Bill Knight column for Mon, Tues., or Wed., Sept. 7, 8 or 9
So when some billionaires recently went public to express alarm about the country’s income inequality, it was, well, as weird as a comic-book bad guy who looks like Frankenstein’s monster dressed in tights and a cape.
Writing in the New York Times last month, former Young & Rubicam chair Peter Georgescu said, “We are creating a caste system from which it’s almost impossible to escape” and warned of “major social unrest” if income inequality isn’t confronted as the crisis it is.
“I’m scared,” he wrote. “The billionaire hedge funder Paul Tudor Jones is scared. My friend Ken Langone, a founder of the Home Depot, is scared. So are many other chief executives. Not of Al Qaeda, or the vicious Islamic State or some other evolving radical group from the Middle East, Africa or Asia. We are afraid where income inequality will lead.”
This may seem new, but it’s not.
Eighty-two years ago, esteemed economist John Maynard Keynes publicly appealed to new President Franklin D. Roosevelt to work “within the framework of the existing social system” in dealing with the Great Depression.
Keynes wanted to save capitalism before it self-destructed.
Likewise, Georgescu said, “We risk losing the capitalist engine that brought us great economic success and our way of life.
“We business leaders know what to do,” he continued. But “are we willing to control the excessive greed so prevalent in our culture today and divert resources to better education and the creation of more opportunity?”
Georgescu proposed businesses invest aggressively in their operations, and employers start paying better wages that let workers share in productivity increases.
“Real wages have been flat for about four decades, while productivity has increased by 80 percent,” he wrote. “Before the early 1970s, wages and productivity were both rising. Now most gains from productivity go to shareholders, not employees.
“But the current Congress has been paralyzed,” he added.
It’s not just Georgescu. Fellow billionaire Charles Koch urged politicians to derail the gravy train and stop subsidizing private companies. Since his companies have received some, that may be hypocritical, but he’s right. Billionaires contribute to lawmakers, and elected officials increasingly represent the wealthy, not everyday Americans.
And earlier this summer, Cartier billionaire Johann Rupert told some rich peers, “We are destroying the middle classes. How is society going to cope with structural unemployment and the envy, hatred and the social warfare?”
Self interest and self preservation, most likely. Shrinking incomes mean fewer consumers; that means less sales. Also, there’s that feeling Keynes and others had that if capitalism’s worst excesses weren’t corrected, it would be sacrificed and inferior systems would be tried.
No gated compound can keep out everyone forever.
Georgescu said, “We really don’t want civil unrest or an 80-percent tax rate [as suggested by economist Thomas Pikkety in the best-selling book “Capital in the Twenty-First Century”].
“Government can provide tax incentives to business to pay more to employees making $80,000 or less,” he said. “The program would exist for three to five years and then be evaluated for effectiveness. People would have more money to spend, and many would no longer need government help. That would mean a reduction in entitlements.
“I don’t know yet what it would cost,” he continued. “But not acting would be far more costly.”
After all, many who hoped for the American Dream have suffered Opposite Day for years.
[PICTURED: Illustration from stevescottsite.com.]