The article again approached the problem of income inequality, which is growing and growing in the US specifically. Interestingly enough, there was an act (Dodd-Frank Act), which required American companies to disclose the compensation ratio of executives to median compensation in the companies, however just like any other movement, it has been delayed for 4 years and "counting". Likewise, in Europe, a proposal suggested EU's companies to "reveal their pay ratios and allow shareholders to vote on whether they are appropriate". And as expected, it didn't get through because of criticisms from those who had the upper hand.
Excuses for the extreme compensation for executives surrounds incentives, this is especially applied to banking sector, and even more specifically to big banks. However, isn't the banking's performance is more correlated to the economy instead of compensation, which suggesting that the high remuneration did not incentivize as much as they (whom receive the big money) claimed it was.
European government seems to be more active regarding the problem than the U.S. Though it is obviously that the European model values equality income more than US does (especially Germany). But no matter what, it is really ridiculous for income to increase by 31.4% for the top 1% and by 0.4% for the bottom 99% from 2009-2012 (in the US).
Either government has some brilliant idea to spread the money more evenly or it probably the case that the "invisible hand" behind the government is too powerful.
http://opinionator.blogs.nytimes.com/2014/03/29/can-we-close-the-pay-gap/?_php=true&_type=blogs&_r=0
2 comments:
Only 35 percent supported the restricted pay gap ratio of 12 to 1 in Switzerland. Why are people not promoting this? I do not think the wealthy in Switzerland makes up 65 percent.
Why are the rich not being hit by the economy? Why are they growing and not suffering during the two years of recovery. It is proven that companies will work better if there is not a huge income gap, so why are companies disregarding this?
When people are making this much money, is it hard to give them incentives or easier?
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