Looking at Income Inequality

Updated: Friday, May 16, 2014
Looking at Income Inequality story image
KALAMAZOO, Mich. (NEWSCHANNEL 3) - A surprise best-selling French author has stoked the fires of class warfare in the United States with the recent publication of his book "Capital in the 21st Century."

Tonight, in Tom's Corner, our Tom Van Howe says whether the book is right or wrong is irrelevant right now; its publication has people talking.


The author's name is Thomas Piketty. And his premise is this: unless governments start using heavy taxes to break up large concentrations of wealth, our economy and the world's economy will become increasingly unbalanced, with only a few people inheriting massive fortunes.

And he says the only way to penetrate that socio-economic class would be to marry into it--because good old-fashioned hard work won't get you there.

The book has been pretty much kicked to the dirt by conservatives and hailed by liberals. I'm stuck in the middle because I struggled with economics in college.

But I'm not sure you need  a dollars-and-sense degree to get a sense that things aren't going well--that somehow the game is rigged; that the fix is in.

Take a look. The pay of the typical American worker peaked in 1978 and has been dropping ever since.

Since 2000, the wages of the median male worker across all age brackets has dropped 10 percent after inflation.

Compare that to what has happened to CEO's over that same period of time. According to former Labor Secretary Robert Reich, until about 1980, CEO's were paid, on average, 30 times what their typical worker was earning.

Since then, CEO pay has skyrocketed to roughly 300 times the pay of a typical worker.

Its good to be on top--not so good for those who are not.

And I can hear you say, 'Well, let's not pick on the job creators.'

But I can't find a single economist to say they're creating that many jobs.

What those CEO's are doing instead is taking their millions and investing it. Maybe hoarding it is a better word.

Maybe--just maybe--if they increased the pay of their workers, those same  workers would have more money in their pockets to buy more of the product they're making.

Kind of like Henry Ford, who doubled the pay of his workers to five dollars a day, so they'd be able to afford their own cars.

That would seem to be a good thing for the economy.

If a company can sell more of what is has to sell, it has reason to expand and hire more people. So customers are really the job creators.

Absent that, however, what do we do to level the paying field?

The french economist Piketty says we ought to start by taxing the hell out of the wealthy and then redistribute all that money to balance the scales.

But--to be real--that doesn't seem likely.

After all, our lawmakers, who rely on the monied classes for their political survival, aren't going to start gnawing on the hands that feed them. Can't see that happening next week.

How about the return of labor unions? To sit down and negotiate wages and benefits.

Well, unions are out of vogue right now, and while we do have the right to collectively bargain in this country, why don't you try organizing a union chapter where you work and see where that gets you.

The best idea I've heard so far is in a bill coming up for consideration in California.

It called Senate Bill 1372, and would set corporate tax rates according to the ratio of CEO pay to that of a typical worker.

The higher the ratio, the higher the tax. The lower the ratio the lower the tax.

All of a sudden, board members at 'Corporation A,' who set CEO pay, would have to start answering to stock holders who'd suddenly have a different set of questions.

I don't know if the Frenchman's book about capitalism is on target or not, but it has, indeed, set people to talking.

The elephant has left the building and we're talking about class warfare in this country as if it were a real thing.

And that's good--because it is.

In this corner...I'm Tom Van Howe.

Business News

Last Update on November 27, 2015 18:34 GMT


CHICAGO (AP) -- A protest march has begun in Chicago's Magnificent Mile shopping district, with the Rev. Jesse Jackson in the middle of a crowd that's shouting, "What do we want? Justice. When do we want it? Now!"

Several hundred demonstrators have gathered in the drizzling rain, many with umbrellas and plastic-wrapped signs.

They're protesting the fatal shooting of a black teenager by a white police officer last year. The recent release of a video showing the fatal shooting of 17-year-old Laquan McDonald has set off days of largely peaceful protests.

Protesters sought high visibility by taking the demonstrations to the city's main shopping area on what's traditionally one of the year's biggest shopping days.

An association representing hundreds of high-end retailers, hotels and restaurants in the district says it's confident authorities will maintain order for thousands of Black Friday shoppers. The Magnificent Mile Association represents 780 businesses on Chicago's North Michigan Avenue.


UNDATED (AP) -- "Black Friday" may no longer represent an early start on holiday shopping. For some, it may be too late.

One woman in Harrisburg, Pennsylvania, says her $200 budget today was the same as last year, but that it didn't buy as much because the best bargains were on Thanksgiving night.

Ashley Walton says the day for bargains is now "Black Thursday." She says she didn't go shopping on Thanksgiving because she was in what she calls a "turkey coma."

A Kmart shopper in Denver this morning had nearly the entire store to herself, and found it "sad." Susan Montoya said it's "no challenge" when no one else is shopping. She says people must have gone out yesterday or be shopping online.

Early numbers aren't out yet on how many shoppers headed to stores on Thanksgiving Day. The National Retail Federation expected about 30 million to shop on Thanksgiving, and 99.7 million on Black Friday.


BERLIN (AP) -- A closely-watched survey shows German consumers are losing confidence amid growing concerns of an economic slump.

The GfK research group said Friday its forward-looking consumer climate index dropped for the fourth month in a row to 9.3 points in December, from 9.4 in November.

GfK says consumers' willingness to buy rose, but that was offset by drops in both their income and economic expectations, partially linked to the growing number of asylum seekers pouring into the country.

Germany is set to receive more than 1 million refugees and other migrants this year and some 40 percent of consumers surveyed told GfK they believed unemployment would soon rise, most of them saying the newcomers would hurt the labor market.

GfK's monthly survey is based on some 2,000 consumer interviews.


BRUSSELS (AP) -- Greece and its creditors are close to sealing a deal on conditions that Athens must respect to obtain the next slice of rescue money.

The country has already received this week approval for a 2 billion euro loan, and is negotiating on more economic measures needed to get another 1 billion euros.

European Commission spokeswoman Mina Andreeva said Friday the sides have "agreed broadly the second set of milestones."

She said that when the details are ironed out "this of course would unlock the disbursement of the final one billion euros still available."

That would also allow for an important review of Greece's handling of its austerity program, which is required to secure international credit.

Andreeva said the implementation of pension reforms "is a key part of the first review."


GENEVA (AP) -- A Swiss court has convicted in absentia a former employee with international bank HSBC for economic espionage and sentenced him to five years in prison.

Herve Falciani -- seen by some as a crucial whistleblower -- had refused to travel from his native France to appear before the Swiss Federal Tribunal in Bellinzona in proceedings that began in October.

France does not extradite its own citizens and Falciani appears unlikely to serve the sentence.

Falciani was on trial for leaking bank data that led to a worldwide wave of tax evasion probes against prominent clients in France and elsewhere.

He was charged with illegally obtaining data, economic espionage, breach of business confidentiality and breach of bank secrecy while working at a Swiss HSBC subsidiary between 2006 and 2008.


Glitch causes bank customers to see billions in charges

HONOLULU (AP) -- A technical glitch meant some First Hawaiian Bank customers logged on to their accounts to find that they appeared to be billions, or sometimes more than a trillion dollars in the red.

KHON-TV reports that bank officials say the glitch was visible to customers who logged on to their accounts during a 20-minute window Wednesday. They say no actual customer information or balances were affected by the issue.

Customers who logged in at that time saw outstanding balances of at least $710 billion.

Kauai resident George White says when he saw the error all he could think was, "Well, my wife is going to kill me."

First Hawaii Bank said in a statement that the issue was resolved quickly and that the bank apologized to customers who were inconvenienced.

Washington Times