Chart of the Day: 1% income

A very illustrative chart used by a member of the 99% “Occupy Wall Street” crowd, has been captured here:

The post goes on to breakdown who makes part of the US 1% crowd, and effectively it is executive managers (CEO’s) and financial professionals.

For Australia, the divergence between the 1% income and average worker is somewhat better but has also accelerated:

The USA definitely wins here:

www.twitter.com/ThePrinceMB

Comments

  1. In the US it’s much worse, as this data is only base salary; if you combime (salary+bonuses+stock [vested]) the chart is vertical.

    Here is one example. Also, alot of the filings are not reported, so hard data is not easy to get.

    http://au.finance.yahoo.com/q/it?s=AAPL

    If the OWS gang really knew what goes on the fury would escalate. Looking at the insider stock vesting you can find CEO’s,CFO’s, VP’s etc. making 70M or more in one month.

  2. I think there’s widespread closet support for these protestors and the recent coverage of income inequality (even Alan Kohler has got in with some charts!). But CEOs getting paid that much isn’t a crisis as such. It’s more symptomatic of structural problems:

    – The splitting of risk and return in finance and the FED’s role of lender last resort.

    – The shift of wealth from labor to capital.

    Still, those don’t make for good placards. My point is that I hear a lot of employed middle-class Americans aren’t happy with system either…

  3. 2 points. Firstly, what is WRONG with some small proportion of a nation’s population “striking it rich” by FAIR means, the Adam Smith way, of providing customers with value? The top 1% seldom includes the same people for long – this is all part of “creative destruction”.
    Secondly, I always agree that the financial sector continually growing at the expense of the rest of the economy, is a bad thing. This is mostly the result of government interference in the economy, such as the invention of company taxes, urban growth boundaries, etc etc.
    Lastly, some proportion of the top 1%, are “celebrities” – is there ever a spite and envy movement agonising over the incomes of people who feature in top selling gossip magazines? Nah, this is “opium of the masses” stuff. And celebrities can more easily pass themselves off as saints while making money out of the masses, by giving lip service to all the touchy-feely PC issues of the day. Business men who make money the Adam Smith way do not seem to get a pass from the leftwing critics as easily.

    • “The top 1% seldom includes the same people for long – this is all part of “creative destruction”.”

      Not sure about that Phil. Do you have any data?

      I would be surprised if celebrity actors/musicians etc made up much of the top 1%.

      “what is WRONG with some small proportion of a nation’s population “striking it rich” by FAIR means”

      Nothing at all. I haven’t seen anyone protesting about Bill Gates for making a product and stiking it rich. But they will protest when Microsoft appears to exert power over regulators who try to ensure an even playing field.

    • Phil, I think we all want the same thing. We want proper functioning capitalism;
      Where the law of the jungle pervades.

      This is not (just) about the classic socialist notion of wealth redistribution and minimising wage inequity.

      I think most of us are all for striking it rich via being clever, innovative and finding better ways to do things eg: the creative destruction process you refer to (although I think you will find this is a process promoted by Schumpeter rather than Adam Smith).

      The government interference you are talking about is specifically promoted and directed by the top 1%. They use their power and massive lobbying budgets to solidify their monopolistic influence which guarantees them massive superprofits for very little risk.

      I do not agree that the 1% is fluid – I would love to see the stats on this. Through wealth, superior education, health etc etc, the super wealthy protect and insulate their offspring which continues the dynasty.

      I agree with Rumplestatskin, here in Australia I doubt there would be many of our B grade celebs in the top 1%. The top 1% are the CEOs of the ASX 100 and the reality is if it goes well because the market is on fire they take home massive wedge and if they blow the place up they either get a golden handshake or the tax payer (the other 99%) bails them out. I mean seriously how hard is it to run a top 4 Aussie bank?

      The problem with the current system is there is no market discipline. The guys who blew up these companies should be in goal or at least be begging on the street.

    • “Firstly, what is WRONG with some small proportion of a nation’s population “striking it rich” by FAIR means”

      Theres no danger in running out of fingers and toes counting the number that have done it by fair means. And that leaves the rest of the one percent.

  4. “by FAIR means, the Adam Smith way, of providing customers with value”

    Nothing. Except that’s not how the majority have done it.

    If they did the taxpayers of the world wouldn’t have had to bail them out, would they?

    • The other issue is that the increase in wealth at the top has not being shared with most of the population. I’d say things have gone backwards as the increasing profits have been channeled to influence policies detrimental to the majority.

  5. Probably close correlation between the top 1% and the household debt growth chart. Maybe ok if these guys got rich on improved economic productivity but looks like they cashed in from majority taking on debt.

  6. If the 1% at the top have more than 20% of the wealth and economic power, we have a monopoly and any private monopoly is destructive for democracy. How can we have democracy with the 1% dictating who is in the government and what kind of legislation we have. The so called “democratic” election in USA are such a joke.

  7. There is only one question that needs to be asked. Is this pay being paid for by private individuals, shareholders, who see value in paying executives more, or is it being paid for by the government to subsidise the businesses they are running?

    If it’s the former then ‘stop whining and work harder’ is the only answer that can be given. Private shareholders can pay their executives whatever they want and it’s nobody elses business nor should it ever be.

    However, if it’s the latter then it’s not executives that are the problem, it’s governments and these people should be ‘occupying [insert nearest parliament/government house here]’ not Wall Street. Ditto for owners of businesses/corporations who are being subsidised by governments and taking the profits.

    Do you blame a child for being extremely overweight or do you blame the parents who fill them with junk food and don’t encourage excercise? You shoudn’t attack people for acting in self-interest and rewarding themselves, despite failure, if the government are pathetic enough to let them.

    If, as some are claiming, these protests are against crony capitalism, they should be marching alongside the TEA party who have been campaigning against this for years. But, I suspect this isn’t the case and these are just more hippy socialists complaining about the ‘evils’ of ‘capitalism’ and ‘consuption’ in one breath, then shoveling down fast food in the next.

    Oh and telling their friends on twitter/facebook about it all via their iPod/Ipad/blackberries, looking good in their designer jeans and Nikes.

    We should take everything they say with a very light grain of salt.

  8. The solution is simple. You have a bottom and a top limit for all salaries (including bonuses and other benefits). Both then must only be moved proportionally, and are recalculated by whatever authority regulates them every year. This way, the top 1% can only ever grow their income by boosting the income of everyone else proportionally.

    • Good idea, we should also have price controls for everything, it’s not fair that some people can afford ferraris and others can’t.

      I mean, it should never be up to private individuals to set wages or anything. It should always be up to the government. What could possibly go wrong?

  9. “Imagine a political system so radical as to promise to move more of the poorest 20% of the population into the richest 20% than remain in the poorest bracket within the decade? You don’t need to imagine it. It’s called the United States of America.”
    (Thomas Sowell)

    It seems some people would rather us all to live in relative poverty as long as the gap between the top and the bottom is smaller