pay 32.3% less inflation of 27.5%. While the minimum wage did rise in 2007, the disparity has only increased, and been exacerbated by offshoring and the economic debacle of recent years. Since many were tempted to use their homes as bank accounts (with the concomitant bubble) a huge number are now actually behind.

For comparison, from 1949—79, family income by quintile rose 116% for the bottom 20%, 100%, 111%, 114% and 99% for the top 20%, with the top 5% rising a 'mere' 86%. But from 1979—2001, the same figures are 3% for the bottom 20%, 11%, 17%, 26% and 53% for the top 20%, with the top 5% gaining 81%. (The source for this is the US Census Bureau).

Taxes, however, are currently at their lowest level since the Eisenhower administration. Despite the scapegoating of many on the right (with particular attention to Governors like Scott Walker of Wisconsin and their funders, like the Koch brothers) even the "generous" salaries and benefits of public sector workers pale — they can lead a decent lifestyle (and we can't have that, can we? If you are suffering, the right thing to do is pull down the person on the rung right above you. Pay no attention to the man behind the curtain.)

There is a group here (probably little known in the UK) callled ALEC (the American Legislative Exchange Council), though which the Koch brothers and their ilk write 'model laws' which have been passed word for word (excepting 'insert state name here') by many state legislatures. These are the source of the anti-union movement in this country — unions which had been declining for years anyway, not least because of their own shenanigans and abuse (I'm looking at you Teamsters).

I could go on for pages. (In fact, I have. I've written a book about these and other related matters, which you can find at http://www.lulu.com/product/hardcover/the-root-of-all-evil/6525037, should you be so inclined).

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Re: Right and wrong at the same time

"For comparison, from 1949—79, family income by quintile rose 116% for the bottom 20%, 100%, 111%, 114% and 99% for the top 20%, with the top 5% rising a 'mere' 86%. But from 1979—2001, the same figures are 3% for the bottom 20%, 11%, 17%, 26% and 53% for the top 20%, with the top 5% gaining 81%. (The source for this is the US Census Bureau)."

Erm, hello?

Family size has changed over recent decades. Fallen quite considerably. And the US Census figures for family incomes have not been changed to show this.

Further, the US figures usually don't include the things that are done to try to alleviate poverty: food stamps, housing vouchers, the EITC etc. So sorry, but not greatly impressed by those numbers. Never have been in fact.

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Mushroom

Re: Right and wrong at the same time

For CEO pay, there are other factors at work.

The average company size today is far larger, employing far more people than they did 20 or 30 years ago. I find it completely reasonable that someone leading 50,000 workers is paid far more than someone leading 1000. Looking at the CEO pay breakdown, this appears to be the case.

Getting back to the main topic: an average workers pay is impacted by a lot of different factors. The biggest factor being the availability of workers for that given skill. In today's world a lot of labor is essentially unskilled or of a type that can be easily trained for. This means wages for those jobs won't rise as long as a large number of people can do that job. Government can enforce minimum wage standards, however that is a double edged sword as prices rice primarily due to a given markets ability to pay. This is why the cost of basics like food and shelter go up shortly after a minimum wage increase; negating the reason for doing the increase in the first place.

If you want prices to fall, then the availability of credit to the average worker needs to be heavily restricted. In the US, our housing market exploded simply because loans were being made regardless of a persons ability to repay them. If those loans weren't made, then housing costs wouldn't have skyrocketed like they did.

The answer isn't to blame CEOs, the answer is for governments to stop screwing with the money system by flooding the banking market with low or zero interest loans. Also, banks that make bad decisions should let the market pick over their dead carcass instead of saving them. Next, banks should never be allowed to operate as an investment company. Those money matters have entirely different customer relationships and goals.

I'll stop here, other than to say the current financial mess is going to be with us for a long time and it's a much more complicated thing than simply a "war" between the workers and the "capitalist pigs"

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ambiguity

Identity, when you state that Taxes, however, are currently at their lowest level since the Eisenhower administration, are you referring to taxes as a percentage of nominal GDP? Are you referring to marginal tax rates? What precisely do you refer to by the single word taxes?

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Pint

Re: Right and wrong at the same time

chris lively said

" In today's world a lot of labor is essentially unskilled or of a type that can be easily trained for. This means wages for those jobs won't rise as long as a large number of people can do that job"

While I agree with the main thrust of your argument Chris, I would like to add that another corrupting factor in play is the inequalities created by certain influential unions, at least here in Australia.

In Aus, one of the two main political parties is essentially the political wing of our biggest union, the incredibly corrupt Australian Workers Union (AWU).

The effect of this is that during the part of the political cycle that the union affiliated ALP is in power large Keynesian style infrastructure projects that include backroom deals to guarantee exorbidant pay rates for unionised workers are embarked upon.

When they are not signing off on incredibly expensive white elephants they are busy propping up commercial companies that coincidentally just happen to be held hostage by their heavily unionised workforce by channelling taxpayers funds to those unionised workers.

This has had the inevitable effect of artificially inflating the salaries of union affiliated blue collar workers to insane levels while workers who are not affiliated with those unions are left behind.

This has reached the point where uneducated blue collar workers now earn more than educated white collar workers in this country.

It truly is the Age of the Bogans downunder, which probably explains why hardly anybody seems overly concerned by the rampant cronyism and corruption at play.

Chuck us another beer Shazza.

Go the 'pies!

Hey, watch the bloody ute ya dickhead

* bogan mating calls

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Re: Right and wrong at the same time

Sorry, I don't buy it. Family sizes have not changed so drastically from the fifties on, and even if I accept your caveat, the disparity in the numbers is too great to be accounted for by them.

I just heard today (from Howard Friedman, statistician for the UN — though I'm sure that's the kiss of death for you) that the combined wealth of the TWO richest PEOPLE in the US (Bill Gates and Warren Buffet) exceeds the wealth of the bottom 40% of the population. Among his findings: income inequality is one of America's greatest challenges.

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Re: ambiguity

Tax rates

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Re: Right and wrong at the same time

@ Chris Lively

I agree, but the rise in CEO pay exceeds any reasonable factor, such as company size, and far exceeds historical norms. More to be said, but I'll leave it at that...

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Re: Right and wrong at the same time

"TWO richest PEOPLE in the US (Bill Gates and Warren Buffet) exceeds the wealth of the bottom 40% of the population. " Yep, that's true. But even the reasonable well off American exceeds the wealth of the bottom 40%. How does that work you ask. That's because wealth is measured in terms of possessions. When the bottom 40% have few possessions and a lot of debt, eg. mortgage, then anyone who has no debt and $1 in the bank is better off.

And family sizes have changed drastically - when you consider a family as a unit living in a house. Actually numbers of children of parents hasn't changed, but the number of people living alone has changed. That means family sized have dropped considerably compared to the time when families consisted of three generations living under the same roof.

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Re: Right and wrong at the same time

Having a mortgage does not equate to being indebted. Only if you are in negative equity. Suggesting a reasonably well off American exceeds the wealth of the bottom 40% is either facetious or merely ludicrous.

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Re: Re: Right and wrong at the same time

".....the TWO richest PEOPLE in the US (Bill Gates and Warren Buffet) exceeds the wealth of the bottom 40% of the population....." It's probably fair to say that Bill G alone probably put more thought and work into making his money than the bottom 40% of the US population.

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Boffin

Re: Re: Right and wrong at the same time

".....the rise in CEO pay exceeds any reasonable factor....." Hmmmmmm, I find this fixation with CEO pay illuminating in that it seems to be guided by envy rather than simple economic reality. I'm sure there are plenty of top CEOs that have seen above average payrises, but I'm also certain there are plenty of CEOs that have actually seen a paydrop or lost their jobs. If you look at the market, it is easy to understand the rise in "top" CEO pay simply as a factor of demand, whether you agree with it as "fair" or not. It's simple supply and demand - there are a limited number of "top" CEOs, and companies will pay more to secure one. When the economy is in the duldrums, having that "top" CEO becomes even more important to guarantee survival, and companies will pay even more to secure one. Sometimes their desperation leads to idiotic choices (Leo Apotheker springs to mind), but other times those pay packets are justified by results (did anyone question Steve Jobs' paypacket?).

In a growing economy, most businesses do better anyway, so there is an expectation that a CEO will return good results and may not be the same pressure to achieve stellar results unless the CEO works for a company very much in the spotlight (such as Microsoft, IBM, etc.). However, in a downturn, the pressure is on and the profit bonuses aren't there to satisfy the top CEOs, but shareholders will want the best CEO possible in an effort to achieve better-than-average results, and hence they offer better renumeration. The average CEO is no longer good enough when company survival is top of the agenda. It's simply supply and demand applied to a limited resource - "top" CEOs. It's a simple but cruel factor of economics, but a CEO is usually a more valued employee than Joe Deskworker, and a downturn can make the CEO even more important to a company worried about survival, so they will screw Joe Deskworker in pursuit of a better CEO. Hence the "top" CEOs will see a payrise above that of the average worker even in bad times.

You may think that is simplistic, but it holds for all parts of the corporation where supply and demand can be applied. A simple example is coders - when the economy is rising and work is plentiful, there is usually no problem securing average or good coders for a reasonable wage. If you can't secure a top coder you may shrug and employ two or three average coders to do the same job. However, when the economy dips, and the pressure is on to deliver projects faster, to smaller budgets, then suddenly the really good coders are more sought after and will actually see a rise in their contract rates. When the pressure is on the average coder is no longer good enough, everyone wants the best coders and will pay more in the hope that having that limited resource will actually lower their overall costs. The pay for average coders goes down as there is less work, but the top coders earn more because they are even more sought after.

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Re: Right and wrong at the same time

"I just heard today (from Howard Friedman, statistician for the UN — though I'm sure that's the kiss of death for you) that the combined wealth of the TWO richest PEOPLE in the US (Bill Gates and Warren Buffet) exceeds the wealth of the bottom 40% of the population."

This is obviously and clearly true. I've even written about it myself elsewhere.

But it's not really all that remarkable. For some 25% of the population have no net wealth at all.

Think about a student just out of college. They've got student debt and no monetary assets. They have negative wealth therefore. Or even someone who lives paycheque to paycheque and has $2,000 in credit card debt. Even if they're earning $50k a year, they've still no net wealth.

In fact, as I've said elsewhere:

"If you’ve no debts and have $10 in your pocket you have more wealth than 25% of Americans. More than that 25% of Americans have collectively that is."

I'm sorry, but it's simply not an odd or shocking statistic.

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[Tax rates] are currently at their lowest level since the Eisenhower administration?

Identity, this is not the case. Tax rates were at their lowest level since the Eisenhower administration during the first half of the Bush père administration.

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