The Really Rich Got Stinking Rich in the Last Decade--Bring Back Max Weberby
I found a copy of Max Weber’s Protestant Ethic And The Spirit of Capitalism in the East Hampton dump this weekend and took it to be a sign of the times. I remember his deep insight into the culture of capitalism—that it developed out of Puritan ethic of work being perceived as holy. Making profits and getting rich were just results of celebrating God through effort and work. Today, it seems as though making profits and getting rich often comes as a result of financial speculation, regulation-rigging through political lobbying and corporate board malfeasance (ergo, massive CEO compensation for mediocre performance).
The IRS has just released figures on income and taxes for the past decade. Take a moment to read them and ponder what they mean for American society. I’ve got these figures from Ed Yardeni, one of the smartest analysts around.
“The Top 5% of earners received 25.7% of AGI (aggregate gross income) in 1987. In 2007, they received 37.4%. The share of the Top 1% rose from 12.3% to 22.83% over this period.”
Got that? The top 1% of earners doubled their take over the past 10 years to 23% of all all income.
We have created a culture of speculation in America over this decade that has doubled the size of finance in the economy and doubled the “take” of income by those few people in charge of it. CEOs and top corporate managers, their compensation tied to the stock of their companies and the market as a whole, did hugely well in this time period. Wall Street, well, we know that narrative. The middle class, well, it’s income stagnated for a decade. Yes, I know class mobility is important and there was plenty of it in recent years. But…..
It’s not all the fault of the bankers and CEOs. American culture has made a fetish of gambling, renaming it “gaming,” and speculation. Poker is more popular than baseball. The best mathematical minds are employed in devising arcane financial instruments. The “enemy” really is “us.”
The big question now, as the recovery begins, is whether or not we change this culture of speculation. Can we rebuild manufacturing in a new way? Can we redesign education to produce people capable of modern work? And can we change our values so that the graduates of Brown and Harvard, Stanford and MIT see glory in making things rather than playing games on Wall Street?
Can we bring back Max?