Interesting article..... http://money.msn.com/investing/who-killed-the-american-dream "Mankiw takes it as a given that compensation equals marginal product. The rich earn their money because someone pays it to them, and that someone must have a good reason to pay that much. The markets decide pay, that's just Econ 101, and on that topic." Plenty of pundits have responded to Mankiw's thesis, but none more effectively than Josh Bivens and Larry Mishel of the Economic Policy Institute, who also contributed a paper to the special issue of the JEP. It turns out that it's not so much what you know, as Mankiw argues, but how much power you have, especially the power to extract economic rents. Bivens and Mishel show that the increase in the incomes of the top 1% over the past 30 years owes more to successful rent-seeking than it does to efficient and competitive markets rewarding education and skills. What do economists mean by "rents"? Simply put, it's the income that's received over and above what would be required to induce the person to supply their labor or capital. For instance, Bevins and Mishel say, "it seems likely that many top-level professional athletes would continue to supply essentially the same amount of labor to their sport, even if their salary was reduced by some substantial fraction, because even the reduced salary would be much higher than their next-best options." So.... it boils down to what you can extract from whom. Most laid off American workers came to the realization as I did during the Great Recession that when your leverage stinks you lose your ability to extract income. At age 54 during such a severe recession and unemployment you don't feel too good about your leverage. Something is amiss economically in this country and if you believe such horseshit as the top 1% are gifted....genetically bred.... etc. etc... to deserve all of their excesses then that is really quite disturbing.
Just glossed it over but I think economic succcess starts with opportunity that can be accessed because of skills and education as well as the ability to stomach risk.
I agree with that basic premise George... absolutely. But that doesn't necessarily provide explanation for the exorbitant and ever increasing amounts that some at the top are able to extract. A baseball pitcher with an era and W-L record that are comparable year after year isn't suddenly worth tripling his contract from 10 million to 30 million but because he/his agent can extract it based on his particular occupational skills and what the market will bear... he gets it anyway. We are not talking about middle level managers and salespeople here George....the workhorses of the economy. It's the inner circle.....the guys that can vote themselves exorbitant pay for the same or lesser accomplishments. It's that last statement that I have long said is a huge waste of economic resources and income distribution. A guy like Steve Jobs or his top product development advisors....those guys earned their compensation through great innovation and marketing prowess..... I have no quibble with that type of scenario. But I think there are far too many average "pitchers" out there who haven't done anything to merit the exorbitant sums of cash they somehow are able to continually extract from their positions.
Wouldn't it be interesting Sid if the bottom 95% of a company voted on the compensation and severance packages for the top 5% instead of the top 5% voting for it on their own? Sorta like the Florida legislature in charge of what they themselves have to repay the state for their own cadillac medical coverages..... which amounts to virtually zilch. As the article states.....it's not about who invents the I-pad....it's about who wields the power.
Who killed the American Dream? Japanese, Koreans, Indians Thais and others living their dream. When we bacame a global economy, our workers had priced themselves out of the world market.
Yes.... somehow the American worker has been blamed for not gladly bending over and saying "thank you sir....may I have another" in order for our economy to remain competitive with 3rd world and emerging markets. Yep... that shoulda been a no brainer.... :roll: ... while at the same time those at the top.... well..... we know what they have been up to.... :lol:
You have to give our bloated federal government a big assist in killing the American dream. Onerous taxation and a myriad of regulations wear individual initiative down like rushing water wears down stone.
When I travel to places like LA or Seattle, I'm surpirsed at how many foreign vehicles there are there. These cars are bought by American workers that don't give a **** about auto workers in Michigan. American workers were betrayed by their fellow Americans who buy at Walmart and buy foreign cars. Somehow someone in the 1% must be at fault...otherwise writing ******** liberal columns would be futile.
Let's see now... exorbitant pay, for little work...they can vote themselves pay raises any time they want...sorry, but those are government workers. Especially those public employee unions that control the government, the taxes and the votes... When private companies raise prices they risk losing existing customers. When governments raise taxes they risk nothing, as long as they use the money to buy more votes...
Funny that's how I felt when I was laid off from a company where I worked for over 23 years..... so I bought a new Hyundai Elantra for my wife last August. First foreign named car I have ever bought and didn't think twice about it. I don't think the American worker feels he/she owes much loyalty to anything these days.
... and the American workers that showed no loyalty 10 years before you were laid off didn't care either. Americas manufacturers mean something to me. In my garage is: 2012 Dodge Challenger SRT8 2013 Dodge Challenger SRT8 2006 Dodge SRT10 Viper engined Truck (not here yet but on a transport vehicle and on it's way) 2012 Harley Tri-Glide Red 2012 Harley Tri-Glide Blue My car club's motto: Death before Prius!
Yeah...it wasn't really GM and Chrysler's fault anyway....it was W and his band of one percenters soaking the financial system dry... :wink:
Well it all went down a scant 6-8 years ago....culminating in a huge life event change for me and my family in 2008. Still pretty fresh.... and yes it still greatly affects me and my family. Not all of it is bad.... I live in Florida earlier than I thought that I would... which is a good thing. Most times however I feel I'll never get even close to where I was income wise in pre-lay off days..... most of that due to my unwillingness to move, uncertainty about switching jobs at my age and a stubborness it seems by my present small company dyed in the wool GOP minded employer to reward my sgnificant accomplishments with increased income. Worklife for me post-Great recession..... like it is for so many Americans affected by the recession.... is drastically different.
Guess that the economic stimulus and the Summer of Recovery must have missed you. But cheer up, free health care is right around the corner. (not for you but for the same folks who get free phones, housing, tuition and food stamps.)
Things were so deeply effed up by W and his band of one percenters Gipper that we may never recover. Actually.....from an income gap standpoint.... or a wage and benefit standpoint...... things are not the same as before the financial meltdown and probably will not be in my working lifetime.
Thank God the party favored by Warren Buffet, George Soros and John Kerry is trying to repair the damage done by the one percenters. :roll: