the richest 10% of adults hold 85% of the world’s total wealth.
Clearly, such disparity is unfair and can be blamed for incidences of extreme poverty. Excessive wealth accumulation amongst a few people is a result of a flaw in the system, whereby a few intelligent and powerful persons get away with exploiting the entire system.
Why is it so?
According to the capitalist ethos, greater intelligence deserves greater monetary rewards. Does this signal that intelligent people work harder and hence deserve higher compensation? The answer is, no.
The truth is that the poor work much harder and longer to earn their minimum wage. The jobs that the poor do are equally important for the sustainability of any society, if compared to the jobs that the rich undertake. The disparity in earnings arises because the power to make wage decisions lies in the hands of the intelligent. It is no surprise then that the rich and influential mercilessly exploit the system for their personal gains and use their power to accumulate even more power and more wealth. The graph clearly shows this glaring disparity: 90% of global wealth lies in North America, Europe and the rich Asia Pacific nations (Japan, South Korea, Malaysia, etc).
This disparity is even more evident if we consider the salaries drawn by the highest paid executives. For example, the Apple CEO’s total package in 2011 was worth $378 million, which was 11,100 times higher than the pay of an average worker in the US. This essentially means that he earns every 47 minutes what a worker earns in an entire year. This disparity is ludicrous and points to the blatant abuse of the economic system. There is no way that the value added to product by a company’s CEO can justify such lavish pay scales.
Where do we go wrong?
In a majority of countries, democracy is seen as a cure to greed and envy, mainly due its objective of creating conditions that allow individuals to achieve happiness and prosperity through the freedom of choice. The system is expected to create laws that discourage the excessive accumulation of wealth. However, democracy can be hijacked if the freedoms of choice are not properly defined and protected. Democratic regimes, run supposedly by the citizenry, can turn into authoritarian regimes under the guise of democracy if too much power gets concentrated in a few hands.
How do we fix it?
The root cure is to have society focus more on fairness rather than freedom alone. This change in paradigm will results in better democratic rules, better life for citizens and a more fair society. We all need to create a culture that favours fairness in our circles of influence, be it in businesses, family or the political process. The impact of doing so will be huge, long term and sustainable. It will result in better sharing of resources, fairer compensation for labour and also result in an improved standard of living for the working masses. Over time, with continued focus, we will see the huge gap between the ‘have’ and ‘have nots’ shrink.
This problem cannot be solved by waiting for governments to take the lead. Rather, it should be driven by personal initiative at the grassroots level.
THE WRITER WORKS IN THE CORPORATE SECTOR AND IS ACTIVE ON VARIOUS BUSINESS FORUMS AND TRADE BODIES
Published in The Express Tribune, December 31st, 2012.
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@p r sharna: Thank you ASQ, you have answered Shama’s concern. Let me expand -- I have no issue people getting paid more as they have more knowledge, or provide more value addition to a job -- everyone of course are not equal. The system will not work if everyone is paid equal as no incentive for innovators to create new products, systems and services. Question is how much more? Did you know that the richest citizens of the world earn in 3 days what the poorest earn in a whole year -- is that fair? I think that is driven by greed and not knowing how much is enough. My suggestion is that the difference between an entry level manager and the CEO salary should not be 100 times. If too much wealth is taken by the top management, then wealth will be accumulated in a few people and will not be spread which will help the society in the long run.
There has to be a "catalytic mechanism" for any system which ensures that the power / authority is dispersed and not concentrated. Every system has its own share of flaws and therefore we can not produce an ideal system to follow. However, the system needs to evolve in relation to global economic dynamics. Good companies / countries become "Great" when they pious an efficient catalytic mechanism.
Greed, hatred and Envy is a common (negative) human trait. It can be found in every segment of the society be it Rich or Poor. However these negative human traits can be translated into positives if used for the Greater Good. And for that every society needs to think to the END
"Good thinking is hard work . . . that’s why so few people do it." - Immanuel Kant
@p r sharna: you are missing the point no where in the article it is being said treat a performer and non performer equal the whole point is lavish pay scale and arrogant attitude of capitalism where companies at times of profit start giving huge incentives to higher management while at the time of depression the first in line of cost cutting are low level employees
" This disparity is even more evident if we consider the salaries drawn by the highest paid executives. For example, the Apple CEO’s total package in 2011 was worth $378 million, which was 11,100 times higher than the pay of an average worker in the US"
Highest salary is paid the employee who is most valuable to the company.The skills and responsibilities that come with the job of CEO are extreme and the number of people who can fill these roles is limited. That is why the market has determined that people with these skills are worth a lot of money to their companies.Only about 20 percent of a CEO's pay is base salary; the rest is made up of incentives based on the company's performance. The rationale is that if the company is performing well and the shareholders are making money, then the CEO should share in that success.. Physical labour can not be compared with the mental power to perform the desired results . ( quantity is not comparable with quality). The system gives best reward to the best performer. In absence of this incentive there would not have been many many many inventions. A system where performer as well a non performer is treated alike ultimately fails.. system can be / should be developed where people have the equal opportunity to learn and excel .