In the UK, just 19% of people agree that “the next generation will probably be richer, safer and healthier than the last”. That figure falls to 15% of Germans and 14% of Americans. Markets might work but they aren’t seen to be working for everyone. [...]
And within those eons, we see individual currents and eddies. We are living at the tail end of a transition which started roughly 35 years ago. It’s a transition which has seen Britain gradually migrate from a manufacturing economy to a service-led one. The UK Commission on Employment and Skills shows the changes over the last 20 years in the UK workforce – fewer people in manufacturing, fewer in the skilled trades, fewer secretarial roles; but a great increase in managerial, professional and technical skills. [...]
It is not inequality that bites deepest, but injustice. People expect that the CEO of a corporation will be the highest paid person on the payroll. What they don’t accept is that FTSE 100 bosses are paid 174 times the average worker’s wage in this decade – compared to 13 to 44 times in 1980.
In 2011, YouGov found that 85% of Britons believed that income should depend on how hard someone works or on their talent. But analysis by the Institute of Policy Studies found that of 241 of the highest paid CEOs between 1993 and 2012, nearly 40% were either sacked, their company had to pay significant fraud-related fines and settlements, or their companies required some form of bail out from the state. Instead of bosses being paid for success, a significant minority were handsomely rewarded for failure.
Adam Smith’s diagnosis “when the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters” while blunt, contains a kernel of truth for the present. If business itself has flunked the opportunity to put its house in order following the 2008 crash, then it is time for governments to take the initiative. Reforms of corporate governance, the break-up of monopolies, restrictions on tax avoidance, lowering barriers of entry to market competitors – each of these actions is required and each needs governments to cooperate in order for them to be effective.
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