Posted Thursday, Dec. 1, 2011, at 2:50 PM
I had a very interesting dialogue this morning with Ned Resnikoff, starting with his tweet "shorter The Economist: Life ain't fair, so let's force workers to bear cost of shoring up crumbling financial system." What's specifically at issue are propsals from the Tory/LibDem coalition in the UK to not pay public sector workers the full amount of pensions they've been promised. My question to Resnikoff was which non-workers are available to pay the cost? His proposal, I think, common to most progressives is that high income people ought to pay the cost, which I'm sympathetic to. But it's worth noting that this rhetoric about "workers" is really a legacy of an outdated time. As Thomas Piketty and Emannuel Saez write in one of their celebrated papers on the death and rebirth of inequality in America (PDF), "this rise of top income shares is due not to the revival of top capital incomes, but rather to the very large
increases in top wages (especially top executive compensation). As a consequence, top executives (the 'working rich') replaced top capital owners (the 'rentiers') at the top of the income hierarchy during the twentieth century."
That's not just to make the banal point that someone like a Jeffrey Immelt does in fact do work, it's to highlight the point that the concept of a class struggle between workers and capitalists was at the time it was created grounded in a specific contrast between workers and owners. Today relatively few companies are managed by their owners. What's more, the kind of rich people least likely to prompt public resentment are the Mark Zuckerbergs and Bill Gateses -- the entrepreneurial capitalists who did primarily make their money through equity stakesin the firms they founded. But your average workaday fat cat CEO is, in a way, just a very well-compensated wage slave. That wasn't true in the era before the Great Compression of the income distribution that happened in the middle of the 20th century, but the New Gilded Age is substantially different from the original in this respect.