What makes a society civilized? In a word: limits. Civilized societies — to protect and enhance the greater good — set limits on how people behave.
We limit, for instance, how fast motorists can drive. We limit how many ducks hunters can shoot. We limit how much noise our neighbors can make late at night.
But we have one aspect of contemporary life where no limits ever seem to apply: We let our wealthiest keep getting ever wealthier. And the pace of that enriching is ever quickening.
Back in 1982, the year Forbes started listing America’s 400 richest on an annual basis, the nation sported a mere 13 billionaires, and the richest on that list had just $2 billion. The combined wealth of all 400 on that initial Forbes list totaled $91.8 billion, about $252 billion in today’s dollars. By 1990, our billionaire population had jumped to 66, and the combined wealth of those billionaires alone had hit $240 billion, nearly the wealth of the entire 1982 Forbes top 400.
And then the real fun began, as the Institute for Policy Studies and Americans for Tax Fairness detailed earlier this week. By the year 2000, our U.S. billionaire cohort had more than quadrupled in size over the 1990 level, to 298 super rich, and their collective net worth had soared to $1.7 trillion, seven times the 1990 total. By 2020, our billionaire class had swelled to 614, nearly ten times the 1990 total.
That upsurge has spilled into 2021. Our U.S. billionaires, just over three months into the new year, now count 719 three-comma souls in their ranks. They hold an astounding $4.56 trillion in wealth.
The worldwide billionaire population, meanwhile, has leaped by 660 over the past year, to over 2,750. The United States is still leading the billionaire pack, but China, with nearly 700, is coming up quick. The world’s 20 richest individuals now hold more wealth than the entire bottom half of humanity.
Can the world’s wealth continue to concentrate this intensely forever? The simple answer: Nothing in human affairs goes on forever. But can we point to any hopeful indications that a turnaround — some real limits — may actually be approaching? We certainly can, if we look closely enough.
One positive sign came last weekend at the policy convention of Canada’s New Democratic Party, that nation’s leading progressive party over recent decades and the current majority party in British Columbia. The delegates to this NDP convention resolved that Canada should raise the tax rate on personal income over $1 million to 80 percent and start levying an additional 1 percent annual tax on those with private fortunes over $20 million.
Other delegates at the NDP convention wanted the party to take even stronger steps and rallied around a proposal to place a 100 percent tax on wealth over $1 billion. In effect, these delegates were proposing a lid — a limit — on the wealth of the wealthy.
If the convention had adopted that limit, mainstream commentators would have no doubt dismissed its supporters as silly and politically unmoored radicals. But over on the other side of the Atlantic no one can dismiss the UK’s Deborah Hargreaves so easily, and she’s talking limits, too.
Hargreaves, a former financial editor of the Financial Times and business editor at the Guardian, rates as one of the UK’s most respected economic commentators. In 2010, she chaired the High Pay Commission, an independent inquiry into compensation throughout the UK private and public sectors that brought together leading figures from British business, labor, and civil society.
In 2011, this Commission published an exhaustive report that spelled out why “excessive top pay is deeply damaging to the UK as a whole” and recommended a dozen modest steps that could help restore more appropriate compensation patterns, everything from requiring investment fund managers to report how they vote on corporate executive pay packages to including employee representatives on corporate pay panels.
Also included in these recommendations: a call for a “permanent body to monitor high pay.” That permanent body, the High Pay Centre, launched in 2011 with Hargreaves as the founding director. Earlier this month, in the first of a series of events to mark the Centre’s tenth anniversary, Hargreaves looked back on the past decade and made clear that modest steps to rein in outrageous executive compensation can no longer suffice.
“We have been tinkering around the edges of corporate governance,” she noted. “We’ve created this system that has allowed greed and a sense of entitlement to accrue rewards to those who are already extremely wealthy and highly paid. I think we have to start thinking big, start talking about bolder measures.”
And what sort of boldness does Hargreaves have in mind?
“What’s wrong with a maximum wage?” she asked. “What’s wrong with a maximum pay ratio?”
In the UK, top business executives as late as 1979 were making less than 20 times average worker pay. At Barclays, the top exec that year pulled down just 14.5 times the banking giant’s average employee pay. By 2011, the Barclays gap between top and average pay had widened to 75 times. In 2019, the Barclays chief exec pocketed 140 times the bank’s average worker pay.
But these numbers can seem almost egalitarian compared to corporate pay gaps in the United States. In 2018, 50 U.S. corporations paid their top execs over 1,000 times their median worker pay. Typical CEOs in the United States now annually walk off with over 300 times their worker compensation.
Stats like those have lawmakers in Washington advancing a new “Tax Excessive CEO Pay Act,” legislation that would subject corporations with CEO-median worker pay gaps over 50:1 to higher taxes. Legislation along similar limiting lines has, to be sure, been before Congress in one form or another for over 30 years. But this legislation has heavy Capitol Hill hitters behind it. Its lead sponsor, Senator Bernie Sanders, currently chairs the powerful Senate Budget Committee.
Civilization marches on.
