Corporations Once Answered To Shareholders (And CEO’s Weren’t Billionaires)

Income HistoryOur American leaders are unhappy with the growing inequality of wealth distribution in our country; not bothering to mention that they have brought it about. Their modesty precludes their taking credit for their works, right?

The chart above clarifies the migration of income toward higher earners over recent years if your annual tax return fails to inform you. That the “rich get richer and the poor get poorer” is ancient but not obsolete per the data and there is a reason for that. It is the same reason that famously led Pogo to say: “We has met the enemy, an he is us.”

Let’s use an example: A corporate board of directors is selected by the stockholders to make policy. Back in mid last century, such boards set the CEO’s salary at a reasonable multiple of the salaries of the highest paid workers, folks whose salaries were set at multiples of those of their subordinates and so on down to the hourly workers whose earnings were market and or union products. It worked and large enterprise CEO’s earned hundreds of thousands of dollars. If the CEO salary became too generous, board members heard from shareholders whose dividends were shrinking to pay it.

Recently, the “Discovery” CEO received $156.1 million for last year.  And that is modest compared to some others. Still, shareholders whose dividends are thereby shorted raised no fuss but if they exist, such fusses are hidden. Something has changed.

Corporate managements and  their lobbyists have evolved into more dependence upon politicians and less responsiveness toward shareholders. Under cover of Congress, whose minions receive corporate contributions. When corporate folk have more money, they contribute more of it to politicians who have helped them to acquire it. In our opinion of course. That’s how we see the “crony capitalism” we hear of.

Note too that it is not only shareholders’ dividends that suffer; there is less for the lower ranked workers, too. At Discovery and elsewhere, the rich are indeed getting richer at the expense of the relatively poor.

Gee, aren’t the government regulators of corporations supposed to prevent this sort of thing? Well, once upon a time, yea. Now, they seem part of it. They become corporate lobbyists when they retire. If you are of the more crude sort who calls a spade by its name, you might refer to: “Corruption.” That is appropriate; our post-Christian society is  literally a corruption of the previous, Christian one. That’s the path such things take in history.

This is not the only factor in the dissolution of the once middle class; it’s just one example of what is going on. It’s an example easy to see, so we have selected it here. At bottom, Congress is restructuring society by diverting flows of income to those at the top of the heap. The “rich are getting richer.”

The old phrase is a truism for sound reasons: money is power; people are acquisitive and more is for our species, never enough. Thus it has always been; thus we are remaking it for no doubt, the umpteenth time in man’s diary. Why not, isn’t that what we have always done? (There’s likely a gene for that …)

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About Jack Curtis

Suspicious of government, doubtful of economics, fond of figure skating (but the off-ice part, not so much)
This entry was posted in Corporations, Law, Regulation, Shareholders, Wealth Distrution and tagged , , . Bookmark the permalink.

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