Debates: Mind the pay gap
15 November 2010
Both on the left and right, consensus in growing that the ever widening gap between executive pay and ordinary wages is squeezing out the middle class, and undermining our democracies, writes Times columnist Anatole Kaletsky.
"What is the greatest threat to our way of life and democracy in the years ahead?” asks Anatole Kaletsky. For the Times columnist, the growing problem is inequality. “(T)he widening gap between the very rich and everybody else, now threatens the social consensus and political stability, not only in Britain but also in America and Europe, to a degree not seen since the terrible era before the two world wars.”
Kaletsky cites two thinkers from the right and left – respectively former Conservative minister Michael Portillo, and author Will Hutton. Conservative Portillo has admitted his “bitter disillusionment with the greedy, irresponsible behaviour of Britain’s wealthy financial and managerial elite. The chief executives of middle-sized financial companies receive average salaries of £2 million and continue to vote themselves pay increases, at a time when ordinary workers face cuts in their pay and pensions.” Such disparities are incompatible with democracy.
“Mr Hutton suggests that extreme inequality, as well as being morally repugnant, imposes huge economic losses on society. Far from encouraging wealth creation and innovation, he argues that it undermines entrepreneurship by offering enormous rewards for zero-sum games that simply shuffle existing assets. When finance is as absurdly lucrative as it is in modern America and Britain, enterprise and talent are inevitably diverted from the creation of genuine new wealth.”
The burgeoning wealth of the rich squeezes out the middle class, who are “priced out of desirable neighbourhoods and cannot enjoy the comforts their parents took for granted, from good schools to eating at the best restaurants.” And as the UK coalition government’s reforms kick in – “abolishing child benefit, trebling university fees, pay and pension cuts in the public sector” – the middle-class will see its living standards hard hit and “is likely to become ever more resentful.” This article is available in Presseurop.eu's 9 other languages...