The gap between what the elite earns and the rest of us is causing a revolt.
Over the past few weeks, the massive disparity between the salaries and bonuses of some of Ireland’s ‘fat cat’ bosses, and the wages paid to employees of the same firms has become a serious issue for shareholders, and rightly.
Last week, CRH experienced a shareholder revolt over pay. Forty per cent of shareholders voted against a new plan that could earn chief executive Albert Manifold an annual bonus of more than €8 million, up from just over €5 million last year.
This shareholder revolt highlights the growing and frankly ridiculous gap that exists between the top brass of a company and the foot soldiers. The disparity between the boardroom and the shop floor has been a growing problem all over the world. Ireland is no exception.
Assuming that some workers in CRH are on the average wage of €40,000, the boss gets paid 200 times more than the average worker. This is questionable, to say the very least.
We are seeing a winner-takes-all form of capitalism at the very top in Ireland, where the few at the very pinnacle of Irish business make multiples of what is being earned by those below them. The market for the top Irish business people operates much more like the market for Premiership footballers than a market for the accountants that most of these people actually are.
The crux of this uneven sharing of the spoils stems from the advent of the winner-takes-all economy in Ireland.
This is not capitalism, but a flashy, show-off version of the old thing. It is very evident in sport, where the rewards for the winner are enormous, while there are few prizes for second place. So, for example, Raheem Sterling makes a fortune, but a talented winger in the lower echelons of football might only just get by. The talent gap between both players is probably modest, but Sterling is the winner and he takes the spoils. For years, sport and entertainment displayed this type of reward system.
In sport and entertainment, it was always understood that deciding to try to make it in these careers was a bit like buying a lottery ticket.
If you win, you could make hundreds of times more than if you had chosen a less risky career. If you lose, however, you earn much, much less.
Now, many professions work in a winner-takes-all fashion – arguably without much of the downside risk. So the best lawyers get paid multiples of the average lawyer’s earnings. The best accountants do likewise.
Look at the bar. There are those who make fortunes, and there are those who just scrape by.
Even in education, grind schools poach better teachers and pay them considerably more than the local school equivalents.
The reason for this is the hyper-competitive economy we live in. The stakes in every game have been raised enormously. If the best barrister can increase the likelihood that you will win the case, then he or she is worth the money.
Likewise, if the best teachers can give your child a comparative advantage and a place in college, then they are worth the price.
Similarly, if the best carpenter will make you furniture which you feel will distinguish you from your peers, he or she will be worth the price. It also exists in journalism, where the standout journalist – the one who is better known, a better communicator on TV or radio and therefore more public – makes more per word than other hacks who might actually be much better writers.
The winner-takes-all economy also works in the status vacuum that exists in Ireland.
How many times have you heard pompous, wealthy men saying: “I have engaged Mr Bigwig, senior counsel”?
This is not only a statement of fact, but a multi-faceted indication of where the pompous man sees himself in society, because only a certain type would either have the connections or the money to engage Mr Bigwig.
So the winner-takes-all economy, where rewards are skewed ludicrously to number one, embeds itself in society.
Being a mere worker or an average employee is simply not good enough. The entire society becomes obsessed with being number one, having the newest, biggest, brightest, latest car, house or kitchen, because with the winner-takes-all rewards come winner-takes-all possessions.
If society believes that it is totally defensible to have such a structure, those who get to the top are therefore to be admired. By extension, those who fall are to be shunned. We only want success, whatever that entails.
Ultimately, the gaps between the winners and the rest grow exponentially, as is happening in Ireland and has occurred in the US and Britain. And because most of the prizes and accolades go to the winners in the private sphere, the public arena gets marginalised.
This huge gap drives inequality, and obviously also drives a certain amount of political resentment. This is not hard to understand. If people see themselves falling behind and an out-of-sight elite pulling away, they will vote for the guy or girl who points at the elite and says, “They’re the problem.”
Inequality is what is driving the likes of Trump and Le Pen, and much of the Brexit debate, and it is also one of the reasons Fine Gael lost the election.
The political party that curries favour with the out-of-sight business community runs the significant risk of being turned on by the average voter. The solution is not to fix the political system, but to change the behaviour of those at the very top. This should be self-evident.
! I agree with most of this article, except where you say: “because most of the prizes and accolades go to the winners in the private sphere, the public arena gets marginalised.” What about the fat cats in the public sphere, from Enda Kenny down to the lower echelons of your average TD, or the bosses in the HSE? Hardly marginalised! For me, the answer is to know what you really need in life, materially and spiritually, and not to want more than what you know is enouigh. Become as self-sufficient as you can, ducking and diving when you have… Read more »
I don’t think inequality is “driving Trump” at all to be honest
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I think the Irish people should be encouraged watching their top politicians being forced to accommodate themselves to the less exalted positions imposed on them by the electorate. The political bosses thought they could rely on their party followers to perform the party tricks they had been taught. What they got instead is something called democracy. That is why I did not think that a coalition of Fine Gael and Fianna Fail would be a good thing. We are very fortunate that it did not happen. David is right. There is too much power concentrated at the top, both in… Read more »
Spot on observation.
The big question is though, Where will this all lead to?
Take the US. If Trump does not get elected, Whoever comes next will be more anti-establishment.
Woe betide if he (Trump) gets assassinated.
I have seen the future and the future is us.
https://mail.google.com/mail/u/0/?tab=wm#inbox/15470d5cbcb8780d
David, ur highlighting of the outlandish rewards for them at the top is very necessary in the overall mission to reform the Institutional State of the Irish State [ I.S.I.S. ]. The folks who should have a grievance about this are : 1. “taxpayers of” / “all citizens connected with” the Irish State when the monies are ultimately paid by the taxpayers / citizens 2. shareholders of the companies 3. employees & contractors of the organisation [ company or civil service department inter alia ] when their particular rewards are unfairly low 4. suppliers to the organisation [ company or… Read more »
Mike, I like the idea of direct nationwide election of Cabinet Ministers at attractive salaries and bonuses for the term of each Government.
Either that or the direct nationwide election of a Taoiseach who would appoint qualified non-politicians to appropriate Cabinet posts based on their experience and knowledge of the particular industry or economic sector they would oversee. It is called separation of powers. The Dail would become the Legislative Body separate and apart from the Executive.
The system we inherited from the British is not suitable for a modern republic. It is based on antiquated theories of monarchical sovereignty.
Yes, of course. That’s how “winners” win.
And Ireland’s tax policies make sure that the “winners” can keep taking everything, everywhere else.
” “Inequality” is not driving the likes of Trump & Le Pen. First of all,”Trump & Le Pen [ Marie ] are completely different politicians. ” Yes, that’s a good point. I guess in support of David’s article (not his finest week in writing) it can be said that they are both populists in their own different ways, but then the same should be said about the jejune comments President Higgins constantly makes on capitalism (I am waiting for a Trotsky-style poem from Him), without even trying to define the word – which shows the decline of our education after… Read more »
Winner take all in Indiana tomorrow
http://www.nbcnews.com/politics/first-read/first-read-trump-cusp-putting-away-gop-race-n565841
At the core of what you are proposing is what kind of society do we want.
I’m not sure a go getting government is the right approach.
To be clear I’m not a socialist but I believe a fair days work is entitled to a fair days pay.
What we actually have is a few self important go getters deciding that they are the entitled ones.
Entitlement is the bane of our society but it’s not just the preserve of citizen socialist.
The test question is what have you done for your country lately.
In a way David you are posing a question that has been looking for an answer for a long time. IE What is the best political system. So far all systems that have been tried have failed or in the case of democracy may be about to fall. At the core of those failures has been the gap between the haves and the have nots. That gap is bigger now than ever before. So why hasn’t the system crashed. Is it because while the gap has increased all boats have been lifted by the capitalism that democracy inherently allows to… Read more »
http://www.profitconfidential.com/economy/the-brink-of-economic-collapse-how-did-this-happen/ The Good News? Lest readers of this essay follow the example of this writer and start to reach for the tissue box, I want to end this essay on an optimistic note. As I have written before, the recent launch of the Shanghai Gold Fix—two daily gold fixes based entirely on demand and supply impacting real metal in real time—suggests that, with the will and the right tools, it is indeed possible to pull the world economy back from the brink that our alleged “betters” have taken it to. For almost a century, the gold pits in London and… Read more »
It seems none of the problems of capitalism are going to be owned by capitalism. We have every memorable alternative form of it presented to us, which, we must understand, are the distorted or misrepresented versions of capitalisms true nature. ‘Winner-take-all capitalism’ or ‘crony capitalism’ can take the blame when a problem is finally, finally, made evident; but it is never true or real capitalism that can be blamed for the faults. A system, both economic and political, which exists to support the control of trade and industry (at a minimum) by private owners for their own profit, could be… Read more »
An even more extreme version than the CRH version of the points above exists. G-Sucks. And Suds. Bailed out by numerous taxpayers. Bailed out by central banks. Corrupt. Responsible for the theft of billions from ratepayers in the US, to Greeks in hospitals that cannot afford essential medecine. And now even going to suburban locations in West Dublin. And at the top a collection of banksters like Suds, who are shaping the system to ensure as much profit for their firms as possible, at as much expense to the common people as possible. The greed and lies of banksters like… Read more »
@David McWilliams
THE GAP IS ABOUT TO GET BIGGER
-> TRANS TRADE AND INVESTMENT PARTNERSHIP
-> PUBLIC SERVICES ARE ABOUT TO GET LESS FREE
-> NEGOTIATED IN SECRET WITHOUT REPRESENTATION
http://www.ethicalconsumer.org/ethicalcampaigns/ttip/ttipandprivatisation.aspx
“The solution is not to fix the political system, but to change the behaviour of those at the very top. This should be self-evident.” A thought provoking and insightful article but your solution is nonsense and indeed your paradigm itself is flawed. Let me explain; Michael O’Leary (accountant)presided over 1bn in profits last year I think in Ryanair. Will you ring him and tell him what you think and try and convince him that if he takes 50m out of that and distributes it to the bottom 5000 of ryanair’s 10000 plus official employees it will add 10k gross to… Read more »
For you Adam;
https://youtu.be/5DCAC1j2HTY
Michael.
@Tony brogan;
Gold Tony up 30% since start of 2016. GDX gold miners up 50% since feb 9th. Gold broke out of a wedge to the upside 3 days ago. I think its safe to say that gold is back in a bull market. I wonder of the comex will start defaulting on delivery?
Michael.
The technological elephant in the room is being ignored. A possible solution would be to set a target to double (in real) terms the average industrial wage over a 15year period while at the same increasing social welfare payments to a level of 50% of the average industrial wage. NOW before your “rubbish” app kicks in make out a list of five pros and five cons. Then come up with solutions. No negative waves. Nothing is off the menu. Water Charges for example. A death duty payable to your country of birth rather than your residency and at 80% rates.… Read more »
“If debt were used for productive purposes, there would be light at the end of the tunnel. Unfortunately, however, it is not, leaving a black hole beyond that could swallow the economy and markets. The vast majority of debt is used for unproductive purposes including massive stock buybacks, leveraged buyouts, debt-financed M&A, consumption, housing and financial speculation. The fact that individuals at the top (the so-called 1%) profit enormously from unproductive activities is a fatal flaw in our economic arrangements. As Hoisington points out, in 2015 business debt increased by $793 billion while total gross private domestic investment (which includes… Read more »
There are a couple of obvious solutions to that problem and the government already has them in hand.
Raise the retirement age and increase the number of public servants.
Joking aside you kind of hit on the solution.
Productive “something ”
Maybe it’s time to consider “robots ” as taxable entities so that as they replace human there is no loss in income.
Robot PAYE
“I can certainly understand why they are doing it because when the extent of their Ponzi scheme in the paper gold and silver markets is revealed for all to see, the reaction is going to be a massive panic. And with the overall rot in global financial markets and the flagging economies worldwide, this will undoubtedly represent a historical turning point. However, I think the gold and silver shares are reflecting where this is all heading. As we speak, the index is up about 130 percent in less than 3 1/2 months. Ironically, despite their explosive gains, many stocks are… Read more »
” Coupled with more than $2 trillion of stock buybacks since the crisis, Corporate America spent virtually all of its profits and free cash flow on cannibalistic activities rather than investing in new capital projects, research and development and other productive activities. It now sits on a ticking time bomb of debt that it cannot repay even if interest rates stay suppressed for years to come.”
http://suremoneyinvestor.com/2016/05/my-2016-debt-report-plus-the-one-kind-of-debt-you-should-buy/?email=COLTA%40shaw.ca#deeplink
There are no winners in this scenario!!
Get ready — World War Three Has Already Begun
By John Pilger
April 17, 2016
The propaganda war against Russia and China has already started, John Pilger points out.
The US and its Nato allies are spoiling for a fight and tensions are escalating. It’s only a matter of time before the bombs begin to fall.
And, Pilger is very candid about Kill-ary Clinton, & Larry Sanders.
https://www.darkmoon.me/2016/get-ready-world-war-three-has-already-begun/#more-36718
It would be remiss of me to not point out that David is doing society a great service in pointing out a particular insidious theme that has been carefully crafted by the masters of society for us all to be in agreement with, vis. The notion of “Winners & Losers” i.e. If u believe in the worthiness of society extolling Winners ; ==> u believe in the worthiness of society denigrating Losers. That is plainly sick / immoral / anti-Christianity And, I regret to say that it is a theme that is very present in many schools of Libertarianism. So,… Read more »
http://investmentresearchdynamics.com/category/gold/ When you see that men get richer by graft and pull than by work, and your laws don’t protect you against them, but protect them against you – you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed. – Francisco’s “Money Speech,” from “Atlas Shrugged” If you reread that passage, think about how it applies to the Patriot Act, Homeland Security Act, Wall Street, the Justice Department and Hillary Clinton. It’s pretty obvious the U.S. is collapsing economically, politically and socially. Perhaps the one last chance at saving the United… Read more »
“Man is a philosophical beast ; Woman is not.” This observation has been attested to by all the great philosophers, & writers. That is why we can have some hope that Nathanyahoo & other male psychopaths can be returned to their senses. But, Queen Elizabeth [ Slaughter of 10,000’s of Irish Catholics, & Native Americans, inter alia ], Mary Queen of Scots [ Execution of 1,000’s of English Protestants, & Slaughter of 1,000’s of Irish Catholics ], Rosa Luxembourg [ Communist Psychopath ], Margaret Thatcher [ Willful destruction of British Industry, & Protector of Paedophile Cabinet Ministers ( Leon Brittan… Read more »