Something that is incredibly surreal about New York that often goes unnoticed is the wealth disparity is constantly on display. We ignore it, we purposefully ignore it, because it’s just depressing. I walk through the wealthiest area of the city every single day. All those stores you tourists come to see and block the sidewalks so I’m late getting to the D Train, yeah, I see those every day.
What I also see is multi-millionaires shopping for watches that cost $50,000 while a homeless guy with obvious mental issues and in need of help sits outside in 18-degree temperatures. I watch as people spend thousands of dollars on shit they don’t need while the person behind the counter struggles to pay rent.
The disparity isn’t unique to New York, but it’s certainly absurdly visible. Take a subway within Midtown before or after a holiday during typical rush hour periods and it’s empty. Take that train from the Bronx into Manhattan and the train will still be crowded with people on their way to work. Why? Because the people in the Bronx mostly work service jobs, jobs that exist to serve the people in Manhattan, the people who get that time off to do whatever. And service jobs need to exist, but when you see young and old, husbands and wives, fathers and mothers all filling these jobs and not moving up the economic ladder, there’s something wrong with that picture.
The issue isn’t that we need to tweak the system or increase minimum wage or continue enacting policies that were fantastic ideas 50-60 years ago. We don’t need some Bolshevik-style revolution, rehashing and utilizing some philosophy from 100 years ago. Just as we don’t need some rehashed socialism, we don’t need to keep rehashing capitalism as though it’s some sacred cow, the arbiter of all economics and that without it we cannot exist. It’s an economic model based on Enlightenment thinking, a way of thinking that (thankfully) has slowly been fading out of our existence. So why are we still using it?
Basically, we need to rethink capitalism, we need to rethink our economy. With the rise of automation, jobs that were previously “skilled” are now “unskilled,” which has caused some to migrate over to other “skilled” positions (such as sales), driving down wages and creating a perpetual downward spiral in our economy. I know, I know, “But muh investments!” Or whatever argument you want to make. At the end of the day, the system is failing and has been failing for over 30 years. It cannot be saved, it cannot be salvaged, but it can be reformed and remade. There are some good things in capitalism that we can continue using, but overall we must use those things as tools and not as centerpieces in any new system.
Consider that we wouldn’t allow the government be run by an elite group of people who openly select a dictator for us, and then have that dictator openly admit to serving the board and not serving us. We wouldn’t allow the government to limit what we could say or do and dictate how we should live our lives the majority of the time we’re awake. I mean, we’ve basically allowed all of the above, but in theory, we wouldn’t allow it. We still have the pretense of voting and, if we honestly got serious we could overpower those that seek to influence our government. We still have a mechanism to change.
But we allow our corporations and bosses to do the above to us all the time and we think nothing of it. What is a CEO if not a dictator? What is a board of directors if not an oligarchy? We don’t like to think about these things, but they’re still true; as much as we claim to value freedom, the fact is we’re very much in favor of totalitarianism so long as it’s privatized. At its core that is the problem with capitalism, is that it took the absolutism of monarchy that existed prior to the Enlightenment experiment and instead placed that absolutism in the hands of individuals so that when one has capital producing property, one has absolute rule over that property. By necessity, those tied to the property through labor would also fall under that absolute rule.
The answer, then, is to take away the absolutism of the boardroom. Yes, it’s private property and all that, but it exists within a social sphere and the larger its influence, the larger its impact, the less “private” it really is. A company dumping toxic waste into part of a lake it owns would still be held accountable for its actions on its own private property because its actions had public ramifications. Only the most anarchist of capitalists would disagree that private companies that harm public interests ought to be punished. There’s almost universal agreement that harming public good (physically) should require the government to step in and stop it. Why, then, do we not have the same view when a corporation – or group of corporations – are harming the economic public good through selfish and greedy business practices? If we think it’s okay to stop a business from harming the public good when it comes to health, why not when it comes to the economy and the lives of others?
Thus, the idea of “private property” is a misnomer in today’s world. Yes, the lower the impact a business has, the more private it is. But the more visible and the bigger impact it is, it really ceases to be private. As such, the government is fully entitled to step in and regulate the absolute shit out of it if it’s harming the general populace or our economic output (in terms of the real economy; the market doesn’t matter). Since the central problem of our economic problem is dictatorial boardrooms, we ought to do what we can to eliminate their power. If that comes through legislation, so what? I think there are two ways – not mutually exclusive, but also not reliant upon each other – that we could remove the influence of boardrooms and stop the damage they’re causing to our economy:
First, we need to enforce a strict ratio tax on large corporations – as mom and pop stores aren’t really a threat to our economy (they can still be horribly run and mistreat employees, but they don’t have a major impact on the economy). What that means is simply don’t allow corporations to compensate (this includes stock options, cash bonuses, and salary) their highest-earning executives at more than 50:1 the average employee. While there’s no absolute number for what ratio is ideal, most economists agree that an income ratio of 100:1 is the highest you can go before you begin to see negative ramifications in the economy. Once the wealth gets to 150:1 or even 200:1, the income gap is wide enough to start putting a strain on the middle class. Right now we’re at 271:1 as an average, though some companies are obscenely higher.
Why does this cause a problem? Well, consider that since 1978 CEO pay has increased nearly 1,000%, which far outpaces the market (the S&P 500 has “only” increased 542.9%) and even the wages of the traditional 0.1% (which has increased 320.5%). In terms of actual dollars, not adjusting for inflation, the average individual income for Americans has increased 195% since 1978. However, keep in mind that $10,500 (the average annual individual income) in 1978 is equivalent to $39,415 in 2017, so with inflation modern workers are either breaking even or at a loss compared to the 70s. The reason for this is simple: if profits from actual production and investments haven’t increased as much as CEO pay has increased, it means the money for the CEOs had to come from somewhere. That somewhere is the workers. The income inequality at 271:1 means that worker pay must be cut and/or restricted in order to pay for the CEO and other executives. Since the pie can only be so big, corporations are cutting bigger and bigger pieces for the CEOs and executives and giving crumbs to their workers. This is why we’re having food drives for people because their low pay means they can’t even afford to eat an adequate meal.
Hence why income inequality must be addressed. It’s one thing if one company inflates the gap, but it’s another when it’s the common practice for all corporations in America. Placing a hard cap of 100:1 and slowly bringing it down to 25:1 (what it was in the 1950s and 60s, which created a strong and stable – apologies to Theresa May and all Brits who hate hearing that phrase now – middle class) ratio over the course of 10 years. This lessens the shock to the system but also elevates us to have a strong middle class. The boardroom still holds power, but not nearly as much. It neuters the damage they can do because they’re limited on how much they can exploit their labor.
The second thing that we should do is look at instituting worker-ownership. Admittedly, this works better as a grassroots project, but it could still be legislated to a degree. Let the workers actually own a piece of the company; if the company sees fit to give significant equity to the CEO, he should have no more than 10x what the average employee is given. After all, the company and CEO are absolutely reliant upon the labor of the worker, so why shouldn’t the worker get ownership or a profit share just like the CEO does? The implication, of course, is that if workers have part ownership in the company, they have say in who their executive board will be. If workers have complete ownership in a company, then they’d have a complete say over who the board would be and who their managers would be.
Now, we can act like that’s a bad thing, argue that workers can’t possibly know how to run a company so why let them vote on a CEO? But these are the same people we allow to vote for a person to have power to launch nuclear weapons; so we trust these people enough to vote for a person who can start WWIII, who can vote legislatures into power who will write the law, but we can’t trust them enough to know what works and what doesn’t work in their own vocation? Bollocks.
In employee-owned companies around the world, employees have actually shown that they know exactly what they’re doing in electing an executive board. Likewise, their pay ratios rarely exceed 10:1, bonuses are distributed to the worker-owners accordingly, and they don’t have food drives for their people because their people can actually afford to eat. What a shocking concept!
Those are admittedly brief, but broad enough to hopefully encourage some thinking. What is known is we can’t continue on this way. Our system is absolutely unsustainable and is headed toward a collapse from which it’ll be difficult to recover. The crashes since the 1980s have proven to be shocking to the system that we’ve yet to recover from, and it’s shaping our politics and our nation.
What is known is that if a company has to hold a food drive for its own employees, then the system is not working. We can point to multiple charts showing its working, we can point to the stock market, and we can perform amazing mathematical acrobatics to prove that the economy is actually doing well. And I will still point to the 14% of the population – the nearly 50,000,000 people – who are food insecure, I will point to the fact that 49% of our nation is low income, and I will point to companies having food drives for their own people and show that the system is absolutely broken.