http://www.thestar.com/NASApp/cs/Con...l=968350116795
American Dream' turning into a nightmare
Jun. 27, 2006. 01:00 AM
RICHARD GWYN
That American CEOs last year earned 262 times the average pay of their own workers is no big deal. It's always possible that some of them actually earned all that money, or at least some of it.
What is, surely, something of a big deal is that according to Corporate Library in Washington, the chief executives of the 11 largest companies in the United States earned a combined $865 million over the past two years at the same time as their shareholders lost $640 million.
What, potentially, is an even bigger deal, is that one of the main activities of American executives these days is figuring out ways to cut the pay of their workers while at the same time hanging on to all they have.
Recently, General Motors CEO Rick Wagoner declared that it was time for the government to become "more proactive on health care."
What Wagoner meant was that Washington should take over much, if not all, of GM's health-care costs, which starts at $1,500 for each car the company makes and is a major reason it's close to bankruptcy.
There's now something called the Employers' Coalition on Medicare. Its essential goal is to transfer health-care costs from companies to the government, perhaps even by creating a Canadian-style, "socialized" national health insurance scheme.
Something along the same lines is going to have to happen to company pension schemes. Company after company is having to "renegotiate," which means cut, their pension commitments to retirees.
The effect of all of this is that at the same time as the U.S. economy has been booming along, most ordinary Americans have been stumbling along.
Once benefits like health care and pensions are taken out, the typical American worker earns no more today than back in 2000 — even though productivity has risen by some 25 per cent since then.
All of the gain has gone to those who already have more than they know what to do with. Since 1980, the share of total income going to the 1 per cent of Americans has doubled, from 8 per cent to 16 per cent.
Famously, Americans believe in the "American Dream." This is that any American can start at the bottom and make it to the top.
Factually, this happens to be untrue. Americans who make it to the top tend to start well above halfway up.
Recent studies show about half of all the income disparities in one generation of Americans mirror the disparities that existed in the previous generation. In most of Europe and in Canada, the proportion is only about one-fifth.
The American Dream keeps Americans pacified. But they may soon start to wake up.
In a complete break with history, those workers who are now doing the worst — comparatively — are those in the middle, rather than those at the bottom.
For the first time in memory, the pay gap between university graduates and high-school graduates is shrinking.
Politically, this matters a great deal. It's when the middle of the middle-class is suffering, or at any rate not getting ahead, that politics becomes stressful and potentially becomes creative.
Today, American politics is entirely about Iraq and terrorism. This may change; paradoxically, this is more likely to happen when and if the news from Iraq ever gets better.
That's when Americans may, at last, notice that the one big economic reform that President George W. Bush is pushing these days is to abolish the estate tax, or death duties.
The big beneficiaries of that will be the top 1 per cent of taxpayers — the same types, in other words, who hauled in $865 million while their shareholders lost $640 million.
Or, more precisely, the big beneficiaries will be their children, who already are just a half-step from the top.
Richard Gwyn's column appears Tuesdays and Fridays.
gwynR@sympatico.ca.
