The Poverty of Affluence. Paul Wachtel

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СКАЧАТЬ forty hours do not see themselves as working part time just because people once worked sixty or eighty. But this would still leave the question of how to ensure that as working hours diminished across the society, people’s material standard of living did not diminish as well.

      It is instructive to note that we are already confronting a version of this challenge right now. Even without any reduction in the standard workweek, the share of economic output going to the people doing the work has been continually declining for some time. In 2013, Steven Greenhouse reported in The New York Times that “Until 1975, wages nearly always accounted for more than 50 percent of the nation’s G.D.P., but last year wages fell to a record low of 43.5 percent.”¹⁶ Two years later, Derek Thompson in The Atlantic noted that the share of U.S. economic output paid out in wages is “at its lowest level since the government started keeping track in the mid-twentieth century.”¹⁷ Thus, even apart from the challenges that would be posed by a concerted effort to bring down the standard number of hours in the workweek, there is already much reason to rethink the way the fruits of the economy are distributed. The goods and services that people want are still getting produced; they’re just not as effectively getting to the people working to produce them.

      A wide range of factors have contributed to changing the dynamics that determine wages and pay scales so that they no longer keep up as readily with advances in productivity as they did in the past. Among the most obvious are the decline of unions and the powerful impact of globalization. Important as well are the accelerating technological changes discussed above, which enable employers more readily to replace human labor if it becomes too expensive. These and other influences place great pressure on wages, and they create serious challenges at a time when a conversion to shorter working hours may be a key tool in maintaining the availability of jobs while averting the dangers of climate change. In order to ensure that such a transition does not mean a decline in living standards, we need to consider a broader spectrum of ways in which to enable people to have access to the output of the economy.

      Some of the answer to developing means and rationales for distribution in these new circumstances entails reworking and expanding upon policies that are already in place, such as minimum wage laws, earned income tax credits, and the provision of public goods that are available to all regardless of income. Public schools, highways, parks and playgrounds, and police and fire protection are among the most familiar and least controversial of these public goods—services and amenities available to all regardless of income, and thus seamlessly enabling those with lower incomes from their jobs to share in the quality of life that derives from a successful economy. But these examples do not exhaust the ways that public goods can enhance people’s lives without the stigma of special programs targeted only to the poor or disadvantaged. Free public universities (not so radical an idea; the university at which I teach was for more than 130 years free for all New York City residents) or free mass transit or bike sharing programs are additional examples of how public goods can complement income in providing access to the opportunities that the society offers. Other kinds of public goods that would further extend opportunities for enjoyment and advancement are not hard to imagine.

      Such programs and policies would rely on still another venerable and long-standing feature of our society, the progressive income tax.^* Taxes have probably been viewed negatively since the very first tax was levied at the dawn of history, but they also are the foundation for a panoply of services, programs, and amenities that we take for granted but would hate to be without. Anti-tax attitudes have been amplified in our current era by the unfortunate and misleading depiction of many civilizing features of our body politic as “entitlements,” a term that—because of the way that our brains work—almost inevitably evokes associations to people who feel “entitled” in the negative sense of that term. Shifting our emphasis from so-called entitlements to public goods can help generate an understanding that the spending enabled by taxes is not necessarily taking from some to give to others but rather a matter of contributions from all that are available to all. Basing those contributions on the ability to pay has been a longstanding principle of our system, and there is little indication that it has the impeding effect on the economy that some have claimed. We have prospered as a society when progressive tax rates were considerably higher than they are now.

      One particular form of public good needs to be mentioned separately in the context of a proposal to encourage greater access to jobs via reduced working hours rather than maintaining an urgent necessity to grow at any cost. Health care systems in which coverage is strongly dependent on funding from employers are a significant obstacle to enabling more people to be employed through reducing the workweek. Even now, the added cost of employer-funded medical coverage is an obstacle to hiring by employers—as well as a detriment to the competitiveness of American companies compared to companies in countries where the cost of medical care is not a direct expense of the employer. If we were to approach the challenge of employing more people via the route of each person’s working fewer hours, the costs of funding health care through employer payments would become even more of an obstacle. People working twenty hours a week would obviously not get sick only half as much as people working forty, so hiring twice as many people for half as many hours would double the employer’s healthcare costs, creating a chilling effect on hiring. Thus in order to ease the path for shorter workweeks it will be important to uncouple healthcare coverage from employment and to treat medical care as a public good, a right of citizenship available to all in the same way that schools, parks, or police protection are available.

      Other proposals to address the increasing disconnect between companies’ earnings and the incomes of its employees point to measures that would permit workers gradually to accumulate shares in the companies in which they work and thereby to share in the profits their work generates.¹⁸ A related but different approach would focus not on shares in the particular company in which one worked but in the overall economy. Here, the income from one’s work would be supplemented by the issuance of shares to every citizen in some broad-based investment vehicle such as an S&P 500 index fund. These shares, financed through some form of taxes, could be issued to everyone at birth and be held in escrow to increase in value until the person was of age to take possession or, in other versions, would be issued in some amount to all citizens annually. In this way, each person would both benefit from and have a stake in the overall performance of the economy.

      Particularly intriguing to explore as a means of enabling more people to benefit from the success of the companies they work for is the idea of requiring the total compensation of the CEO and other top executives of publicly traded companies to be limited to some multiple of the total compensation of either the median or lowest paid employee of the company. The ratio of CEO pay to that of the average worker has increased 1,000 percent since 1950.¹⁹ Yet back then, when the ratio was only about twenty to one, the economy seemed to run just fine. Indeed, it was just a few short years before we were described as The Affluent Society.²⁰ If we were to legislate some limit to the ratio today, it could have a number of important and beneficial consequences. Particularly important to understand is that the essential impact of such a policy would not be a “leveling down” caused by placing a ceiling on the top earner’s income, but a ratcheting up of the incomes of everyone else working in the firm. There would be strong incentive for the CEO and other top executives to reverse the recent trend for wages and salaries to reflect a smaller share of the company’s sales and profits. In order for the CEO’s income to go up, the incomes of the people working in the firm would need to also go up. Consequently, everyone working in the firm, from top to bottom, would have a stake in the success of the company, because that success would be the foundation of their gains.

      We presently operate on a rather perverse incentive system, because, although in one sense there is enormous incentive for CEOs to strive for success in their work—the rewards are in the multimillions—in another sense, we essentially evaporate any real economic incentive. By paying CEOs and other top executives so much, we create an income structure in which they essentially have no economic need. Their only incentive is pure ego. Placing serious limits on the possibility of the CEO’s income to grow unless the income of the people who work СКАЧАТЬ