The difference between the top and the bottom of the income distribution now lies about where it did in the Gilded Age and the roaring 1920s, up until the Great Depression. Unlike these earlier periods, however, this rise in economic inequality has not been driven by returns on capital assets. This time, one of the most important contributors to the rise has been the payment of extraordinarily high levels of compensation to corporate executives. In 2017, for example, the 200 highest-paid CEOs in US business each received compensation of between $13.8 million and $103.2 million, well above the cut-off for the top 0.01% of the income distribution, which currently lies at $8.3 million. More troubling still, while the compensation for corporate executives has been almost continually rising during this period, real (inflation-adjusted) wages for almost everybody else have been stagnating.
Over the last month, Warren rolled out two foundational campaign proposals. The first is a sweeping package of corporate reforms, called the Accountable Capitalism Act, the primary centerpieces of which would be to disincentivize stock buybacks and require firms with at least $1 billion in revenue to reserve 40 percent of the seats on their board of directors for workers. (The latter measure is called “codetermination,” and it has been used for decades in Germany, which has a highly productive corporate sector.)
This is a fairly radical move for the US, and would likely face serious opposition, even in a Democrat-dominated congress. However, the German experience suggests that it could provide a good path to closer engagement of workers into the corporate sector.
Her second proposal is the Anti-Corruption and Public Integrity Act, which would impose lifetime lobby bans on certain federal officials, require presidential candidates to disclose their tax returns (Trump has avoided that), and block members of Congress and federal judges from owning individual stocks.
We’ll have to see how she pitches these positions in the new Congress, post election.
The rationale? Basically, avoiding increased wages which are harder to decrease in an economic downturn.
Tesla HR Chief Suggested Promoting UAW Advocates to Safety Jobs
| Josh Eidelson
reports on email exchange between Tesla
’s chief people officer, Gaby Toledano
and CEO Elon Musk
plotting to promote employees so they would be unable to advocate for unionization. Toledano left Tesla recently. The National Labor Relations Board
is investigating. Pretty shady, if true.
“Whereas last year we just needed to make it so that more people could use the Slack that already exists, now we’re starting to take steps to expand what Slack is,” says April Underwood, Slack’s chief product officer.
Last month Slack acquired Atlassian’s Stride and Hipchat workchat tools. Slack is now valued at $7 billion.
Across our studies, we found that employees who rated their relationship with their leader as highly ambivalent performed worse in their jobs (as rated by their leader) than those who rated the relationship as low in ambivalence. This effect held even when we controlled for the overall quality of the relationship. In other words, when people felt more ambivalently toward their leader, they had lower job performance, regardless of whether they rated their relationship overall as good or bad. Having mixed feelings about one’s leader seemed to make an otherwise poor-quality relationship worse and offset the benefits of a high-quality relationship.
Why do ambivalent leader-follower relationships have such powerful negative effects on job performance? We argue it is because of a well-known social psychological process called “cognitive consistency,” which says that we tend to seek consistency in our thoughts and feelings and avoid inconsistency. For example, people usually feel uncomfortable when they act in a way that is not consistent with their attitudes. (Individuals who smoke might do so despite knowing it is bad for their health.) To reduce this discomfort, they often change their original attitude to make it consistent with their behavior. (The smoker might persuade himself that the adverse health effects are overstated, or that he can’t avoid every possible risk out there.)
Ambivalence is a form of cognitive inconsistency that reflects being psychologically torn or conflicted — a feeling that we typically find unpleasant. This has been supported by research showing that ambivalent social relationships (such as friendships and family ties) are associated with increased cardiovascular stress, higher levels of daily blood pressure, and greater risk of disease. In our research we found that followers who reported having an ambivalent relationship with their leader were also more likely to report feeling more negative emotions, such as anxiety, at work, which may partly explain their lower job performance.
Quote of The Day
Regulations correct for “externalities,” where market forces alone would lead to the destruction of unpriced shared goods, such as clean water and air. Anti-predatory lending laws and disclosure rules for mortgages protect consumers from exploitation. Regulations can curtail the ability of one person’s risk-taking to cause collective losses. This kind of “asymmetric risk-taking” was the root cause of the 2008 financial crisis. And regulations should guard against monopolies that undermine competition.
These rules often arise as correctives to a disaster: the Great Depression, Three Mile Island, thalidomide, the global financial crisis. We should heed those lessons, not burn them down in a fit of Jacobin rage or wave them off with wishful thinking about self-regulation.
As consumers and citizens, we need companies to succeed because they provide the best products and services — not because they dump the most pollution in our water, most skillfully exploit our personal information, or are the best at avoiding pension obligations. When a democracy fails to protect people from these depredations, authoritarianism grows in appeal. And the capitalists among us should realize we have the most to lose in the long run: an economic system in which we are rewarded for maximizing our growth and profits.