South By North Strategies, Ltd.

Robert Skidelsky doesn’t buy the arguments that justify the growth in income inequality.

The growth of inequality leaves ideological defenders of capitalism unfazed. In a competitive market system, people are said to be paid what they are worth: so top CEOs add 263 times more value to the American economy than the workers they employ. But the poor, it is claimed, are still better off than they would have been had the gap been artificially narrowed by trade unions or governments. The only secure way to get “trickle-down” wealth to trickle faster is by cutting marginal tax rates still further, or, alternatively, by improving the “human capital” of the poor, so that they become worth more to their employers.
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This is a method of economic reasoning that is calculated to appeal to those at the top of the income pyramid. After all, there is no way whatsoever to calculate the marginal products of different individuals in cooperative productive activities. Top pay rates are simply fixed by comparing them to other top pay rates in similar jobs.
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In the past, pay differentials were settled by reference to what seemed fair and reasonable. The greater the knowledge, skill, and responsibility attached to a job, the higher the acceptable and accepted reward for doing it.
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But all of this occurred within bounds that maintained some connection between the top and the bottom….