The United States: Good Old Meritocracy or Emerging Oligarchy?

You see them on TV – the richest people in the world. They are captains of industry, celebrities, and famous or infamous individuals and who, for the most part, live lifestyles no middle class citizen can even dream of. And most of them live and work in America.

First, let me tell you that I’m not against wealth and I actually admire those who work hard, sacrifice, and take a risk. Entrepreneurship is at the heart of America. But could those that reach the extreme upper limits of wealth actually be hurting America?

I know many conservatives will immediately balk at this line of thinking. How could one person (or a group of people) getting rich hurt anyone? Don’t these people stimulate the economy by creating jobs, innovating, and buying lots of material goods? Certainly, but when wealth gets concentrated in such a narrow strata of our population, could it actually be tying up money in the hands of a few when it could be better spread among the many?

Many economists will say that our economy isn’t a zero-sum game. One person having a lot doesn’t take away from someone else having something. They usually point to productivity and say it is almost infinitely expandable. But these same economist also fail to examine productivity in terms of real wages and the fall of real wages since the 1960’s. (see: http://www.laborresearch.org/charts.php?id=8)

Some studies will show that real wages have, indeed, increased. If you look at these you might see a slight increase of around two percent. But if you also look at how the cost of living has increased, you can easily see how that figure has dwarfed any increases in real wages.

What I do know is that in the face of real wages is that CEO pay increased from 42 times that of the average line worker’s pay to 500 times that in a mere 20 years. Did these CEOs really earn their opulent salaries? Jack Walsh led G.E. to healthy profit margins during his tenure. Steve Jobs is a gem at elevating both Apple and Pixar. Most of their “compensation” packages are really incentive packages of treasure troves of stock options used to prod them on to actually make the best moves to increase performance and the stock’s value. But what about those that didn’t perform? Michael Ovitz of Disney was jettisoned early and walked out the door with a golden parachute of $120 million dollars worth of compensation.

The topic of CEO pay (compensation) and performance is another topic for another time. But before leaving the topic, I don’t know too many of us that wouldn’t want even a portion of their compensation packages.

And don’t get me started in the likes of a Paris Hilton, who before deciding to market herself for fame and fortune, never worked a day in her life. Add to that the fact that she would never have to work to maintain an extravagant lifestyle.

My point is what do the rich really do to earn these opulent riches? Does David Lesar (CEO of Halliburton - pictured) work harder than “Joe” who puts in 55 hours a week as his job as an accountant at the firm just off the expressway?

Let’s look at Joe. He makes just above the national average at, say, $35,000. David Lesar is pulling in a total compensation package of $7.7 million dollars. By my calculations, straight up before taxes, Joe makes around $16 an hour. David Lesar makes over $37,000 an hour.

Does David Lesar actually deliver $37,000 dollars more value an hour than our poor little “Joe?” Stock holders certainly think so. The Halliburton board certainly thinks so. And maybe Joe would be a little over matched by the job.

What I’m getting at is that the U.S. is based on a meritocractic idea. You get what you earn and deserve. Work hard, achieve and you will get what you deserve. I’m sure that David Lesar worked hard, sacrificed and made all the right moves. And maybe you don’t want Joe to manage your company. But in giving David Lesar such a big salary, could it actually concentrate a dangerous and inequitable amount of money in the hands of one person when it some of that money could be spread across dozens of hard working Joes?

Anyway, isn’t this whole concept of taking from the rich and giving it to the poor immoral, though? Am I attempting to incite class warfare? From my perspective, the class war has been and is still being fought in a subtle way throughout our culture.

My point isn’t that the government needs to punish the rich. Or that the proletariat brothers need to rise up and “de-throne” the upper crust? Or that fortunes should be ripped away from heirs because life should be more fair?

My point is that the recent revisions in tax laws have tilted the playing field away from the middle class values that our present administration keeps stating that it is supporting and have started creating an oligarchy. By concentrating wealth and creating tax structures that almost guarantee that they retain their whole pie, it takes a great deal of money out of the economy and away from people who could work to attain it.

In the meritocratic ideal, people would be rewarded for working hard, contributing to society and making sacrifices. With the new oligarchy that is being created, this idea is being diminished. David Lesar has done nothing to earn $37,000 an hour. It’s certainly beyond the pale. Paris Hilton’s family fortune was not earned by Paris Hilton. Extravagant wealth concentration is dangerous to the meritocratic ideal because it says that the rich deserve to be rich and the less fortunate deserve what they get because they aren’t smart enough, aren’t hard working enough, and just aren’t plain greedy enough.

I think that many people over simplify their arguments by stating that it’s immoral to take money away people who have worked hard to earn it. Now, usually this takes the form of an attack on the progressive tax system – it isn’t fair to tax the rich more because they’ve worked hard to get it!

I’m not saying that working hard shouldn’t be rewarded. Having productive goals to shoot for in the form of some of our high achievers is a good idea. But in our current system, we are starting to create an insular system that pools money in the hands of a few while the many see real wages shrink, health care costs erode at their take home pay, and energy costs start to take huge chunks out of their small piece of pie.

Simply put, infinite productivity isn’t possible. Trickle down economics from these oligarchs won’t sustain the country. While I don’t advocate a socialistic reform, taking pieces of the large portions of pies that the advantaged have and spreading it equitably to hard working and deserving folks makes sense to me. What do you think?