October 3, 2013
Income inequality is a serious threat to the U.S. economy. The enormous concentration of this country's wealth that is now in the hands of a tiny minority is simply inconsistent with a vibrant economy. In the long and even medium term this will come back to hurt even these very wealthy few; even they would be better off with a growing, vibrant economy; what is now happening was foretold in the familiar parable of the man who ate the golden goose.
CEO compensation, along with other corporate compensation of top executives is at the root of this problem, but also contributing to the problem is the dramatically low taxes that people with high incomes pay. The problem has continued to become ever worse since the top income tax brackets were eliminated but also since corporations have been encouraged to compensate their executives through stock options (at the very least, such options should not be negotiable or used as collateral until several years after the executive retires.
Generally speaking, anyone formulating rules should look back to the period between 1950 and 1970 when income inequality was not so extreme and when our economy truly was a vibrant one. Whatever we were doing then seemed to work while what we are doing now does not. As a whole, the experiments with our economy since 1970 have simply not worked; rather than continue with what we now do, let's go back to what in fact did work.