Here, I learned that:
- The 100 top paid CEOs in America earn an average income of $13.9 million per year
- The top paid 350 executives earn an average annual income of $11.7 million
- The average income in America is $35,000
- The rate of income for those top 350 executives is 331 times higher than what most people earn
- The top 1% of the population earns 60% of the income
The April 18th 2014 interview focuses on a book by French author Thomas Piketty called CAPITAL. This book maps the concentration of inherited wealth and suggests that an Oligarchy is emerging. This is because of the disproportionate influence on policymaking that wealthy families have, because they have the money to lobby in the corridors of power. This is undermining Democracy, in the sense that while ordinary wage earners may be able to vote, they have little impact on public policy formulation.
The Economist recently ran a cover story about Capitalist Cronyism. Please note that the two words are reversed – pointing to this same phenomenon. It is no longer ad hoc, it is entrenched.
An interesting trend is that while investors can earn about 4 or 5% on their capital, economies are only growing at about 2 or 3%. In other words, private wealth is being stashed away by those who already have plenty. While economies are growing too slowly even to catch up with the rush of school leavers into the work force. The result is high rates of unemployment or underemployment, while the gap keeps widening between haves and have-nots.
Here is what I wrote in the last C4L Bulletin on April 22nd:
“The gospel of neoliberalism, brought to you by Ronald Reagan and Maggie Thatcher, said that lowering taxes would stimulate economic growth. Business would experience that “my cup runneth over” – and that would cause plenty of “trickle-down”.
“Pope Francis pointed out that the problem with this approach is that they keep making the cup bigger! His metaphor is instructive. Neither do I see it as only governments that do this, slowing the trickle-down effect.”
I then got very bold with an attempt to challenge you all (coz Bill Gates and Warren Buffet aren’t on my mailing list) to do your part. Coz charity begins at home:
“Most people gauge their giving by their income - for example, by tithing ten percent of it. But if you earn 100 000 per year, live on 50 000 and tithe 10 000, then you “store” 40 000 away in investments. You accumulate wealth by doing this year after year. What about deploying ten percent of your wealth for development, as well as ten percent of your income? That would make the cup smaller, and increase the trickle-down. We all need to do more, because the gap is getting wider as the trickle-down dries up.”
Well the best response that I got to that Bulletin so far was when one of you sent me the above link today. Thank you old friend! It makes me realize that you out there are thinking about what this voice crying in the wilderness says.
Do you remember that the Truth and Reconciliation Commission here in South Africa made a number of recommendations to government how to redress past imbalances? One was a once-off wealth tax. Desmond Tutu has recently lamented that this was never implemented, and I second the emotion. Redistribution is clearly needed – but how?
Let me come back to that question: What about deploying ten percent of your wealth for development, as well as ten percent of your income?
If you are up to this, I can put you in touch with a bona fide investment broker in Canada, although your own broker could do it as well...
Put aside ten percent of your wealth. I mean the accumulation, on your balance sheet, not the tithe on your annual income. You are not giving it away, it still belongs to you. Invest it for a specified period, let’s say a year – until you need it back. The broker will skim off what she predicts it can earn during the period specified, and release that amount to charity. Then she grows your capital back to the same amount that you invested, and returns it to you.
This is not the Giving Pledge, where you give away 50% of your wealth. Coz you are not fabulously wealthy. But if you are not part of the solution, then you are part of the problem. Some people are caught in a web of poverty, and others in a web of affluence. Please recognize that the system is stacked against the poor. But you can do something about it, without marching on Wall Street!
If you are up to this, I will make you a pledge. If C4L is nominated as your charity, we will not give that money away. We will lend it to poor and unemployed youth to start viable business ventures. They will pay it back in less than 3 years into a revolving loan fund. So others can also benefit. I am speaking about our Chaya microfranchising, which also has nutritional and medicinal benefits, not to mention the job creation and positive impact on food security.
I am talking about voluntary redistribution of wealth. Not about tithing your income. Make the cup smaller. Increase the trickle down. Then think of the mustard seed, so small, but it grows into a tree that birds can sit in. You don’t have to be a billionaire to do this!